<PAGE>
PAINEWEBBER EQUITY FUNDS SEMIANNUAL REPORT
April 15, 2000
Dear Shareholder,
We are pleased to present you with the semiannual report for PaineWebber
Growth and Income Fund, PaineWebber Mid Cap Fund and PaineWebber Growth Fund for
the six-month period ended February 29, 2000.
MARKET REVIEW
[GRAPHIC]
Technology stocks continued to lead the equity markets during the six
months ended February 29, 2000. The NASDAQ Composite, one of the most
technology-heavy of the major market indices, surged 71.45% for the period. On
the other hand, the Standard and Poor's 500 Index (S&P 500) gained only 4.10%
for the period, and the Dow Jones Industrial Average lost 5.73%.
Other trends of recent years also continued: an ever-smaller number of
stocks accounted for most of the market's gains, while day-today price
fluctuations became more volatile. In January 2000, the market briefly rewarded
investors who owned more cyclical, value-oriented stocks, but high-growth
technology stocks resumed their predominance in February.
OUTLOOK
The near-term outlook for the market appears uncertain in light of recent
volatility among technology stocks and the likelihood that the Federal Reserve
(the Fed) will continue to raise interest rates. We are therefore concerned that
the stock market currently appears somewhat overvalued. Offsetting our concern,
however, expectations for corporate profits are rising. If these higher profit
expectations prove correct, then we believe the market can "grow into" its
current price levels without significant downside risk--barring an inflationary
shock.
Despite some uncertainty, the longer-term picture looks positive. The
consensus estimate of real GDP growth in 2000 stands at about 3.4%; early
estimates for real GDP growth in 2001 stand at about 3.5%. It seems likely that
the economy will remain healthy, with tolerable inflation of around 2.5% per
year. Long-term interest rates, as gauged by the 30-year U.S. Treasury bond,
have been dipping below six percent. We believe the combination of lower
long-term rates and higher profit expectations will help support stock prices
over the longer term.
<PAGE>
SEMIANNUAL REPORT
PAINEWEBBER GROWTH AND INCOME FUND
Investment Goal:
Current income and capital growth
Portfolio Manager:
Mark Tincher
Mitchell Hutchins Asset Management Inc.
Commencement:
December 20,1983 (Class A) July 1,1991 (Class B) July 2,1992 (Class C) February
12,1992 (Class Y)
Dividend Payments:
Semiannually
PAINEWEBBER GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Average Annual Total Return, Periods Ended 2/29/00
6 Months 1 Year 5 Years 10 Years Inception(0)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Before Deducting Class A* 4.98% 8.04% 20.29% 13.59% 13.28%
Maximum Sales Charge Class B** 4.55 7.18 19.35 N/A 12.85
Class C+ 4.57 7.24 19.37 N/A 12.83
Class Y++ 5.06 8.30 20.61 N/A 12.65
- ---------------------------------------------------------------------------------------
After Deducting Class A* 0.26 3.18 19.19 13.06 12.96
Maximum Sales Charge Class B** -0.45 2.18 19.15 N/A 12.85
Class C+ 3.57 6.24 19.37 N/A 12.83
- ---------------------------------------------------------------------------------------
S&P 500 Index 4.10 11.73 25.13 18.03 17.37
Lipper Multi-Cap Core Funds Median 10.34 18.49 19.98 15.14 15.22
- ---------------------------------------------------------------------------------------
</TABLE>
Past performance is no guarantee of future performance.The investment return and
the principal value of an investment in the Fund will fluctuate,so that an
investor's shares,when redeemed,may be worth more or less than their original
cost.Six-month and one-year returns are cumulative.
(0) Inception: since commencement of issuance on December 20,1983 for Class A
shares,July 1,1991 for Class B shares,July 2,1992 for Class C shares and
February 12,1992 for Class Y shares.Index and Lipper median inception
returns are as of oldest share class inception.
* Maximum sales charge for Class A shares is 4.5% of the public offering
price.Class A shares bear ongoing 12b-1 service fees.
** Maximum contingent deferred sales charge for Class B shares is 5% and is
reduced to 0% after six years.Class B shares bear ongoing 12b-1
distribution and service fees.
+ Maximum contingent deferred sales charge for Class C shares is 1% and is
reduced to 0% after one year.Class C shares bear ongoing 12b-1 distribution
and service fees.
++ The Fund offers Class Y shares to a limited group of eligible
investors,including participants in certain investment programs that are
sponsored by PaineWebber and that may invest in PaineWebber mutual funds,as
well as the trustee of the PaineWebber 401(k) Plus Plan.Class Y shares do
not bear initial or contingent deferred sales charges or ongoing
distribution and service fees.
PORTFOLIO HIGHLIGHTS
During the fiscal period we increased the Fund's exposure to technology and
reduced exposure to consumer cyclical companies. The strong performance of
technology benefited Fund performance. However, by period-end we began to reduce
the Fund's exposure to technology stocks, selling into strength and realizing
gains. Our models identified a number of attractively priced stocks in the
financial services sector, and we began to look for early indications of price
momentum there. We are seeing positive signs among brokerage companies, which
continue to report significantly better than expected earnings. We feel there is
opportunity here and believe these stocks will garner a lot of interest once
investors get a sense that the Federal Reserve (the Fed) is nearly finished
raising interest rates. Financial stocks tend to gain in anticipation of the
last Fed rate hike.
The Fund is market weighted in most other areas except for utilities and
consumer nondurables. We would expect these sectors to do better in a more
recessionary economic environment, which we do not foresee. Therefore, we think
a pro-cyclical, pro-growth stance is appropriate at this time.
The Fund's portfolio has taken on a "barbell" structure as we get mixed
readings from our valuation framework. We find stocks
<PAGE>
PAINEWEBBER EQUITY FUNDS SEMIANNUAL REPORT
that look attractive based on their earnings momentum, earnings surprise and
price momentum; however, those stocks typically do not have much valuation
support. On the other hand, we see stocks that look cheap relative to their
valuations but that lack earnings acceleration and price momentum. The Fund's
mixture of both gets it to an aggregate valuation that is not much different
from that of the S&P 500.
The Fund owns a mix of "old-economy" companies--energy, retail and
financial services--and "new-economy" technology companies connected to the
Internet. As the economy changes to a phase of higher energy costs and tighter
credit, market sentiment is seesawing between old and new. The new-economy
companies seem less dependent on energy prices and credit, but old-economy
companies are using new technologies to become more productive. At this point,
no one knows whether old or new will take the lead, but we believe the Fund is
well positioned to benefit either way.
Characteristics* 2/29/00 8/31/99
- --------------------------------------------------------------------------------
Net Assets ($bln) $1.2 $1.4
Price/Earnings Ratio(1) 31.1x 24.1x
Beta(2) 0.75 0.85
Dividend Yield 1.04% 1.05%
Number of Securities 98 110
Stocks 87.6% 90.6%
Bonds 3.7% 2.9%
Cash & Equivalents 8.7% 6.5%
- --------------------------------------------------------------------------------
Top Five Sectors* 2/29/00 8/31/99
- --------------------------------------------------------------------------------
Technology 31.0% Consumer Cyclicals 19.6%
Consumer Cyclicals 14.5 Technology 19.4
Financial Services 11.7 Financial Services 12.9
Utilities 8.4 Utilities 10.2
Capital Goods 7.0 Healthcare 7.3
- --------------------------------------------------------------------------------
Total 72.6 Total 69.4
* Weightings represent percentages of portfolio assets.The Fund's portfolio
is actively managed and its composition will vary over time.
(1) Based on projected forward fiscal year earnings.
(2) Beta is a measure of a stock portfolio's risk relative to the overall
market,as measured by the S&P 500 Index.The market has a Beta of 1.If a
portfolio has a Beta greater than 1,it is riskier than the market; if it
has a Beta less than 1,it is less risky than the market.
<PAGE>
SEMIANNUAL REPORT
PAINEWEBBER MID CAP FUND
Investment Goal:
Long-term capital
appreciation
Portfolio Managers:
Mark Tincher
Antony J.Scott
Mitchell Hutchins Asset
Management Inc.
Commencement:
April 7,1992 (Class A)
April 7,1992 (Class B)
July 2,1992 (Class C)
March 17,1998 (Class Y)
Dividend Payments:
Annually
Top Ten Equity Holdings* 2/29/00 8/31/99
- --------------------------------------------------------------------------------
Cisco Systems,Inc. 3.8% United Technologies Corp. 2.4%
JDS Uniphase Corp. 3.6 Tyco International Inc. 2.3
Apple Computer,Inc. 2.8 IBM Corp. 1.9
Applied Materials,Inc. 2.7 Chase Manhattan Corp. 1.8
United Technologies Corp. 2.1 Applied Materials,Inc. 1.8
Microsoft Corp. 1.9 Cisco Systems,Inc. 1.8
Chase Manhattan Corp. 1.9 Microsoft Corp. 1.8
Exxon Mobil Corp. 1.9 Dayton Hudson Corp. 1.7
Target Corp. 1.9 Unisys Corp. 1.6
MCI Worldcom,Inc. 1.8 SBC Communications,Inc. 1.6
- --------------------------------------------------------------------------------
Total 24.4 Total 18.7
* Weightings represent percentages of portfolio assets.The Fund's portfolio
is actively managed and its composition will vary over time.
PAINEWEBBER MID CAP FUND
Average Annual Total Return, Periods Ended 2/29/00
6 Months 1 Year 5 Years Inception(0)
- --------------------------------------------------------------------------------
Before Deducting Class A* 68.43% 87.01% 26.71% 20.18%
Maximum Sales Charge Class B** 67.60 85.07 25.64 19.42
Class C+ 67.80 85.44 25.72 21.06
Class Y++ 68.61 87.54 N/A 33.99
- --------------------------------------------------------------------------------
After Deducting Class A* 60.89 78.64 25.54 19.49
Maximum Sales Charge Class B** 62.60 80.07 25.48 19.42
Class C+ 66.80 84.44 25.72 21.06
- --------------------------------------------------------------------------------
S&P Midcap 400 Index 18.09 30.98 22.50 17.66
Lipper Multi-Cap Growth Funds Median 51.39 67.19 30.76 22.06
- --------------------------------------------------------------------------------
Past performance is no guarantee of future performance.The investment return and
the principal value of an investment in the Fund will fluctuate,so that an
investor's shares,when redeemed,may be worth more or less than their original
cost.Six-month and one-year returns are cumulative.
(0) Inception: since commencement of issuance on April 7,1992 for Class A and
Class B shares,July 2,1992 for Class C shares and March 17,1998 for Class Y
shares.Index and Lipper median inception returns are as of oldest share
class inception.
* Maximum sales charge for Class A shares is 4.5% of the public offering
price.Class A shares bear ongoing 12b-1 service fees.
** Maximum contingent deferred sales charge for Class B shares is 5% and is
reduced to 0% after six years.Class B shares bear ongoing 12b-1
distribution and service fees.
+ Maximum contingent deferred sales charge for Class C shares is 1% and is
reduced to 0% after one year.Class C shares bear ongoing 12b-1 distribution
and service fees.
++ The Fund offers Class Y shares to a limited group of eligible
investors,including participants in certain investment programs that are
sponsored by PaineWebber and that may invest in PaineWebber mutual funds,as
well as the trustee of the PaineWebber 401(k) Plus Plan.Class Y shares do
not bear initial or contingent deferred sales charges or ongoing
distribution and service fees.
<PAGE>
PAINEWEBBER EQUITY FUNDS SEMIANNUAL REPORT
PORTFOLIO HIGHLIGHTS
For the six months ended February 29, 2000, the Fund strongly outperformed
its index and its Lipper peer group. The Fund did well because of its
significant exposure to telecommunications (11.2%) and technology (52.2%), and
its underweightings in financial services (4.7%) and healthcare (1.2%).*
The Fund's growth focus also led us to underweight utility stocks. Fears of
increasing interest rates kept us out of the retail sector and kept our
weightings down in financial services. Thus, the Fund's leadership names
remained largely constant throughout the period.
We added to the Fund's technology exposure during September and October,
and again in January. Exposure increased further in February, largely through
capital appreciation. We continue to watch for any slowing in the demand for
technology, which would lead us to shift into other less volatile, more
value-oriented sectors. We see no evidence of slowing demand yet, but we may
look to trade names within the Fund's technology exposure.
The emphasis on technology followed our decision to place greater emphasis
on growth stocks, which we believe will continue to lead the market.
Nevertheless, we continue to make opportunistic trades in value-oriented stocks.
Within the mid-cap universe, we are looking for undervalued names that may be
little known due to lack of coverage by other investors. We also look for a
potential catalyst that could spark an acceleration of earnings growth, such as
new product introductions, management changes or increasing market share.
Characteristics* 2/29/00 8/31/99
- --------------------------------------------------------------------------------
Net Assets ($mm) $250.0 $158.1
Price/Earnings Ratio(3) 124.9x 34.0x
Beta(4) 1.41 0.90
Dividend Yield 0.20% 0.58%
Number of Securities 120 110
Stocks 93.1% 97.4%
Cash & Equivalents 6.9% 2.6%
- --------------------------------------------------------------------------------
* Weightings represent percentages of portfolio assets.The Fund's portfolio
is actively managed and its composition will vary over time.
(3) Forward fiscal year earnings.
(4) Beta is a measure of a stock portfolio's risk relative to the overall
market,as measured by the S&P 400 Midcap Index.The market has a Beta of
1.If a portfolio has a Beta greater than 1,it is riskier than the market;
if it has a Beta less than 1,it is less risky than the market.
<PAGE>
SEMIANNUAL REPORT
Top Ten Equity Holdings* 2/29/00 8/31/99
- --------------------------------------------------------------------------------
JDS Uniphase Corp. 6.7% JDS Uniphase Corp. 4.1%
SDL Inc. 2.6 Solectron Corp. 3.0
Maxim Integrated Products,Inc. 2.2 SCI Systems,Inc. 2.3
Peregrine Systems,Inc. 2.0 ASM Lithography Holdings 2.1
Lam Research Corp. 2.0 Maxim Integrated Products,Inc. 1.8
Comverse Technology,Inc. 1.8 America Online Inc. 1.8
Advanced Fibre Communications 1.8 Clarify,Inc. 1.7
ASM Lithography Holdings 1.7 BMC Software,Inc. 1.6
EMC Corp. 1.7 Mettler Toledo International Inc. 1.6
Teradyne Inc. 1.7 Vitesse Semiconductor Corp. 1.6
- --------------------------------------------------------------------------------
Total 24.2 Total 21.6
Top Five Sectors* 2/29/00 8/31/99
- --------------------------------------------------------------------------------
Technology 55.2% Technology 28.5%
Telecommunications 11.2 Consumer Cyclicals 21.5
Consumer Cyclicals 7.9 Capital Goods 15.3
Financial Services 4.7 Financial Services 13.1
Capital Goods 4.3 Utilities 7.0
- --------------------------------------------------------------------------------
Total 83.3 Total 85.4
* Weightings represent percentages of portfolio assets.The Fund's portfolio
is actively managed and its composition will vary over time.
<PAGE>
PAINEWEBBER EQUITY FUNDS SEMIANNUAL REPORT
PAINEWEBBER GROWTH FUND
<TABLE>
<CAPTION>
Average Annual Total Return, Periods Ended 2/29/00
6 Months 1 Year 5 Years 10 Years Inception((0))
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Before Deducting Class A* 28.72% 34.28% 25.13% 17.36% 16.75%
Maximum Sales Charge Class B** 28.19 33.19 24.13 N/A 17.50
Class C+ 28.21 33.20 24.14 N/A 17.93
Class Y++ 28.98 34.76 25.50 N/A 17.60
- ---------------------------------------------------------------------------------------
After Deducting Class A* 22.91 28.25 23.98 16.82 16.40
Maximum Sales Charge Class B** 23.19 28.19 23.96 N/A 17.50
Class C+ 27.21 32.20 24.14 N/A 17.93
- ---------------------------------------------------------------------------------------
S&P 500 Index 4.10 11.73 25.13 18.03 17.76
Lipper Multi-Cap Growth Funds Median 51.39 67.19 30.76 21.80 19.33
- ---------------------------------------------------------------------------------------
</TABLE>
Past performance is no guarantee of future performance. The investment return
and the principal value of an investment in the Fund will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Six-month and one-year returns are cumulative.
(0) Inception since commencement of issuance on March 18, 1985 for Class A
shares, July 1, 1991 for Class B shares, July 2, 1992 for Class C shares
and August 26, 1991 for Class Y shares. Index and Lipper median inception
returns are as of oldest share class inception.
* Maximum sales charge for Class A shares is 4.5% of the public offering
price. Class A shares bear ongoing 12b-1 service fees.
** Maximum contingent deferred sales charge for Class B shares is 5% and is
reduced to 0% after six years. Class B shares bear ongoing 12b-1
distribution and service fees.
+ Maximum contingent deferred sales charge for Class C shares is 1% and is
reduced to 0% after one year. Class C shares bear ongoing 12b-1
distribution and service fees.
++ The Fund offers Class Y shares to a limited group of eligible investors,
including participants in certain investment programs that are sponsored by
PaineWebber and that may invest in PaineWebber mutual funds, as well as the
trustee of the PaineWebber 401(k) Plus Plan. Class Y shares do not bear
initial or contingent deferred sales charges or ongoing distribution and
service fees.
PORTFOLIO HIGHLIGHTS
The Fund seeks to achieve its objective of long-term capital appreciation
by investing primarily in companies that we believe have a dominant position in
their industries, have strong management and are financially sound. We look for
companies that can deliver sustained or accelerating growth in earnings or cash
flow of at least 10% a year in each of the next three years. To help us identify
such companies, the Fund uses a proprietary quantitative model, which can point
us to what we should and should not own, and also provides a shopping list of
potential investments. We take that shopping list and conduct fundamental
analyses on the most attractive candidates.
For the past six-month period we found most of our "best in class" picks in
our highest-weighted technology (42.9%) and consumer cyclical (26.0%) sectors,
which along with telecommunications (1.1%) were the key contributors to
performance during the period.* Our bias toward larger-cap securities has been
positive for the Fund. We continue to weed out smaller-cap issues when we
identify larger-cap opportunities with comparable upside potential.
Our holdings are selected through a fundamental,
* Weightings represent percentages of portfolio assets as of February 29,
2000. The Fund's portfolio is actively managed and its composition will
vary over time.
PAINEWEBBER GROWTH FUND
Investment Goal:
Long-term capital
appreciation
Portfolio Manager:
Ellen R.Harris
Mitchell Hutchins Asset
Management Inc.
Commencement:
March 18, 1985 (Class A)
July 1, 1991 (Class B)
July 2, 1992 (Class C)
August 26, 1991 (Class Y)
Dividend Payments
Annually
7
<PAGE>
SEMIANNUAL REPORT
bottom-up process, yet they tend to reflect broad investment themes. Many times
these themes overlap a variety of industries. For example, we have long believed
that technological evolution is having, and will continue to have, a profound
impact on the way we conduct our businesses and our lives. Two more themes that
we believe affect a broad range of industries are the critical importance of
having strong brands and the need to establish a global presence.
