<PAGE>
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC. SEMIANNUAL REPORT
PAINEWEBBER UTILITY INCOME FUND
Dear Shareholder,
We are pleased to present you with the semiannual report for the
PaineWebber Financial Services Growth Fund Inc. and the PaineWebber Utility
Income Fund for the six-month period ended September 30, 1999.
MARKET REVIEW
================================================================================
[GRAPHIC OMITTED]
For most of 1998 and the first quarter of 1999 the market was very narrow,
its gains concentrated in a small number of large-capitalization growth
companies. Mid- to small-cap stocks generally posted losses. This was a highly
unusual situation. We expected conditions to return to normal--i.e., less of a
performance discrepancy between growth and value styles, and between the largest
companies and the rest of the market. Value did briefly return to favor in the
second quarter, but only the most deeply undervalued of the value stocks
benefited before investors got concerned about the surge in commodity prices,
and narrowness returned. For the 12 months ended September 30, 1999, the S&P 500
Index gained 27.79%.
Despite gains in the broad market, individual stock performance varied
widely. About two thirds of the stocks traded on the New York Stock Exchange
have actually posted losses year-to-date. The market weakened at the end of the
Funds' fiscal year, as investors became concerned about the possibility of the
Federal Reserve again raising short-term interest rates. Technology and consumer
cyclicals were the strongest sectors; the weakest sectors included healthcare,
utilities and capital goods.
OUTLOOK
We expect gross domestic product growth of around 3.80% for 1999, and
about 2.90% growth for 2000. Our outlook calls for 2.25% inflation for calendar
year 1999, and about the same or slightly higher for calendar year 2000. We
expect the yield on the long bond (30-year Treasury) to stay close to 6.10% for
the rest of 1999, and to retreat below 6.00% in 2000. Overseas growth does not
seem strong enough to raise inflationary expectations to a great degree, but
should allow companies to maintain profitability.
- --------------------------------------------------------------------------------
1
<PAGE>
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC. SEMIANNUAL REPORT
PAINEWEBBER UTILITY INCOME FUND
PAINEWEBBER FINANCIAL SERVICES
GROWTH FUND INC.
================================================================================
PERFORMANCE--TOTAL % RETURNS FOR SIX MONTHS ENDED 9/30/99
Before Sales After Maximum S&P 500 S&P Financial
Charges Sales Charges Index Index
- --------------------------------------------------------------------------------
Class A Shares -13.99 -17.85 0.37 -10.98
Class B Shares -14.31 -18.59 0.37 -10.98
Class C Shares -14.31 -15.17 0.37 -10.98
Class Y Shares -13.86 -13.86 0.37 -10.98
- --------------------------------------------------------------------------------
The Fund's total return consists of the change in net asset value with any
dividends reinvested. For shareowners who purchased or redeemed Fund shares
during the period, the Fund's total return may be lower because of applicable
sales charges. Class Y shares are not subject to sales charges.
- --------------------------------------------------------------------------------
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC.
PROFILE
as of September 30, 1999
Investment Goal:
Long-term capital appreciation
Portfolio Managers:
Andrew Dinnhaupt and Mark Tincher--Chief Investment Officer--Equities,
Mitchell Hutchins Asset Management Inc.
Commencement:
Class A shares, May 22, 1986; Class B shares, July 1, 1991; Class C shares, July
2, 1992; Class Y shares, March 30, 1998
Dividend Payments:
Annually
- --------------------------------------------------------------------------------
PERFORMANCE
During the six-month period, rising interest rates, earnings
disappointments and fears of Y2K problems battered the financial services
sector. The sector, as measured by the S&P Financial Index, lost 10.98% for the
six months ended September 30, 1999. The broad market, as measured by the S&P
500 Index, gained 0.37% for the period. Like the broad market, gains in the
financial sector were limited to a small number of large-capitalization stocks.
Mid- to small-capitalization stocks generally sustained losses.
The Fund has trailed the S&P 500 Index since 1998, and trailed it during
the reporting period (see performance table above). We attribute the Fund's
underperformance to several factors arising from market conditions and our
management style.
Management Style Issues
Smaller-cap orientation--small-cap stocks significantly underperformed
large caps for the three years ended September 30, 1999. The Fund's
overweighting in small caps and underweighting in large-cap banks during the
first part of the year have hurt performance. We increased the Fund's exposure
to large-cap banks and also increased its median market capitalization to $13.5
billion as of September 30, 1999.
Lack of exposure to brokerage stocks--unlike many of its competitors, the
Fund was not invested in brokerage stocks during their rally (October
1998-February 1999). As a result, the Fund's performance significantly lagged
that of its competitors. We began to add select brokerage stocks to the
portfolio in February 1999. Although the Fund's performance benefited somewhat,
the gain did not bring the Fund into line with competitors.
Sector Performance Issues
Earnings disappointments--Bank One's August 24 announcement of an earnings
shortfall in its First USA unit weighed heavily on the banking sector and on
credit card companies. Investors reacted to this company-specific event by
punishing bank stocks generally. Even though the Fund had sold its position in
Bank One before the announcement, its other bank positions suffered.
- --------------------------------------------------------------------------------
2
<PAGE>
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC. SEMIANNUAL REPORT
PAINEWEBBER UTILITY INCOME FUND
Narrow breadth in stock market performance. Financial services
underperformed the broader market as money flowed into the larger-cap growth
companies and technology companies, in particular.
Fear of rising interest rates, which put pressure on the financial
services sector and pushed the S&P Financial Index down 15% from its early July
highs. Despite the market's concerns, we do not believe the Federal Reserve will
embark on a series of interest rate hikes.
