<PAGE>
PaineWebber Growth Fund
PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund
---------------------------------
PROSPECTUS
DECEMBER 31, 2000
---------------------------------
This prospectus offers Class A, Class B, Class C and Class Y shares in three of
PaineWebber's stock funds. Each class has different sales charges and ongoing
expenses. You can choose the class that is best for you based on how much you
plan to invest and how long you plan to hold your fund shares. Class Y shares
are available only to certain types of investors.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved any fund's shares or determined whether this prospectus
is complete or accurate. To state otherwise is a crime.
On October 6, 2000, the board of trustees for each of the above funds
approved the submission to its shareholders of an Agreement and Plan of
Reorganization and Termination under which the fund would transfer
substantially all of its assets and liabilities to the series indicated
below of PaineWebber PACE Select Advisors Trust, another open-end mutual
fund (each series may be referred to as a 'PACE fund').
<TABLE>
<CAPTION>
PROPOSED MERGER PARTNER
-----------------------
<S> <C>
PaineWebber Growth Fund PACE Large Company Growth Equity Investments
PaineWebber Growth and Income Fund PACE Large Company Value Equity Investments
PaineWebber Mid Cap Fund PACE Small/Medium Company Growth Equity Investments
</TABLE>
The same sub-advisers that now manage each fund's investments also manage
the investments of the PACE fund proposed as its merger partner. If a fund's
shareholders approve its proposed merger, they will receive like shares of
the applicable PACE fund in exchange for their fund shares and the fund will
cease operations. Each merger is expected to be a tax-free reorganization,
which means that a fund's shareholders will not realize any gain or loss on
their receipt of PACE fund shares in the merger and neither fund that is a
party to the merger will realize any gain or loss. The proxy solicitation
materials mailed to each fund's shareholders provide more information about
the proposed mergers.
You may continue to buy, sell and exchange your fund shares as described in
this prospectus prior to the shareholder meetings. When you sell or exchange
your fund shares, however, you generally will be subject to federal income
tax on any gain you realize. If a merger proposal is approved for a fund,
the fund expects to close to new purchases and exchange purchases
approximately five business days prior to the date on which the merger is to
be effected.
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund PaineWebber Mid Cap Fund
PaineWebber Growth and Income Fund
Contents
THE FUNDS
<TABLE>
<S> <C> <C>
----------------------------------------------------------------------------------------------
What every investor PaineWebber Growth Fund
should know about 3 Investment Objective, Strategies and Risks
the funds 4 Performance
5 Expenses and Fee Tables
PaineWebber Growth and Income Fund
6 Investment Objective, Strategies and Risks
8 Performance
9 Expenses and Fee Tables
PaineWebber Mid Cap Fund
10 Investment Objective, Strategies and Risks
11 Performance
12 Expenses and Fee Tables
13 More About Risks and Investment Strategies
YOUR INVESTMENT
----------------------------------------------------------------------------------------------
Information for 15 Managing Your Fund Account
managing your fund -- Flexible Pricing
account -- Buying Shares
-- Selling Shares
-- Exchanging Shares
-- Pricing and Valuation
ADDITIONAL INFORMATION
----------------------------------------------------------------------------------------------
Additional important 20 Management
information about 22 Dividends and Taxes
the funds 23 Financial Highlights
----------------------------------------------------------------------------------------------
Where to learn more Back Cover
about PaineWebber
mutual funds
</TABLE>
The funds are not complete or
balanced investment programs.
------------
--------------------------------------------------------------------------------
Prospectus Page 2
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund
PaineWebber Growth Fund
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
--------------------------------------------------------------------------------
FUND OBJECTIVE
Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
The fund invests primarily in common stocks that are believed to have
substantial potential for capital growth.
The fund generally invests in larger capitalization companies but has the
flexibility to invest in companies having any market capitalization. Some of the
fund's investments may be in U.S. dollar denominated securities of foreign
issuers, and the fund also may invest in bonds. The fund may (but is not
required to) use options, futures contracts and other derivatives as part of its
investment strategy or to help manage portfolio risk.
The fund's manager, Mitchell Hutchins Asset Management Inc., has appointed
Alliance Capital Management L.P. ('Alliance Capital') and State Street Global
Advisors ('SSgA') to serve as the fund's sub-advisers. Mitchell Hutchins
allocates the fund's assets between the two sub-advisers and has initially
allocated approximately 60% of the fund's assets to Alliance Capital and
approximately 40% to SSgA. Mitchell Hutchins may change this allocation at any
time. The relative values of each sub-adviser's share of the fund's assets also
may change over time.
In managing its share of the fund's assets, Alliance Capital follows its
'disciplined growth' strategy and seeks to identify the best combinations of
earnings growth and reasonable valuation in selecting stocks for the fund.
Alliance Capital ranks each stock in its investment universe based on its
analysts' assessments and fundamental research that includes six measures of
earnings growth and valuation. The fund normally invests in stocks that rank in
the top 30% of this research universe and generally sells stocks that rank in
the bottom half.
In managing its share of the fund's assets, SSgA seeks to outperform the Russell
1000 Growth Index (before fees and expenses). SSgA uses several independent
valuation measures to identify investment opportunities within a large cap
growth universe and combines factors to produce an overall rank. Comprehensive
research determines the optimal weighting of these perspectives to arrive at
strategies that vary by industry. SSgA ranks all companies within the investable
universe from top to bottom based on their relative attractiveness. SSgA
constructs the fund's portfolio by selecting the highest ranked stocks from the
universe and manages deviations from the benchmark to maximize the risk/reward
trade-off. The resulting portfolio has characteristics similar to the Russell
1000 Growth Index. SSgA generally sells stocks that no longer meet its selection
criteria or that it believes otherwise may adversely affect the fund's
performance relative to that of the index.
PRINCIPAL RISKS
An investment in the fund is not guaranteed; you may lose money by investing in
the fund. The principal risks presented by the fund are:
Equity Risk -- Stocks and other equity securities generally fluctuate in value
more than bonds. The fund could lose all of its investment in a company's
stock.
Index Strategy Risk -- SSgA's proprietary strategy may not result in
outperformance of the designated index and may even result in underperformance.
Technology Sector Risk -- The fund may invest a significant portion of its
assets in the stocks of companies in the technology sector. As a result, the
fund is more susceptible to risks that are associated with that sector than a
fund with a broader range of investments, and the fund's performance will be
adversely affected by unfavorable developments in the technology sector.
Derivatives Risk -- The fund's investments in derivatives may rise or fall more
rapidly than other investments.
Foreign Investing Risk -- The value of the fund's investments in foreign
securities may fall due to adverse political, social and economic developments
abroad. However, because the fund's foreign investments must be denominated in
U.S. dollars, it generally is not subject to the risk of changes in currency
valuations.
More information about risks of an investment in the fund is provided below in
'More About Risks and Investment Strategies.'
--------------------------------------------------------------------------------
Prospectus Page 3
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund
PERFORMANCE
--------------------------------------------------------------------------------
RISK/RETURN BAR CHART AND TABLE
The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.
The bar chart shows how the fund's performance has varied from year to year. The
chart shows Class A shares because they have the longest performance history of
any class of fund shares. The chart does not reflect the effect of sales
charges; if it did, the total returns shown would be lower.
The table that follows the chart shows the average annual returns for each class
of the fund's shares. That table does reflect fund sales charges. The table
compares fund returns to returns on a broad-based market index that is unmanaged
and that, therefore, does not include any sales charges or expenses.
The fund's past performance does not necessarily indicate how the fund will
perform in the future. This may be particularly true for the period prior to
October 10, 2000, when Mitchell Hutchins managed the fund's assets.
TOTAL RETURN ON CLASS A SHARES
[PERFORMANCE GRAPH]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar Year.... 1990 1991 1992 1993 1994 1995 1996 1997 1998 1998
Total Return..... -7.72% 47.61% 4.15% 19.17% -10.90% 33.02% 14.11% 17.01% 31.95% 32.43%
</TABLE>
Total return January 1, 2000 to September 30, 2000 -- (2.33)%
Best quarter during years shown: 4th quarter, 1998 -- 29.99%
Worst quarter during years shown: 3rd quarter, 1990 -- (19.03)%
AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1999
<TABLE>
<CAPTION>
CLASS CLASS A CLASS B* CLASS C CLASS Y S&P 500
(INCEPTION DATE) (3/18/85) (7/1/91) (7/2/92) (8/26/91) INDEX
---------------- --------- -------- -------- --------- -----
<S> <C> <C> <C> <C> <C>
One Year.......................................... 26.46% 26.35% 30.39% 32.86% 21.03%
Five Years........................................ 24.27% 24.25% 24.43% 25.78% 28.54%
Ten Years......................................... 16.14% N/A N/A N/A 18.19%
Life of Class..................................... 16.52% 17.73% 18.23% 17.83% **
</TABLE>
---------
* Assumes conversion of Class B shares to Class A shares after six years.
** Average annual total returns for the S&P 500 Index for the life of each class
were as follows:
Class A -- 18.55%; Class B -- 20.29%; Class C -- 21.24%; Class Y -- 19.74%.
------------
--------------------------------------------------------------------------------
Prospectus Page 4
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund
EXPENSES AND FEE TABLES
--------------------------------------------------------------------------------
FEES AND EXPENSES These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a % of offering price)................................ 4.5% None None None
Maximum Contingent Deferred Sales Charge (Load) (CDSC)
(as a % of offering price)................................ None 5% 1% None
Exchange Fee................................................ None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management Fees............................................. 0.75% 0.75% 0.75% 0.75%
Distribution and/or Service (12b-1) Fees.................... 0.25 1.00 1.00 0.00
Other Expenses.............................................. 0.16 0.22 0.19 0.11
---- ---- ---- ----
Total Annual Fund Operating Expenses........................ 1.16% 1.97% 1.94% 0.86%
---- ---- ---- ----
---- ---- ---- ----
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then sell all of your shares at the end of those periods unless
otherwise stated. The example also assumes that your investment has a 5% return
each year and that the fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A................................................. $563 $802 $1,060 $1,796
Class B (assuming sale of all shares at end of
period)............................................... 700 918 1,262 1,894
Class B (assuming no sale of shares).................... 200 618 1,062 1,894
Class C (assuming sale of all shares at end of
period)............................................... 297 609 1,047 2,264
Class C (assuming no sale of shares).................... 197 609 1,047 2,264
Class Y................................................. 88 274 477 1,061
</TABLE>
------------
--------------------------------------------------------------------------------
Prospectus Page 5
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth and Income Fund
PaineWebber Growth and Income Fund
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
--------------------------------------------------------------------------------
FUND OBJECTIVE
Current income and capital growth.