The recently announced merger of America Online, Inc. (AOL) (1.4%)* and
Time Warner, Inc. (TWX) (2.2%) demonstrates these themes. The dominant "content-
based" Internet player is combining with the leading global-branded media and
content provider, who is also the second largest cable operator in the United
States. Citigroup, Inc. (C) (0.5%), the dominant financial service company, also
embodies these themes with the global presence of Citibank now enhancing the
investment banking opportunities of Salomon Smith Barney. And Travelers
Insurance is a dominant brand in its industry. Wal- Mart Stores, Inc. (WMT)
(0.9%), the leading retailer in the United States, is also expanding
internationally, both internally and through acquisitions. Wal-Mart's recently
launched website brings e-commerce to the company, which has long been a pioneer
in the application of technology to the "back office" part of its operations.
Because we take a fundamental approach to the companies in which the Fund
invests, we believe that these companies have the potential to deliver our
expected earnings growth over time. However, we are concerned about the current,
impulsive nature of the market, which can create unreasonable expectations,
excessively high valuations, and, in the dot.com mania, a definitely speculative
environment. Our challenge is to maintain prudence and redouble our efforts in
analyzing the fundamentals of the companies in which we are invested.
As always, we do not make broad changes to the portfolio but look for
refinements. For example, during the past six-month period, we increased the
Fund's exposure to the technology sector. We did this selectively, focusing on
areas that we believe will have sustained growth and avoiding those areas we
consider highly speculative. We added Corning, Inc (0.5%) as a complement to JDS
Uniphase (4.9%) because of Corning's strong position in fiber optics; and we
initiated positions in IBM (0.7%) and Texas Instruments (0.6%).
We continue to think that stock prices will be volatile and that there is
little leadership in the market. We strive, as always, to find the right balance
in our portfolio management between the more aggressive names and more
conservative names to mitigate volatility in the Fund.
* Weightings represent percentages of portfolio assets as of February 29,
2000. The Fund's portfolio is actively managed and its composition will
vary over time.
8
<PAGE>
PAINEWEBBER EQUITY FUNDS SEMIANNUAL REPORT
Characteristics* 2/29/00 8/31/99
- --------------------------------------------------------------------------------
Net Assets ($mm) $585.0 $450.7
Median Market Cap ($bln) $31.0 N/A
Price/Earnings Ratio 43.8x 29.9x
Beta(5) 0.92 1.1
Number of Securities 118 120
Stocks 89.5% 89.7%
Cash & Equivalents 10.5% 10.3%
- --------------------------------------------------------------------------------
Top Five Sectors* 2/29/00 8/31/99
- --------------------------------------------------------------------------------
Technology 42.9% Consumer Cyclicals 30.7%
Consumer Cyclicals 26.0 Technology 28.8
Utilities 5.9 Financial Services 15.7
Financial Services 4.3 Utilities (Telecom) 9.0
Healthcare 3.6 Healthcare 4.5
- --------------------------------------------------------------------------------
Total 82.7 Total 88.7
Top Ten Equity Holdings* 2/29/00 8/31/99
- --------------------------------------------------------------------------------
JDS Uniphase Corp. 4.9% Dell Computer Corp. 3.0%
Cisco Systems, Inc. 3.9 Cisco Systems, Inc. 2.7
EMC Corp. 3.3 MCI Worldcom, Inc. 2.4
Sun Microsystems, Inc. 2.7 EMC Corp. 2.2
Time Warner, Inc. 2.2 Tyco International Ltd. 2.1
Network Appliance, Inc. 2.2 Time Warner, Inc. 2.0
Liberty Media Group 2.1 Outdoor Systems, Inc. 2.0
Level 3 Communications 2.1 AT&T Corp. 1.9
Home Depot, Inc. 2.0 Home Depot, Inc. 1.9
Dell Computer Corp. 1.9 JDS Uniphase Corp. 1.9
- --------------------------------------------------------------------------------
Total 27.3 Total 22.1
* Weightings represent percentages of portfolio assets.The Fund's portfolio
is actively managed and its composition will vary over time.
(5) Beta is a measure of a stock portfolio's risk relative to the overall
market,as measured by the S&P 500 Index.The market has a Beta of 1.If a
portfolio has a Beta greater than 1,it is riskier than the market; if it
has a Beta less than 1,it is less risky than the market.
9
<PAGE>
PAINEWEBBER EQUITY FUNDS SEMIANNUAL REPORT
Our ultimate objective in managing your investments is to help you
successfully meet your financial goals. We thank you for your continued support
and welcome any comments or questions you may have. For a Quarterly Review on
PaineWebber Growth and Income Fund, Mid Cap Fund or Growth Fund, or another fund
in the PaineWebber Family of Funds,(6)please contact your Financial Advisor.
Sincerely,
/s/ Margo Alexander
MARGO ALEXANDER
Chairman and
Chief Executive Officer
Mitchell Hutchins Asset
Management Inc.
/s/ Brian M. Storms
BRIAN M. STORMS
President and
Chief Operating Officer
Mitchell Hutchins
Asset Management Inc.
/s/ Mark A. Tincher
MARK A. TINCHER
Managing Director and Chief
Investment Officer -- Equities
Portfolio Manager, PaineWebber
Growth and Income Fund
and PaineWebber Mid Cap Fund
/s/ Ellen R. Harris
ELLEN R. HARRIS
Portfolio Manager
PaineWebber Growth Fund
/s/ Antony J. Scott
ANTONY J. SCOTT
Portfolio Manager/Research Analyst
PaineWebber Mid Cap Fund
This letter is intended to assist shareholders in understanding how the funds
performed during the six-month period ended February 29, 2000, and reflects our
views at the time of its writing. Of course, these views may change in response
to changing circumstances. We encourage you to consult your Financial Advisor
regarding your personal investment program.
(6) Mutual funds are sold by prospectus only. The prospectuses for the funds
contain more complete information regarding risks, charges and expenses, and
should be read carefully before investing.
<PAGE>
PAINEWEBBER GROWTH AND INCOME FUND
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN/1/
-------------------------------------- --------------------------------
12 MONTHS 6 MONTHS
02/29/00 08/31/99 02/28/99 ENDED 02/29/00 ENDED 02/29/00
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A
SHARES $32.39 $32.07 $31.16 8.04% 4.98%
- ---------------------------------------------------------------------------------------
CLASS B
SHARES 31.90 31.72 30.94 7.18 4.55
- ---------------------------------------------------------------------------------------
CLASS C SHARES 31.97 31.78 30.99 7.24 4.57
- ---------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS A SHARES
<CAPTION>
NET ASSET VALUE
----------------------
PERIOD CAPITAL GAINS TOTAL
COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
12/20/83 -
12/31/84 $12.65 $ 13.21 -- $1.0800 13.72%
- ---------------------------------------------------------------------------------------
1985 13.21 14.97 $ 0.1950 0.8850 22.36
- ---------------------------------------------------------------------------------------
1986 14.97 15.04 1.1380 0.6830 12.68
- ---------------------------------------------------------------------------------------
1987 15.04 12.05 2.3027 0.7366 (3.16)
- ---------------------------------------------------------------------------------------
1988 12.05 13.67 -- 0.5120 17.83
- ---------------------------------------------------------------------------------------
1989 13.67 16.32 0.1675 0.5178 24.59
- ---------------------------------------------------------------------------------------
1990 16.32 15.85 -- 0.3030 (1.01)
- ---------------------------------------------------------------------------------------
1991 15.85 21.17 -- 0.2526 35.34
- ---------------------------------------------------------------------------------------
1992 21.17 21.74 -- 0.2432 3.90
- ---------------------------------------------------------------------------------------
1993 21.74 20.86 0.0310 0.2818 (2.59)
- ---------------------------------------------------------------------------------------
1994 20.86 18.18 1.2111 0.2417 (5.87)
- ---------------------------------------------------------------------------------------
1995 18.18 22.39 1.5085 0.2475 33.21
- ---------------------------------------------------------------------------------------
1996 22.39 24.37 3.0247 0.2584 23.46
- ---------------------------------------------------------------------------------------
1997 24.37 29.29 2.6664 0.2064 31.86
- ---------------------------------------------------------------------------------------
1998 29.29 32.46 1.7755 0.1707 17.97
- ---------------------------------------------------------------------------------------
1999 32.46 34.05 1.2696 0.0112 9.03
- ---------------------------------------------------------------------------------------
01/01/00 -
02/29/00 34.05 32.39 -- -- (4.88)
- ---------------------------------------------------------------------------------------
TOTALS: $15.2900 $6.6309
- ---------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/29/00: 654.86%
- ---------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS B SHARES
<CAPTION>
NET ASSET VALUE
----------------------
PERIOD CAPITAL GAINS TOTAL
COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/01/91 -
12/31/91 $18.04 $21.14 -- $0.1074 17.85%
- ---------------------------------------------------------------------------------------
1992 21.14 21.69 -- 0.0992 3.09
- ---------------------------------------------------------------------------------------
1993 21.69 20.82 $ 0.0310 0.1193 (3.31)
- ---------------------------------------------------------------------------------------
1994 20.82 18.15 1.2111 0.0768 (6.62)
- ---------------------------------------------------------------------------------------
1995 18.15 22.35 1.5085 0.0715 32.18
- ---------------------------------------------------------------------------------------
1996 22.35 24.32 3.0247 0.0643 22.55
- ---------------------------------------------------------------------------------------
1997 24.32 29.20 2.6508 0.0044 30.79
- ---------------------------------------------------------------------------------------
1998 29.20 32.26 1.7755 -- 17.02
- ---------------------------------------------------------------------------------------
1999 32.26 33.58 1.2696 -- 8.21
- ---------------------------------------------------------------------------------------
01/01/00 -
02/29/00 33.58 31.90 -- -- (5.00)
- ---------------------------------------------------------------------------------------
TOTALS: $11.4712 $0.5429
- ---------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/29/00: 185.36%
- ---------------------------------------------------------------------------------------
</TABLE>
/1/FIGURES ASSUME REINVESTMENT OF ALL DIVIDENDS AND OTHER DISTRIBUTIONS AT NET
ASSET VALUE ON THE PAYABLE DATES AND DO NOT INCLUDE SALES CHARGES; RESULTS
WOULD BE LOWER IF SALES CHARGES WERE INCLUDED. TOTAL INVESTMENT RETURN FOR
PERIODS OF LESS THAN ONE YEAR HAS NOT BEEN ANNUALIZED.
THE DATA ABOVE REPRESENTS PAST PERFORMANCE OF THE FUND'S SHARES, WHICH IS NO
GUARANTEE OF FUTURE RESULTS. THE PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
11
<PAGE>
PAINEWEBBER GROWTH AND INCOME FUND
PERFORMANCE RESULTS (UNAUDITED) (CONCLUDED)
PERFORMANCE SUMMARY CLASS C SHARES
<TABLE>
<CAPTION>
NET ASSET VALUE
----------------
PERIOD CAPITAL GAINS
COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID TOTAL RETURN/1/
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/02/92 -
12/31/92 $19.96 $21.75 -- $0.1160 9.58%
- -------------------------------------------------------------------------
1993 21.75 20.87 $ 0.0310 0.1308 (3.30)
- -------------------------------------------------------------------------
1994 20.87 18.20 1.2111 0.0756 (6.61)
- -------------------------------------------------------------------------
1995 18.20 22.42 1.5085 0.0728 32.21
- -------------------------------------------------------------------------
1996 22.42 24.39 3.0247 0.0781 22.55
- -------------------------------------------------------------------------
1997 24.39 29.24 2.6664 0.0318 30.77
- -------------------------------------------------------------------------
1998 29.24 32.32 1.7755 -- 17.06
- -------------------------------------------------------------------------
1999 32.32 33.65 1.2696 -- 8.23
- -------------------------------------------------------------------------
01/01/00 -
02/29/00 33.65 31.97 -- -- (4.99)
- -------------------------------------------------------------------------
TOTALS: $11.4868 $0.5051
- -------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
02/29/00: 152.38%
- -------------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
% RETURN AFTER
DEDUCTING
% RETURN WITHOUT DEDUCTING MAXIMUM SALES
MAXIMUM SALES CHARGE CHARGE
----------------------------- -------------------
CLASS A* B** C*** A* B** C***
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TWELVE MONTHS ENDED
03/31/00 17.10% 16.20% 16.20% 11.84% 11.20% 15.20%
- ----------------------------------------------------------------------------
FIVE YEARS ENDED
03/31/00 21.69 20.75 20.75 20.58 20.56 20.75
- ----------------------------------------------------------------------------
TEN YEARS ENDED 03/31/00 14.55 N/A N/A 14.03 N/A N/A
- ----------------------------------------------------------------------------
COMMENCEMENT OF
OPERATIONS
THROUGH 03/31/00+ 13.83 13.87 13.97 13.51 13.87 13.97
- ----------------------------------------------------------------------------
</TABLE>
/1/FIGURES ASSUME REINVESTMENT OF ALL DIVIDENDS AND OTHER DISTRIBUTIONS AT NET
ASSET VALUE ON THE PAYABLE DATES AND TO NOT INCLUDE SALES CHARGES, RESULTS
WOULD BE LOWER IF SALES CHARGES WERE INCLUDED. TOTAL INVESTMENT RETURN FOR
PERIODS OF LESS THAN ONE YEAR HAS NOT BEEN ANNUALIZED.
* MAXIMUM SALES CHARGE FOR CLASS A SHARES IS 4.5% OF THE PUBLIC OFFERING PRICE.
CLASS A SHARES BEAR ONGOING 12B-1 SERVICE FEES.
** MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 5% AND IS
REDUCED TO 0% AFTER 6 YEARS. CLASS B SHARES BEAR ONGOING 12B-1 DISTRIBUTION
AND SERVICE FEES.
*** MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C SHARES IS 1% AND IS
REDUCED TO 0% AFTER 1 YEAR. CLASS C SHARES BEAR ONGOING 12B-1 DISTRIBUTION
AND SERVICE FEES.
+ COMMENCEMENT OF OPERATIONS DATES ARE DECEMBER 20, 1983, JULY 1, 1991 AND JULY
2, 1992 FOR CLASS A, CLASS B AND CLASS C SHARES, RESPECTIVELY.
NOTE: THE FUND OFFERS CLASS Y SHARES TO A LIMITED GROUP OF INVESTORS, INCLUDING
PARTICIPANTS IN CERTAIN INVESTMENT PROGRAMS THAT ARE SPONSORED BY
PAINEWEBBER AND THAT MAY INVEST IN PAINEWEBBER MUTUAL FUNDS. FOR THE SIX
MONTHS ENDED FEBRUARY 29, 2000 AND SINCE INCEPTION, FEBRUARY 12, 1992
THROUGH FEBRUARY 29, 2000. CLASS Y SHARES HAD A TOTAL RETURN OF 5.06% AND
161.01%, RESPECTIVELY. FOR THE ONE YEAR AND FIVE YEAR PERIODS ENDED MARCH
31, 2000 AND SINCE INCEPTION, FEBRUARY 12, 1992 THROUGH MARCH 31, 2000,
CLASS Y SHARES HAVE AN AVERAGE ANNUAL TOTAL RETURN OF 17.35%, 22.00% AND
13.75%, RESPECTIVELY. CLASS Y SHARES DO NOT HAVE INITIAL OR CONTINGENT
DEFERRED SALES CHARGES OR ONGOING DISTRIBUTION AND SERVICE FEES.
THE DATA ABOVE REPRESENTS PAST PERFORMANCE OF THE FUND'S SHARES, WHICH IS NO
GUARANTEE OF FUTURE RESULTS. THE PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE, SO THAT AN INVESTORS SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
12
<PAGE>
PAINEWEBBER MID CAP FUND
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN/1/
-------------------------------------- -----------------------------
12 MONTHS 6 MONTHS
02/29/00 08/31/99 02/28/99 ENDED 02/29/00 ENDED 02/29/00
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES $16.74 $10.67 $9.61 87.01% 68.43%
- ------------------------------------------------------------------------------------
CLASS B SHARES 16.52 10.59 9.59 85.07 67.60
- ------------------------------------------------------------------------------------
CLASS C SHARES 14.83 9.57 8.66 85.44 67.80
- ------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS A SHARES
<CAPTION>
NET ASSET VALUE
------------------ CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
04/07/92 -
12/31/92 $ 9.55 $10.50 -- -- 9.95%
- ------------------------------------------------------------------------------------
1993 10.50 12.19 -- -- 16.10
- ------------------------------------------------------------------------------------
1994 12.19 11.98 $ 0.0433 -- (1.36)
- ------------------------------------------------------------------------------------
1995 11.98 14.67 0.7480 -- 28.79
- ------------------------------------------------------------------------------------
1996 14.67 14.92 2.3244 -- 17.87
- ------------------------------------------------------------------------------------
1997 14.92 13.55 3.4608 -- 15.14
- ------------------------------------------------------------------------------------
1998 13.55 10.34 4.5107 -- 11.81
- ------------------------------------------------------------------------------------
1999 10.34 14.29 0.9297 -- 48.37
- ------------------------------------------------------------------------------------
01/01/00 -
02/29/00 14.29 16.74 -- 17.14
- ------------------------------------------------------------------------------------
TOTALS: $12.0169 $0.0000
- ------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/29/00: 327.66%
- ------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS B SHARES
<CAPTION>
NET ASSET VALUE
------------------ CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
04/07/92 -
12/31/92 $10.00 $10.93 -- -- 9.30%
- ------------------------------------------------------------------------------------
1993 10.93 12.59 -- -- 15.19
- ------------------------------------------------------------------------------------
1994 12.59 12.28 $ 0.0433 -- (2.03)
- ------------------------------------------------------------------------------------
1995 12.28 14.94 0.7480 -- 27.73
- ------------------------------------------------------------------------------------
1996 14.94 15.11 2.3244 -- 17.01
- ------------------------------------------------------------------------------------
1997 15.11 13.64 3.4608 -- 14.28
- ------------------------------------------------------------------------------------
1998 13.64 10.33 4.5107 -- 10.85
- ------------------------------------------------------------------------------------
1999 10.33 14.13 0.9297 -- 46.96
- ------------------------------------------------------------------------------------
01/01/00 -
02/29/00 14.13 16.52 -- $0.0000 16.91
- ------------------------------------------------------------------------------------
TOTALS: $12.0169
- ------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/29/00: 306.68%
- ------------------------------------------------------------------------------------
</TABLE>
/1/FIGURES ASSUME REINVESTMENT OF ALL DIVIDENDS AND OTHER DISTRIBUTIONS, IF
ANY, AT NET ASSET VALUE ON THE PAYABLE DATES AND DO NOT INCLUDE SALES CHARGES;
RESULTS FOR EACH CLASS WOULD BE LOWER IF SALES CHARGES WERE INCLUDED. TOTAL
INVESTMENT RETURN FOR PERIODS OF LESS THAN ONE YEAR HAS NOT BEEN ANNUALIZED.