PORTFOLIO HIGHLIGHTS
[GRAPHIC OMITTED]
The Fund's weightings in banks increased from 30.0% to 35.1% by the end of
the period, as we positioned the Fund to benefit from the improving earnings
prospects of the large commercial banks and the preference of investors for
large cap, high liquidity stocks. During the period, we also decreased exposure
to general financial services companies, such as credit card issuers, and
increased exposure to brokerages and asset managers.
PaineWebber Financial Services Growth Fund Inc.--Sector Allocation*
As of 9/30/99 % As of 3/31/99 %
- --------------------------------------------------------------------------------
Banks 35.1 Banks 30.0
Insurance 25.9 Insurance 27.9
Financial Services 15.7 Financial Services 18.4
Cash & Cash Equivalents 8.0 Cash & Cash Equivalents 11.1
Thrift Institutions 6.5 Thrift Institutions 6.4
Brokerage & Asset Management 5.3 Business Services 3.1
Business Services 3.5 Real Estate 2.9
Rights and Warrants 0.2
- --------------------------------------------------------------------------------
Total 100.0 Total 100.0
The Fund's banking and credit card holdings mainly consist of Chase
Manhattan Bank, Bank of New York, Mellon Bank and Capital One, companies whose
earnings outlook we believe to be realistic. We are still seeking investment
opportunities within the brokerage industry.
* Weightings represent percentages of portfolio assets, as of September 30,
1999, unless noted otherwise. The Fund's portfolio is actively managed and
its composition will vary over time.
- --------------------------------------------------------------------------------
3
<PAGE>
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC. SEMIANNUAL REPORT
PAINEWEBBER UTILITY INCOME FUND
PaineWebber Financial Services Growth Fund Inc.--Top Ten Holdings*
<TABLE>
<CAPTION>
As of 9/30/99 % As of 3/31/99 %
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
American International Group, Inc. 3.6 Capital One Financial Corp. 2.7
Axa Financial Inc. 3.5 American International Group, Inc. 2.5
Bank of New York Co. Inc. 3.2 Providian Corp. 2.3
Ambac Financial Group Inc. 3.0 Associates First Capital Corp. 2.2
Nationwide Financial Services Inc. 2.9 Ambac Financial Group Inc. 2.0
Firstar Corp. 2.9 Hartford Financial Services Group, Inc. 2.0
Associates First Capital Corp. 2.9 Nationwide Financial Services Inc. 2.0
Travelers Property Casualty Corp. 2.7 Zions BanCorp 2.0
UnionBanCal Corp. 2.6 Travelers Property Casualty Corp. 1.9
Federal Home Loan Mortgage Corp. 2.6 Bank One Corp. 1.8
- -------------------------------------------------------------------------------------------
Total 29.9 Total 21.4
</TABLE>
LEAD PORTFOLIO MANAGER
Andrew Dinnhaupt has co-managed PaineWebber Financial Services Growth Fund
Inc. since October 1998. After Karen Finkel, the former portfolio manager,
relocated to London in April 1999, Chief Investment Officer of Equities Mark
Tincher and Mr. Dinnhaupt co-managed the Fund during a transition period of
several months. Mr. Dinnhaupt has now taken the reins as lead portfolio manager,
with support from a team of research analysts. Mr. Tincher will continue to
serve as a portfolio manager for the Fund.
Mr. Dinnhaupt joined Mitchell Hutchins in 1996 as an equity research
analyst. Before that he was a research analyst at Summit Bank, where he covered
the financial services, transportation and aerospace industries. Mr. Dinnhaupt
also was responsible for managing $50 million in equity and fixed income
securities for individuals, retirement accounts, trusts, profit sharing and
401(k) accounts. Mr. Dinnhaupt holds a BS in Economics/Finance from the
University of Scranton and an MBA in Finance from Seton Hall University. He is a
Chartered Financial Analyst.
GOING FORWARD
We believe the financial services sector is poised for a rebound. The
sector's fundamentals (interest rates and earnings trends) currently appear
positive. In our view, earnings estimates for the remainder of 1999 and 2000
seem attainable. Additionally, trends that could make financials very attractive
remain in place: deregulation has taken a significant step with passage of
legislation to rescind the Glass-Steagall Act, and demand for financial products
and services continues to rise as the baby-boomer generation ages.
* Weightings represent percentages of portfolio assets as of the dates
indicated. The Fund's portfolio is actively managed and its composition
will vary over time.
- --------------------------------------------------------------------------------
4
<PAGE>
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC. SEMIANNUAL REPORT
PAINEWEBBER UTILITY INCOME FUND
The Fund's portfolio consists of companies that we believe have strong
fundamentals and attractive valuations. We continue to believe that a broadening
of market performance coupled with a rebound in more value-oriented stocks will
occur, and that the value of the Fund's holdings will be recognized over the
long term.
PaineWebber Financial Services Growth Fund Inc.--Characteristics*
9/30/99 3/31/99
- --------------------------------------------------------------------------------
Total Net Assets ($mm) $321.3 $483.8
Dividend Yield 1.58% 1.58%
Number of Securities 57 82
Stocks 92.0% 88.9%
Cash & Cash Equivalents 8.0% 11.1%
- --------------------------------------------------------------------------------
* Weightings represent percentages of portfolio assets as of the dates
indicated. The Fund's portfolio is actively managed and its composition
will vary over time.