PRINCIPAL INVESTMENT STRATEGIES
The fund invests in a combination of securities to obtain both growth and
income. To obtain growth, the fund invests in stocks that are believed to have
substantial potential for capital growth. To obtain current income, the fund
invests in dividend paying stocks and, to a lesser extent, convertible bonds and
money market instruments.
The fund generally invests in large capitalization companies. Some of the fund's
investments may be in U.S. dollar denominated securities of foreign issuers. The
fund may (but is not required to) use options, futures contracts and other
derivatives as part of its investment strategy or to help manage portfolio
risks.
The fund's manager, Mitchell Hutchins Asset Management Inc., has appointed
Institutional Capital Corporation ('ICAP'), Westwood Management Corporation
('Westwood') and State Street Global Advisors ('SSgA') to serve as the fund's
sub-advisers. Mitchell Hutchins allocates the fund's assets among the three
sub-advisers and has initially allocated approximately 50% of the fund's assets
to SSgA and approximately 25% each to ICAP and Westwood. Mitchell Hutchins may
change this allocation at any time. The relative value of each sub-adviser's
share of the fund's assets also may change over time.
In managing its share of the fund's assets, ICAP uses its proprietary valuation
model to identify large-capitalization companies that ICAP believes offer the
best relative values because they sell below the price-to-earnings ratio
warranted by their prospects. ICAP looks for companies where a catalyst for a
positive change is about to occur with potential to produce stock appreciation
of 20% or more relative to the market over a 12 to 18 month period. The catalyst
can be thematic (e.g., global economic recovery) or company specific (e.g., a
corporate restructuring or a new product). ICAP also uses internally generated
research to evaluate the financial condition and business prospects of every
company it considers. ICAP monitors each stock purchased and sells the stock
when its target price is achieved, the catalyst becomes inoperative or ICAP
identifies another stock with greater opportunity for appreciation.
In managing its share of the fund's assets, Westwood maintains a list of
securities that it believes have proven records and potential for above-average
earnings growth. It considers purchasing a security on such list if Westwood's
forecast for growth rates and earnings estimates exceeds Wall Street
expectations or Westwood's forecasted price/earnings ratio is less than the
forecasted growth rate. Westwood monitors the issuing companies and will sell a
stock if Westwood expects limited future price appreciation or the projected
price/earnings ratio exceeds the three-year growth rate.
In managing its share of the fund's assets, SSgA seeks to outperform the Russell
1000 Value Index (before fees and expenses). SSgA uses several independent
valuation measures to identify investment opportunities within a large cap value
universe and combines factors to produce an overall rank. Comprehensive research
determines the optimal weighting of these perspectives to arrive at strategies
that vary by industry. SSgA ranks all companies within the investable universe
from top to bottom based on their relative attractiveness. SSgA constructs the
fund's portfolio by selecting the highest ranked stocks from the universe and
manages deviations from the benchmark to maximize the risk/reward trade-off. The
resulting portfolio has characteristics similar to the Russell 1000 Value Index.
SSgA generally sells stocks that no longer meet its selection criteria or that
it believes otherwise may adversely affect the fund's performance relative to
that of the index.
PRINCIPAL RISKS
An investment in the fund is not guaranteed; you may lose money by investing in
the fund. The principal risks presented by the fund are:
Equity Risk -- Stocks and other equity securities generally fluctuate in value
more than bonds. The
------------
--------------------------------------------------------------------------------
Prospectus Page 6
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth and Income Fund
fund could lose all of its investment in a company's stock.
Index Strategy Risk -- SSgA's proprietary strategy may not result in
outperformance of the designated index and may even result in underperformance.
Derivatives Risk -- The fund's investments in derivatives may rise or fall more
rapidly than other investments.
Foreign Investing Risk -- The value of the fund's investments in foreign
securities may fall due to adverse political, social and economic developments
abroad. However, because the fund's foreign investments must be denominated in
U.S. dollars, it generally is not subject to the risk of changes in currency
valuations.
More information about risks of an investment in the fund is provided below in
'More About Risks and Investment Strategies.'
------------
--------------------------------------------------------------------------------
Prospectus Page 7
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth and Income Fund
PERFORMANCE
--------------------------------------------------------------------------------
RISK/RETURN BAR CHART AND TABLE
The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.
The bar chart shows how the fund's performance has varied from year to year. The
chart shows Class A shares because they have the longest performance history of
any class of fund shares. The chart does not reflect the effect of sales
charges; if it did, the total returns shown would be lower.
The table that follows the chart shows the average annual returns for each class
of the fund's shares. That table does reflect fund sales charges. The table
compares fund returns to returns on a broad-based market index that is unmanaged
and that, therefore, does not include any sales charges or expenses.
The fund's past performance does not necessarily indicate how the fund will
perform in the future. This may be particularly true for the period prior to
October 10, 2000, when Mitchell Hutchins managed the fund's assets.
TOTAL RETURN ON CLASS A SHARES
[PERFORMANCE GRAPH]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar Year..... 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Total Return...... -1.01% 35.34% 3.90% -2.59% -5.87% 33.21% 23.46% 31.86% 17.97% 9.03%
</TABLE>
Total return January 1, 2000 to September 30, 2000 -- (4.88)%
Best quarter during years shown: 4th quarter, 1998 -- 20.96%
Worst quarter during years shown: 3rd quarter, 1998 -- (13.95)%
AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1999
<TABLE>
<CAPTION>
CLASS CLASS A CLASS B* CLASS C CLASS Y S&P 500
(INCEPTION DATE) (12/20/83) (7/1/91) (7/2/92) (2/12/92) INDEX
---------------- ---------- -------- -------- --------- -----
<S> <C> <C> <C> <C> <C>
One Year.......................................... 4.12% 3.21% 7.23% 9.31% 21.03%
Five Years........................................ 21.64% 21.64% 21.83% 23.10% 28.54%
Ten Years......................................... 13.02% N/A N/A N/A 18.19%
Life of Class..................................... 13.45% 13.78% 13.90% 13.64% **
</TABLE>
---------
* Assumes conversion of Class B shares to Class A shares after six years.
** Average annual total returns for the S&P 500 Index for the life of each class
were as follows:
Class A -- 18.07%; Class B -- 20.29%; Class C -- 21.24%; Class Y -- 20.20%.
------------
--------------------------------------------------------------------------------
Prospectus Page 8
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth and Income Fund
EXPENSES AND FEE TABLES
--------------------------------------------------------------------------------
FEES AND EXPENSES These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a % of offering price)................................ 4.5% None None None
Maximum Contingent Deferred Sales Charge (Load) (CDSC)
(as a % of offering price)................................ None 5% 1% None
Exchange Fee................................................ None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------- ------- ------- -------
Management Fees............................................. 0.70% 0.70% 0.70% 0.70%
Distribution and/or Service (12b-1) Fees.................... 0.25 1.00 1.00 0.00
Other Expenses.............................................. 0.20 0.25 0.24 0.15
---- ---- ---- ----
Total Annual Fund Operating Expenses........................ 1.15% 1.95% 1.94% 0.85%
---- ---- ---- ----
---- ---- ---- ----
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then sell all of your shares at the end of those periods unless
otherwise stated. The example also assumes that your investment has a 5% return
each year and that the fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A................................................. $562 $799 $1,054 $1,785
Class B (assuming sale of all shares at end of
period)............................................... 698 912 1,252 1,877
Class B (assuming no sale of shares).................... 198 612 1,052 1,877
Class C (assuming sale of all shares at end of
period)............................................... 297 609 1,047 2,264
Class C (assuming no sale of shares).................... 197 609 1,047 2,264
Class Y................................................. 87 271 471 1,049
</TABLE>
------------
--------------------------------------------------------------------------------
Prospectus Page 9
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Mid Cap Fund
PaineWebber Mid Cap Fund
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
--------------------------------------------------------------------------------
FUND OBJECTIVE
Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
The fund invests primarily in common stocks of medium capitalization ('mid cap')
companies that are believed to have substantial potential for capital growth.
The fund considers companies with market capitalizations of between $750 million
and $8 billion to be mid cap.
The fund also invests, to a lesser extent, in stocks of larger and smaller
companies and in bonds and money market instruments. Some of the fund's
investments may be in U.S. dollar denominated securities of foreign issuers. The
fund may (but is not required to) use options, futures contracts and other
derivatives as part of its investment strategy or to help manage portfolio
risks.
The fund's manager, Mitchell Hutchins Asset Management Inc., has appointed
Delaware Management Company to serve as the fund's sub-adviser. In deciding
which stocks to buy for the fund, Delaware Management Company employs a
bottom-up, fundamental analysis to attempt to identify companies that have
substantially above-average earnings growth because of management changes, new
products, growth of established products or structural changes in the economy.
Delaware Management Company also considers the quality of a company's management
team and the strength of its finances and internal controls in selecting stocks
for the fund. Although Delaware Management Company follows companies in a full
range of market sectors, it may focus on a limited number of attractive
industries. Delaware Management Company generally sells stocks that no longer
meet its selection criteria, are at risk for fundamental deterioration or when
it identifies more attractive investment opportunities.
PRINCIPAL RISKS
An investment in the fund is not guaranteed; you may lose money by investing in
the fund. The principal risks presented by the fund are:
Equity Risk -- Stocks and other equity securities generally fluctuate in value
more than bonds. The fund could lose all of its investment in a company's
stock.