THE DATA ABOVE REPRESENTS PAST PERFORMANCE OF THE FUND'S SHARES, WHICH IS NO
GUARANTEE OF FUTURE RESULTS. THE PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
13
<PAGE>
PAINEWEBBER MID CAP FUND
PERFORMANCE RESULTS (UNAUDITED) (CONCLUDED)
PERFORMANCE SUMMARY CLASS C SHARES
<TABLE>
<CAPTION>
NET ASSET VALUE
----------------
PERIOD CAPITAL GAINS
COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID TOTAL RETURN/1/
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/02/92 -
12/31/92 $ 8.89 $10.46 -- -- 17.66%
- ------------------------------------------------------------------------------
1993 10.46 12.05 -- -- 15.20
- ------------------------------------------------------------------------------
1994 12.05 11.75 $ 0.0433 -- (2.13)
- ------------------------------------------------------------------------------
1995 11.75 14.26 0.7480 -- 27.82
- ------------------------------------------------------------------------------
1996 14.26 14.31 2.3244 -- 16.98
- ------------------------------------------------------------------------------
1997 14.31 12.74 3.4608 -- 14.39
- ------------------------------------------------------------------------------
1998 12.74 9.33 4.5107 -- 10.82
- ------------------------------------------------------------------------------
1999 9.33 12.68 0.9297 -- 47.17
- ------------------------------------------------------------------------------
01/01/99 -
02/29/00 12.68 14.83 -- -- 16.96
- ------------------------------------------------------------------------------
TOTALS: $12.0169 $0.0000
- ------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/29/00: 332.95%
- ------------------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
% RETURN WITHOUT % RETURN AFTER
DEDUCTING DEDUCTING
MAXIMUM SALES MAXIMUM SALES
CHARGE CHARGE
------------------- -------------------
CLASS A* B** C*** A* B** C***
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TWELVE MONTHS ENDED 03/31/00 78.78% 77.07% 77.40% 70.69% 72.07% 76.40%
- -----------------------------------------------------------------------
FIVE YEARS ENDED 03/31/00 25.67 24.65 24.71 24.53 24.48 24.71
- -----------------------------------------------------------------------
COMMENCEMENT OF OPERATIONS
THROUGH 03/31/00+ 19.75 19.00 20.59 19.06 19.00 20.59
- -----------------------------------------------------------------------
</TABLE>
/1/FIGURES ASSUME REINVESTMENT OF ALL DIVIDENDS AND OTHER DISTRIBUTIONS, IF
ANY, AT NET ASSET VALUE ON THE PAYABLE DATES AND DO NOT INCLUDE SALES CHARGES;
RESULTS FOR EACH CLASS WOULD BE LOWER IF SALES CHARGES WERE INCLUDED. TOTAL
INVESTMENT RETURN FOR PERIODS OF LESS THAN ONE YEAR HAS NOT BEEN ANNUALIZED.
* MAXIMUM SALES CHARGE FOR CLASS A SHARES IS 4.5% OF THE PUBLIC OFFERING PRICE.
CLASS A SHARES BEAR ONGOING 12B-1 SERVICE FEES.
** MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 5% AND IS
REDUCED TO 0% AFTER 6 YEARS. CLASS B SHARES BEAR ONGOING 12B-1 DISTRIBUTION
AND SERVICE FEES.
*** MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C SHARES IS 1% AND IS
REDUCED TO 0% AFTER 1 YEAR. CLASS C SHARES BEAR ONGOING 12B-1 DISTRIBUTION
AND SERVICE FEES.
+ COMMENCEMENT OF OPERATIONS DATES ARE APRIL 7, 1992 FOR CLASS A AND CLASS B
SHARES AND JULY 2, 1992 FOR CLASS C SHARES.
NOTE: THE FUND OFFERS CLASS Y SHARES TO A LIMITED GROUP OF INVESTORS, INCLUDING
PARTICIPANTS IN CERTAIN INVESTMENT PROGRAMS THAT ARE SPONSORED BY
PAINEWEBBER AND THAT MAY INVEST IN PAINEWEBBER MUTUAL FUNDS. FOR THE SIX
MONTHS ENDED FEBRUARY 29, 2000 AND SINCE INCEPTION MARCH 17, 1998 THROUGH
FEBRUARY 29, 2000, CLASS Y SHARES HAD A TOTAL RETURN OF 68.61% AND
77.39%, RESPECTIVELY. FOR THE YEAR ENDED MARCH 31, 2000 AND SINCE
INCEPTION MARCH 17, 1998 THROUGH MARCH 31, 2000 CLASS Y SHARES HAVE AN
AVERAGE ANNUAL TOTAL RETURN OF 79.31% AND 31.52%, RESPECTIVELY. CLASS Y
SHARES DO NOT HAVE INITIAL OR CONTINGENT DEFERRED SALES CHARGES OR
ONGOING DISTRIBUTION AND SERVICE FEES.
THE DATA ABOVE REPRESENTS PAST PERFORMANCE OF THE FUND'S SHARES, WHICH IS NO
GUARANTEE OF FUTURE RESULTS. THE PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
14
<PAGE>
PAINEWEBBER GROWTH FUND
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN/1/
----------------------------------- -----------------------------
12 MONTHS 6 MONTHS
02/29/00 08/31/99 02/28/99 ENDED 02/29/00 ENDED 02/29/00
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A
SHARES $32.48 $26.85 $25.74 34.28% 28.72%
- -----------------------------------------------------------------------------
CLASS B
SHARES 29.02 24.26 23.35 33.19 28.19
- -----------------------------------------------------------------------------
CLASS C
SHARES 29.41 24.56 23.64 33.20 28.21
- -----------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS A SHARES
<CAPTION>
NET ASSET VALUE
------------------
PERIOD CAPITAL GAINS TOTAL
COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
03/18/85 -
12/31/85 $ 9.15 $10.55 -- $0.1275 16.87%
- -----------------------------------------------------------------------------
1986 10.55 10.86 $ 0.4064 0.1042 7.64
- -----------------------------------------------------------------------------
1987 10.86 9.81 1.4051 0.0847 4.34
- -----------------------------------------------------------------------------
1988 9.81 11.87 -- 0.1011 22.05
- -----------------------------------------------------------------------------
1989 11.87 14.79 1.1520 -- 34.27
- -----------------------------------------------------------------------------
1990 14.79 12.98 0.4625 0.1625 (7.72)
- -----------------------------------------------------------------------------
1991 12.98 18.53 0.6003 0.0072 47.61
- -----------------------------------------------------------------------------
1992 18.53 18.66 0.6235 -- 4.15
- -----------------------------------------------------------------------------
1993 18.66 21.14 1.0734 -- 19.17
- -----------------------------------------------------------------------------
1994 21.14 18.81 0.0258 -- (10.90)
- -----------------------------------------------------------------------------
1995 18.81 23.12 1.8440 -- 33.02
- -----------------------------------------------------------------------------
1996 23.12 24.24 2.1056 -- 14.11
- -----------------------------------------------------------------------------
1997 24.24 21.24 6.7819 -- 17.01
- -----------------------------------------------------------------------------
1998 21.24 25.85 2.0057 -- 31.95
- -----------------------------------------------------------------------------
1999 25.85 32.17 1.9441 -- 32.43
- -----------------------------------------------------------------------------
01/01/00 -
02/29/00 32.17 32.48 -- -- 0.96
- -----------------------------------------------------------------------------
TOTALS: $20.4303 $0.5872
- -----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/29/00 915.39%
- -----------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS B SHARES
<CAPTION>
NET ASSET VALUE
------------------
PERIOD CAPITAL GAINS TOTAL
COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/01/91 -
12/31/91 $15.63 $18.47 $ 0.6003 $0.0037 22.18%
- -----------------------------------------------------------------------------
1992 18.47 18.44 0.6235 -- 3.30
- -----------------------------------------------------------------------------
1993 18.44 20.71 1.0734 -- 18.26
- -----------------------------------------------------------------------------
1994 20.71 18.28 0.0258 -- (11.61)
- -----------------------------------------------------------------------------
1995 18.28 22.22 1.8440 -- 31.95
- -----------------------------------------------------------------------------
1996 22.22 23.02 2.1056 -- 13.24
- -----------------------------------------------------------------------------
1997 23.02 19.62 6.7819 -- 16.17
- -----------------------------------------------------------------------------
1998 19.62 23.48 2.0057 -- 30.76
- -----------------------------------------------------------------------------
1999 23.48 28.78 1.9441 -- 31.35
- -----------------------------------------------------------------------------
01/01/00 -
02/29/00 28.78 29.02 -- -- 0.83
- -----------------------------------------------------------------------------
TOTALS: $17.0043 $0.0037
- -----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/29/00: 305.08%
- -----------------------------------------------------------------------------
</TABLE>
/1/FIGURES ASSUME REINVESTMENT OF ALL DIVIDENDS AND OTHER DISTRIBUTIONS AT NET
ASSET VALUE ON THE PAYABLE DATES AND DO NOT INCLUDE SALES CHARGES; RESULTS
WOULD BE LOWER IF SALES CHARGES WERE INCLUDED. TOTAL INVESTMENT RETURN FOR
PERIODS OF LESS THAN ONE YEAR HAS NOT BEEN ANNUALIZED.
THE DATA ABOVE REPRESENTS PAST PERFORMANCE OF THE FUND'S SHARES, WHICH IS NO
GUARANTEE OF FUTURE RESULTS. THE PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
15
<PAGE>
PAINEWEBBER GROWTH FUND
PERFORMANCE RESULTS (UNAUDITED) (CONCLUDED)
PERFORMANCE SUMMARY CLASS C SHARES
<TABLE>
<CAPTION>
NET ASSET VALUE
----------------
PERIOD CAPITAL GAINS
COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID TOTAL RETURN/1/
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/02/92 -
12/31/92 $17.04 $18.57 $ 0.6235 -- 12.73%
- ----------------------------------------------------------------------------
1993 18.57 20.85 1.0734 -- 18.19
- ----------------------------------------------------------------------------
1994 20.85 18.41 0.0258 -- (11.58)
- ----------------------------------------------------------------------------
1995 18.41 22.40 1.8440 -- 32.00
- ----------------------------------------------------------------------------
1996 22.40 23.21 2.1056 -- 13.18
- ----------------------------------------------------------------------------
1997 23.21 19.83 6.7819 -- 16.13
- ----------------------------------------------------------------------------
1998 19.83 23.77 2.0057 -- 30.84
- ----------------------------------------------------------------------------
1999 23.77 29.17 1.9441 -- 31.39
- ----------------------------------------------------------------------------
01/01/00 -
02/29/00 29.17 29.41 -- -- 0.82
- ----------------------------------------------------------------------------
TOTALS: $16.4040 $0.0000
- ----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
02/29/00: 254.24%
- ----------------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
% RETURN WITHOUT % RETURN AFTER
DEDUCTING DEDUCTING
MAXIMUM SALES MAXIMUM SALES
CHARGE CHARGE
------------------- -------------------
CLASS A* B** C*** A* B** C***
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TWELVE MONTHS ENDED 03/31/00 34.59% 33.50% 33.54% 28.53% 28.50% 32.54%
- -----------------------------------------------------------------------
FIVE YEARS ENDED 03/31/00 25.80 24.81 24.81 24.65 24.64 24.81
- -----------------------------------------------------------------------
TEN YEARS ENDED 3/31/00 17.84 N/A N/A 17.30 N/A N/A
- -----------------------------------------------------------------------
COMMENCEMENT OF OPERATIONS
THROUGH 03/31/00+ 17.08 18.07 18.56 16.73 18.07 18.56
- -----------------------------------------------------------------------
</TABLE>
/1/FIGURES ASSUME REINVESTMENT OF ALL DIVIDENDS AND OTHER DISTRIBUTIONS AT NET
ASSET VALUE ON THE PAYABLE DATES AND DO NOT INCLUDE SALES CHARGES; RESULTS
WOULD BE LOWER IF SALES CHARGES WERE INCLUDED. TOTAL INVESTMENT RETURN FOR
PERIODS OF LESS THAN ONE YEAR HAS NOT BEEN ANNUALIZED.
* MAXIMUM SALES CHARGE FOR CLASS A SHARES IS 4.5% OF THE PUBLIC OFFERING PRICE.
CLASS A SHARES BEAR ONGOING 12B-1 SERVICE FEES.
** MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS B SHARES IS 5% AND IS
REDUCED TO 0% AFTER 6 YEARS. CLASS B SHARES BEAR ONGOING 12B-1 DISTRIBUTION AND
SERVICE FEES.
*** MAXIMUM CONTINGENT DEFERRED SALES CHARGE FOR CLASS C SHARES IS 1% AND IS
REDUCED TO 0% AFTER 1 YEAR. CLASS C SHARES BEAR ONGOING 12B-1 DISTRIBUTION AND
SERVICE FEES.
+ COMMENCEMENT OF OPERATIONS DATES ARE MARCH 18, 1985, JULY 1, 1991 AND JULY
2,1992 FOR CLASS A, CLASS B AND CLASS C SHARES, RESPECTIVELY.
NOTE: THE FUND OFFERS CLASS Y SHARES TO A LIMITED GROUP OF INVESTORS, INCLUDING
PARTICIPANTS IN CERTAIN INVESTMENT PROGRAMS THAT ARE SPONSORED BY
PAINEWEBBER AND THAT MAY INVEST IN PAINEWEBBER MUTUAL FUNDS. FOR THE SIX
MONTHS ENDED FEBRUARY 29, 2000 AND SINCE INCEPTION, AUGUST 26, 1991
THROUGH FEBRUARY 29, 2000, CLASS Y SHARES HAD A TOTAL RETURN OF 28.98%
AND 297.92%, RESPECTIVELY. FOR THE ONE YEAR AND FIVE YEAR PERIODS ENDED
MARCH 31, 2000 AND SINCE INCEPTION THROUGH MARCH 31, 2000. CLASS Y SHARES
HAVE AN AVERAGE ANNUAL TOTAL RETURN OF 35.12%, 26.17% AND 18.18%,
RESPECTIVELY. CLASS Y SHARES DO NOT HAVE INITIAL OR CONTINGENT DEFERRED
SALES CHARGES OR ONGOING DISTRIBUTION AND SERVICE FEES.