- --------------------------------------------------------------------------------
5
<PAGE>
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC. SEMIANNUAL REPORT
PAINEWEBBER UTILITY INCOME FUND
PAINEWEBBER UTILITY INCOME FUND
================================================================================
PERFORMANCE--TOTAL % RETURNS FOR SIX MONTHS ENDED 9/30/99
Before Sales After Maximum S&P Utility
Charges Sales Charges Index
- --------------------------------------------------------------------------------
Class A Shares 0.97 -3.57 6.26
Class B Shares 0.51 -4.49 6.26
Class C Shares 0.56 -0.44 6.26
Class Y Shares 1.04 1.04 6.26
- --------------------------------------------------------------------------------
The Fund's total return consists of the change in net asset value with any
dividends reinvested. For shareowners who purchased or redeemed Fund shares
during the period, the Fund's total return may be lower because of applicable
sales charges. Class Y shares are not subject to sales charges.
- --------------------------------------------------------------------------------
PAINEWEBBER UTILITY INCOME FUND
PROFILE
as of September 30, 1999
Investment Goal:
Current income and capital appreciation
Portfolio Managers:
equity component-- Mark Tincher, Chief Investment Officer of Equities, and
Christopher Solmssen; fixed income Component--Julieanna Berry and Jim Keegan,
Mitchell Hutchins Asset Management Inc.
Commencement:
Class A, B and C shares, July 2, 1993; Class Y shares, September 10, 1998
Dividend Payments:
Quarterly
- --------------------------------------------------------------------------------
HIGHLIGHTS
[GRAPHIC OMITTED]
Fund performance lagged the benchmark for the six months ended September
30, 1999 (see table above). The Fund's investment style hurt performance during
the period. The Fund seeks to achieve current income and capital appreciation by
balancing high yielding, electric utility stocks with faster growing, lower
dividend paying stocks such as telecommunications companies, gas utilities,
independent power producers and non-utility companies.
To achieve the goal of current income, we generally seek to maintain a
dividend yield above the Fund's peer group average. To maintain an above average
dividend yield, we allocate about 40% of the portfolio to the electric utility
sector. Investors sold electric utility stocks during the period, acting on
fears of higher interest rates and uncertainty about consolidation. The
resulting underperformance of the electric utilities reduced Fund performance.
Fund performance also was hurt by lagging performance among the
telecommunications stocks, which comprised the Fund's second largest exposure
(36.5%).
On the other hand, the downturn gave us an opportunity to purchase some of
our favorite telecom stocks at attractive prices. We consider telecommunications
one of the most compelling long-term growth stories in the market today. We are
seeking to decrease the Fund's exposure to electric utilities and increase its
exposure to telecommunications. During the period we added to the Fund's
position in MCI WorldCom (3.4%), Global Telesystems Group (0.7%) and AT&T
(2.0%).*
- --------------------------------------------------------------------------------
6
<PAGE>
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC. SEMIANNUAL REPORT
PAINEWEBBER UTILITY INCOME FUND
PaineWebber Utility Income Fund--Top Ten Equity Holdings*
<TABLE>
<CAPTION>
As of 9/30/99 % As of 3/31/99 %
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
NTL Inc. 4.0 MCI WorldCom Inc. 2.9
MCI WorldCom Inc. 3.4 Century Telephone Enterprises, Inc. 2.8
Bell Atlantic Corp. 3.2 PECO Energy Co. 2.7
BellSouth Corp. 3.1 Qwest Communications Intn'l. Inc. 2.6
CMS Energy Corp. 3.1 Cilcorp Inc. 2.4
Century Telephone Enterprises, Inc. 2.9 BellSouth Corp. 2.3
American Water Works Co. Inc. 2.7 American Water Works Co. Inc. 2.3
US West, Inc. 2.7 US West, Inc. 2.2
New Century Energies Inc. 2.6 Bell Atlantic Corp. 2.1
Univision Communications Inc. 2.5 Energy East Corp. 2.1
- ---------------------------------------------------------------------------------------
Total 30.2 Total 24.4
</TABLE>
New purchases included Sprint Corp. Fon Group (1.7%); Calpine Corp (1.3%),
an independent power producer with attractive growth prospects; Martin Marietta
Materials Inc. (0.6%) and Fox Entertainment Group Inc. (1.0%) represented two
non-utility companies with histories of stable, long-term growth. Other
purchases during the period included CMS Energy Corp. convertible shares (3.1%),
added for their combination of high dividend payout and strong earnings
prospects. The Fund may invest up to 35% of its total assets in equities outside
the utilities industries.
We trimmed the Fund's position in PECO Energy Co. (1.2%) and sold out of
Public Service New Mexico because it no longer fit with our investment themes.
Finally, we sold Consolidated Edison because we did not believe the earnings
potential was great enough to justify the stock's low yield.
PaineWebber Utility Income Fund--Top Five Sectors*
As of 9/30/99 % As of 3/31/99 %
- --------------------------------------------------------------------------------
Utilities 74.9 Utilities 75.0
Energy 7.3 Consumer Cyclical 8.8
Technology 5.1 Financial Services 2.4
Consumer Cyclical 1.1 Capital Goods 1.6
Basic Materials 0.8 Energy 1.6
- --------------------------------------------------------------------------------
Total 89.2 Total 89.4
* Weightings represent percentages of portfolio assets as of the dates
indicated. The Fund's portfolio is actively managed and its composition
will vary over time.