Limited Capitalization Risk -- Equity risk is greater for the common stocks of
mid and small cap companies because they generally are more vulnerable than
larger companies to adverse business or economic developments and they may have
more limited resources. In general, these risks are greater for small cap
companies than for mid cap companies.
Technology Sector Risk -- The fund may invest a significant portion of its
assets in the stocks of companies in the technology sector. As a result, the
fund is more susceptible to the risks that are associated with that sector than
a fund with a broader range of investments, and the fund's performance may be
adversely affected by unfavorable developments in the technology sector.
Foreign Investing Risk -- The value of the fund's investments in foreign
securities may fall due to adverse political, social and economic developments
abroad. However, because the fund's foreign investments must be denominated in
U.S. dollars, it generally is not subject to the risk of changes in currency
valuations.
Derivatives Risk -- The fund's investments in derivatives may rise or fall more
rapidly than other investments.
More information about risks of an investment in the fund is provided below in
'More About Risks and Investment Strategies.'
------------
--------------------------------------------------------------------------------
Prospectus Page 10
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Mid Cap Fund
PERFORMANCE
--------------------------------------------------------------------------------
RISK/RETURN BAR CHART AND TABLE
The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.
The bar chart shows how the fund's performance has varied from year to year. The
chart shows Class A shares because they have as long a performance history as
any class of fund shares. The chart does not reflect the effect of sales
charges; if it did, the total returns shown would be lower.
The table that follows the chart shows the average annual returns for each class
of the fund's shares. That table does reflect fund sales charges. The table
compares fund returns to returns on a broad-based market index of mid-cap
companies that is unmanaged and that, therefore, does not include any sales
charges or expenses.
The fund's past performance does not necessarily indicate how the fund will
perform in the future. This may be particularly true for the period prior to
October 10, 2000, when Mitchell Hutchins managed the fund's assets.
TOTAL RETURN ON CLASS A SHARES (1993 IS THE FUND'S FIRST FULL CALENDAR YEAR OF
OPERATIONS)
[PERFORMANCE GRAPH]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Total Return 16.10% -1.36% 28.79% 17.87% 15.14% 11.81% 48.37%
</TABLE>
Total return January 1, 2000 to September 30, 2000 -- 4.69%
Best quarter during years shown: 4th quarter, 1999 -- 41.92%
Worst quarter during years shown: 3rd quarter, 1998 -- (18.10)%
AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1999
<TABLE>
<CAPTION>
CLASS CLASS A CLASS B* CLASS C CLASS Y S&P MIDCAP 400
(INCEPTION DATE) (4/7/92) (4/7/92) (7/2/92) (3/17/98) INDEX
---------------- -------- -------- -------- --------- -----
<S> <C> <C> <C> <C> <C>
One Year.................................... 41.65% 41.96% 46.17% 48.80% 14.72%
Five Years.................................. 22.60% 22.54% 22.78% N/A 23.05%
Life of Class............................... 17.51% 17.45% 19.06% 26.02% **
</TABLE>
---------
* Assumes conversion of Class B shares to Class A shares after six years.
** Average annual total returns for the S&P MidCap 400 Index for the life of
each class were as follows: Class A -- 17.48%; Class B -- 17.48%;
Class C -- 18.62%; Class Y -- 12.60%.
------------
--------------------------------------------------------------------------------
Prospectus Page 11
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Mid Cap Fund
EXPENSES AND FEE TABLES
--------------------------------------------------------------------------------
FEES AND EXPENSES These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a % of offering price)................................ 4.5% None None None
Maximum Contingent Deferred Sales Charge (Load) (CDSC)
(as a % of offering price)................................ None 5% 1% None
Exchange Fee................................................ None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management Fees. 1.00% 1.00% 1.00% 1.00%
Distribution and/or Service (12b-1) Fees.................... 0.25 1.00 1.00 0.00
Other Expenses.............................................. 0.25 0.29 0.26 0.24
---- ---- ---- ----
Total Annual Fund Operating Expenses........................ 1.50% 2.29% 2.26% 1.24%
---- ---- ---- ----
---- ---- ---- ----
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then sell all of your shares at the end of those periods unless
otherwise stated. The example also assumes that your investment has a 5% return
each year and that the fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A................................................ $596 $ 903 $1,232 $2,160
Class B (assuming sale of all shares at end of
period).............................................. 732 1,015 1,425 2,246
Class B (assuming no sale of shares)................... 232 715 1,225 2,246
Class C (assuming sale of all shares at end of
period).............................................. 329 706 1,210 2,595
Class C (assuming no sale of shares)................... 229 706 1,210 2,595
Class Y................................................ 126 393 681 1,500
</TABLE>
------------
--------------------------------------------------------------------------------
Prospectus Page 12
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund PaineWebber Mid Cap Fund
PaineWebber Growth and Income Fund
MORE ABOUT RISKS
AND INVESTMENT STRATEGIES
--------------------------------------------------------------------------------
PRINCIPAL RISKS
The main risks of investing in one or more of the funds are described below.
Other risks of investing in a fund, along with further detail about some of the
risks described below, are discussed in the funds' Statement of Additional
Information ('SAI'). Information on how you can obtain the SAI is on the back
cover of this prospectus.
Derivatives Risk. The value of 'derivatives' -- so-called because their value
'derives' from the value of an underlying asset, reference rate or index -- may
rise or fall more rapidly than other investments. For some derivatives, it is
possible for a fund to lose more than the amount it invested in the derivative.
Options and futures contracts are examples of derivatives. A fund's use of
derivatives may not succeed for various reasons, including unexpected changes in
the values of the derivatives or the assets underlying them. Also, if a fund
uses derivatives to adjust or 'hedge' the overall risk of its portfolio, the
hedge may not succeed if changes in the values of the derivatives are not
matched by opposite changes in the values of the assets being hedged.
Equity Risk. The prices of common stocks and other equity securities generally
fluctuate more than those of other investments. They reflect changes in the
issuing company's financial condition and changes in the overall market. A fund
may lose a substantial part, or even all, of its investment in a company's
stock.
Foreign Investing Risk. Foreign investing involves risks relating to political,
social and economic developments abroad to a greater extent than investing in
the securities of U.S. issuers. In addition, there are differences between U.S.
and foreign regulatory requirements and market practices. Investments in foreign
government bonds involve special risks because the investors may have limited
legal recourse in the event of default. Political conditions, especially a
country's willingness to meet the terms of its debt obligations, can be of
considerable significance.
Index Strategy Risk. Performance of the portions of Growth Fund and Growth and
Income Fund managed by SSgA may deviate from that of an index because of
shareholder purchases and sales of shares, which can occur daily, and because of
fees and expenses borne by a fund.
Limited Capitalization Risk. Securities of mid cap companies generally involve
greater risk than securities of larger capitalization companies because they may
be more vulnerable to adverse business or economic developments. Mid cap
companies also may have limited product lines, markets or financial resources,
and they may be dependent on a relatively small management group. Securities of
mid cap companies may be less liquid and more volatile than securities of larger
companies or the market averages in general. In general, all of these risks are
greater for small capitalization companies than for mid cap companies. In
addition, small capitalization companies may not be well-known to the investing
public, may not have institutional ownership and may have only cyclical, static
or moderate growth prospects.
ADDITIONAL RISKS
Credit and Interest Rate Risks. Each fund is authorized to invest in bonds and
other income-producing securities. These securities are subject to credit risk
and interest rate risk.
Credit risk is the risk that the issuer of a bond will not make principal or
interest payments when they are due. Even if an issuer does not default on a
payment, a bond's value may decline if the market believes that the issuer has
become less able, or less willing, to make payments on time. Even high quality
bonds are subject to some credit risk. However, credit risk is greater for lower
quality bonds. Bonds that are not investment grade (commonly known as 'junk
bonds') involve high credit risk and are considered speculative. Lower quality
bonds may fluctuate in value more than higher quality bonds and, during periods
of market volatility, may be more difficult to sell at the time and price a fund
desires.
The value of bonds generally can be expected to fall when interest rates rise
and to rise when interest
------------
--------------------------------------------------------------------------------
Prospectus Page 13
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund PaineWebber Mid Cap Fund
PaineWebber Growth and Income Fund
rates fall. Interest rate risk is the risk that interest rates will rise, so
that the value of a fund's investments in bonds will fall. Interest rate risk is
the primary source of risk for U.S. government and usually for other very high
quality bonds. The impact of changes in the general level of interest rates on
lower quality bonds may be greater or less than the impact on higher quality
bonds.
ADDITIONAL INVESTMENT STRATEGIES
Defensive Positions; Cash Reserves. In order to protect itself from adverse
market conditions, a fund may take a temporary defensive position that is
different from its normal investment strategy. This means that the fund may
temporarily invest a larger-than-normal part, or even all, of its assets in cash
or money market instruments. In addition, if a fund's board appoints a new
sub-adviser to manage all or a portion of the fund's investments, it may
increase its cash reserves to facilitate the transition to the investment style
and strategies of the new sub-adviser. Since these investments provide
relatively low income, a defensive or transitional position may not be
consistent with achieving a fund's investment objective. Each fund may invest up
to 35% of its total assets in cash or money market instruments as a cash reserve
for liquidity or, except in the case of Growth Fund, as part of its ordinary
investment strategy.
Portfolio Turnover. Each fund may engage in frequent trading to achieve its
investment objective. Frequent trading can result in portfolio turnover in
excess of 100% (high portfolio turnover).
Frequent trading may increase the portion of a fund's capital gains that are
realized for tax purposes in any given year. This may increase the fund's
taxable distributions in that year. Frequent trading also may increase the
portion of a fund's realized capital gains that are considered 'short-term' for
tax purposes. Shareholders will pay higher taxes on distributions that represent
short-term gains than they would pay on distributions that represent long-term
gains. Frequent trading also may result in higher fund expenses due to
transaction costs.