THE DATA ABOVE REPRESENTS PAST PERFORMANCE OF THE FUND'S SHARES, WHICH IS NO
GUARANTEE OF FUTURE RESULTS. THE PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND
WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
16
<PAGE>
PAINEWEBBER GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- --------------
<C> <S> <C>
COMMON STOCKS -- 87.36%
AIRLINES -- 0.68%
183,600 DELTA AIR LINES, INC. ............................... $ 8,376,750
--------------
ALCOHOL -- 0.39%
76,000 ANHEUSER-BUSCH COMPANIES, INC. ...................... 4,873,500
--------------
BANKS -- 2.51%
298,700 CHASE MANHATTAN CORP. ............................... 23,783,987
221,808 WELLS FARGO AND CO. ................................. 7,333,527
--------------
31,117,514
--------------
BROADCASTING & PUBLISHING -- 0.36%
140,000 INFINITY BROADCASTING CORP.*......................... 4,471,250
--------------
CHEMICALS -- 0.56%
63,569 DOW CHEMICAL CO. .................................... 6,897,237
--------------
COMPUTER HARDWARE -- 7.89%
300,000 APPLE COMPUTER, INC.*................................ 34,387,500
360,000 CISCO SYSTEMS, INC.*................................. 47,587,500
389,000 DELL COMPUTER CORP.*................................. 15,876,062
--------------
97,851,062
--------------
COMPUTER SOFTWARE -- 5.86%
191,162 BMC SOFTWARE, INC.*.................................. 8,793,452
235,100 COMPUWARE CORP.*..................................... 5,201,588
139,700 IBM CORP. ........................................... 14,249,400
264,425 MICROSOFT CORP.*..................................... 23,632,984
694,668 UNISYS CORP.*........................................ 20,796,623
--------------
72,674,047
--------------
CONSTRUCTION, REAL PROPERTY -- 0.18%
116,400 LAFARGE CORP., ADR................................... 2,291,625
--------------
CONSUMER DURABLES -- 0.68%
155,477 WHIRLPOOL CORP. ..................................... 8,444,345
--------------
DEFENSE & AEROSPACE -- 1.44%
190,900 BOEING CO. .......................................... 7,039,437
77,924 GENERAL DYNAMICS CORP. .............................. 3,370,213
155,847 TRW, INC. ........................................... 7,480,656
--------------
17,890,306
--------------
</TABLE>
FEBRUARY 29, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- --------------
<C> <S> <C>
DIVERSIFIED RETAIL -- 3.25%
327,500 FEDERATED DEPARTMENT STORES, INC.*................... $ 12,015,156
399,250 TARGET CORP. ........................................ 23,555,750
98,000 WAL-MART STORES, INC. ............................... 4,771,375
--------------
40,342,281
--------------
DRUGS & MEDICINE -- 4.40%
185,600 BIOGEN INC.*......................................... 20,033,200
141,000 PHARMACIA & UPJOHN, INC., ADR........................ 6,715,125
268,000 SCHERING-PLOUGH CORP. ............................... 9,346,500
216,142 WARNER LAMBERT CO. .................................. 18,493,650
--------------
54,588,475
--------------
ELECTRIC UTILITIES -- 1.46%
123,600 DUKE ENERGY CORP. ................................... 5,994,600
221,000 ENERGY EAST CORP. ................................... 4,641,000
197,200 UNICOM CORP. ........................................ 7,456,625
--------------
18,092,225
--------------
ELECTRICAL EQUIPMENT -- 4.32%
306,200 HONEYWELL, INC. ..................................... 14,735,875
206,000 JABIL CIRCUIT INC.*.................................. 14,304,125
110,900 MOTOROLA, INC. ...................................... 18,908,450
116,800 TELLABS, INC.*....................................... 5,606,400
--------------
53,554,850
--------------
ENERGY RESERVES & PRODUCTION -- 4.52%
114,749 ATLANTIC RICHFIELD CO. .............................. 8,147,179
319,922 EXXON MOBIL CORP. ................................... 24,094,126
341,500 ROYAL DUTCH PETROLEUM CO., ADR....................... 17,928,750
219,790 TOSCO CORP. ......................................... 5,879,382
--------------
56,049,437
--------------
ENTERTAINMENT -- 1.18%
263,000 VIACOM, INC., CLASS B*............................... 14,662,250
--------------
FINANCIAL SERVICES -- 3.12%
329,538 CITIGROUP, INC. ..................................... 17,032,995
84,800 GENERAL ELECTRIC CO. ................................ 11,209,500
295,543 MBNA CORP. .......................................... 6,723,603
57,075 PROVIDIAN FINANCIAL CORP. ........................... 3,699,174
--------------
38,665,272
--------------
FOOD RETAIL -- 0.91%
758,800 KROGER CO.*.......................................... 11,287,150
--------------
</TABLE>
17
<PAGE>
PAINEWEBBER GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- --------------
<C> <S> <C>
COMMON STOCKS (CONCLUDED)
FOREST PRODUCTS, PAPER -- 3.52%
264,205 CHAMPION INTERNATIONAL CORP. ........................ $ 13,672,608
147,500 GEORGIA PACIFIC CORP. ............................... 5,724,844
214,000 GEORGIA PACIFIC CORP., PEPS.......................... 7,423,125
132,993 INTERNATIONAL PAPER CO. ............................. 4,895,805
232,919 WEYERHAEUSER CO. .................................... 11,951,656
--------------
43,668,038
--------------
GAS UTILITY -- 0.45%
93,700 COLUMBIA ENERGY GROUP................................ 5,528,300
--------------
INDUSTRIAL PARTS -- 4.85%
117,000 AMERICAN STANDARD COMPANIES INC.*.................... 4,080,375
305,800 INGERSOLL RAND CO.................................... 11,715,963
358,700 METTLER-TOLEDO INTERNATIONAL INC., ADR*.............. 13,854,787
56,411 SPX CORP.*........................................... 4,911,283
501,400 UNITED TECHNOLOGIES CORP............................. 25,540,062
--------------
60,102,470
--------------
INDUSTRIAL SERVICES & SUPPLIES -- 1.39%
155,263 HERTZ CORP........................................... 5,560,356
307,400 TYCO INTERNATIONAL LTD., ADR......................... 11,661,988
--------------
17,222,344
--------------
INFORMATION & COMPUTER SERVICES -- 0.82%
103,500 AMERICA ONLINE, INC.*................................ 6,106,500
147,450 VALASSIS COMMUNICATIONS INC.*........................ 4,082,522
--------------
10,189,022
--------------
LIFE INSURANCE -- 2.21%
155,300 AMERICAN GENERAL CORP. .............................. 8,104,719
303,818 AXA FINANCIAL INC. .................................. 9,095,551
240,800 LINCOLN NATIONAL CORP. .............................. 6,697,250
159,560 PROTECTIVE LIFE CORP. ............................... 3,510,320
--------------
27,407,840
--------------
LONG DISTANCE & PHONE COMPANIES -- 6.55%
393,750 AT&T CORP. .......................................... 19,466,016
400,600 BELLSOUTH CORP. ..................................... 16,324,450
259,700 CENTURYTEL, INC. .................................... 8,732,412
250,000 GTE CORP. ........................................... 14,750,000
491,305 MCI WORLDCOM, INC.*.................................. 21,924,486
--------------
81,197,364
--------------
MEDIA -- 0.59%
171,858 COMCAST CORP., CLASS A............................... 7,303,965
--------------
MEDICAL PRODUCTS -- 0.66%
150,275 BAXTER INTERNATIONAL, INC. .......................... 8,189,988
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- --------------
<C> <S> <C>
MINING & METALS -- 1.26%
228,102 ALCOA, INC. ......................................... $ 15,624,987
--------------
MOTOR VEHICLES -- 2.23%
142,600 BORG WARNER AUTOMOTIVE, INC. ........................ 4,563,200
107,635 DELPHI AUTOMOTIVE SYSTEMS CORP. ..................... 1,796,159
348,000 FORD MOTOR CO. ...................................... 14,485,500
90,200 GENERAL MOTORS CORP. ................................ 6,860,838
--------------
27,705,697
--------------
OIL REFINING -- 0.37%
233,500 CONOCO, INC. ........................................ 4,597,031
--------------
OIL SERVICES -- 0.46%
150,386 HALLIBURTON CO. ..................................... 5,742,865
--------------
OTHER INSURANCE -- 1.38%
205,032 AMBAC FINANCIAL GROUP INC. .......................... 9,008,594
255,000 TRAVELERS PROPERTY CASUALTY CORP. ................... 8,064,375
--------------
17,072,969
--------------
PUBLISHING -- 1.77%
294,461 KNIGHT RIDDER, INC. ................................. 13,802,859
193,711 NEW YORK TIMES CO., CLASS A.......................... 8,184,290
--------------
21,987,149
--------------
RESTAURANTS -- 0.40%
230,000 BRINKER INTERNATIONAL INC.*.......................... 5,002,500
--------------
SECURITIES & ASSET MANAGEMENT -- 1.70%
300,000 MORGAN STANLEY DEAN WITTER & CO. .................... 21,131,250
--------------
SEMICONDUCTOR -- 10.40%
183,678 APPLIED MATERIALS, INC.*............................. 33,601,594
379,620 ATMEL CORP.*......................................... 18,791,190
151,979 INTEL CORP. ......................................... 17,173,627
170,000 JDS UNIPHASE CORP.*.................................. 44,816,250
141,287 VITESSE SEMICONDUCTOR CORP.*......................... 14,667,357
--------------
129,050,018
--------------
SPECIALTY RETAIL -- 2.64%
221,903 CIRCUIT CITY STORES, INC. ........................... 8,959,334
260,397 HOME DEPOT, INC. .................................... 15,054,201
323,000 STAPLES INC.*........................................ 8,721,000
--------------
32,734,535
--------------
TOTAL COMMON STOCKS (COST -- $798,713,642)...................... 1,083,587,908
--------------
</TABLE>
18
<PAGE>
PAINEWEBBER GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- --------------
<C> <S> <C>
PREFERRED STOCK -- 0.54%
WIRELESS TELECOMMUNICATIONS -- 0.54%
122,500 MEDIAONE GROUP INC. (COST -- $5,321,094)............. $ 6,683,906
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
--------- -------- --------
<S> <C> <C> <C>
CONVERTIBLE BONDS -- 3.66%
FINANCIAL SERVICES -- 1.86%
$16,100 BELL ATLANTIC FINANCIAL SERVICES INC. #................... 09/15/05 4.250% 23,023,000
--------------
WIRELESS TELECOMMUNICATIONS -- 1.80%
3,930 ECHOSTAR COMMUNICATIONS CORP. #.......................... 01/01/07 4.875 5,447,963
9,800 NEXTEL COMMUNICATIONS INC. #............................. 01/15/10 5.250 10,902,500
5,880 NTL INC. #............................................... 12/15/09 5.750 6,027,000
--------------
22,377,463
--------------
TOTAL CONVERTIBLE BONDS (COST -- $35,587,343)...................... 45,400,463
--------------
SHORT TERM U.S. GOVERNMENT AGENCY
OBLIGATION -- 4.01%
50,000 STUDENT LOAN MARKETING DISCOUNT NOTES (COST --
$49,789,250).................................................... 03/28/00 5.620@ 49,789,250
--------------
REPURCHASE AGREEMENTS -- 4.74%
29,403 REPURCHASE AGREEMENT DATED 2/29/00 WITH SG COWEN
SECURITIES CORP., COLLATERALIZED BY $23,969,000
U.S. TREASURY BONDS, 8.750% DUE 5/15/17 (VALUE --
$29,991,211); PROCEEDS: $29,407,704.................... 03/01/00 5.760 29,403,000
29,403 REPURCHASE AGREEMENT DATED 2/29/00 WITH
WARBURG DILLON READ L.L.C., COLLATERALIZED
BY $33,651,000
U.S. TREASURY BONDS, 5.500% DUE 8/15/28
(VALUE -- $29,991,454); PROCEEDS: $29,407,704.......... 03/01/00 5.70 29,403,000
--------------
TOTAL REPURCHASE AGREEMENTS
(COST -- $58,806,000).............................................. 58,806,000
--------------
TOTAL INVESTMENTS (COST -- $948,217,329) -- 100.31%................ 1,244,267,527
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.31)%................... (3,809,030)
--------------
NET ASSETS -- 100.00%.............................................. $1,240,458,497
==============
</TABLE>
- ---------
* NON-INCOME PRODUCING SECURITY.
@ INTEREST RATE REFLECTS YIELD TO MATURITY AT DATE OF PURCHASE.
# SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION, NORMALLY TO QUALIFIED INSTITUTIONAL BUYERS.
ADR - AMERICAN DEPOSITARY RECEIPT.
PEPS - PREMIUM EQUITY PARTICIPATING SECURITIES.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
PAINEWEBBER MID CAP FUND
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS -- 94.98%
AIRLINES -- 0.91%
50,000 DELTA AIR LINES, INC. ................................. $ 2,281,250
------------
BANKS -- 0.77%
60,000 UNIONBANCAL CORP. ..................................... 1,927,500
------------
COMPUTER - BUSINESS SERVICES -- 0.68%
2,700 AVENUE A INC.*......................................... 194,400
3,000 EBAY INC.*............................................. 430,125
12,000 GOTO.COM, INC.*(1)..................................... 763,500
2,000 YAHOO! INC.*........................................... 319,375
------------
1,707,400
------------
COMPUTER HARDWARE -- 1.76%
37,000 EMC CORP.*............................................. 4,403,000
------------
COMPUTER SOFTWARE -- 15.03%
15,000 BLUESTONE SOFTWARE INC.*............................... 1,168,125
75,000 BMC SOFTWARE, INC.*.................................... 3,450,000
15,000 BROADBASE SOFTWARE INC.*............................... 2,271,562
2,000 C BRIDGE INTERNET SOLUTIONS INC.*...................... 105,250
7,800 CACHEFLOW INC.*........................................ 949,650
156,000 CADENCE DESIGN SYSTEMS INC.*........................... 3,110,250
3,500 CAMINUS CORP.*......................................... 82,688
50,000 COMPUWARE CORP.*....................................... 1,106,250
14,000 E PIPHANY INC.(1)...................................... 3,078,250
4,000 EXTENSITY INC.*........................................ 290,000
1,000 FIREPOND INC.*......................................... 97,437
50,000 INTUIT*................................................ 2,625,000
80,000 LEGATO SYSTEMS INC.*................................... 2,850,000
10,000 MARIMBA INC.*.......................................... 609,375
36,000 NEW ERA OF NETWORKS INC.*(1)........................... 3,298,500
94,000 PEREGRINE SYSTEMS INC.*................................ 5,134,750
6,000 PRICELINE.COM INC.*.................................... 335,625
30,000 SANCHEZ COMPUTER ASSOCIATES INC.*...................... 1,455,000
20,000 SIEBEL SYSTEMS INC.*................................... 2,773,750
68,000 STERLING SOFTWARE INC.*................................ 2,439,500
600 VIRGINIA LINUX SYSTEMS INC.*(1)........................ 63,375
15,000 XCARE NET INC.*(1)..................................... 285,000
------------
37,579,337
------------
CONSUMER DURABLES -- 1.11%
35,000 BLACK & DECKER CORP.(1)................................ 1,152,813
30,000 WHIRLPOOL CORP. ....................................... 1,629,375
------------
2,782,188
------------
</TABLE>
FEBRUARY 29, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
DEFENSE & AEROSPACE -- 1.44%
75,000 TRW, INC. ............................................. $ 3,600,000
------------
DRUGS & MEDICINE -- 0.65%
15,000 BIOGEN INC.*........................................... 1,619,063
------------
ELECTRIC UTILITIES -- 1.03%
28,000 CALPINE CORP.*......................................... 2,562,000
------------
ELECTRICAL EQUIPMENT -- 8.31%
15,800 EPCOS AG*.............................................. 2,219,900
40,000 FLEXTRONICS INTERNATIONAL LTD*(1)...................... 2,435,000
44,000 GEMSTAR GROUP LTD.*.................................... 3,338,500
40,000 JABIL CIRCUIT INC.*(1)................................. 2,777,500
100,000 SCI SYSTEMS INC.*...................................... 4,025,000
25,000 SOLECTRON CORP.*....................................... 1,637,500
50,000 TERADYNE INC.*......................................... 4,350,000
------------
20,783,400
------------
FINANCIAL SERVICES -- 1.16%
50,000 COMDISCO INC........................................... 1,921,875
30,000 T. ROWE PRICE & ASSOCIATES, INC. ...................... 988,125
------------
2,910,000
------------
GAS UTILITY -- 0.30%
20,000 EQUITABLE RESOURCES INC. .............................. 755,000
------------
INDUSTRIAL PARTS -- 3.24%
60,000 HELIX TECHNOLOGY CORP. ................................ 4,267,500
48,000 PRI AUTOMATION INC.*(1)................................ 3,834,000
------------
8,101,500
------------
INDUSTRIAL SERVICES & SUPPLIES -- 0.36%
25,000 HERTZ CORP. ........................................... 895,313
------------
INFORMATION & COMPUTER SERVICES -- 4.95%
2,700 AKAMAI TECHNOLOGIES INC.*(1)........................... 705,375
60,000 AMERICA ONLINE INC.*................................... 3,540,000
7,600 ARIBA INC.*............................................ 2,010,200
15,000 ASK JEEVES INC.*....................................... 1,206,562
15,000 ASPECT DEVELOPMENT INC.*............................... 2,233,125
9,000 CAREINSITE INC.*....................................... 612,000
50,775 FISERV INC.*(1)........................................ 1,383,619
300 LANTE CORP.*........................................... 23,925
10,500 NEOFORMA.COM INC.*(1).................................. 624,750
1,500 ONVIA.COM INC. ........................................ 31,500
------------
12,371,056
------------
</TABLE>
20
<PAGE>
PAINEWEBBER MID CAP FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
LIFE INSURANCE -- 0.60%
50,000 AXA FINANCIAL, INC. ................................... $ 1,496,875
------------
MANUFACTURING - GENERAL -- 0.77%
50,000 METTLER-TOLEDO INTERNATIONAL INC., ADR*................ 1,931,250
------------
MANUFACTURING - HIGH TECHNOLOGY -- 1.79%
35,000 ASM LITHOGRAPHY HOLDINGS N.V.*......................... 4,484,375
------------
MEDIA -- 4.30%
10,600 ADELPHIA COMMUNICATIONS CORP.*......................... 582,338
35,000 AMFM INC.*............................................. 2,148,125
25,000 CABLEVISION SYSTEMS CORP.*............................. 1,604,687
62,400 COMCAST CORP., CLASS A................................. 2,652,000
46,500 INFINITY BROADCASTING CORP.*........................... 1,485,094
60,000 PENTON MEDIA INC. ..................................... 1,575,000
15,000 TV GUIDE INC.*......................................... 706,875
------------
10,754,119
------------
MEDICAL PRODUCTS -- 0.08%
3,000 ASPECT MED SYSTEMS INC.*............................... 197,625
------------
MEDICAL-BIMEDICAL & GENETICS -- 0.53%
10,000 DIVERSA CORP.*(1)...................................... 1,335,000
------------
MINING & METALS -- 0.51%
20,000 REYNOLDS METALS CO. ................................... 1,270,000
------------
MOTOR VEHICLES -- 1.86%
50,000 LEAR CORP.*............................................ 1,056,250
110,000 NAVISTAR INTERNATIONAL CORP.*.......................... 3,602,500
------------
4,658,750
------------
OIL REFINING -- 1.51%
30,000 CONOCO, INC. .......................................... 590,625
20,000 SMITH INTERNATIONAL INC.*.............................. 1,253,750
40,000 TOSCO CORP. ........................................... 1,070,000
40,000 USX-MARATHON GROUP..................................... 865,000
------------
3,779,375
------------
OIL SERVICES -- 2.81%
40,000 COOPER CAMERON CORP.*.................................. 2,210,000
100,000 ENSCO INTERNATIONAL INC.(1)............................ 3,025,000
40,000 EVI WEATHERFORD INC.*(1)............................... 1,800,000
------------
7,035,000
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
OTHER INSURANCE -- 0.56%
32,000 AMBAC FINANCIAL GROUP, INC. ........................... $ 1,406,000
------------
SECURITIES & ASSET MANAGEMENT -- 1.72%
30,000 DLJ DIRECT INC.*(1).................................... 1,303,125
20,000 LEHMAN BROTHERS HOLDINGS, INC. ........................ 1,450,000
15,000 MERRILL LYNCH & COMPANY, INC. ......................... 1,537,500
------------
4,290,625
------------
SEMICONDUCTOR -- 23.76%
5,000 ALPHA INDUSTRIES, INC.*................................ 725,938
15,000 ALTERA CORP.*.......................................... 1,196,250
5,000 APPLIED MICRO CIRCUITS CORP.*.......................... 1,375,312
70,000 ATMEL CORP.*........................................... 3,465,000
35,000 CHARTERED SEMICONDUCTOR MANUFACTURING*................. 3,088,750
7,000 DII GROUP, INC. *...................................... 676,813
83,500 FAIRCHILD SEMICONDUCTOR
INTERNATIONA, INC.*................................... 3,152,125
500 INTERSIL HOLDING CORP.*................................ 29,688
65,000 JDS UNIPHASE CORP.*.................................... 17,135,625
32,500 LAM RESEARCH CORP.*.................................... 5,074,062
82,600 MAXIM INTEGRATED PRODUCTIONS INC.*..................... 5,518,712
20,000 MKS INSTRUMENTS INC.*.................................. 910,000
60,000 NOVELLUS SYSTEMS INC.*................................. 3,558,750
10,000 QLOGIC CORP.*.......................................... 1,560,000
18,000 RF MICRO DEVICES INC.*................................. 2,489,625
16,000 SDL INC.*.............................................. 6,560,000
27,700 VITESSE SEMICONDUCTOR CORP.*........................... 2,875,606
------------
59,392,256
------------
SPECIALTY RETAIL -- 1.02%
35,000 BED, BATH & BEYOND INC.*............................... 993,125
600 FREEMARKETS INC.*...................................... 104,513
20,000 LOWE'S COMPANIES INC. ................................. 952,500
6,500 SCIQUEST.COM INC.*..................................... 486,687
------------
2,536,825
------------
TELECOMMUNICATIONS -- 11.46%
65,000 ADVANCED FIBRE COMMUNICATIONS*(1)...................... 4,428,125
60,000 ASPECT COMMUNICATIONS INC.*............................ 3,866,250
4,300 AVANEX CORP.*.......................................... 896,012
23,500 CARRIER 1 INTERNATIONAL S.A.*.......................... 762,281
2,000 CHOICE ONE COMMUNICATIONS INC.*........................ 120,000
20,000 CIENA CORP.*........................................... 3,196,250
23,000 COMVERSE TECHNOLOGY, INC.*(1).......................... 4,528,125
3,750 COVAD COMMUNICATIONS GROUP INC.*....................... 338,438
13,000 FOUNDRY NETWORKS INC.*(1).............................. 1,815,937
32,749 GLOBAL CROSSING LTD.*.................................. 1,526,922
25,000 GLOBAL TELESYSTEMS GROUP INC. ......................... 625,000
20,000 INET TECHNOLOGIES INC.*................................ 867,500
</TABLE>
21
<PAGE>
PAINEWEBBER MID CAP FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS (CONCLUDED)
TELECOMMUNICATIONS (CONCLUDED)
20,250 MCI WORLDCOM, INC.*.................................... $ 903,656
10,000 NORTHPOINT COMMUNICATIONS HOLDING*(1).................. 226,875
80,000 P-COM INC.*............................................ 1,460,000
2,000 REDBACK NETWORKS INC.*................................. 597,000
10,000 RHYTHMS NETCONNECTIONS INC.*........................... 356,875
14,400 SYCAMORE NETWORK INC.*(1).............................. 2,131,200
------------
28,646,446
------------
TOTAL COMMON STOCKS (COST -- $126,557,735)........................ 237,492,528
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
--------- ------------ -----------
<C> <S> <C> <C> <C>
SHORT TERM U.S. GOVERNMENT AGENCY
OBLIGATION -- 1.99%
$5,000 STUDENT LOAN MARKETING
ASSOCIATION DISCOUNT NOTE
(COST -- $4,978,145)...... 03/29/00 5.620%@ $ 4,978,145
------------
REPURCHASE AGREEMENTS -- 5.03%
6,000 REPURCHASE AGREEMENT DATED
02/29/00 WITH DRESDNER
BANK, COLLATERALIZED BY
$6,199,000 U.S. TREASURY
NOTES, 4.500% DUE 01/31/01
(VALUE -- $6,120,893);
PROCEEDS: $6,000,958...... 03/01/00 5.750 6,000,000
6,560 REPURCHASE AGREEMENT DATED
02/29/00 WITH STATE STREET
BANK AND TRUST COMPANY,
COLLATERALIZED BY
$5,680,000 U.S. TREASURY
BONDS, 8.125% DUE 08/15/19
(VALUE -- $6,695,300);
PROCEEDS: $6,561,048 ..... 03/01/00 5.750 6,560,000
------------
TOTAL REPURCHASE AGREEMENTS (COST --
$12,560,000)......................... 12,560,000
------------
TOTAL INVESTMENTS (COST --
$144,095,880) -- 102.00%............. 255,030,673
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (2.00)%..................... (4,993,510)
------------
NET ASSETS -- 100.00%................. $250,037,163
============
</TABLE>
- ---------
* NON-INCOME PRODUCING SECURITY.