- --------------------------------------------------------------------------------
7
<PAGE>
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC. SEMIANNUAL REPORT
PAINEWEBBER UTILITY INCOME FUND
GOING FORWARD
Y2K has moved to the forefront of utility issues, particularly the
question of plant safety and disruption of the electric grid. The nuclear
utilities--where the greatest safety concerns arise--have taken the lead in
reaching Y2K compliance. All the utilities have developed protocols for
overriding their computers and operating their plants manually, as well as
contingency plans for "must-run" facilities to stabilize the power grid. In
addition, many utilities are asking big industrial customers to shut down for 24
hours at year-end. We believe the industry is well prepared for Y2K and do not
anticipate major problems or service disruptions. As the shadows of Y2K recede,
we expect the utility sector to return to favor.
PaineWebber Utility Income Fund--Characteristics*
9/30/99 3/31/99
- --------------------------------------------------------------------------------
Total Net Assets ($mm) $31.8 $34.5
Dividend Yield 3.02% 3.47%
Number of Securities 53 55
Stocks 94.2% 72.5%
Bonds 5.4% 8.8%
Cash & Cash Equivalents 0.4% 18.7%
- --------------------------------------------------------------------------------
Unlike gas utilities, which are federally regulated, electric utilities
are regulated on a state-by-state basis. Deregulation thus has proceeded
according to each state's perceived best interests, with the most populous
states deregulating quickly and the least populous states moving slowly. The
significance of this for investors is that, in states that have deregulated, the
benefits of deregulation are already priced into the stocks when issued; in
states that have not deregulated, the potential benefits of deregulation are
highly speculative.
The utility sector is evolving, and the definition of a utility company is
changing. Traditional definitions such as water, electric and gas companies are
expanding to include important new areas of growth such as telecommunications,
cable and independent power producers. We are taking a flexible approach to the
sector, and expect the Fund's composition to evolve as the utility sector
expands to encompass more diverse businesses.
* Weightings represent percentages of portfolio assets as of the dates
indicated. The Fund's portfolio is actively managed and its composition
will vary over time.
- --------------------------------------------------------------------------------
8
<PAGE>
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC. SEMIANNUAL REPORT
PAINEWEBBER UTILITY INCOME FUND
================================================================================
Our ultimate objective in managing your investments is to help you
successfully meet your financial goals. We thank you for your continued support
and welcome any comments or questions you may have. For a Quarterly Review on
PaineWebber Financial Services Growth Fund Inc., PaineWebber Utility Income Fund
or another fund in the PaineWebber Family of Funds,(1) please contact your
Financial Advisor.
Sincerely,
/s/ Margo Alexander /s/ Brian M. Storms
MARGO ALEXANDER BRIAN M. STORMS
Chairman and Chief Executive Officer President and Chief Operating Officer
Mitchell Hutchins Asset Management Inc. Mitchell Hutchins Asset Management Inc.
/s/ Mark A. Tincher /s/ Andrew B. Dinnhaupt
MARK A. TINCHER ANDREW B. DINNHAUPT
Managing Director and Chief Investment Vice President
Officer--Equities Portfolio Manager, Mitchell Hutchins Asset Management Inc.
PaineWebber Financial Services Lead Portfolio Manager, PaineWebber
Growth Fund Inc. and Financial Services Growth Fund Inc.
PaineWebber Utility Income Fund
/s/ Christopher T. Solmssen /s/ Julieanna M. Berry
CHRISTOPHER T. SOLMSSEN JULIEANNA M. BERRY
Vice President First Vice President
Mitchell Hutchins Asset Management Inc. Mitchell Hutchins Asset Management Inc.
Portfolio Manager, PaineWebber Portfolio Manager, PaineWebber
Utility Income Fund Utility Income Fund
/s/ James F. Keegan
JAMES F. KEEGAN
Senior Vice President
Mitchell Hutchins Asset Management Inc.
Portfolio Manager, PaineWebber
Utility Income Fund
This letter is intended to assist shareholders in understanding how the Funds
performed during the six-month period ended September 30, 1999, and reflects our
views at the time of its writing. Of course, these views may change in response
to changing circumstances. We encourage you to consult your Financial Advisor
regarding your personal investment program.
(1) Mutual funds are sold by prospectus only. The prospectuses for the Funds
contain more complete information regarding risks, charges and expenses,
and should be read carefully before investing.
- --------------------------------------------------------------------------------
9
<PAGE>
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC.