The funds do not restrict the frequency of trading to limit expenses or the tax
effect that the fund's distributions may have on shareholders. After assuming
responsibility for managing the funds' assets on October 10, 2000, the new
sub-advisers started realigning their funds' portfolios to reflect their
proprietary investment strategies. That realignment, which is still ongoing for
Growth Fund and Growth and Income Fund, has resulted in higher portfolio
turnover than normal for each fund. Growth Fund and Growth and Income Fund also
have realized greater long-term capital gains for tax purposes than normal, a
significant portion of which the fund must distribute to its shareholders as a
taxable distribution in 2001.
------------
--------------------------------------------------------------------------------
Prospectus Page 14
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund PaineWebber Mid Cap Fund
PaineWebber Growth and Income Fund
MANAGING YOUR FUND ACCOUNT
--------------------------------------------------------------------------------
FLEXIBLE PRICING
The funds offer four classes of shares -- Class A, Class B, Class C and
Class Y. Each class has different sales charges and ongoing expenses. You can
choose the class that is best for you, based on how much you plan to invest and
how long you plan to hold your fund investment. Class Y shares are only
available to certain types of investors.
Each fund has adopted a plan under rule 12b-1 for its Class A, Class B and Class
C shares that allows it to pay service fees for providing services to
shareholders and (for Class B and Class C shares) distribution fees for the sale
of its shares. Because the 12b-1 distribution fees for Class B and Class C
shares are paid out of a fund's assets on an ongoing basis, over time they will
increase the cost of your investment and may cost you more than if you paid a
front-end sales charge.
CLASS A SHARES
Class A shares have a front-end sales charge that is included in the offering
price of the Class A shares. This sales charge is not invested in the fund.
Class A shares pay an annual 12b-1 service fee of 0.25% of average net assets,
but they pay no 12b-1 distribution fees. The ongoing expenses for Class A shares
are lower than for Class B and Class C shares.
The Class A sales charges for each fund are described in the following table.
CLASS A SALES CHARGES
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF: REALLOWANCE TO SELECTED DEALERS AS
AMOUNT OF INVESTMENT OFFERING PRICE NET AMOUNT INVESTED PERCENTAGE OF OFFERING PRICE
-------------------- -------------- ------------------- ----------------------------------
<S> <C> <C> <C>
Less than $50,000.......................... 4.50% 4.71% 4.25%
$50,000 to $99,999......................... 4.00 4.17 3.75
$100,000 to $249,999....................... 3.50 3.63 3.25
$250,000 to $499,999....................... 2.50 2.56 2.25
$500,000 to $999,999....................... 1.75 1.78 1.50
$1,000,000 and over(1)..................... None None 1.00(2)
</TABLE>
(1) A contingent deferred sales charge of 1% of the shares' offering price or
the net asset value at the time of sale by the shareholder, whichever is
less, is charged on sales of shares made within one year of the purchase
date. Class A shares representing reinvestment of dividends are not subject
to this 1% charge. Withdrawals in the first year after purchase of up to 12%
of the value of the fund account under the fund's Systematic Withdrawal Plan
are not subject to this charge.
(2) Mitchell Hutchins pays 1% to the dealer.
Sales Charge Reductions and Waivers. You may qualify for a lower sales charge if
you already own Class A shares of a PaineWebber mutual fund. You can combine the
value of Class A shares that you own in other PaineWebber funds and the purchase
amount of the Class A shares of the PaineWebber fund that you are buying.
You may also qualify for a lower sales charge if you combine your purchases with
those of:
your spouse, parents or children under age 21;
your Individual Retirement Accounts (IRAs);
certain employee benefit plans, including 401(k) plans;
a company that you control;
a trust that you created;
Uniform Gifts to Minors Act/Uniform Transfers to Minors Act accounts created
by you or by a group of investors for your children; or
accounts with the same adviser.
------------
--------------------------------------------------------------------------------
Prospectus Page 15
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund PaineWebber Mid Cap Fund
PaineWebber Growth and Income Fund
You may qualify for a complete waiver of the sales charge if you:
Are an employee of PaineWebber or its affiliates or the spouse, parent or child
under age 21 of a PaineWebber employee;
Buy these shares through a PaineWebber Financial Advisor who was formerly
employed as an investment executive with a competing brokerage firm that was
registered as a broker-dealer with the SEC; and
-- you were the Financial Advisor's client at the competing brokerage firm;
-- within 90 days of buying shares in a fund, you sell shares of one or more
mutual funds that were principally underwritten by the competing
brokerage firm or its affiliates, and you either paid a sales charge to
buy those shares, pay a contingent deferred sales charge when selling
them or held those shares until the contingent deferred sales charge was
waived; and
-- you purchase an amount that does not exceed the total amount of money you
received from the sale of the other mutual fund.
Acquire these shares through the reinvestment of dividends of a PaineWebber
unit investment trust;
Are a 401(k) or 403(b) qualified employee benefit plan with 50 or more eligible
employees in the plan or at least $1 million in assets;
Are a participant in the PaineWebber Members Only'sm' Program. For investments
made pursuant to this waiver, Mitchell Hutchins may make payments out of its
own resources to PaineWebber and to participating membership organizations in a
total amount not to exceed 1% of the amount invested; or
Acquire these shares through a PaineWebber InsightOne'sm' Program brokerage
account.
CLASS B SHARES
Class B shares have a contingent deferred sales charge. When you purchase Class
B shares, we invest 100% of your purchase in fund shares. However, you may have
to pay the deferred sales charge when you sell your fund shares, depending on
how long you own the shares.
Class B shares pay an annual 12b-1 distribution fee of 0.75% of average net
assets, as well as an annual 12b-1 service fee of 0.25% of average net assets.
If you hold your Class B shares for six years, they will automatically convert
to Class A shares, which have lower ongoing expenses.
If you sell Class B shares before the end of six years, you will pay a deferred
sales charge. We calculate the deferred sales charge by multiplying the lesser
of the net asset value of the Class B shares at the time of purchase or the net
asset value at the time of sale by the percentage shown below:
<TABLE>
<CAPTION>
PERCENTAGE BY WHICH THE
IF YOU SELL SHARES' NET ASSET
SHARES WITHIN: VALUE IS MULTIPLIED:
-------------- --------------------
<S> <C>
1st year since purchase... 5%
2nd year since purchase... 4
3rd year since purchase... 3
4th year since purchase... 2
5th year since purchase... 2
6th year since purchase... 1
7th year since purchase... None
</TABLE>
We will not impose the deferred sales charge on Class B shares representing
reinvestment of dividends or on withdrawals in any year of up to 12% of the
value of your Class B shares under the Systematic Withdrawal Plan.
To minimize your deferred sales charge, we will assume that you are selling:
First, Class B shares representing reinvested dividends, and
Second, Class B shares that you have owned the longest.
Sales Charge Waivers. You may qualify for a waiver of the deferred sales charge
on a sale of shares if:
You participate in the Systematic Withdrawal Plan;
You are older than 59 1/2 and are selling shares to take a distribution from
certain types of retirement plans;
You receive a tax-free return of an excess IRA contribution;
You receive a tax-qualified retirement plan distribution following retirement;
The shares are sold within one year of your death and you owned the shares
either (1) as the sole shareholder or (2) with your spouse as a joint tenant
with the right of survivorship;
The shares are held in trust and the death of the trustee requires liquidation
of the trust; or
The shares are sold in connection with a transfer from an existing PaineWebber
mutual fund
------------
--------------------------------------------------------------------------------
Prospectus Page 16
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund PaineWebber Mid Cap Fund
PaineWebber Growth and Income Fund
SIMPLE IRA to another fund group's SIMPLE IRA.
CLASS C SHARES
Class C shares have a level load sales charge in the form of ongoing 12b-1
distribution fees. When you purchase Class C shares, we will invest 100% of your
purchase in fund shares.
Class C shares pay an annual 12b-1 distribution fee of 0.75% of average net
assets, as well as an annual 12b-1 service fee of 0.25% of average net assets.
Class C shares do not convert to another class of shares. This means that you
will pay the 12b-1 fees for as long as you own your shares.
Class C shares also have a contingent deferred sales charge. You may have to pay
the deferred sales charge if you sell your shares within one year of the date
you purchased them. We calculate the deferred sales charge on sales of Class C
shares by multiplying 1.00% by the lesser of the net asset value of the Class C
shares at the time of purchase or the net asset value at the time of sale. We
will not impose the deferred sales charge on Class C shares representing
reinvestment of dividends or on withdrawals in the first year after purchase, of
up to 12% of the value of your Class C shares under the Systematic Withdrawal
Plan.
Sales Charge Waivers. You may qualify for a waiver of deferred sales charge on a
sale of shares if:
You are a 401(k) or 403(b) qualified employee benefit plan with less than 100
eligible employees or less than $1 million in assets; or
The shares are sold in connection with a transfer from an existing PaineWebber
mutual fund SIMPLE IRA to another fund group's SIMPLE IRA.
NOTE ON SALES CHARGE WAIVERS FOR CLASS A, CLASS B AND CLASS C SHARES
If you think you qualify for any of the sale charge waivers described above, you
will need to provide documentation to PaineWebber or the fund. For more
information, you should contact your PaineWebber Financial Advisor or
correspondent firm or call 1-800-647-1568. If you want information on a fund's
Systematic Withdrawal Plan, see the SAI or contact your PaineWebber Financial
Advisor or correspondent firm.
CLASS Y SHARES
Class Y shares have no sales charge. Only specific types of investors can
purchase Class Y shares. You may be eligible to purchase Class Y shares if you:
Buy shares through PaineWebber's PACE'sm' Multi Advisor Program;
Buy $10 million or more of PaineWebber fund shares at any one time;
Are a qualified retirement plan with 5,000 or more eligible employees or $50
million in assets; or
Are a corporation, bank, trust company, insurance company, pension fund,
employee benefit plan, professional firm, trust, estate or educational,
religious or charitable organization with 5,000 or more employees or with over
$50 million in investable assets.
The trustee of PaineWebber's 401(k) Plus Plan for its employees is also eligible
to purchase Class Y shares.