@ INTEREST RATE REFLECTS YIELD TO MATURITY AT DATE OF PURCHASE.
(1) SECURITY, OR PORTION THEREOF, WAS ON LOAN AT FEBRUARY 29, 2000.
ADR AMERICAN DEPOSITARY RECEIPT.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
PAINEWEBBER GROWTH FUND
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS -- 91.33%
AIRLINES -- 0.43%
80,000 CONTINENTAL AIRLINES, INC.*(1)......................... $ 2,530,000
------------
ALCOHOL -- 0.38%
35,000 ANHEUSER-BUSCH COMPANIES, INC.......................... 2,244,375
------------
APPAREL, RETAIL -- 0.33%
40,000 GAP, INC............................................... 1,932,500
------------
APPAREL, TEXTILES -- 0.36%
75,000 NIKE, INC.............................................. 2,132,813
------------
BANKS -- 0.91%
40,000 CHASE MANHATTAN CORP................................... 3,185,000
55,000 FIRSTAR CORP........................................... 979,688
35,000 WELLS FARGO & CO. ..................................... 1,157,187
------------
5,321,875
------------
CHEMICALS -- 0.68%
80,000 SEALED AIR CORP.*...................................... 3,975,000
------------
COMPUTER-BUSINESS SERVICES -- 1.39%
60,000 CMG INFORMATION SERVICES, INC.*(1)..................... 7,773,750
6,000 PRICELINE.COM INC.*.................................... 335,625
------------
8,109,375
------------
COMPUTER HARDWARE -- 15.45%
54,000 APPLE COMPUTER, INC.*(1)............................... 6,189,750
180,000 CISCO SYSTEMS, INC.*................................... 23,793,750
280,000 DELL COMPUTER CORP.*................................... 11,427,500
166,000 EMC CORP.*(1).......................................... 19,754,000
70,000 NETWORK APPLIANCE, INC.*............................... 13,212,500
168,000 SUN MICROSYSTEMS, INC.*(1)............................. 16,002,000
------------
90,379,500
------------
COMPUTER SOFTWARE -- 3.53%
120,000 BMC SOFTWARE, INC.*(1)................................. 5,520,000
100,000 CADENCE DESIGN SYSTEMS, INC.*.......................... 1,993,750
72,000 COMPUWARE CORP.*....................................... 1,593,000
40,000 IBM CORP. ............................................. 4,080,000
50,000 INTUIT................................................. 2,625,000
54,000 MICROSOFT CORP.*....................................... 4,826,250
------------
20,638,000
------------
CONSUMER DURABLES -- 0.88%
70,000 AVERY DENNISON CORP. .................................. 4,248,125
50,000 MASCO CORP. ........................................... 893,750
------------
5,141,875
------------
</TABLE>
FEBRUARY 29, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
DIVERSIFIED RETAIL -- 3.61%
160,000 COSTCO COMPANIES, INC.*................................ $ 7,940,000
50,000 FEDERATED DEPARTMENT STORES, INC.*..................... 1,834,375
40,000 KOHL'S CORP.*.......................................... 3,032,500
50,000 TARGET CORP.*.......................................... 2,950,000
110,000 WAL-MART STORES, INC. ................................. 5,355,625
------------
21,112,500
------------
DRUGS & MEDICINE -- 3.11%
33,758 AVENTIS CORP.(1)....................................... 1,755,416
49,312 CARDINAL HEALTH, INC. ................................. 2,034,120
90,000 ELAN CORP. PLC, ADR*(1)................................ 3,701,250
14,000 GENETECH, INC.*........................................ 2,700,250
65,000 PHARMACYCLICS, INC.*(1)................................ 5,187,812
80,000 SCHERING-PLOUGH CORP.*................................. 2,790,000
------------
18,168,848
------------
ELECTRICAL EQUIPMENT -- 7.56%
14,400 CORNING, INC. ......................................... 2,707,200
37,000 JABIL CIRCUIT, INC.*................................... 2,569,187
34,000 KLA-TENCOR CORP.*(1)................................... 2,649,875
110,000 LEVEL 3 COMMUNICATIONS, INC.(1)........................ 12,526,250
28,000 LUCENT TECHNOLOGIES, INC. ............................. 1,666,000
25,000 MOTOROLA, INC. ........................................ 4,262,500
100,000 SCI SYSTEMS, INC.*..................................... 4,025,000
70,000 TELLABS, INC.*(1)...................................... 3,360,000
120,000 TERADYNE, INC.*........................................ 10,440,000
------------
44,206,012
------------
ENERGY RESERVES & PRODUCTION -- 0.70%
54,403 EXXON MOBIL CORP. ..................................... 4,097,226
------------
ENTERTAINMENT -- 4.70%
125,000 CARNIVAL CORP.(1)...................................... 3,601,562
200,000 CINAR FILMS, INC.*..................................... 4,125,000
240,000 LIBERTY MEDIA GROUP.................................... 12,540,000
130,000 VIACOM, INC.*.......................................... 7,247,500
------------
27,514,062
------------
ENVIRONMENTAL SERVICES -- 0.56%
303,300 REPUBLIC SERVICES, INC.*............................... 3,298,388
------------
FINANCIAL SERVICES -- 1.91%
54,000 CITIGROUP, INC. ....................................... 2,791,125
80,000 FEDERAL HOME LOAN MORTGAGE CORP. ...................... 3,340,000
50,000 FEDERAL NATIONAL MORTGAGE ASSOCIATION.................. 2,650,000
105,000 MBNA CORP. ............................................ 2,388,750
------------
11,169,875
------------
</TABLE>
23
<PAGE>
PAINEWEBBER GROWTH FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
FOOD RETAIL -- 0.66%
100,000 SAFEWAY, INC.*........................................ $ 3,856,250
------------
FOREST PRODUCTS, PAPER -- 0.53%
60,000 WEYERHAEUSER CO. ..................................... 3,078,750
------------
HOUSEHOLD PRODUCTS -- 0.18%
24,000 ESTEE LAUDER, INC.(1)................................. 1,041,000
------------
INDUSTRIAL PARTS -- 0.89%
45,000 INGERSOLL RAND CO. ................................... 1,724,063
90,000 METTLER TOLEDO INTERNATIONAL, INC.*................... 3,476,250
------------
5,200,313
------------
INDUSTRIAL SERVICES & SUPPLIES -- 1.41%
49,904 CAPESUCCESS LLC*...................................... 16,932
50,500 CENDANT CORP.*........................................ 899,531
13,056 IMMEDIENT CORP.*...................................... 4,308
192,532 TYCO INTERNATIONAL LTD., ADR.......................... 7,304,183
------------
8,224,954
------------
INFORMATION & COMPUTER SERVICES -- 5.45%
145,000 AMERICA ONLINE, INC.*................................. 8,555,000
30,000 COMPUTER SCIENCES CORP.*.............................. 2,364,375
18,600 EQUANT CORP.(1)....................................... 2,078,550
15,000 MEDIA METRIX, INC.(1)................................. 526,875
40,000 OMNICOM GROUP, INC. .................................. 3,767,500
150,000 PAYCHEX, INC.(1)...................................... 7,509,375
73,200 VALASSIS COMMUNICATIONS, INC.*........................ 2,026,725
100,000 YOUNG & RUBICAM, INC.*(1)............................. 5,050,000
------------
31,878,400
------------
LIFE INSURANCE -- 0.76%
110,000 AXA FINANCIAL, INC. .................................. 3,293,125
50,000 NATIONWIDE FINANCIAL SERVICES, INC.*.................. 1,153,125
------------
4,446,250
------------
LONG DISTANCE & PHONE COMPANIES -- 4.53%
192,695 AT&T CORP. ........................................... 9,526,359
35,000 FRANCE TELECOM, ADR................................... 5,757,500
217,500 MCI WORLDCOM, INC.*................................... 9,705,938
40,000 SBC COMMUNICATIONS, INC. ............................. 1,520,000
------------
26,509,797
------------
MANUFACTURING - GENERAL -- 0.52%
60,000 UNITED TECHNOLOGIES CORP. ............................ 3,056,250
------------
MANUFACTURING - HIGH TECHNOLOGY -- 0.44%
20,000 ASM LITHOGRAPHY HOLDINGS N.V.*(1)..................... 2,562,500
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
MEDIA -- 7.58%
55,743 AMFM, INC. ........................................... $ 3,421,227
25,000 CABLEVISION SYSTEMS CORP.*............................ 1,604,687
160,000 COMCAST CORP.(1)...................................... 6,800,000
90,000 FOX ENTERTAINMENT GROUP, INC.*........................ 2,368,125
291,250 INFINITY BROADCASTING CORP.*(1)....................... 9,301,797
40,000 MEDIAONE GROUP, INC.*................................. 3,140,000
155,000 TIME WARNER, INC. .................................... 13,252,500
200,000 USA NETWORKS, INC.*(1)................................ 4,487,500
------------
44,375,836
------------
MEDICAL PRODUCTS -- 0.58%
50,000 GUIDANT CORP.*(1)..................................... 3,368,750
------------
OIL REFINING -- 0.64%
190,000 CONOCO, INC. ......................................... 3,740,625
------------
OIL SERVICES -- 0.64%
50,000 HALLIBURTON CO. ...................................... 1,909,375
25,000 SCHLUMBERGER LTD. .................................... 1,846,875
------------
3,756,250
------------
OTHER INSURANCE -- 0.26%
35,000 AMBAC FINANCIAL GROUP INC. ........................... 1,537,813
------------
PUBLISHING -- 1.16%
62,000 NEW YORK TIMES CO. ................................... 2,619,500
83,000 NEWS CORP. LTD., ADR(1)............................... 4,175,937
------------
6,795,437
------------
RESTAURANTS -- 0.27%
50,000 MCDONALDS CORP. ...................................... 1,578,125
------------
SECURITIES & ASSET MANAGEMENT -- 0.59%
50,000 CHARLES SCHWAB CORP. ................................. 2,090,625
50,000 FRANKLIN RESOURCES, INC. ............................. 1,359,375
------------
3,450,000
------------
SEMICONDUCTOR -- 10.05%
30,000 ALTERA CORP.*......................................... 2,392,500
30,000 APPLIED MATERIALS, INC.*.............................. 5,488,125
40,000 BROADCOM CORP.(1)..................................... 7,895,000
67,500 FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. .......... 2,548,125
30,000 INTEL CORP. .......................................... 3,390,000
110,000 JDS UNIPHASE CORP.*................................... 28,998,750
20,000 TEXAS INSTRUMENTS, INC. .............................. 3,330,000
60,000 XILINX, INC.*......................................... 4,785,000
------------
58,827,500
------------
</TABLE>
24
<PAGE>
PAINEWEBBER GROWTH FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS (CONCLUDED)
SPECIALTY RETAIL -- 6.21%
150,000 AUTONATION, INC.*(1).................................. $ 1,134,375
80,000 BED, BATH & BEYOND, INC.*............................. 2,270,000
75,000 CIRCUIT CITY STORES, INC. ............................ 3,028,125
210,000 HOME DEPOT, INC. ..................................... 12,140,625
58,500 LOWE'S COMPANIES, INC. ............................... 2,786,062
270,000 STAPLES, INC.*........................................ 7,290,000
120,000 TIFFANY & CO.*........................................ 7,702,500
------------
36,351,687
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
TELECOMMUNICATIONS -- 1.12%
13,800 COVAD COMMUNICATIONS GROUP, INC.*..................... $ 1,245,450
67,135 GLOBAL CROSSING LTD.*................................. 3,130,169
10,800 GLOBAL TELESYSTEMS GROUP, INC. ....................... 270,000
25,700 NORTHPOINT COMMUNICATIONS GROUP, INC*(1).............. 583,069
13,800 RHYTHMS NETCONNECTIONS, INC.*......................... 492,488
18,500 WILLIAMS COMMUNICATIONS GROUP*(1)..................... 823,250
------------
6,544,426
------------
WIRELESS TELECOMMUNICATIONS -- 0.37%
37,500 VODAFONE GROUP PLC(1)................................. 2,163,281
------------
TOTAL COMMON STOCKS (COST -- $238,371,834)....................... 534,316,418
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
--------- -------------- ------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY
OBLIGATION -- 5.11%
$30,000 FEDERAL HOME LOAN BANK
MORTGAGE CORP. DISCOUNT
NOTES (COST --
$29,901,650).......... 3/22/00 5.620%@ 29,901,650
------------
REPURCHASE AGREEMENTS -- 5.60%
16,376 REPURCHASE AGREEMENT
DATED 02/29/00 WITH
STATE STREET BANK,
COLLATERALIZED BY
$14,175,000 U.S.
TREASURY BONDS, 8.250%
DUE 08/15/19 (VALUE --
$16,708,781);
PROCEEDS: $16,378,616.. 03/01/00 5.750 16,376,000
16,376 REPURCHASE AGREEMENT
DATED 02/29/00 WITH
ZIONS BANCORP,
COLLATERALIZED BY
$16,865,000 U.S.
TREASURY BILLS, 5.370%
DUE 04/27/00 (VALUE --
$16,706,469);
PROCEEDS: $16,378,616.. 03/01/00 5.750 16,376,000
------------
TOTAL REPURCHASE AGREEMENTS
(COST -- $32,752,000).............. 32,752,000
------------
TOTAL INVESTMENTS (COST --
$301,025,484) -- 102.04%.......... 596,970,068
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (2.04)%.................. (11,929,412)
------------
NET ASSETS -- 100.00%.............. $585,040,656
============
</TABLE>
- ---------
*NON-INCOME PRODUCING SECURITY.
ADRAMERICAN DEPOSITARY RECEIPT.
@INTEREST RATES REFLECT YIELD TO MATURITY AT DATE OF PURCHASE.