PERFORMANCE RESULTS (unaudited)
<TABLE>
<CAPTION>
Total Return(1)
Net Asset Value ---------------------------------
----------------------------------------- 12 Months 6 Months
09/30/99 03/31/99 09/30/98 Ended 09/30/99 Ended 09/30/99
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $26.01 $30.24 $28.32 (6.03)% (13.99)%
- -------------------------------------------------------------------------------------------------------------
Class B Shares 25.15 29.35 27.42 (6.74) (14.31)
- -------------------------------------------------------------------------------------------------------------
Class C Shares 25.09 29.28 27.37 (6.73) (14.31)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Performance Summary Class A Shares
<TABLE>
<CAPTION>
Net Asset Value
---------------------- Capital Gains Total
Period Covered Beginning Ending Distributed Dividends Paid Return(1)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
05/22/86-12/31/86 $ 9.25 $ 8.31 -- -- (10.16)%
- -------------------------------------------------------------------------------------------------------------
1987 8.31 6.88 $0.2265 $0.3703 (11.05)
- -------------------------------------------------------------------------------------------------------------
1988 6.88 7.70 -- 0.2375 15.38
- -------------------------------------------------------------------------------------------------------------
1989 7.70 9.08 -- 0.2900 21.71
- -------------------------------------------------------------------------------------------------------------
1990 9.08 7.73 -- 0.2410 (12.33)
- -------------------------------------------------------------------------------------------------------------
1991 7.73 12.55 -- 0.2070 65.37
- -------------------------------------------------------------------------------------------------------------
1992 12.55 17.38 -- 0.0237 38.68
- -------------------------------------------------------------------------------------------------------------
1993 17.38 17.22 1.8425 0.0820 10.32
- -------------------------------------------------------------------------------------------------------------
1994 17.22 15.68 1.2660 0.1345 (0.75)
- -------------------------------------------------------------------------------------------------------------
1995 15.68 20.57 2.2099 0.2942 47.46
- -------------------------------------------------------------------------------------------------------------
1996 20.57 22.80 3.3870 0.2300 28.96
- -------------------------------------------------------------------------------------------------------------
1997 22.80 31.24 1.5895 0.2068 45.20
- -------------------------------------------------------------------------------------------------------------
1998 31.24 31.24 0.4139 0.2780 2.31
- -------------------------------------------------------------------------------------------------------------
01/01/99-09/30/99 31.24 26.01 -- -- (16.74)
- -------------------------------------------------------------------------------------------------------------
Totals: $10.9353 $2.5950
- -------------------------------------------------------------------------------------------------------------
Cumulative Total Return as of 09/30/99: 481.05%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Performance Summary Class B Shares
<TABLE>
<CAPTION>
Net Asset Value
--------------------- Capital Gains Total
Period Covered Beginning Ending Distributed Dividends Paid Return(1)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/01/91-12/31/91 $10.24 $12.56 -- $0.0640 23.30%
- -------------------------------------------------------------------------------------------------------------
1992 12.56 17.31 -- -- 37.82
- -------------------------------------------------------------------------------------------------------------
1993 17.31 17.04 $1.8425 0.0571 9.57
- -------------------------------------------------------------------------------------------------------------
1994 17.04 15.47 1.2660 0.0344 (1.53)
- -------------------------------------------------------------------------------------------------------------
1995 15.47 20.21 2.2099 0.1766 46.36
- -------------------------------------------------------------------------------------------------------------
1996 20.21 22.32 3.3870 0.0592 28.00
- -------------------------------------------------------------------------------------------------------------
1997 22.32 30.42 1.5895 0.0884 44.10
- -------------------------------------------------------------------------------------------------------------
1998 30.42 30.38 0.4139 0.0755 1.55
- -------------------------------------------------------------------------------------------------------------
01/01/99-09/30/99 30.38 25.15 -- -- (17.22)
- -------------------------------------------------------------------------------------------------------------
Totals: $10.7088 $0.5552
- -------------------------------------------------------------------------------------------------------------
Cumulative Total Return as of 09/30/99: 323.08%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the payable dates and do not include
sales charges; results for each class would be lower if sales charges were
included. Total investment return for periods of less than one year has
not been annualized.
The data above represents past performance of the Fund's shares, which is
no guarantee of future results. The principal value of an investment in
the Fund will fluctuate, so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
10
<PAGE>
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC.
PERFORMANCE RESULTS (unaudited) (concluded)
Performance Summary Class C Shares
<TABLE>
<CAPTION>
Net Asset Value
--------------------- Capital Gains Total
Period Covered Beginning Ending Distributed Dividends Paid Return(1)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/01/92-12/31/92 $14.61 $17.32 -- $0.0359 18.80%
- -------------------------------------------------------------------------------------------------------------
1993 17.32 17.03 $1.8425 0.0691 9.52
- -------------------------------------------------------------------------------------------------------------
1994 17.03 15.48 1.2660 0.0209 (1.50)
- -------------------------------------------------------------------------------------------------------------
1995 15.48 20.21 2.2099 0.1819 46.30
- -------------------------------------------------------------------------------------------------------------
1996 20.21 22.29 3.3870 0.0861 27.99
- -------------------------------------------------------------------------------------------------------------
1997 22.29 30.37 1.5895 0.0938 44.09
- -------------------------------------------------------------------------------------------------------------
1998 30.37 30.31 0.4139 0.0944 1.55
- -------------------------------------------------------------------------------------------------------------
01/01/99-09/30/99 30.31 25.09 -- -- (17.22)
- -------------------------------------------------------------------------------------------------------------
Totals: $10.7088 $0.5821
- -------------------------------------------------------------------------------------------------------------
Cumulative Total Return as of 09/30/99: 190.69%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL TOTAL RETURN(1)
<TABLE>
<CAPTION>
% Return Without Deducting % Return After Deducting
Maximum Sales Charge Maximum Sales Charge
-------------------------------------- --------------------------------
Class A* B** C*** A* B** C***
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Twelve Months Ended 09/30/99 (6.03)% (6.74)% (6.73)% (10.25)% (11.32)% (7.64)%
- -------------------------------------------------------------------------------------------------------------
Five Years Ended 09/30/99 17.25 16.37 16.36 16.18 16.16 16.36
- -------------------------------------------------------------------------------------------------------------
Ten Years Ended 09/30/99 16.73 N/A N/A 16.20 N/A N/A
- -------------------------------------------------------------------------------------------------------------
Commencement of Operations
Through 09/30/99+ 14.07 19.09 15.85 13.67 19.09 15.85
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Figures assume reinvestment of all dividends and other distributions at
net asset value on the payable dates and do not include sales charges;
results would be lower if sales charges were included.
* Maximum sales charge for Class A shares is 4.5% of the public offering
price. Class A shares bear ongoing 12b-1 service fees.