Class Y shares do not pay ongoing distribution or service fees or sales charges.
The ongoing expenses for Class Y shares are the lowest for all the classes.
BUYING SHARES
If you are a PaineWebber client, or a client of a PaineWebber correspondent
firm, you can purchase fund shares through your Financial Advisor. Otherwise,
you can invest in the funds through the funds' transfer agent, PFPC Inc. You can
obtain an application by calling 1-800-647-1568. You must complete and sign the
application and mail it, along with a check, to:
PFPC Inc.
Attn.: PaineWebber Mutual Funds
P.O. Box 8950
Wilmington, DE 19899.
If you wish to invest in other PaineWebber funds, you can do so by:
Contacting your Financial Advisor (if you have an account at PaineWebber or at
a PaineWebber correspondent firm);
Mailing an application with a check; or
Opening an account by exchanging shares from another PaineWebber fund.
You do not have to complete an application when you make additional investments
in the same fund.
------------
--------------------------------------------------------------------------------
Prospectus Page 17
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund PaineWebber Mid Cap Fund
PaineWebber Growth and Income Fund
The funds and Mitchell Hutchins reserve the right to reject a purchase order or
suspend the offering of shares.
MINIMUM INVESTMENTS
<TABLE>
<S> <C>
To open an account............... $1,000
To add to an account............. $ 100
</TABLE>
Each fund may waive or reduce these amounts for:
Employees of PaineWebber or its affiliates; or
Participants in certain pension plans, retirement accounts, unaffiliated
investment programs or the funds' automatic investment plans.
Frequent Trading. The interests of a fund's long-term shareholders and its
ability to manage its investments may be adversely affected when its shares are
repeatedly bought and sold in response to short-term market fluctuations -- also
known as 'market timing'. When large dollar amounts are involved, the fund may
have difficulty implementing long-term investment strategies, because it cannot
predict how much cash it will have to invest. Market timing also may force the
fund to sell portfolio securities at disadvantageous times to raise the cash
needed to buy a market timer's fund shares. These factors may hurt the fund's
performance and its shareholders. When Mitchell Hutchins believes frequent
trading would have a disruptive effect on a fund's ability to manage its
investments, Mitchell Hutchins and the fund may reject purchase orders and
exchanges into the fund by any person, group or account that Mitchell Hutchins
believes to be a market timer. A fund may notify the market timer that a
purchase order or an exchange has been rejected after the day the order is
placed.
SELLING SHARES
You can sell your fund shares at any time. If you own more than one class of
shares, you should specify which class you want to sell. If you do not, the fund
will assume that you want to sell shares in the following order: Class A, then
Class C, then Class B and last, Class Y.
If you want to sell shares that you purchased recently, the fund may delay
payment until it verifies that it has received good payment. If you purchased
shares by check, this can take up to 15 days.
If you have an account with PaineWebber or a PaineWebber correspondent firm, you
can sell shares by contacting your Financial Advisor.
If you do not have an account at PaineWebber or a correspondent firm, and you
bought your shares through the transfer agent, you can sell your shares by
writing to the fund's transfer agent. Your letter must include:
Your name and address;
The fund's name;
The fund account number;
The dollar amount or number of shares you want to sell; and
A guarantee of each registered owner's signature. A signature guarantee may be
obtained from a financial institution, broker, dealer or clearing agency that
is a participant in one of the medallion programs recognized by the Securities
Transfer Agents Association. These are: Securities Transfer Agents Medallion
Program (STAMP), Stock Exchanges Medallion Program (SEMP) and the New York
Stock Exchange Medallion Signature Program (MSP). The funds will not accept
signature guarantees that are not a part of these programs.
Mail the letter to:
PFPC Inc.
Attn.: PaineWebber Mutual Funds
P.O. Box 8950
Wilmington, DE 19899.
If you sell Class A shares and then repurchase Class A shares of the same fund
within 365 days of the sale, you can reinstate your account without paying a
sales charge.
It costs each fund money to maintain shareholder accounts. Therefore, the funds
reserve the right to repurchase all shares in any account that has a net asset
value of less than $500. If a fund elects to do this with your account, it will
notify you that you can increase the amount invested to $500 or more within 60
days. A fund will not repurchase shares in accounts that fall below $500 solely
because of a decrease in the fund's net asset value.
EXCHANGING SHARES
You may exchange Class A, Class B or Class C shares of each fund for shares of
the same class of
------------
--------------------------------------------------------------------------------
Prospectus Page 18
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund PaineWebber Mid Cap Fund
PaineWebber Growth and Income Fund
most other PaineWebber funds. You may not exchange Class Y shares.
You will not pay either a front-end sales charge or a deferred sales charge when
you exchange shares. However, you may have to pay a deferred sales charge if you
later sell the shares you acquired in the exchange. Each fund will use the date
that you purchased the shares in the first fund to determine whether you must
pay a deferred sales charge when you sell the shares in the acquired fund.
Other PaineWebber funds may have different minimum investment amounts. You may
not be able to exchange your shares if your exchange is not as large as the
minimum investment amount in that other fund.
You may exchange shares of one fund for shares of another fund only after the
first purchase has settled and the first fund has received your payment.
PaineWebber and Correspondent Firm Clients. If you bought your shares through
PaineWebber or a correspondent firm, you may exchange your shares by placing an
order with your Financial Advisor.
Other Investors. If you are not a PaineWebber or correspondent firm client, you
may exchange your shares by writing to the fund's transfer agent. You must
include:
Your name and address;
The name of the fund whose shares you are selling and the name of the fund
whose shares you want to buy;
Your account number;
How much you are exchanging (by dollar amount or by number of shares to be
sold); and
A guarantee of your signature. (See 'Selling Shares' for information on
obtaining a signature guarantee.)
Mail the letter to:
PFPC Inc.
Attn.: PaineWebber Mutual Funds
P.O. Box 8950
Wilmington, DE 19899.
A fund may modify or terminate the exchange privilege at any time.
PRICING AND VALUATION
The price at which you may buy, sell or exchange fund shares is based on net
asset value per share. Each fund calculates net asset value on days that the New
York Stock Exchange is open. Each fund calculates net asset value separately for
each class as of the close of regular trading on the NYSE (generally,
4:00 p.m., Eastern time). The NYSE normally is not open, and the funds do not
price their shares, on most national holidays and on Good Friday. If trading on
the NYSE is halted for the day before 4:00 p.m., Eastern time, the fund's net
asset value per share will be calculated as of the time trading was halted.
Your price for buying, selling or exchanging shares will be based on the net
asset value that is next calculated after the fund accepts your order. If you
place your order through PaineWebber, your PaineWebber Financial Advisor is
responsible for making sure that your order is promptly sent to the fund.
You should keep in mind that a front-end sales charge may be applied to your
purchase if you buy Class A shares. A deferred sales charge may be applied when
you sell Class B or Class C shares.
Each fund calculates its net asset value based on the current market value for
its portfolio securities. The funds normally obtain market values for their
securities from independent pricing services that use reported last sales
prices, current market quotations or valuations from computerized 'matrix'
systems that derive values based on comparable securities. If a market value is
not available from an independent pricing source for a particular security, that
security is valued at a fair value determined by or under the direction of the
fund's board. The funds normally use the amortized cost method to value bonds
that will mature in 60 days or less.
Judgment plays a greater role in valuing thinly traded securities, including
many lower-rated bonds, because there is less reliable, objective data
available.
------------
--------------------------------------------------------------------------------
Prospectus Page 19
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund PaineWebber Mid Cap Fund
PaineWebber Growth and Income Fund
MANAGEMENT
--------------------------------------------------------------------------------
MANAGER
Mitchell Hutchins Asset Management Inc. is the manager and administrator of each
fund. Mitchell Hutchins is located at 51 West 52nd Street, New York, New York,
10019-6114, and is a wholly owned asset management subsidiary of PaineWebber
Incorporated, which is an indirect wholly owned subsidiary of UBS AG. UBS AG,
with headquarters in Zurich, Switzerland, is an internationally diversified
organization with operations in many areas of the financial services industry.
On November 30, 2000, Mitchell Hutchins was manager, adviser or sub-adviser of
31 investment companies with 75 separate portfolios and aggregate assets of
approximately $59.5 billion.
Mitchell Hutchins, with the approval of each fund's board, has appointed
investment sub-advisers for the funds and reviews the performance of those sub-
advisers.
SUB-ADVISERS AND PORTFOLIO MANAGERS
GROWTH FUND. Alliance Capital Management L.P. ('Alliance Capital') and State
Street Global Advisors ('SSgA') serve as sub-advisers for this fund. Alliance
Capital is located at 1345 Avenue of the Americas, New York, New York 10105. It
is a leading international investment manager supervising client accounts with
assets as of September 30, 2000 of approximately $388 billion.
Jane Mack Gould is primarily responsible for the day-to-day portfolio management
of the fund's assets allocated to Alliance Capital and has held her fund
responsibilities since October 10, 2000. Ms. Gould is a senior vice president
and portfolio manager and has been with Alliance Capital since 1971.
SSgA is located at Two International Place, Boston, Massachusetts 02110, and is
the investment management division of State Street Bank and Trust Company. As of
September 30, 2000, SSgA had approximately $741 billion under management. SSgA
uses a team approach in the day-to-day management of its share of the fund's
assets. SSgA has held its fund responsibilities since October 10, 2000.
GROWTH AND INCOME FUND. Institutional Capital Corporation ('ICAP'), Westwood
Management Corporation ('Westwood') and State Street Global Advisors ('SSgA')
serve as sub-advisers for this fund. ICAP is located at 225 West Wacker Drive,
Suite 2400, Chicago, Illinois 60606-1229, and has been in the investment
management business since 1970. As of September 30, 2000, ICAP had approximately
$14.4 billion in assets under management. ICAP uses a team approach in the
day-to-day management of its share of the fund's assets. ICAP has held its fund
responsibilities since October 10, 2000.