(1)SECURITY, OR PORTION THEREOF, WAS ON LOAN AT FEBRUARY 29, 2000.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
PAINEWEBBER
STATEMENTS OF ASSETS AND LIABILITIES FEBRUARY 29, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
GROWTH
AND INCOME MID CAP GROWTH
FUND FUND FUND
-------------- ------------ ------------
<S> <C> <C> <C>
ASSETS
INVESTMENTS IN SECURITIES, AT VALUE
(COST -- $948,217,329, $144,095,880
AND $301,025,484, RESPECTIVELY).... $1,244,267,527 $255,030,673 $596,970,068
INVESTMENTS OF CASH COLLATERAL
RECEIVED FOR SECURITIES LOANED, AT
VALUE (COST -- $0, $30,992,500, AND
$89,327,150, RESPECTIVELY)......... -- 30,992,500 89,327,150
CASH................................ 985 686 375
RECEIVABLE FOR INVESTMENTS SOLD..... 11,698,081 137,683 10,101,585
RECEIVABLE FOR SHARES OF BENEFICIAL
INTEREST SOLD...................... 100,405 535,982 564,986
DIVIDENDS AND INTEREST RECEIVABLE... 1,968,723 61,401 187,984
OTHER ASSETS........................ 248,550 14,867 141,853
-------------- ------------ ------------
TOTAL ASSETS........................ 1,258,284,271 286,773,792 697,294,001
-------------- ------------ ------------
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED... 12,693,370 4,727,826 21,043,104
COLLATERAL FOR SECURITIES LOANED.... -- 30,992,500 89,327,150
PAYABLE TO AFFILIATES............... 1,173,203 259,764 516,143
PAYABLE FOR SHARES OF BENEFICIAL
INTEREST REPURCHASED............... 3,948,085 562,955 1,293,783
ACCRUED EXPENSES AND OTHER
LIABILITIES........................ 11,116 193,584 73,165
-------------- ------------ ------------
TOTAL LIABILITIES................... 17,825,774 36,736,629 112,253,345
-------------- ------------ ------------
NET ASSETS
BENEFICIAL INTEREST -- $0.001 PAR
VALUE (UNLIMITED NUMBER
AUTHORIZED)........................ 853,831,097 120,149,917 280,214,996
ACCUMULATED UNDISTRIBUTED NET
INVESTMENT INCOME (LOSS)........... 554,947 (1,038,866) (1,134,143)
ACCUMULATED NET REALIZED GAINS FROM
INVESTMENT TRANSACTIONS............ 90,022,255 19,991,319 10,015,219
NET UNREALIZED APPRECIATION OF
INVESTMENTS........................ 296,050,198 110,934,793 295,944,584
-------------- ------------ ------------
NET ASSETS.......................... $1,240,458,497 $250,037,163 $585,040,656
============== ============ ============
CLASS A:
NET ASSETS.......................... $ 797,264,273 $181,925,715 $424,960,629
-------------- ------------ ------------
SHARES OUTSTANDING.................. 24,612,662 10,868,220 13,084,149
-------------- ------------ ------------
NET ASSET VALUE AND REDEMPTION VALUE
PER SHARE.......................... $32.39 $16.74 $32.48
====== ====== ======
MAXIMUM OFFERING PRICE PER SHARE
(NET ASSET VALUE PLUS SALES CHARGE
OF 4.50% OF OFFERING PRICE)........ $33.92 $17.53 $34.01
====== ====== ======
CLASS B:
NET ASSETS.......................... $ 250,230,640 $ 40,281,779 $ 68,095,887
-------------- ------------ ------------
SHARES OUTSTANDING.................. 7,843,971 2,438,093 2,346,368
-------------- ------------ ------------
NET ASSET VALUE AND OFFERING PRICE
PER SHARE.......................... $31.90 $16.52 $29.02
====== ====== ======
CLASS C:
NET ASSETS.......................... $ 141,006,861 $ 27,093,621 $ 49,058,166
-------------- ------------ ------------
SHARES OUTSTANDING.................. 4,411,188 1,826,443 1,667,862
-------------- ------------ ------------
NET ASSET VALUE AND OFFERING PRICE
PER SHARE.......................... $31.97 $14.83 $29.41
====== ====== ======
CLASS Y:
NET ASSETS.......................... $ 51,956,723 $ 736,048 $ 42,925,974
-------------- ------------ ------------
SHARES OUTSTANDING.................. 1,599,646 43,788 1,271,436
-------------- ------------ ------------
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION VALUE PER SHARE......... $32.48 $16.81 $33.76
====== ====== ======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
26
<PAGE>
PAINEWEBBER
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
FEBRUARY 29, 2000 (UNAUDITED)
----------------------------------------
GROWTH
AND INCOME MID CAP GROWTH
FUND FUND FUND
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
DIVIDENDS (NET OF FOREIGN WITHHOLDING
TAX OF $0, $0 AND $1,806,
RESPECTIVELY)....................... $ 6,395,022 $ 322,245 $ 802,739
INTEREST............................. 3,266,845 264,381 1,361,045
------------ ------------ ------------
9,661,867 586,626 2,163,784
------------ ------------ ------------
EXPENSES:
INVESTMENT ADVISORY AND
ADMINISTRATION...................... 4,607,556 926,318 1,912,280
SERVICE FEES -- CLASS A.............. 1,035,435 167,950 417,005
SERVICE AND DISTRIBUTION FEES --
CLASS B............................ 1,377,146 150,990 345,245
SERVICE AND DISTRIBUTION FEES --
CLASS C............................ 773,049 101,226 192,759
CUSTODY AND ACCOUNTING............... 455,095 55,312 152,005
TRANSFER AGENCY AND SERVICE FEES..... 429,934 97,060 169,229
REPORTS AND NOTICES TO SHAREHOLDERS.. 108,300 41,852 41,022
FEDERAL AND SATE REGISTRATION........ 67,518 22,704 27,020
LEGAL AND AUDIT...................... 54,280 52,017 42,876
TRUSTEES' FEES....................... 6,750 6,750 6,750
OTHER EXPENSES....................... 190,627 8,774 7,241
------------ ------------ ------------
9,105,690 1,630,953 3,313,432
LESS: FEE WAIVERS FROM ADVISER....... -- (5,461) (15,505)
------------ ------------ ------------
NET EXPENSES......................... 9,105,690 1,625,492 3,297,927
------------ ------------ ------------
NET INVESTMENT INCOME (LOSS)......... 556,177 (1,038,866) (1,134,143)
------------ ------------ ------------
REALIZED AND UNREALIZED GAINS
(LOSSES) FROM INVESTMENT ACTIVITIES:
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS........................ 90,313,394 20,518,942 10,018,284
NET CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION OF
INVESTMENTS......................... (26,843,482) 81,173,123 119,543,212
------------ ------------ ------------
NET REALIZED AND UNREALIZED GAINS
FROM INVESTMENT TRANSACTIONS........ 63,469,912 101,692,065 129,561,496
------------ ------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS..................... $ 64,026,089 $100,653,199 $128,427,353
============ ============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
27
<PAGE>
PAINEWEBBER GROWTH AND INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
FEBRUARY 29, 2000 ENDED
(UNAUDITED) AUGUST 31, 1999
----------------- ---------------
<S> <C> <C>
FROM OPERATIONS:
NET INVESTMENT INCOME........................ $ 556,177 $ 2,029,536
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS................................ 90,313,394 50,934,437
NET CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION OF INVESTMENTS.... (26,843,482) 268,667,623
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. 64,026,089 321,631,596
-------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
FROM:
NET INVESTMENT INCOME -- CLASS A............. (282,013) (2,152,840)
NET INVESTMENT INCOME -- CLASS Y............. (36,002) (274,465)
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS -- CLASS A..................... (31,968,129) (45,342,437)
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS -- CLASS B..................... (10,629,639) (21,458,879)
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS -- CLASS C..................... (5,950,335) (9,905,709)
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS -- CLASS Y..................... (2,116,131) (4,000,922)
-------------- --------------
TOTAL DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS................................ (50,982,249) (83,135,252)
-------------- --------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
NET PROCEEDS FROM THE SALE OF SHARES......... 66,678,302 412,392,338
COST OF SHARES REPURCHASED................... (268,936,636) (585,691,639)
PROCEEDS FROM DIVIDENDS REINVESTED........... 47,648,532 78,095,718
-------------- --------------
NET DECREASE IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS....................... (154,609,802) (95,203,583)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS........ (141,565,962) 143,292,761
NET ASSETS:
BEGINNING OF PERIOD.......................... 1,382,024,459 1,238,731,698
-------------- --------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET
INVESTMENT INCOME OF $554,947 AND $316,785,
RESPECTIVELY)............................... $1,240,458,497 $1,382,024,459
============== ==============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
28
<PAGE>
PAINEWEBBER MID CAP FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
FEBRUARY 29, 2000 ENDED
(UNAUDITED) AUGUST 31, 1999
----------------- ---------------
<S> <C> <C>
FROM OPERATIONS:
NET INVESTMENT LOSS.......................... $ (1,038,866) $ (1,700,945)
NET REALIZED GAINS FROM INVESTMENTS
TRANSACTIONS................................ 20,518,942 12,767,655
NET CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION OF INVESTMENTS.... 81,173,123 52,006,931
------------ -------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. 100,653,199 63,073,641
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS -- CLASS A..................... (9,495,627) (7,165,732)
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS -- CLASS B..................... (2,079,691) (3,684,717)
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS -- CLASS C..................... (1,631,919) (1,501,190)
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS -- CLASS Y..................... (33,440) (6,732)
------------ -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS.......... (13,240,677) (12,358,371)
------------ -------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
NET PROCEEDS FROM THE SALE OF SHARES......... 77,177,220 103,937,783
COST OF SHARES REPURCHASED................... (85,241,471) (170,753,908)
PROCEEDS FROM DIVIDENDS REINVESTED........... 12,602,121 11,619,786
------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
BENEFICIAL INTEREST TRANSACTION............. 4,537,870 (55,196,339)
------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS........ 91,950,392 (4,481,069)
NET ASSETS:
BEGINNING OF PERIOD.......................... 158,086,771 162,567,840
------------ -------------
END OF PERIOD................................ $250,037,163 $ 158,086,771
============ =============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
29
<PAGE>
PAINEWEBBER GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
FEBRUARY 29, 2000 ENDED
(UNAUDITED) AUGUST 31, 1999
----------------- ---------------
<S> <C> <C>
FROM OPERATIONS:
NET INVESTMENT LOSS.......................... $ (1,134,143) $ (2,591,118)
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS................................ 10,018,284 38,329,110
NET CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION OF INVESTMENTS.... 119,543,212 103,470,683
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. 128,427,353 139,208,675
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS -- CLASS A..................... (23,651,246) (19,967,578)
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS -- CLASS B..................... (4,422,756) (7,360,795)
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS -- CLASS C..................... (2,923,743) (2,428,166)
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS -- CLASS Y..................... (2,260,339) (2,076,520)
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS.......... (33,258,084) (31,833,059)
------------- -------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
NET PROCEEDS FROM SALE OF SHARES............. 109,231,927 150,769,416
COST OF SHARES REPURCHASED................... (101,209,293) (157,148,972)
PROCEEDS FROM DIVIDENDS REINVESTED........... 31,190,900 30,161,764
------------- -------------
NET INCREASE IN NET ASSETS FROM BENEFICIAL
INTEREST TRANSACTIONS....................... 39,213,534 23,782,208
------------- -------------
NET INCREASE IN NET ASSETS................... 134,362,803 131,157,824
NET ASSETS:
BEGINNING OF PERIOD.......................... 450,657,853 319,500,029
------------- -------------
END OF PERIOD................................ $ 585,040,656 $ 450,657,853
============= =============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
30
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Growth and Income Fund ("Growth and Income Fund"), PaineWebber Mid
Cap Fund ("Mid Cap Fund") and PaineWebber Growth Fund ("Growth Fund")
(collectively, the "Funds") are diversified series of PaineWebber America Fund,
PaineWebber Managed Assets Trust and PaineWebber Olympus Fund (the "Trusts"),
respectively. The Trusts were organized under separate Declarations of Trust
and are registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, as diversified open-end investment
companies.
Currently, each Fund offers Class A, Class B, Class C and Class Y shares. Each
class represents interests in the same assets of the applicable Fund and the
classes are identical except for differences in their sales charge structures,
ongoing service and distribution charges and certain transfer agency expenses.
In addition, Class B shares and all corresponding reinvested dividend shares
automatically convert to Class A shares approximately six years after issuance.
All classes of shares have equal voting privileges except that each class has
exclusive voting rights with respect to its service and/or distribution plan.
The preparation of financial statements in accordance with generally accepted
accounting principles requires Fund management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates. The following is
a summary of significant accounting policies:
Valuation of Investments--The Funds calculate net asset values based on the
current market value for its portfolio securities. The Funds normally obtain
market values for the securities from independent pricing sources. Independent
pricing sources may use reported last sale prices, current market quotations or
valuations from computerized "matrix" systems that derive values based on com-
parable securities. Securities traded in the over-the-counter ("OTC") market
and listed on the Nasdaq Stock Market, Inc. ("Nasdaq") normally are valued at
the last sale price on Nasdaq prior to valuation. Other OTC securities are val-
ued at the last bid price available prior to valuation. Securities which are
listed on U.S. and foreign stock exchanges normally are valued at the last sale
price on the day the securities are valued or, lacking any sales on such day,
at the last available bid price. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange designated as the
primary market by Mitchell Hutchins Asset Management Inc. ("Mitchell
Hutchins"), a wholly owned asset management subsidiary of PaineWebber Incorpo-
rated ("PaineWebber"), and investment adviser and administrator of the Funds.
If a market value is not available from an independent pricing source for a
particular security, that security is valued at fair market value as determined
in good faith by or under the direction of each Trust's board of trustee's (the
"board"). The amortized cost method of valuation, which approximates market
value, generally is used to value short-term debt instruments with sixty days
or less remaining to maturity, unless each Trust's board determines that this
does not represent fair value.
Repurchase Agreements--Each Fund's custodian takes possession of the collat-
eral pledged for investments in repurchase agreements. The underlying collat-
eral is valued daily on a mark-to-market basis to ensure that the value includ-
ing accrued interest, is at least equal to the repurchase price. In the event
of default of the obligation to repurchase, each Fund has the right to liqui-
date the collateral and apply the proceeds in satisfaction of the obligation.
Under certain circumstances, in the event of default or bankruptcy by the other
parts to the agreement, realization and/or retention of the collateral may be
subject to legal proceedings. Each Fund occasionally participates in joint re-
purchase agreement transactions with other funds managed by Mitchell Hutchins.
Investment Transactions and Investment Income--Investment transactions are re-
corded on the trade date. Realized gains and losses from investment transac-
tions are calculated using the identified cost method. Interest income is re-
corded
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
on an accrual basis. Dividend income is recorded on the ex-dividend date. Dis-
counts are accreted and premiums are amortized as adjustments to interest in-
come and identified cost of investments.
Income, expenses (excluding class-specific expenses) and realized/unrealized
gains/losses are allocated proportionately to each class of shares based upon
the relative net asset value of outstanding shares (or the value of dividend-
eligible shares, as appropriate) of each class at the beginning of the day (af-
ter adjusting for current capital share activity of the respective classes).
Class specific expenses are charged directly to the applicable class of shares.
Option Writing--When a Fund writes a call or a put option, an amount equal to
the premium received by the Fund is included in the Fund's Statement of Assets
and Liabilities as an asset and as an equivalent liability. The amount of the
liability is subsequently marked-to-market to reflect the current market value
of the option written. If an option which the Fund has written either expires
on its stipulated expiration date or the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or loss if the cost of a closing
purchase transaction exceeds the premium received when the option was written)
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option is extinguished. If a call option which
the Fund has written is exercised, the Fund realizes a capital gain or loss
(long-term or short-term, depending on the holding period of the underlying
security) from the sale of the underlying security and the proceeds from the
sale are increased by the premium originally received. If a put option which a
Fund has written is exercised, the amount of the premium originally received
reduces the cost of the security which the Fund purchases upon exercise of the
option. There were no options written for the Funds during the six months ended
February 29, 2000.
Dividends and Distributions--Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification.
INVESTMENT ADVISER AND ADMINISTRATOR
Each Trust's board has approved an Investment Advisory and Administration Con-
tract ("Advisory Contract") with Mitchell Hutchins, under which Mitchell
Hutchins serves as investment adviser and administrator of the Funds. In accor-
dance with the Advisory Contracts, Growth and Income Fund, Mid Cap Fund and
Growth Fund pay Mitchell Hutchins an investment advisory and administration
fee, which is accrued daily and paid monthly, at the annual rate of 0.70%,
1.00% and 0.75%, respectively, of each Funds' average daily net assets. At Feb-
ruary 29, 2000, Growth and Income Fund, Mid Cap Fund and Growth Fund owed
Mitchell Hutchins $694,059, $177,208 and $335,884, respectively, in investment
advisory and administration fees. Mitchell Hutchins waived a portion of its in-
vestment advisory and administration fees in connection with the Mid Cap Fund's
and Growth Fund's investment of cash collateral from security lending in the
Mitchell Hutchins Private Money Market Fund LLC. For the six months ended Feb-
ruary 29, 2000, Mitchell Hutchins waived $5,461 and $15,505, respectively.
For the six months ended February 29, 2000, Growth and Income Fund, Mid Cap
Fund and Growth Fund paid $45,345, $7,800, and $7,260, respectively, in broker-
age commissions to PaineWebber for transactions executed on behalf of the
Funds.
SERVICING AGREEMENT
The board of Growth and Income Fund and Growth Fund have approved a Servicing
Agreement ("Servicing Agreement") with Mitchell Hutchins and the Mitchell
Hutchins Portfolios (comprising, respectively, the Aggressive Portfolio, Moder-
ate Portfolio and the Conservative Portfolio) (each a "Portfolio") pursuant to
an exemptive order from the Securities and Exchange Commission that permits the
Funds to reimburse each Portfolio for certain expenses to the extent a Fund re-
alizes
32
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
savings from each Portfolio. The savings to a Fund result from the elimination
of separate shareholder accounts for each Portfolio's investors, who otherwise
might invest directly in the Fund. For the six months ended February 29, 2000,
the Growth and Income Fund and Growth Fund incurred $6,365 and $5,597, respec-
tively, under the Servicing Agreement, which is included in other expenses on
the Statement of Operations. At February 29, 2000, Growth and Income Fund and
Growth Fund owed the Portfolios $6,365 and $5,597, respectively, under the Ser-
vicing Agreement. On March 28, 2000 the Portfolios will be liquidated: there
will be no reimbursements from that date on.
DISTRIBUTION PLANS
Mitchell Hutchins is the distributor of each Fund's shares and has appointed
PaineWebber as the exclusive dealer for the sale of those shares. Under sepa-
rate plans of service and/or distribution pertaining to Class A, Class B and
Class C shares, the Funds pay Mitchell Hutchins monthly service fees at the an-
nual rate of up to 0.25% of the average daily net assets of Class A, Class B
and Class C shares and monthly distribution fees at the annual rate of 0.75% of
the average daily net assets on Class B and Class C shares. At February 29,
2000, Growth and Income Fund, Mid Cap Fund and Growth Fund owed Mitchell
Hutchins $472,779, $79,829 and $171,252, respectively, in service and distribu-
tion fees.
Mitchell Hutchins also receives the proceeds of the initial sales charges paid
upon the purchase of Class A shares and the contingent deferred sales charges
paid by shareholders upon certain redemptions of Class A, Class B and Class C
shares. Mitchell Hutchins has informed each Fund that for the six months ended
February 29, 2000, it earned $742,020, $18,660 and $160,777 in sales charges
for the Growth and Income Fund, Mid Cap Fund and Growth Fund, respectively.
SECURITY LENDING
Each Fund may lend securities up to 33 1/2% of its total assets to qualified
institutions. The loans are secured at all times by cash or U.S. government se-
curities in an amount at least equal to the market value of the securities
loaned, plus accrued interest, determined on a daily basis and adjusted accord-
ingly. Each Fund will regain record ownership of loaned securities to exercise
certain beneficial rights, however, each Fund may bear the risk of delay in re-
covery of, or even loss of rights in, the securities loaned should the borrower
fail financially. Each Fund receives compensation, which is included in inter-
est income, for lending its securities from interest earned on the cash or U.S.
government securities held as collateral, net of fee rebates paid to the bor-
rower plus reasonable administrative and custody fees. For the six months ended
February 29, 2000, the Growth and Income Fund, Mid Cap Fund and Growth Fund,
earned $2,507, $48,763 and $91,196, respectively, for lending securities. Each
Fund's lending agent is PaineWebber, who received $836, $16,545, and $30,903
for Growth and Income Fund, Mid Cap Fund and Growth Fund, respectively, in com-
pensation from the Funds in that capacity for the six months ended February 29,
2000. At February 29, 2000, Mid Cap Fund and Growth Fund owed PaineWebber
$2,727 and $3,410, respectively, in compensation.
As of February 29, 2000 the Mid Cap Fund and Growth Fund held cash as collat-
eral for market value of securities loaned as follows:
<TABLE>
<CAPTION>
COLLATERAL MARKET
FOR VALUE OF
SECURITIES SECURITIES
LOANED LOANED
----------- -----------
<S> <C> <C>
MID CAP FUND............................................ $30,992,500 $31,542,019
GROWTH FUND............................................. $89,327,150 $89,239,816
</TABLE>
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
As of February 29, 2000 the Mid Cap Fund and Growth Fund invested the cash
collateral in the following money market funds:
<TABLE>
<CAPTION>
NUMBER
OF MARKET
SHARES VALUE
------ -----------
<S> <C>
MID CAP FUND
11,710,877 LIQUID ASSETS PORTFOLIO................................ $11,710,877
16,454,130 MITCHELL HUTCHINS PRIVATE MONEY MARKET FUND LLC........ 16,454,130
2,827,499 PRIME PORTFOLIO........................................ 2,827,493
-----------
TOTAL INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED (COST--
$30,992,500)..................................................... $30,992,500
===========
GROWTH FUND
20,028,949 LIQUID ASSETS PORTFOLIO................................ $20,028,949
47,226,912 MITCHELL HUTCHINS PRIVATE MONEY MARKET FUND LLC ....... 47,226,912
22,071,289 SCUDDER INSTITUTIONAL FUND INC. ....................... 22,071,289
-----------
TOTAL INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED (COST--
$89,327,150)..................................................... $89,327,150
===========
</TABLE>
BANK LINE OF CREDIT
Each Fund may participate with other funds managed by Mitchell Hutchins in a
$200 million committed credit facility ("Facility") to be utilized for
temporary financing until the settlement of sale or purchase of portfolio
securities, the repurchase or redemption of shares of each Fund at the request
of the shareholders and other temporary or emergency purposes. In connection
therewith, each Fund has agreed to pay a commitment fee, pro rata, based on the
relative asset size of the Funds in the Facility. Interest is charged to each
Fund at rates based on prevailing market rates in effect at the time of
borrowings. For the six months ended February 29, 2000, the Funds did not
borrow under the Facility.