** Maximum contingent deferred sales charge for Class B shares is 5% and is
reduced to 0% after 6 years. Class B shares bear ongoing 12b-1
distribution and service fees.
*** Maximum contingent deferred sales charge for Class C shares is 1% and is
reduced to 0% after 1 year. Class C shares bear ongoing 12b-1 distribution
and service fees.
+ Commencement of issuance dates are May 22, 1986, July 1, 1991 and July 2,
1992 for Class A, Class B and Class C shares, respectively.
Note: The fund offers Class Y shares to a limited group of elegible
investors, including participants in certain investment programs that are
sponsored by PaineWebber and may invest in PaineWebber mutual funds. For
the six months ended September 30, 1999 and since inception, March 30,
1998 through September 30,1999, Class Y shares have a total return of
(13.86)% and (19.56)%, respectively. Class Y shares do not have initial or
contingent deferred sales charges or ongoing distribution and service
fees.
The data above represent past performance of the Fund's shares, which is
no guarantee of future results. The principal value of an investment in
the Fund will fluctuate, so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
11
<PAGE>
PAINEWEBBER UTILITY INCOME FUND
PERFORMANCE RESULTS (unaudited)
<TABLE>
<CAPTION>
Total Return(1)
Net Asset Value --------------------------------
------------------------------------ 12 Months 6 Months
09/30/99 03/31/99 09/30/98 Ended 09/30/99 Ended 09/30/99
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $13.58 $13.60 $13.43 3.26% 0.97%
- -------------------------------------------------------------------------------------------------------------
Class B Shares 13.60 13.60 13.43 2.41 0.51
- -------------------------------------------------------------------------------------------------------------
Class C Shares 13.56 13.58 13.41 2.46 0.56
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Performance Summary Class A Shares
<TABLE>
<CAPTION>
Net Asset Value
--------------------- Capital Gains Total
Period Covered Beginning Ending Distributed Dividends Paid Return(1)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/02/93-12/31/93 $10.00 $ 9.70 -- $0.2340 (0.70)%
- -------------------------------------------------------------------------------------------------------------
1994 9.70 8.28 -- 0.4829 (9.71)
- -------------------------------------------------------------------------------------------------------------
1995 8.28 10.14 -- 0.4662 28.82
- -------------------------------------------------------------------------------------------------------------
1996 10.14 10.56 -- 0.3530 7.90
- -------------------------------------------------------------------------------------------------------------
1997 10.56 12.90 -- 0.3299 25.75
- -------------------------------------------------------------------------------------------------------------
1998 12.90 14.17 -- 0.3709 12.87
- -------------------------------------------------------------------------------------------------------------
01/01/99-09/30/99 14.17 13.58 -- 0.2144 (2.67)
- -------------------------------------------------------------------------------------------------------------
Totals: $0.0000 $2.4513
- -------------------------------------------------------------------------------------------------------------
Cumulative Total Return as of 09/30/99: 72.13%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Performance Summary Class B Shares
<TABLE>
<CAPTION>
Net Asset Value
--------------------- Capital Gains Total
Period Covered Beginning Ending Distributed Dividends Paid Return(1)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/02/93-12/31/93 $10.00 $ 9.70 -- $0.2010 (1.02)%
- -------------------------------------------------------------------------------------------------------------
1994 9.70 8.28 -- 0.4169 (10.40)
- -------------------------------------------------------------------------------------------------------------
1995 8.28 10.14 -- 0.3980 27.87
- -------------------------------------------------------------------------------------------------------------
1996 10.14 10.56 -- 0.2756 7.06
- -------------------------------------------------------------------------------------------------------------
1997 10.56 12.90 -- 0.2427 24.78
- -------------------------------------------------------------------------------------------------------------
1998 12.90 14.17 -- 0.2689 12.03
- -------------------------------------------------------------------------------------------------------------
01/01/99-09/30/99 14.17 13.60 -- 0.1039 (3.30)
- -------------------------------------------------------------------------------------------------------------
Totals: $0.0000 $1.9070
- -------------------------------------------------------------------------------------------------------------
Cumulative Total Return as of 09/30/99: 64.35%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Performance Summary Class C Shares
<TABLE>
<CAPTION>
Net Asset Value
---------------------- Capital Gains Total
Period Covered Beginning Ending Distributed Dividends Paid Return(1)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/02/93-09/30/99 $10.00 $ 9.70 -- $0.2020 (1.01)%
- -------------------------------------------------------------------------------------------------------------
1994 9.70 8.28 -- 0.4158 (10.41)
- -------------------------------------------------------------------------------------------------------------
1995 8.28 10.14 -- 0.3970 27.86
- -------------------------------------------------------------------------------------------------------------
1996 10.14 10.56 -- 0.2766 7.07
- -------------------------------------------------------------------------------------------------------------
1997 10.56 12.89 -- 0.2459 24.72
- -------------------------------------------------------------------------------------------------------------
1998 12.89 14.15 -- 0.2728 12.00
- -------------------------------------------------------------------------------------------------------------
01/01/99-09/30/99 14.15 13.56 -- 0.1325 (3.25)
- -------------------------------------------------------------------------------------------------------------
Totals: $0.0000 $1.9426
- -------------------------------------------------------------------------------------------------------------
Cumulative Total Return as of 09/30/99: 64.08%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Figures assume reinvestment of all dividends and capital gain
distributions at net asset value on the payable dates and do not include
sales charges; results for each class would be lower if sales charges were
included. Total investment return for periods of less than one year has
not been annualized.