Westwood is located at 300 Crescent Court, Suite 1300, Dallas, Texas 75201, and
has been in the investment management business since 1983. As of September 30,
2000, Westwood had approximately $3.2 billion in assets under management.
Susan M. Byrne, president of Westwood since 1983, is the lead portfolio manager.
She and a team of five research analysts are primarily responsible for the
day-to-day management of Westwood's share of the fund's assets. They have held
their fund responsibilities since October 10, 2000.
SSgA is located at Two International Place, Boston, Massachusetts 02110, and is
the investment management division of State Street Bank and Trust Company. As of
September 30, 2000, SSgA had approximately $741 billion under management. SSgA
uses a team approach in the day-to-day management of its share of the fund's
assets. SSgA has held its fund responsibilities since October 10, 2000.
MID CAP FUND. Delaware Management Company serves as sub-adviser for this fund.
Delaware Management Company is located at One Commerce Square, Philadelphia, PA
19103. Delaware Management Company and its predecessors have been managing funds
for affiliated organizations in the financial services industry since 1938. As
of September 30, 2000, Delaware Management Company and its affiliates had over
$80 billion in assets under management.
------------
--------------------------------------------------------------------------------
Prospectus Page 20
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund PaineWebber Mid Cap Fund
PaineWebber Growth and Income Fund
Gerald S. Frey is primarily responsible for the fund's day-to-day portfolio
management and has held his fund responsibilities since October 10, 2000.
Mr. Frey is a vice president of Delaware Management Company. Prior to joining
the group of companies of which Delaware Management Company is a part in 1996,
Mr. Frey was a senior director with Morgan Grenfell Capital Management,
Incorporated in New York. He has 18 years of experience in the money management
business.
In making investment decisions for the fund, Mr. Frey regularly consults with
other members of the Delaware Management Company team: John A. Heffern,
Marshall T. Bassett, Jeffrey Hynoski, Steven Lampe, Lori F. Wachs and Frank
Houghton. All team members have held their fund responsibilities since
October 10, 2000.
Mr. Heffern joined Delaware Management Company in 1997 and serves as a vice
president. Previously, he was a senior vice president, equity research at
NatWest Security Corporation's Specialty Financial Services unit. Prior to that,
he was a principal and senior regional bank analyst at Alex. Brown & Sons.
Mr. Bassett joined Delaware Management Company in 1997 and serves as a vice
president. Previously, he was employed by Morgan Stanley Asset Management's
Emerging Growth Group, most recently as a vice president, where he analyzed
small growth companies. Prior to that, he was trust officer at Sovran Bank and
Trust Company.
Mr. Hynoski joined Delaware Management Company in 1998 and serves as a vice
president. Previously, he held the position of vice president with Bessemer
Trust since 1993. Prior to that, he served as an analyst for Lord Abbett and
Cowen Asset Management. Prior to that, he held a manager position with Price
Waterhouse servicing the financial services industry.
Mr. Lampe joined Delaware Management Company in 1995 and serves as a vice
president. Prior to that, he held a manager position with Price Waterhouse
servicing the financial services industry.
Ms. Wachs joined Delaware Management Company in 1992 and serves as an assistant
vice president. Previously, she was an equity analyst at Goldman Sachs & Company
for two years.
Mr. Houghton joined Delaware Management Company in March 2000 and serves as a
vice president. Previously, he was a vice president and a portfolio manager with
Lynch & Mayer, a Delaware affiliate, since 1990.
ADVISORY FEES
The funds paid fees to Mitchell Hutchins for advisory and administrative
services during the last fiscal year at the following rate of average daily net
assets:
<TABLE>
<S> <C>
Growth Fund.................... 0.75%
Growth and Income Fund......... 0.70%
Mid Cap Fund................... 1.00%
</TABLE>
OTHER INFORMATION
The funds have received an exemptive order from the SEC that permits their
boards to appoint and replace sub-advisers and to amend sub-advisory contracts
without obtaining shareholder approval. A fund's shareholders must approve this
policy before its board may implement it. As of the date of this prospectus, the
shareholders of the funds have not been asked to do so.
------------
--------------------------------------------------------------------------------
Prospectus Page 21
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund PaineWebber Mid Cap Fund
PaineWebber Growth and Income Fund
DIVIDENDS AND TAXES
--------------------------------------------------------------------------------
DIVIDENDS
Growth and Income Fund normally pays dividends semi-annually and distributes any
gains annually. The other funds normally declare and pay dividends and
distribute any gains annually.
Classes with higher expenses are expected to have lower dividends. For example,
Class B shares and Class C are expected to have the lowest dividends of any
class of a fund's shares, while Class Y shares are expected to have the highest.
You will receive dividends in additional shares of the same class unless you
elect to receive them in cash. Contact your Financial Advisor at PaineWebber or
one of its correspondent firms if you prefer to receive dividends in cash.
TAXES
The dividends that you receive from a fund generally are subject to federal
income tax regardless of whether you receive them in additional fund shares or
in cash. If you hold fund shares through a tax-exempt account or plan, such as
an IRA or 401(k) plan, dividends on your shares generally will not be subject to
tax.
When you sell fund shares, you generally will be subject to federal income tax
on any gain you realize. If you exchange any fund's shares for shares of another
PaineWebber mutual fund, the transaction will be treated as a sale of the first
fund's shares, and any gain will be subject to federal income tax.
Growth and Income Fund expects that its dividends will include both ordinary
income and capital gain distributions. The other funds expect that their
dividends will be comprised primarily of capital gain distributions. The
distribution of capital gains will be taxed at a lower rate than ordinary income
if the fund held the assets that generated the gains for more than 12 months.
Your fund will tell you annually how you should treat its dividends for tax
purposes.
------------
--------------------------------------------------------------------------------
Prospectus Page 22
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund PaineWebber Mid Cap Fund
PaineWebber Growth and Income Fund
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
The following financial highlights tables are intended to help you understand
the funds' financial performance for the past 5 years. Shorter periods are shown
for classes of fund shares that have existed for less than 5 years. Certain
information reflects financial results for a single fund share. In the tables,
'total investment return' represents the rate that an investor would have earned
(or lost) on an investment in a fund (assuming reinvestment of all dividends).
This information in the financial highlights has been audited by Ernst & Young
LLP, independent auditors, whose reports, along with the funds' financial
statements, are included in the funds' Annual Reports to Shareholders. Annual
Reports may be obtained without charge by calling 1-800-647-1568.
------------
--------------------------------------------------------------------------------
Prospectus Page 23
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
PAINEWEBBER GROWTH FUND
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
FOR THE YEARS ENDED AUGUST 31,
----------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year... $ 26.85 $ 20.08 $ 25.94 $ 24.37 $ 22.27
-------- -------- -------- -------- --------
Net investment income (loss)......... (0.08) (0.10) (0.09) (0.08)@ (0.12)
Net realized and unrealized gains
from investments.................... 8.99 8.88 1.01 3.76 @ 4.06
-------- -------- -------- -------- --------
Total increase from investment
operations.......................... 8.91 8.78 0.92 3.68 3.94
-------- -------- -------- -------- --------
Distributions from net realized gains
from investment transactions........ (1.94) (2.01) (6.78) (2.11) (1.84)
-------- -------- -------- -------- --------
Net asset value, end of year......... $ 33.82 $ 26.85 $ 20.08 $ 25.94 $ 24.37
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return(1)........... 34.04% 44.97% 3.37% 15.85% 18.43%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios/Supplemental data:
Net assets, end of year (000's)...... $448,960 $295,906 $202,253 $201,725 $203,882
Expenses to average net assets, net
of waivers from adviser............. 1.15% 1.15% 1.19% 1.27% 1.28%
Expenses to average net assets,
before fee waivers from adviser..... 1.16% 1.15% 1.19% 1.27% 1.28%
Net investment loss to average net
assets, net of waivers from
adviser............................. (0.27)% (0.41)% (0.39)% (0.32)% (0.49)%
Net investment loss to average net
assets before fee waivers from
adviser............................. (0.28)% (0.41)% (0.39)% (0.32)% (0.49)%
Portfolio turnover................... 23% 38% 52% 86% 60%
<CAPTION>
CLASS B
--------------------------------------------------
FOR THE YEARS ENDED AUGUST 31,
--------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year... $ 24.26 $ 18.44 $ 24.51 $ 23.30 $ 21.53
------- ------- -------- -------- --------
Net investment income (loss)......... (0.31) (0.30) (0.30) (0.26)@ (0.39)
Net realized and unrealized gains
from investments.................... 8.09 8.13 1.01 3.58 @ 4.00
------- ------- -------- -------- --------
Total increase from investment
operations.......................... 7.78 7.83 0.71 3.32 3.61
------- ------- -------- -------- --------
Distributions from net realized gains
from investment transactions........ (1.94) (2.01) (6.78) (2.11) (1.84)
------- ------- -------- -------- --------
Net asset value, end of year......... $ 30.10 $ 24.26 $ 18.44 $ 24.51 $ 23.30
------- ------- -------- -------- --------
------- ------- -------- -------- --------
Total investment return(1)........... 32.96% 43.75% 2.55% 14.98% 17.48%
------- ------- -------- -------- --------
------- ------- -------- -------- --------
Ratios/Supplemental data:
Net assets, end of year (000's)...... $72,769 $85,576 $ 74,094 $115,529 $140,551
Expenses to average net assets, net
of waivers from adviser............. 1.96% 1.96% 1.99% 2.06% 2.06%
Expenses to average net assets,
before fee waivers from adviser..... 1.97% 1.96% 1.99% 2.06% 2.06%
Net investment loss to average net
assets, net of waivers from
adviser............................. (1.08)% (1.22)% (1.18)% (1.12)% (1.27)%
Net investment loss to average net
assets before fee waivers from
adviser............................. (1.09)% (1.22)% (1.18)% (1.12)% (1.27)%
Portfolio turnover................... 23% 38% 52% 86% 60%
</TABLE>
---------
@ Calculated using the average shares outstanding for the year.