TRANSFER AGENCY SERVICE FEES
PaineWebber provides transfer agency related services to the Funds pursuant to
a delegation of authority from PFPC, Inc., the Funds' transfer agent, and is
compensated for these services by PFPC, Inc., not the Funds. For the six months
ended February 29, 2000, PaineWebber received approximately 49%, 46% and 53% of
the total transfer agency and service fees collected by PFPC, Inc. from Growth
and Income Fund, Mid Cap Fund and Growth Fund, respectively.
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned at February 29,
2000 was substantially the same as the cost of securities for financial
statement purposes.
At February 29, 2000, the components of net unrealized appreciation of
investments were as follows:
<TABLE>
<CAPTION>
GROWTH AND
INCOME FUND MID CAP FUND GROWTH FUND
------------ ------------ ------------
<S> <C> <C> <C>
GROSS APPRECIATION (INVESTMENTS
HAVING AN EXCESS OF VALUE OVER
COST)............................... $355,606,410 $116,998,506 $310,724,224
GROSS DEPRECIATION (INVESTMENTS
HAVING AN EXCESS OF COST OVER
VALUE).............................. (59,556,212) (6,063,713) (14,779,640)
------------ ------------ ------------
NET UNREALIZED APPRECIATION OF
INVESTMENTS......................... $296,050,198 $110,934,793 $295,944,584
============ ============ ============
</TABLE>
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
For the six months ended February 29, 2000, total aggregate purchases and
sales of portfolio securities, excluding short-term securities, were as
follows:
<TABLE>
<CAPTION>
GROWTH AND
INCOME FUND MID CAP FUND GROWTH FUND
------------ ------------ -----------
<S> <C> <C> <C>
PURCHASES................................. $293,972,960 $84,331,932 $53,575,742
SALES..................................... $503,634,471 $98,534,436 $58,959,112
</TABLE>
FEDERAL TAX STATUS
Each Fund intends to distribute substantially all of its taxable income and to
comply with the requirements of the Internal Revenue Code applicable to
regulated investment companies. Accordingly, no provisions for federal income
taxes is required. In addition, by distributing during each calendar year,
substantially all of its net investment income, capital gains and certain other
amounts, if any, each Fund intends not to be subject to any federal excise tax.
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SHARES OF BENEFICIAL INTEREST
There is an unlimited number of $0.001 par value shares of beneficial interest
authorized. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
-------------------------- ------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- ------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH AND
INCOME FUND
FOR THE SIX MONTHS ENDED
FEBRUARY 29, 2000
SHARES SOLD..... 1,175,944 $ 38,214,610 199,278 $ 6,386,223 463,700 $ 14,976,900 218,909 $ 7,100,569
SHARES
REPURCHASED.... (4,435,623) (144,413,239) (1,698,445) (54,218,066) (1,451,121) (46,970,724) (711,610) (23,334,607)
SHARES CONVERTED
FROM CLASS B TO
CLASS A........ 615,921 20,005,948 (623,723) (20,005,948) -- -- -- --
DIVIDENDS
REINVESTED..... 927,890 30,165,691 301,646 9,673,799 176,529 5,671,889 65,597 2,137,153
----------- ------------- ---------- ------------- ---------- ------------ ---------- ------------
NET DECREASE.... (1,715,868) $ (56,026,990) (1,821,244) $ (58,163,992) (810,892) $(26,321,935) (427,104) $(14,096,885)
=========== ============= ========== ============= ========== ============ ========== ============
FOR THE YEAR ENDED AUGUST
31, 1999
SHARES SOLD..... 8,747,051 $ 271,868,943 1,794,624 $ 55,174,611 1,553,969 $ 48,502,553 1,177,699 $ 36,846,231
SHARES
REPURCHASED.... (11,983,913) (374,902,084) (2,776,809) (86,739,484) (2,221,720) (69,944,686) (1,726,359) (54,105,385)
SHARES CONVERTED
FROM CLASS B TO
CLASS A........ 3,179,259 99,263,662 (3,202,455) (99,263,662) -- -- -- --
DIVIDENDS
REINVESTED..... 1,477,072 44,548,497 659,253 19,770,993 316,470 9,509,920 141,503 4,266,308
----------- ------------- ---------- ------------- ---------- ------------ ---------- ------------
NET INCREASE
(DECREASE)..... 1,419,469 $ 40,779,018 (3,525,387) $(111,057,542) (351,281) $(11,932,213) (407,157) $(12,992,846)
=========== ============= ========== ============= ========== ============ ========== ============
MID CAP FUND
FOR THE SIX MONTHS ENDED
FEBRUARY 29, 2000
SHARES SOLD..... 4,866,659 $ 62,412,460 494,019 $ 6,961,030 643,327 $ 7,555,260 18,591 $ 248,470
SHARES
REPURCHASED.... (5,885,212) (73,580,261) (293,367) (3,734,590) (686,381) (7,863,702) (4,572) (62,918)
SHARES CONVERTED
FROM CLASS B TO
CLASS A........ 564,063 7,081,553 (569,787) (7,081,553) -- -- -- --
DIVIDENDS
REINVESTED..... 719,417 9,093,434 155,987 1,949,835 135,955 1,525,412 2,635 33,440
----------- ------------- ---------- ------------- ---------- ------------ ---------- ------------
NET INCREASE
(DECREASE)..... 264,927 $ 5,007,186 (213,148) $ (1,905,278) 92,901 $ 1,216,970 16,654 $ 218,992
=========== ============= ========== ============= ========== ============ ========== ============
FOR THE YEAR ENDED AUGUST
31, 1999
SHARES SOLD..... 9,301,918 $ 96,532,568 274,754 $ 2,735,524 474,530 $ 4,399,409 26,630 $ 270,282
SHARES
REPURCHASED.... (13,574,300) (138,990,018) (2,115,404) (20,745,827) (1,220,947) (10,928,751) (8,406) (89,312)
SHARES CONVERTED
FROM CLASS B TO
CLASS A........ 2,761,639 27,666,645 (2,765,975) (27,666,645) -- -- -- --
DIVIDENDS
REINVESTED..... 735,220 6,844,897 372,644 3,469,313 154,440 1,298,844 722 6,732
----------- ------------- ---------- ------------- ---------- ------------ ---------- ------------
NET INCREASE
(DECREASE)..... (775,523) $ (7,945,908) (4,233,981) $ (42,207,635) (591,977) $ (5,230,498) 18,946 $ 187,702
=========== ============= ========== ============= ========== ============ ========== ============
</TABLE>
36
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SHARES OF BENEFICIAL INTEREST (CONCLUDED)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
----------------------- ------------------------ ----------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ------------ ---------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUND
FOR THE SIX MONTHS ENDED
FEBRUARY 29, 2000
SHARES SOLD..... 2,091,960 $62,448,898 549,649 $ 15,133,634 918,386 $25,853,120 182,279 $ 5,796,275
SHARES
REPURCHASED.... (2,264,492) (67,243,988) (209,309) (5,561,716) (807,748) (22,645,363) (184,053) (5,758,226)
SHARES CONVERTED
FROM CLASS B TO
CLASS A........ 1,507,031 43,252,449 (1,672,593) (43,252,449) -- -- -- --
DIVIDENDS
REINVESTED..... 728,289 22,081,738 151,148 4,102,146 99,879 2,746,677 71,803 2,260,339
---------- ----------- ---------- ------------ ---------- ----------- -------- -----------
NET INCREASE
(DECREASE)..... 2,062,788 $60,539,097 (1,181,105) $(29,578,385) 210,517 $ 5,954,434 70,029 $ 2,298,388
========== =========== ========== ============ ========== =========== ======== ===========
FOR THE YEAR ENDED AUGUST
31, 1999
SHARES SOLD..... 2,603,107 $70,761,120 757,665 $ 18,400,169 1,839,539 $43,921,544 662,614 $17,686,583
SHARES
REPURCHASED.... (3,329,890) (88,510,215) (756,225) (13,932,593) (1,649,567) (39,233,924) (582,735) (15,472,240)
SHARES CONVERTED
FROM CLASS B TO
CLASS A........ 882,439 22,682,778 (809,713) (22,682,778) -- -- -- --
DIVIDENDS
REINVESTED..... 794,422 18,931,080 318,639 6,898,545 102,903 2,255,619 84,377 2,076,520
---------- ----------- ---------- ------------ ---------- ----------- -------- -----------
NET INCREASE
(DECREASE)..... 950,078 $23,864,763 (489,634) $(11,316,657) 292,875 $ 6,943,239 164,256 $ 4,290,863
========== =========== ========== ============ ========== =========== ======== ===========
</TABLE>
37
<PAGE>
PAINEWEBBER GROWTH AND INCOME FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD IS PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED
FEBRUARY 29, FOR THE YEARS ENDED AUGUST 31,
2000 ----------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $32.07 $26.92 $30.60 $24.35 $22.52 $20.43
------ ------ ------ ------ ------ ------
NET INVESTMENT INCOME
(LOSS)................. 0.06 0.13 0.19 0.23 0.22 0.24
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) FROM
INVESTMENTS AND
OPTIONS................ 1.54 6.88 (0.99) 9.29 3.46 3.18
------ ------ ------ ------ ------ ------
TOTAL INCREASE
(DECREASE) FROM
INVESTMENT OPERATIONS.. 1.60 7.01 (0.80) 9.52 3.68 3.42
------ ------ ------ ------ ------ ------
DIVIDENDS FROM NET
INVESTMENT INCOME...... (0.01) (0.08) (0.21) (0.25) (0.34) (0.12)
DISTRIBUTIONS FROM NET
REALIZED GAINS FROM
INVESTMENT
TRANSACTIONS........... (1.27) (1.78) (2.67) (3.02) (1.51) (1.21)
------ ------ ------ ------ ------ ------
TOTAL DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS........... (1.28) (1.86) (2.88) (3.27) (1.85) (1.33)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $32.39 $32.07 $26.92 $30.60 $24.35 $22.52
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT
RETURN(1).............. 4.98% 26.48% (3.51)% 42.42% 17.40% 18.30%
====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL
DATA:
NET ASSETS, END OF
PERIOD (000'S)......... $797,264 $844,415 $670,606 $441,699 $276,016 $187,057
EXPENSES TO AVERAGE NET
ASSETS................. 1.14%* 1.08% 1.07% 1.15% 1.20%(2) 1.19%
NET INVESTMENT INCOME
(LOSS) TO AVERAGE NET
ASSETS................. 0.34%* 0.41% 0.71% 0.88% 0.98%(2) 1.07%
PORTFOLIO TURNOVER...... 24% 57% 62% 70% 112% 111%
</TABLE>
- ---------
* ANNUALIZED.
(1) TOTAL INVESTMENT RETURN IS CALCULATED ASSUMING A $1,000 INVESTMENT ON THE
FIRST DAY OF EACH PERIOD REPORTED, REINVESTMENT OF ALL DIVIDENDS AND
DISTRIBUTIONS AT NET ASSET VALUE ON THE PAYABLE DATES AND A SALE AT NET
ASSET VALUE ON THE LAST DAY OF EACH PERIOD REPORTED. THE FIGURES DO NOT
INCLUDE ANY APPLICABLE SALES CHARGES OR PROGRAM FEES; RESULTS WOULD BE
LOWER IF THEY WERE INCLUDED. TOTAL INVESTMENT RETURN FOR PERIODS OF LESS
THAN ONE YEAR HAS NOT BEEN ANNUALIZED.
(2) THESE RATIOS INCLUDE NON-RECURRING ACQUISITION EXPENSES OF 0.04%.
38
<PAGE>
<TABLE>
<CAPTION>
CLASS B
- -------------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED
FEBRUARY 29, FOR THE YEARS ENDED AUGUST 31,
2000 -----------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$31.72 $26.77 $30.46 $24.26 $22.37 $20.37
------ ------ ------ ------ ------ ------
(0.13) (0.15) (0.02) 0.04 0.04 0.06
1.58 6.88 (1.02) 9.23 3.45 3.18
------ ------ ------ ------ ------ ------
1.45 6.73 (1.04) 9.27 3.49 3.24
------ ------ ------ ------ ------ ------
-- -- -- (0.05) (0.09) (0.03)
(1.27) (1.78) (2.65) (3.02) (1.51) (1.21)
------ ------ ------ ------ ------ ------
(1.27) (1.78) (2.65) (3.07) (1.60) (1.24)
------ ------ ------ ------ ------ ------
$31.90 $31.72 $26.77 $30.46 $24.26 $22.37
====== ====== ====== ====== ====== ======
4.55% 25.51% (4.28)% 41.33% 16.49% 17.38%
====== ====== ====== ====== ====== ======
$250,231 $306,557 $353,150 $376,840 $277,753 $247,543
1.93%* 1.86% 1.87% 1.93% 1.99%(2) 1.97%
(0.48)%* (0.37)% (0.08)% 0.11% 0.17%(2) 0.29%
24% 57% 62% 70% 112% 111%
<CAPTION>
CLASS B CLASS C
- -------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS SIX MONTHS
ENDED ENDED
FEBRUARY 29, FEBRUARY 29, FOR THE YEARS ENDED AUGUST 31,
2000 2000 ---------------------------------------------------
(UNAUDITED) (UNAUDITED) 1999 1998 1997 1996 1995
- ------------- ------------- ---------- ---------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
$31.72 $31.78 $26.82 $30.53 $24.33 $22.43 $20.42
------ ------ ------ ------ ------ ------ ------
(0.13) (0.11) (0.12) 0.01 0.05 0.05 0.06
1.58 1.57 6.86 (1.03) 9.24 3.46 3.19
------ ------ ------ ------ ------ ------ ------
1.45 1.46 6.74 (1.02) 9.29 3.51 3.25
------ ------ ------ ------ ------ ------ ------
-- -- -- (0.02) (0.07) (0.10) (0.03)
(1.27) (1.27) (1.78) (2.67) (3.02) (1.51) (1.21)
------ ------ ------ ------ ------ ------ ------
(1.27) (1.27) (1.78) (2.69) (3.09) (1.61) (1.24)
------ ------ ------ ------ ------ ------ ------
$31.90 $31.97 $31.78 $26.82 $30.53 $24.33 $22.43
====== ====== ====== ====== ====== ====== ======
4.55% 4.57% 25.49% (4.23)% 41.30% 16.52% 17.37%
====== ====== ====== ====== ====== ====== ======
$250,231 $141,007 $165,948 $149,458 $84,922 $43,148 $30,468
1.93%* 1.93%* 1.85% 1.85% 1.92% 1.99%(2) 1.98%
(0.48)%* (0.46)%* (0.36)% (0.07)% 0.10% 0.18%(2) 0.28%
24% 24% 57% 62% 70% 112% 111%
</TABLE>
39
<PAGE>
PAINEWEBBER GROWTH AND INCOME FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD IS PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS Y
------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED
FEBRUARY 29, FOR THE YEARS ENDED AUGUST 31,
2000 -----------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $32.12 $26.92 $30.59 $24.35 $22.54 $20.42
------ ------ ------ ------ ------ ------
NET INVESTMENT INCOME... 0.16 0.24 0.30 0.32 0.30 0.30
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) FROM
INVESTMENTS AND
OPTIONS................ 1.49 6.86 (1.02) 9.26 3.45 3.18
------ ------ ------ ------ ------ ------
TOTAL INCREASE
(DECREASE) FROM
INVESTMENT OPERATIONS.. 1.65 7.10 (0.72) 9.58 3.75 3.48
------ ------ ------ ------ ------ ------
DIVIDENDS FROM NET
INVESTMENT INCOME...... (0.02) (0.12) (0.28) (0.32) (0.43) (0.15)
DISTRIBUTIONS FROM NET
REALIZED GAINS FROM
INVESTMENT
TRANSACTIONS........... (1.27) (1.78) (2.67) (3.02) (1.51) (1.21)
------ ------ ------ ------ ------ ------
TOTAL DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS........... (1.29) (1.90) (2.95) (3.34) (1.94) (1.36)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $32.48 $32.12 $26.92 $30.59 $24.35 $22.54
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT
RETURN(1).............. 5.06% 26.82% (3.24)% 42.74% 17.77% 18.66%
====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL
DATA:
NET ASSETS, END OF
PERIOD (000'S)......... $51,957 $65,104 $65,518 $46,745 $22,942 $14,680
EXPENSES TO AVERAGE NET
ASSETS................. 0.85%* 0.79% 0.80% 0.88% 0.92%(2) 0.89%
NET INVESTMENT INCOME TO
AVERAGE NET ASSETS..... 0.61%* 0.70% 0.99% 1.14% 1.26%(2) 1.39%
PORTFOLIO TURNOVER RATE. 24% 57% 62% 70% 112% 111%
</TABLE>
- ---------
* ANNUALIZED.
(1) TOTAL INVESTMENT RETURN IS CALCULATED ASSUMING A $1,000 INVESTMENT ON THE
FIRST DAY OF EACH PERIOD REPORTED, REINVESTMENT OF ALL DIVIDENDS AND
DISTRIBUTIONS AT NET ASSET VALUE ON THE PAYABLE DATES AND A SALE AT NET
ASSET VALUE ON THE LAST DAY OF EACH PERIOD REPORTED. THE FIGURES DO NOT
INCLUDE ANY APPLICABLE SALES CHARGES OR PROGRAM FEES; RESULTS WOULD BE
LOWER IF THEY WERE INCLUDED. TOTAL INVESTMENT RETURN FOR PERIODS OF LESS
THAN ONE YEAR HAS NOT BEEN ANNUALIZED.
(2) THESE RATIOS INCLUDE NON-RECURRING ACQUISITION EXPENSES OF 0.04%.