Note: The Fund offers Class Y shares to a limited group of eligible investors,
including participants in certain investment programs that are sponsored
by PaineWebber and may invest in PaineWebber mutual funds. For the six
months ended September 30, 1999 and since inception, September 10, 1998
through September 30, 1999, Class Y shares have a total return of 1.04%,
and 11.28%, respectively. Class Y shares do not have initial or contingent
deferred sales charges or ongoing distribution and service fees.
The data above represents past performance of the Fund's shares, which is
no guarantee of future results. The principal value of an investment in
the Fund will fluctuate, so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
12
<PAGE>
PAINEWEBBER UTILITY INCOME FUND
PERFORMANCE RESULTS (unaudited) (concluded)
AVERAGE ANNUAL TOTAL RETURN(1)
<TABLE>
<CAPTION>
% Return Without Deducting % Return After Deducting
Maximum Sales Charge Maximum Sales Charge
-------------------------------------- -----------------------------
Class A* B** C*** A* B** C***
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Twelve Months Ended 09/30/99 3.26% 2.41% 2.46% (1.37)% (2.59)% 1.46%
- -------------------------------------------------------------------------------------------------------------
Five Years Ended 09/30/99 13.99 13.14 13.13 12.94 12.98 13.13
- -------------------------------------------------------------------------------------------------------------
Commencement of Operations
Through 09/30/99+ 9.08 8.27 8.24 8.28 8.27 8.24
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Figures assume reinvestment of all dividends and other distributions at
net asset value on the payable dates and do not include sales charges;
results would be lower if sales charges were included
* Maximum sales charge for Class A shares is 4.5% of the public offering
price. Class A shares bear ongoing 12b-1 service fees.
** Maximum contingent deferred sales charge for Class B shares is 5% and is
reduced to 0% after 6 years. Class B shares bear ongoing 12b-1
distribution and service fees.
*** Maximum contingent deferred sales charge for Class C shares is 1% and is
reduced to 0% after 1 year. Class C shares bear ongoing 12b-1 distribution
and service fees.
+ Commencement of issuance date is July 2, 1993 for Class A, Class B and
Class C shares.
The data above represents past performance of the Fund's shares, which is
no guarantee of future results. The principal value of an investment in
the Fund will fluctuate, so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
13
<PAGE>
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1999 (unaudited)
Number of
Shares Value
- ---------------- ------------
COMMON STOCKS--90.36%
Banks--34.40%
300,000 Bank of New York Co. Inc. ............... $ 10,031,250
60,000 CCB Financial Corp. ..................... 2,497,500
82,500 Comerica, Inc.(1) ....................... 4,176,562
84,000 Commerce Bancorp, Inc. .................. 3,486,000
250,000 Cullen Frost Bankers Inc. ............... 6,250,000
146,500 Financial Institutions Incorporated ..... 1,895,343
105,000 First Security Corp. .................... 2,497,031
355,470 Firstar Corp. ........................... 9,108,919
17,000 M&T Bank Corp.* ......................... 7,803,000
82,500 Marshall and Ilsley Corp.(1) ............ 4,707,656
200,000 Mellon Bank Corp. ....................... 6,750,000
60,000 Northern Trust Corp.(1) ................. 5,010,000
125,000 Prosperity Bancshares Incorporated ...... 1,882,813
180,000 Sterling Bancshares Incorporated ........ 2,058,750
95,000 Summit Bancorp, Inc. .................... 3,081,563
140,000 Texas Regional Bankshares Inc. .......... 3,465,000
110,000 The Chase Manhattan Corp. ............... 8,291,250
230,000 UnionBanCal Corp. ....................... 8,337,500
180,000 Wells Fargo and Co. ..................... 7,132,500
125,000 Westamerica BanCorp. .................... 3,781,250
150,000 Zions BanCorp. .......................... 8,268,750
------------
110,512,637
------------
Business Services--3.42%
155,000 Deluxe Corp. ............................ 5,270,000
130,000 First Data Corp.(1) ..................... 5,703,750
------------
10,973,750
------------
Financial Services--20.67%
50,000 American Express Co. .................... 6,731,250
250,000 Associates First Capital Corp. .......... 9,000,000
200,000 Axa Financial Inc. ...................... 11,162,500
210,000 Capital One Financial Corp. ............. 8,190,000
50,000 Citigroup, Inc. ......................... 2,200,000
40,000 Compucredit Corporation ................. 742,500
180,000 Conning Corp. ........................... 2,070,000
2,100 Digital Insight Corporation ............. 31,500
160,000 Federal Home Loan Mortgage Corp. ........ 8,320,000
100,000 Lehman Brothers Holdings, Inc. .......... 5,831,250
80,000 Merrill Lynch & Co., Inc. ............... 5,375,000
40,000 Morgan Stanley, Dean Witter & Co. ....... 3,567,500
40,000 Providian Corp. ......................... 3,167,500
------------
66,389,000
------------
Insurance--25.47%
200,000 Ambac Financial Group Inc. .............. 9,475,000
62,500 American General Corp. .................. 3,949,219
130,156 American International Group, Inc. ...... 11,315,437
215,000 Enhance Financial Services Group Inc. ... 3,802,813
100,000 Hartford Financial Services Group, Inc. . 4,087,500
160,000 Hartford Life Inc. ...................... 7,880,000
70,000 Marsh & McLennan Cos., Inc. ............. 4,795,000
200,000 Mutual Risk Management Ltd.(1) .......... 2,450,000
260,000 Nationwide Financial Services Inc. ...... 9,197,500
250,000 Protective Life Corp. ................... 7,250,000
190,277 Reinsurance Group of America, Inc. ...... 4,887,740
130,000 Reliastar Financial Corp.(1) ............ 4,322,500
285,000 Travelers Property Casualty Corp. ....... 8,407,500
------------
81,820,209
------------
Thrift Institutions--6.41%
214,725 Charter One Financial Inc.(1) ........... 4,965,516
300,000 Dime Bancorp Inc. ....................... 5,250,000
94,300 Golden State Bancorp Inc.* .............. 1,691,506
250,000 Greenpoint Financial Corp.(1) ........... 6,640,625
70,000 Washington Mutual, Inc. ................. 2,047,500
------------
20,595,147
------------
Total Common Stocks (cost--$274,480,814).................. 290,290,743
------------
14
<PAGE>
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC.