(1) Total investment return is calculated assuming a $10,000 investment on the
first day of each year reported, reinvestment of all dividends and
distributions, if any, at net asset value on the payable dates and a sale at
net asset value on the last day of each year reported. The figures do not
include any applicable sales charges or program fees; results would be lower
if they were included.
------------
--------------------------------------------------------------------------------
Prospectus Page 24
<PAGE>
--------------------------------------------------------------------------------
-------------------------
PaineWebber Growth Fund
FINANCIAL HIGHLIGHTS
(Continued)
--------------------------------------------------------------------------------
PAINEWEBBER GROWTH FUND
<TABLE>
<CAPTION>
CLASS C CLASS Y
------------------------------------------------------- -----------------------------------------------
FOR THE YEARS ENDED AUGUST 31, FOR THE YEARS ENDED AUGUST 31,
------------------------------------------------------- -----------------------------------------------
2000 1999 1998 1997 1996 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 24.56 $ 18.65 $ 24.71 $ 23.48 $ 21.68 $ 27.79 $ 20.67 $ 26.46 $ 24.74 $ 22.53
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(0.28) (0.26) (0.27) (0.27)@ (0.34) 0.01 (0.03) (0.03) (0.01)@ (0.02)
8.17 8.18 0.99 3.61 @ 3.98 9.35 9.16 1.02 3.84 @ 4.07
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
7.89 7.92 0.72 3.34 3.64 9.36 9.13 0.99 3.83 4.05
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(1.94) (2.01) (6.78) (2.11) (1.84) (1.94) (2.01) (6.78) (2.11) (1.84)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
$ 30.51 $ 24.56 $ 18.65 $ 24.71 $ 23.48 $ 35.21 $ 27.79 $ 20.67 $ 26.46 $ 24.74
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
33.01% 43.74% 2.59% 14.95% 17.50% 34.52% 45.40% 3.61% 16.24% 18.72%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
$52,716 $35,793 $21,714 $24,760 $29,923 $45,247 $33,383 $21,440 $20,281 $21,409
1.93% 1.94% 1.99% 2.07% 2.07% 0.85% 0.86% 0.91% 1.00% 1.02%
1.94% 1.94% 1.99% 2.07% 2.07% 0.86% 0.86% 0.91% 1.00% 1.02%
(1.05)% (1.20)% (1.19)% (1.13)% (1.28)% 0.03% (0.12)% (0.12)% (0.05)% (0.23)%
(1.06)% (1.20)% (1.19)% (1.13)% (1.28)% 0.02% (0.12)% (0.12)% (0.05)% (0.23)%
23% 38% 52% 86% 60% 23% 38% 52% 86% 60%
</TABLE>
------------
--------------------------------------------------------------------------------
Prospectus Page 25
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth and Income Fund
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
PAINEWEBBER GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
FOR THE YEARS ENDED AUGUST 31,
----------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year............................... $ 32.07 $ 26.92 $ 30.60 $ 24.35 $ 22.52
-------- -------- -------- -------- --------
Net investment income (loss)........ 0.14@ 0.13 0.19 0.23 0.22
Net realized and unrealized gains
(losses) from investments.......... 3.67@ 6.88 (0.99) 9.29 3.46
-------- -------- -------- -------- --------
Total increase (decrease) from
investment operations.............. 3.81 7.01 (0.80) 9.52 3.68
-------- -------- -------- -------- --------
Dividends from net investment
income............................. (0.06) (0.08) (0.21) (0.25) (0.34)
Distributions from net realized
gains from investment
transactions....................... (1.27) (1.78) (2.67) (3.02) (1.51)
-------- -------- -------- -------- --------
Total dividends and distributions to
shareholders....................... (1.33) (1.86) (2.88) (3.27) (1.85)
-------- -------- -------- -------- --------
Net asset value, end of year........ $ 34.55 $ 32.07 $ 26.92 $ 30.60 $ 24.35
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return(1).......... 12.15% 26.48% (3.51)% 42.42% 17.40%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios/Supplemental data:
Net assets, end of year (000's)..... $760,386 $844,415 $670,606 $441,699 $276,016
Expenses to average net assets...... 1.15% 1.08% 1.07% 1.15% 1.20%(2)
Net investment income (loss) to
average net assets................. 0.43% 0.41% 0.71% 0.88% 0.98%(2)
Portfolio turnover.................. 50% 57% 62% 70% 112%
<CAPTION>
CLASS B
----------------------------------------------------
FOR THE YEARS ENDED AUGUST 31,
----------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year............................... $ 31.72 $ 26.77 $ 30.46 $ 24.26 $ 22.37
-------- -------- -------- -------- --------
Net investment income (loss)........ (0.12)@ (0.15) (0.02) 0.04 0.04
Net realized and unrealized gains
(losses) from investments.......... 3.62@ 6.88 (1.02) 9.23 3.45
-------- -------- -------- -------- --------
Total increase (decrease) from
investment operations.............. 3.50 6.73 (1.04) 9.27 3.49
-------- -------- -------- -------- --------
Dividends from net investment
income............................. -- -- -- (0.05) (0.09)
Distributions from net realized
gains from investment
transactions....................... (1.27) (1.78) (2.65) (3.02) (1.51)
-------- -------- -------- -------- --------
Total dividends and distributions to
shareholders....................... (1.27) (1.78) (2.65) (3.07) (1.60)
-------- -------- -------- -------- --------
Net asset value, end of year........ $ 33.95 $ 31.72 $ 26.77 $ 30.46 $ 24.26
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return(1).......... 11.27% 25.51% (4.28)% 41.33% 16.49%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios/Supplemental data:
Net assets, end of year (000's)..... $223,416 $306,557 $353,150 $376,840 $277,753
Expenses to average net assets...... 1.95% 1.86% 1.87% 1.93% 1.99%(2)
Net investment income (loss) to
average net assets................. (0.39)% (0.37)% (0.08)% 0.11% 0.17%(2)
Portfolio turnover.................. 50% 57% 62% 70% 112%
</TABLE>
---------
@ Calculated using the average shares outstanding for the year.
(1) Total investment return is calculated assuming a $10,000 investment on the
first day of each year reported, reinvestment of all dividends and
distributions, if any, at net asset value on the payable dates and a sale at
net asset value on the last day of each year reported. The figures do not
include any applicable sales charges or program fees; results would be lower
if they were included.
(2) These ratios include non-recurring acquisition expenses of 0.04%.
------------
--------------------------------------------------------------------------------
Prospectus Page 26
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth and Income Fund
FINANCIAL HIGHLIGHTS
(Continued)
--------------------------------------------------------------------------------
PAINEWEBBER GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
CLASS C CLASS Y
-------------------------------------------------- -----------------------------------------------
FOR THE YEARS ENDED AUGUST 31, FOR THE YEARS ENDED AUGUST 31,
-------------------------------------------------- -----------------------------------------------
2000 1999 1998 1997 1996 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 31.78 $ 26.82 $ 30.53 $ 24.33 $ 22.43 $ 32.12 $ 26.92 $ 30.59 $ 24.35 $ 22.54
-------- -------- -------- ------- ------- ------- ------- ------- ------- -------
(0.12)@ (0.12) 0.01 0.05 0.05 0.24@ 0.24 0.30 0.32 0.30
3.63@ 6.86 (1.03) 9.24 3.46 3.68@ 6.86 (1.02) 9.26 3.45
-------- -------- -------- ------- ------- ------- ------- ------- ------- -------
3.51 6.74 (1.02) 9.29 3.51 3.92 7.10 (0.72) 9.58 3.75
-------- -------- -------- ------- ------- ------- ------- ------- ------- -------
-- -- (0.02) (0.07) (0.10) (0.11) (0.12) (0.28) (0.32) (0.43)
(1.27) (1.78) (2.67) (3.02) (1.51) (1.27) (1.78) (2.67) (3.02) (1.51)
-------- -------- -------- ------- ------- ------- ------- ------- ------- -------
(1.27) (1.78) (2.69) (3.09) (1.61) (1.38) (1.90) (2.95) (3.34) (1.94)
-------- -------- -------- ------- ------- ------- ------- ------- ------- -------
$ 34.02 $ 31.78 $ 26.82 $ 30.53 $ 24.33 $ 34.66 $ 32.12 $ 26.92 $ 30.59 $ 24.35
-------- -------- -------- ------- ------- ------- ------- ------- ------- -------
-------- -------- -------- ------- ------- ------- ------- ------- ------- -------
11.28% 25.49% (4.23)% 41.30% 16.52% 12.48% 26.82% (3.24)% 42.74% 17.77%
-------- -------- -------- ------- ------- ------- ------- ------- ------- -------
-------- -------- -------- ------- ------- ------- ------- ------- ------- -------
$130,866 $165,948 $149,458 $84,922 $43,148 $47,946 $65,104 $65,518 $46,745 $22,942
1.94% 1.85% 1.85% 1.92% 1.99%(2) 0.85% 0.79% 0.80% 0.88% 0.92%(2)
(0.37)% (0.36)% (0.07)% 0.10% 0.18%(2) 0.71% 0.70% 0.99% 1.14% 1.26%(2)
50% 57% 62% 70% 112% 50% 57% 62% 70% 112%
</TABLE>
------------
--------------------------------------------------------------------------------
Prospectus Page 27
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Mid Cap Fund
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
PAINEWEBBER MID CAP FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------------------------------------------ ------------------------------
FOR THE FOR THE
FIVE FIVE
FOR THE YEARS MONTHS FOR THE YEARS MONTHS
ENDED AUGUST 31, ENDED FOR THE YEARS ENDED MARCH 31, ENDED AUGUST 31, ENDED
------------------- AUGUST 31, ------------------------------- ----------------- AUGUST 31,
2000 1999 1998# 1998 1997 1996 2000 1999 1998#
-------- -------- ----- ---- ---- ---- ------- ------- -----
<S> <C> <C> <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 $ 10.59 $ 7.99 $ 15.07