40
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
41
<PAGE>
PAINEWEBBER MID CAP FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD IS
PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS FOR THE FIVE
ENDED YEAR MONTHS
FEBRUARY 29, ENDED ENDED FOR THE YEARS ENDED MARCH 31,
2000 AUGUST AUGUST 31, --------------------------------------
(UNAUDITED) 31, 1999 1998# 1998 1997 1996 1995
------------ -------- ---------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $10.67 $ 7.97 $15.00 $13.44 $15.61 $12.81 $11.65
------ ------ ------ ------ ------ ------ ------
NET INVESTMENT LOSS..... (0.05) (0.07) (0.03) (0.13) (0.17) (0.16) (0.09)
NET REALIZED UNREALIZED
GAINS (LOSSES) FROM
INVESTMENTS............ 7.05 3.43 (3.15) 5.15 0.32 3.71 1.29
------ ------ ------ ------ ------ ------ ------
NET INCREASE (DECREASE)
FROM INVESTMENT
OPERATIONS............. 7.00 3.36 (3.18) 5.02 0.15 3.55 1.20
------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS FROM NET
REALIZED GAINS FROM
INVESTMENTS............ (0.93) (0.66) (3.85) (3.46) (2.32) (0.75) (0.04)
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $16.74 $10.67 $ 7.97 $15.00 $13.44 $15.61 $12.81
====== ====== ====== ====== ====== ====== ======
TOTAL INVESTMENT
RETURN(1).............. 68.43% 43.38% (27.31)% 41.50% (0.21)% 28.16% 10.36%
====== ====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL
DATA:
NET ASSETS, END OF
PERIOD (000'S)......... $181,926 $113,126 $90,650 $101,698 $76,909 $76,558 $62,673
EXPENSES TO AVERAGE NET
ASSETS, NET OF WAIVERS
FROM ADVISER(3)........ 1.51%* 1.60% 1.48%* 1.51% 1.60% 1.58% 1.58%
NET INVESTMENT LOSS TO
AVERAGE NET ASSETS, NET
OF WAIVERS FROM
ADVISER(3)............. (0.87)%* (0.64)% (0.61)%* (1.16)% (1.20)% (1.11)% (0.79)%
PORTFOLIO TURNOVER...... 47% 79% 80% 64% 56% 57% 42%
</TABLE>
- ---------
* ANNUALIZED.
# EFFECTIVE MAY 1, 1998. MITCHELL HUTCHINS TOOK OVER DAY-TO-DAY MANAGEMENT OF
THE FUND'S ASSETS.
(1) TOTAL INVESTMENT RETURN IS CALCULATED ASSUMING A $1,000 INVESTMENT ON THE
FIRST DAY OF EACH PERIOD REPORTED, REINVESTMENT OF ALL DIVIDENDS AND
DISTRIBUTIONS 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 ANY APPLICABLE SALES CHARGES OR PROGRAM FEES; RESULTS WOULD BE
LOWER IF THEY WERE INCLUDED. TOTAL INVESTMENT RETURN FOR PERIODS OF LESS
THAN ONE YEAR HAS NOT BEEN ANNUALIZED.
(3) DURING THE SIX MONTHS ENDED FEBRUARY 29, 2000 AND 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%.
42
<PAGE>
<TABLE>
<CAPTION>
CLASS B
- --------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS FIVE
ENDED FOR THE MONTHS
FEBRUARY 29, YEAR ENDED ENDED FOR THE YEARS ENDED MARCH 31,
2000 AUGUST 31, AUGUST 31, -----------------------------------------
(UNAUDITED) 1999 1998# 1998 1997 1996 1995
- ------------ ---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$10.59 $ 7.99 $15.07 $13.59 $15.88 $13.11 $12.02
------ ------ ------ ------ ------ ------ ------
(0.12) (0.27) (0.07) (0.31) (0.31) (0.29) (0.20)
6.98 3.53 (3.16) 5.25 0.34 3.81 1.33
------ ------ ------ ------ ------ ------ ------
6.86 3.26 (3.23) 4.94 0.03 3.52 1.13
------ ------ ------ ------ ------ ------ ------
(0.93) (0.66) (3.85) (3.46) (2.32) (0.75) (0.04)
------ ------ ------ ------ ------ ------ ------
$16.52 $10.59 $ 7.99 $15.07 $13.59 $15.88 $13.11
====== ====== ====== ====== ====== ====== ======
67.60% 41.95% (27.54)% 40.39% (0.99)% 27.28% 9.46%
====== ====== ====== ====== ====== ====== ======
$40,282 $28,077 $54,978 $143,058 $134,495 $157,021 $139,302
2.49%* 2.55% 2.32%* 2.28% 2.36% 2.34% 2.34%
(1.85)%* (1.61)% (1.48)%* (1.92)% (1.95)% (1.87)% (1.56)%
47% 79% 80% 64% 56% 57% 42%
<CAPTION>
CLASS B CLASS C
- --------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE
SIX MONTHS SIX MONTHS FIVE
ENDED ENDED FOR THE MONTHS
FEBRUARY 29, FEBRUARY 29, YEAR ENDED ENDED FOR THE YEARS ENDED MARCH 31,
2000 2000 AUGUST 31, AUGUST 31, ---------------------------------------
(UNAUDITED) (UNAUDITED) 1999 1998# 1998 1997 1996 1995
- ------------- ------------- ----------- ------------ --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$10.59 $ 9.57 $ 7.26 $14.07 $12.87 $15.14 $12.54 $11.50
------ ------ ------ ------ ------ ------ ------ ------
(0.12) (0.09) (0.15) (0.06) (0.26) (0.29) (0.27) (0.19)
6.98 6.28 3.12 (2.90) 4.92 0.34 3.62 1.27
------ ------ ------ ------ ------ ------ ------ ------
6.86 6.19 2.97 (2.96) 4.66 0.05 3.35 1.08
------ ------ ------ ------ ------ ------ ------ ------
(0.93) (0.93) (0.66) (3.85) (3.46) (2.32) (0.75) (0.04)
------ ------ ------ ------ ------ ------ ------ ------
$16.52 $14.83 $ 9.57 $ 7.26 $14.07 $12.87 $15.14 $12.54
====== ====== ====== ====== ====== ====== ====== ======
67.60% 67.80% 42.17% (27.58)% 40.46% (0.91)% 27.16% 9.45%
====== ====== ====== ====== ====== ====== ====== ======
$40,282 $27,094 $16,594 $16,875 $27,814 $24,810 $27,601 $24,993
2.49%* 2.31%* 2.43% 2.28%* 2.29% 2.37% 2.36% 2.35%
(1.85)%* (1.67)%* (1.47)% (1.42)%* (1.94)% (1.97)% (1.89)% (1.57)%
47% 47% 79% 80% 64% 56% 57% 42%
</TABLE>
43
<PAGE>
PAINEWEBBER MID CAP FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD IS
PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS Y
---------------------------------------------
FOR THE FOR THE FOR THE
SIX MONTHS FIVE PERIOD
ENDED FOR THE MONTHS MARCH 17,
FEBRUARY 29, YEAR ENDED ENDED 1998+ TO
2000 AUGUST 31, AUGUST 31, MARCH 31,
(UNAUDITED) 1999 1998# 1998
------------ ---------- ---------- ---------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.......................... $10.70 $ 7.97 $15.00 $14.90
------ ------ ------ ------
NET INVESTMENT LOSS.............. (0.03) (0.02) (0.01) --
NET REALIZED AND UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS....... 7.07 3.41 (3.17) 0.10
------ ------ ------ ------
NET INCREASE (DECREASE) FROM
INVESTMENT OPERATIONS........... 7.04 3.39 (3.18) 0.10
------ ------ ------ ------
DISTRIBUTIONS FROM NET REALIZED
GAINS FROM INVESTMENTS.......... (0.93) (0.66) (3.85) --
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD... $16.81 $10.70 $ 7.97 $15.00
====== ====== ====== ======
TOTAL INVESTMENT RETURN(1)....... 68.61% 43.77% (27.31)% 0.67%
====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD
(000'S)......................... $ 736 $ 290 $ 65 $ 35
EXPENSES TO AVERAGE NET ASSETS,
NET OF WAIVERS FROM ADVISER(3).. 1.22%* 1.36% 1.23%* 1.22%*
NET INVESTMENT INCOME (LOSS) TO
AVERAGE NET ASSETS, NET OF
WAIVERS FROM ADVISER(3)......... (0.60)%* (0.36)% (0.29)%* 0.00%*
PORTFOLIO TURNOVER............... 47% 79% 80% 64%
</TABLE>
- ---------
* ANNUALIZED
# EFFECTIVE MAY 1, 1998. MITCHELL HUTCHINS TOOK OVER DAY-TO-DAY MANAGEMENT OF
THE FUND'S ASSETS.
+ COMMENCEMENT OF ISSUANCE OF SHARES.
(1) TOTAL INVESTMENT RETURN IS CALCULATED ASSUMING A $1,000 INVESTMENT ON THE
FIRST DAY OF EACH PERIOD REPORTED, REINVESTMENT OF ALL DIVIDENDS AND
DISTRIBUTIONS 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 ANY APPLICABLE SALES CHARGES OR PROGRAM FEES; RESULTS WOULD BE
LOWER IF THEY WERE INCLUDED. TOTAL INVESTMENT RETURN FOR PERIODS OF LESS
THAN ONE YEAR HAS NOT BEEN ANNUALIZED.
(3) DURING THE SIX MONTHS ENDED FEBRUARY 29, 2000 AND 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%.
44
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
45
<PAGE>
PAINEWEBBER GROWTH FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD IS
PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED
FEBRUARY 29, FOR THE YEARS ENDED AUGUST 31,
2000 ----------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $26.85 $20.08 $25.94 $24.37 $22.27 $20.04
------ ------ ------ ------ ------ ------
NET INVESTMENT INCOME
(LOSS)................. (0.04) (0.10) (0.09) (0.08)+ (0.12) 0.01
NET REALIZED AND
UNREALIZED GAINS FROM
INVESTMENTS............ 7.61 8.88 1.01 3.76 + 4.06 2.25
------ ------ ------ ------ ------ ------
TOTAL INCREASE FROM
INVESTMENT OPERATIONS.. 7.53 8.78 0.92 3.68 3.94 2.26
------ ------ ------ ------ ------ ------
DISTRIBUTIONS FROM NET
REALIZED GAINS FROM
INVESTMENT
TRANSACTIONS........... (1.94) (2.01) (6.78) (2.11) (1.84) (0.03)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $32.48 $26.85 $20.08 $25.94 $24.37 $22.27
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT
RETURN(1).............. 28.72% 44.97% 3.37% 15.85% 18.43% 11.28%
====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL
DATA:
NET ASSETS, END OF
PERIOD (000'S)......... $424,961 $295,906 $202,253 $201,725 $203,882 $183,958
EXPENSES TO AVERAGE NET
ASSETS, NET OF WAIVERS
FROM ADVISER(3)........ 1.15%* 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)........ (0.29)%* (0.41)% (0.39)% (0.32)% (0.49)% 0.19%(2)
PORTFOLIO TURNOVER RATE. 11% 38% 52% 86% 60% 36%
</TABLE>
- ---------
* ANNUALIZED.
+ CALCULATED USING THE AVERAGE SHARES OUTSTANDING FOR THE YEAR.
(1) TOTAL INVESTMENT RETURN IS CALCULATED ASSUMING A $1,000 INVESTMENT ON THE
FIRST DAY OF EACH PERIOD REPORTED, REINVESTMENT OF ALL DIVIDENDS AND
DISTRIBUTIONS 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 ANY APPLICABLE SALES CHARGES OR PROGRAM FEES; RESULTS WOULD BE
LOWER IF THEY WERE INCLUDED. TOTAL INVESTMENT RETURN FOR PERIODS OF LESS
THAN ONE YEAR HAS NOT BEEN ANNUALIZED.
(2) THESE RATIOS INCLUDE NON-RECURRING ACQUISITION EXPENSES OF 0.06%.
(3) DURING THE SIX MONTHS ENDED FEBRUARY 29, 2000 AND 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%.
46
<PAGE>
<TABLE>
<CAPTION>
CLASS B
- ----------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED
FEBRUARY 29, FOR THE YEARS ENDED AUGUST 31,
2000 --------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
- ------------ ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$24.26 $18.44 $24.51 $23.30 $21.53 $19.53
------ ------ ------ ------ ------ ------
(0.16) (0.30) (0.30) (0.26)+ (0.39) (0.02)
6.86 8.13 1.01 3.58 + 4.00 2.05
------ ------ ------ ------ ------ ------
6.66 7.83 0.71 3.32 3.61 2.03
------ ------ ------ ------ ------ ------
(1.94) (2.01) (6.78) (2.11) (1.84) (0.03)
------ ------ ------ ------ ------ ------
$29.02 $24.26 $18.44 $24.51 $23.30 $21.53
====== ====== ====== ====== ====== ======
28.19% 43.75% 2.55% 14.98% 17.48% 10.40%
====== ====== ====== ====== ====== ======
$68,096 $85,576 $74,094 $115,529 $140,551 $152,357
1.97%* 1.96% 1.99% 2.06% 2.06% 2.06%(2)
(1.12)%* (1.22)% (1.18)% (1.12)% (1.27)% (0.60)%(2)
11% 38% 52% 86% 60% 36%
<CAPTION>
CLASS B CLASS C
- --------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS SIX MONTHS
ENDED ENDED
FEBRUARY 29, FEBRUARY 29, FOR THE YEARS ENDED AUGUST 31,
2000 2000 ----------------------------------------------------
(UNAUDITED) (UNAUDITED) 1999 1998 1997 1996 1995
- ------------- ------------- --------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
$24.26 $24.56 $18.65 $24.71 $23.48 $21.68 $19.67
------ ------ ------ ------ ------ ------ ------
(0.16) (0.13) (0.26) (0.27) (0.27)+ (0.34) (0.10)
6.86 6.92 8.18 0.99 3.61+ 3.98 2.14
------ ------ ------ ------ ------ ------ ------
6.66 6.75 7.92 0.72 3.34 3.64 2.04
------ ------ ------ ------ ------ ------ ------
(1.94) (1.94) (2.01) (6.78) (2.11) (1.84) (0.03)
------ ------ ------ ------ ------ ------ ------
$29.02 $29.41 $24.56 $18.65 $24.71 $23.48 $21.68
====== ====== ====== ====== ====== ====== ======
28.19% 28.21% 43.74% 2.59% 14.95% 17.50% 10.37%
====== ====== ====== ====== ====== ====== ======
$68,096 $49,058 $35,793 $21,714 $24,760 $29,923 $30,608
1.97%* 1.93%* 1.94% 1.99% 2.07% 2.07% 2.05%(2)
(1.12)%* (1.07)%* (1.20)% (1.19)% (1.13)% (1.28)% (0.57)%(2)
11% 11% 38% 52% 86% 60% 36%
</TABLE>
47
<PAGE>
PAINEWEBBER GROWTH FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD IS
PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS Y
------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED FOR THE
FEBRUARY 29, YEARS ENDED AUGUST 31,
2000 -----------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $27.79 $20.67 $26.46 $24.74 $22.53 $20.22
------ ------ ------ ------ ------ ------
NET INVESTMENT INCOME
(LOSS)................. -- (0.03) (0.03) (0.01)+ (0.02) 0.24
NET REALIZED AND
UNREALIZED GAINS FROM
INVESTMENTS............ 7.91 9.16 1.02 3.84 + 4.07 2.10
------ ------ ------ ------ ------ ------
TOTAL INCREASE FROM
INVESTMENT OPERATIONS.. 7.87 9.13 0.99 3.83 4.05 2.34
------ ------ ------ ------ ------ ------
DISTRIBUTIONS FROM NET
REALIZED GAIN FROM
INVESTMENT
TRANSACTIONS........... (1.94) (2.01) (6.78) (2.11) (1.84) (0.03)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $33.76 $27.79 $20.67 $26.46 $24.74 $22.53
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT
RETURN(1).............. 28.98% 45.40% 3.61% 16.24% 18.72% 11.58%
====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL
DATA:
NET ASSETS, END OF
PERIOD (000'S)......... $42,926 $33,383 $21,440 $20,281 $21,409 $20,948
EXPENSES TO AVERAGE NET
ASSETS, NET OF WAIVERS
FROM ADVISER(3)........ 0.86%* 0.86% 0.91% 1.00% 1.02% 0.97%(2)
NET INVESTMENT INCOME
(LOSS) TO AVERAGE NET
ASSETS, NET OF WAIVERS
FROM ADVISER........... 0.00%* (0.12)% (0.12)% (0.05)% (0.23)% 0.53%(2)
PORTFOLIO TURNOVER...... 114% 38% 52% 86% 60% 36%
</TABLE>
- ---------
* ANNUALIZED.
+ CALCULATED USING THE AVERAGE SHARES OUTSTANDING FOR THE YEAR.
(1) TOTAL INVESTMENT RETURN IS CALCULATED ASSUMING A $1,000 INVESTMENT ON THE
FIRST DAY OF EACH PERIOD REPORTED, REINVESTMENT OF ALL DIVIDENDS AND
DISTRIBUTIONS 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 ANY APPLICABLE SALES CHARGES OR PROGRAM FEES; RESULTS WOULD BE
LOWER IF THEY WERE INCLUDED. TOTAL INVESTMENT RETURN FOR PERIODS OF LESS
THAN ONE YEAR HAS NOT BEEN ANNUALIZED.
(2) THESE RATIOS INCLUDE NON-RECURRING ACQUISITION EXPENSES OF 0.05%.
(3) DURING THE SIX MONTHS ENDED FEBRUARY 29, 2000 AND 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%.
48
<PAGE>
TRUSTEES
E. Garrett Bewkes, Jr. Mary C. Farrell
Chairman George W. Gowen
Margo N. Alexander Frederic V. Malek
Richard Q. Armstrong Carl W. Schafer
Richard R. Burt Brian M. Storms
Meyer Feldberg
PRINCIPAL OFFICERS
Margo N. Alexander Mark A. Tincher
President Vice President
Dianne E. O'Donnell Ellen R. Harris
Vice President and Secretary Vice President
Paul H. Schubert
Vice President and Treasurer
INVESTMENT ADVISER,
ADMINISTRATOR AND DISTRIBUTOR
Mitchell Hutchins Asset Management Inc.
51 West 52nd Street
New York, New York 10019
A prospectus containing more complete information for any of the Funds listed on
the back cover can be obtained from a PaineWebber Financial Advisor or
correspondent firm. Read the prospectus carefully before investing.
The financial information included herein is taken from the records of the Funds
without examination by independent auditors who do not express an opinion
thereon.
This report is not to be used in connection with the offering of shares of the
Funds unless accompanied or preceded by an effective prospectus.
<PAGE>
PaineWebber offers a family of 27 Funds which encompass a diversified range of
investment goals.
BOND FUNDS
. High Income Fund
. Investment Grade Income Fund
. Low Duration U.S. Government Income Fund
. Strategic Income Fund
. U.S. Government Income Fund
TAX - FREE BOND FUNDS
. California Tax Free Income Fund
. Municipal High Income Fund
. National Tax Free Income Fund
. New York Tax-Free Income Fund
STOCK FUNDS
. Enhanced S&P 500 Fund
. Enhanced Nasdaq-100 Fund
. Financial Services Growth Fund
. Growth Fund
. Growth and Income Fund
. Mid Cap Fund
. Small Cap Fund
. S&P 500 Index Fund
. Strategy Fund
. Tax-Managed Equity Fund
. Utility Income Fund
ASSET ALLOCATION FUNDS
. Balanced Fund
. Tactical Allocation Fund
GLOBAL FUNDS
. Asia Pacific Growth Fund
. Emerging Markets Equity Fund
. Global Equity Fund
. Global Income Fund
PAINEWEBBER MONEY MARKET FUND
GROWTH AND INCOME FUND
MID CAP FUND
GROWTH FUND
SEMI ANNUAL REPORT
FEBRUARY 29, 2000