-------- -------- ------- -------- ------- ------- ------- ------- -------
Net investment loss..... (0.12) (0.07) (0.03) (0.13) (0.17) (0.16) (0.25) (0.27) (0.07)
Net realized unrealized
gains (losses) from
investment
transactions........... 7.21 3.43 (3.15) 5.15 0.32 3.71 7.15 3.53 (3.16)
-------- -------- ------- -------- ------- ------- ------- ------- -------
Net increase (decrease)
from investment
operations............. 7.09 3.36 (3.18) 5.02 0.15 3.55 6.90 3.26 (3.23)
-------- -------- ------- -------- ------- ------- ------- ------- -------
Distributions from net
realized gains from
investments............ (0.93) (0.66) (3.85) (3.46) (2.32) (0.75) (0.93) (0.66) (3.85)
-------- -------- ------- -------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $ 16.83 $ 10.67 $ 7.97 $ 15.00 $ 13.44 $ 15.61 $ 16.56 $ 10.59 $ 7.99
-------- -------- ------- -------- ------- ------- ------- ------- -------
-------- -------- ------- -------- ------- ------- ------- ------- -------
Total investment
return(1).............. 69.33% 43.38% (27.31)% 41.50% (0.21)% 28.16% 68.00% 41.95% (27.54)%
-------- -------- ------- -------- ------- ------- ------- ------- -------
-------- -------- ------- -------- ------- ------- ------- ------- -------
Ratios/Supplemental
Data:
Net assets, end of
period (000's)......... $184,433 $113,126 $90,650 $101,698 $76,909 $76,558 $35,136 $28,077 $54,978
Expenses to average net
assets, net of waivers
from adviser........... 1.49% 1.60% 1.48%* 1.51% 1.60% 1.58% 2.28% 2.55% 2.32%*
Expenses to average net
assets, before fee
waivers from adviser... 1.50% 1.60% 1.48% 1.51% 1.60% 1.58% 2.29% 2.55% 2.32%
Net investment loss to
average net assets, net
of waivers from
adviser................ (0.87)% (0.64)% (0.61)%* (1.16)% (1.20)% (1.11)% (1.66)% (1.61)% (1.48)%*
Net investment loss to
average net assets
before fee waivers from
adviser................ (0.88)% (0.64)% (0.61)% (1.16)% (1.20)% (1.11)% (1.67)% (1.61)% (1.48)%
Portfolio turnover...... 71% 79% 80% 64% 56% 57% 71% 79% 80%
<CAPTION>
CLASS B
------------------------------
FOR THE YEARS ENDED MARCH 31,
------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net asset value,
beginning of period.... $ 13.59 $ 15.88 $ 13.11
-------- -------- --------
Net investment loss..... (0.31) (0.31) (0.29)
Net realized unrealized
gains (losses) from
investment
transactions........... 5.25 0.34 3.81
-------- -------- --------
Net increase (decrease)
from investment
operations............. 4.94 0.03 3.52
-------- -------- --------
Distributions from net
realized gains from
investments............ (3.46) (2.32) (0.75)
-------- -------- --------
Net asset value, end of
period................. $ 15.07 $ 13.59 $ 15.88
-------- -------- --------
-------- -------- --------
Total investment
return(1).............. 40.39% (0.99)% 27.28%
-------- -------- --------
-------- -------- --------
Ratios/Supplemental
Data:
Net assets, end of
period (000's)......... $143,058 $134,495 $157,021
Expenses to average net
assets, net of waivers
from adviser........... 2.28% 2.36% 2.34%
Expenses to average net
assets, before fee
waivers from adviser... 2.28% 2.36% 2.34%
Net investment loss to
average net assets, net
of waivers from
adviser................ (1.92)% (1.95)% (1.87)%
Net investment loss to
average net assets
before fee waivers from
adviser................ (1.92)% (1.95)% (1.87)%
Portfolio turnover...... 64% 56% 57%
</TABLE>
---------
* Annualized.
# Effective May 1, 1998, Mitchell Hutchins took over day-to-day management of
the Fund's assets.
'D' Commencement of issuance of shares.
(1) Total investment return is calculated assuming a $10,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions, if any, at net asset value on the payable dates, and a sale
at net asset value on the last day of each period reported. The figures do
not include any applicable sales charges or program fees; results would be
lower if they were included. Total investment return for periods less than
one year has not been annualized.
------------
--------------------------------------------------------------------------------
Prospectus Page 28
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Mid Cap Fund
FINANCIAL HIGHLIGHTS
(Continued)
--------------------------------------------------------------------------------
PAINEWEBBER MID CAP FUND
<TABLE>
<CAPTION>
CLASS C CLASS Y
--------------------------------------------------------------- -------------------------------------------
FOR THE FOR THE FOR THE
FIVE FIVE PERIOD
FOR THE YEARS MONTHS FOR THE YEARS MONTHS MARCH 17,
ENDED AUGUST 31, ENDED FOR THE YEARS ENDED MARCH 31, ENDED AUGUST 31, ENDED 1998'D' TO
----------------- AUGUST 31, ------------------------------ ----------------- AUGUST 31, MARCH 31,
2000 1999 1998# 1998 1997 1996 2000 1999 1998# 1998
------- ------- ----- ---- ---- ---- ------- ------- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 9.57 $ 7.26 $ 14.07 $ 12.87 $ 15.14 $ 12.54 $10.70 $ 7.97 $15.00 $14.90
------- ------- ------- ------- ------- ------- ------ ------ ------ ------
(0.20) (0.15) (0.06) (0.26) (0.29) (0.27) (0.07) (0.02) (0.01) --
6.42 3.12 (2.90) 4.92 0.34 3.62 7.22 3.41 (3.17) 0.10
------- ------- ------- ------- ------- ------- ------ ------ ------ ------
6.22 2.97 (2.96) 4.66 0.05 3.35 7.15 3.39 (3.18) 0.10
------- ------- ------- ------- ------- ------- ------ ------ ------ ------
(0.93) (0.66) (3.85) (3.46) (2.32) (0.75) (0.93) (0.66) (3.85) --
------- ------- ------- ------- ------- ------- ------ ------ ------ ------
$ 14.86 $ 9.57 $ 7.26 $ 14.07 $ 12.87 $ 15.14 $16.92 $10.70 $ 7.97 $15.00
------- ------- ------- ------- ------- ------- ------ ------ ------ ------
------- ------- ------- ------- ------- ------- ------ ------ ------ ------
68.14% 42.17% (27.58)% 40.46% (0.91)% 27.16% 69.72% 43.77% (27.31)% 0.67%
------- ------- ------- ------- ------- ------- ------ ------ ------ ------
------- ------- ------- ------- ------- ------- ------ ------ ------ ------
$27,561 $16,594 $16,875 $27,814 $24,810 $27,601 $ 746 $ 290 $ 65 $ 35
2.25% 2.43% 2.28%* 2.29% 2.37% 2.36% 1.23% 1.36% 1.23%* 1.22%*
2.26% 2.43% 2.28%* 2.29% 2.37% 2.36% 1.24% 1.36% 1.23% 1.22%*
(1.63)% (1.47)% (1.42)%* (1.94)% (1.97)% (1.89)% (0.60)% (0.36)% (0.29)%* 0.00%*
(1.64)% (1.47)% (1.42)%* (1.94)% (1.97)% (1.89)% (0.61)% (0.36)% (0.29)%* 0.00%*
71% 79% 80% 64% 56% 57% 71% 79% 80% 64%
</TABLE>
------------
--------------------------------------------------------------------------------
Prospectus Page 29
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund PaineWebber Mid Cap Fund
PaineWebber Growth and Income Fund
[THIS PAGE INTENTIONALLY LEFT BLANK]
------------
--------------------------------------------------------------------------------
Prospectus Page 30
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund PaineWebber Mid Cap Fund
PaineWebber Growth and Income Fund
[THIS PAGE INTENTIONALLY LEFT BLANK]
------------
--------------------------------------------------------------------------------
Prospectus Page 31
<PAGE>
--------------------------------------------------------------------------------
------------------------
PaineWebber Growth Fund PaineWebber Mid Cap Fund
PaineWebber Growth and Income Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
TICKER SYMBOL: Growth Fund Class: A: PGRAX Growth and Income Fund Class: A: PDGAX
B: PGRBX B: PDGBX
C: PGRDX C: PWDDX
Y: PGRYX Y: PWGYX
Mid Cap Fund Class: A: PWCAX
B: PWCBX
C: PWCDX
Y: None
</TABLE>
If you want more information about the funds, the following documents are
available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS
Additional information about the funds' investments is available in the funds'
annual and semi-annual reports to shareholders. In the funds' annual reports,
you will find a discussion of the market conditions and investment strategies
that significantly affected the funds' performance during the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI provides more detailed information about the funds and is incorporated
by reference into this prospectus.
You may discuss your questions about the funds by contacting your Financial
Advisor. You may obtain free copies of the funds' annual and semi-annual reports
and the SAI by contacting the funds directly at 1-800-647-1568.
You may review and copy information about the funds, including shareholder
reports and the SAI, at the Public Reference Room of the Securities and Exchange
Commission. You may obtain information about the operations of the SEC's Public
Reference Room by calling the SEC at 1-202-942-8090. You may get copies of
reports and other information about the funds:
For a fee, by electronic request at [email protected] or by writing the SEC's
Public Reference Section, Washington, D.C. 20549-0102; or
Free, from the EDGAR Database on the SEC's Internet website at:
http://www.sec.gov
PaineWebber Olympus Fund
-- PaineWebber Growth Fund
Investment Company Act File No. 811-4180
PaineWebber America Fund
-- PaineWebber Growth and Income Fund
Investment Company Act File No. 811-3502
PaineWebber Managed Assets Trust
-- PaineWebber Mid Cap Fund
Investment Company Act File No. 811-6376
'c'2000 PaineWebber Incorporated. All rights reserved.
------------
--------------------------------------------------------------------------------
STATEMENT OF DIFFERENCES
------------------------
The copyright symbol shall be expressed as ........................... 'c'
The service mark symbol shall be expressed as ........................ 'sm'
The dagger symbol shall be expressed as .............................. 'D'