<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000) Dates Rates Value
- ---------------- ------------ ------------ ------------
<S> <C> <C> <C>
SHORT TERM U.S. GOVERNMENT AGENCY OBLIGATIONS--1.56%
$ 5,000 Federal Home Loan Mortgage Corp. Discount Notes (cost--$4,995,692) .. 10/07/99 5.17%@ $ 4,995,692
------------
REPURCHASE AGREEMENTS--6.31%
10,285 Repurchase Agreement dated 09/30/99 with SG Cowen Corp.,
collateralized by $9,015,000 U.S. Treasury Notes, 13.125%
due 05/15/01 (value--$10,486,699); proceeds; $10,286,514 ............ 10/01/99 5.300 10,285,000
10,000 Repurchase Agreement dated 09/30/99 with SG Warburg,
collateralized by $7,432,000 U.S. Treasury Notes, 12.750%
due 11/15/10 (value--$10,200,420); proceeds; $10,001,472 ............ 10/01/99 5.300 10,000,000
------------
Total Repurchase Agreements (cost--$20,285,000) ...................................... 20,285,000
------------
Total Investments (cost--$299,761,506)--98.23% ....................................... 315,571,435
Other assets in excess of liabilities--1.77% ......................................... 5,685,164
------------
Net Assets--100.00% .................................................................. $321,256,599
============
</TABLE>
- ----------
* Non-income producing security.
(1) Security, or portion thereof, was on loan at September 30, 1999.
@ Interest rate reflects yield to maturity at date of purchase.
See accompanying notes to financial statements
15
<PAGE>
PAINEWEBBER UTILITY INCOME FUND
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1999 (unaudited)
Number of
Shares Value
- ---------------- -----------
COMMON STOCKS--94.44%
Construction--0.63%
5,000 Martin Marietta Materials, Inc. ........... $ 199,687
-----------
Electric Utilities--40.66%
20,000 Allegheny Energy Inc. ..................... 636,250
15,000 Alliant Corp. ............................. 415,313
5,000 Calpine Corp.* ............................ 425,313
20,000 Central Hudson Gas & Electric Corp. ....... 787,500
28,000 CMS Energy Corp. .......................... 987,000
20,000 Constellation Energy Group, Inc. .......... 562,500
37,500 DPL Inc. .................................. 660,937
20,000 DQE Inc. .................................. 782,500
5,000 Duke Energy Corp. ......................... 275,625
30,000 Energy East Corp. ......................... 712,500
20,000 Illinova Corp. ............................ 561,250
25,000 New Century Energies Inc. ................. 835,937
24,000 Nisource Inc. ............................. 531,000
17,500 NSTAR ..................................... 678,125
10,000 PECO Energy Co. ........................... 375,000
20,000 Puget Sound Power & Light Co. ............. 448,750
25,000 RGS Energy Group Inc. ..................... 612,500
25,000 SCANA Corp. ............................... 604,687
25,200 Sierra Pacific Resources .................. 560,700
20,000 Texas Utilities Co. ....................... 746,250
20,000 Unicom Corp. .............................. 738,750
-----------
12,938,387
-----------
Gas Utility--6.43%
17,000 Coastal Corp. ............................. 695,937
10,000 Columbia Energy Group ..................... 553,750
20,000 El Paso Energy Corp. ...................... 796,250
-----------
2,045,937
-----------
Long Distance & Phone Companies--38.00%
10,000 Ameritech Corp. ........................... 671,875
15,000 AT&T Corp. ................................ 652,500
15,376 Bell Atlantic Corp. ....................... 1,034,997
22,000 BellSouth Corp. ........................... 990,000
22,500 Century Telephone Enterprises, Inc. ....... 914,062
3,000 Covad Communications Group, Inc.* ......... 130,781
9,825 Global Crossing Ltd.* ..................... 260,363
11,000 Global Telesystems Group Inc. ............. 216,906
10,000 GTE Corp. ................................. 768,750
25,000 ITC Deltacom* ............................. 687,500
10,000 Level 3 Communications Inc.* .............. 522,188
15,000 MCI WorldCom Inc.* ........................ 1,078,125
10,000 Northpoint Communications Holding* ........ 185,000
13,201 NTL Inc.* ................................. 1,268,534
27,000 Qwest Communications International Inc.* .. 798,188
10,000 SBC Communications Inc. ................... 510,625
10,000 Sprint Corp. .............................. 542,500
15,000 US West, Inc. ............................. 855,937
-----------
12,088,831
-----------
Media--3.55%
15,000 Fox Entertainment Group Inc.* ............. 316,875
10,000 Univision Communications Inc.* ............ 813,750
-----------
1,130,625
-----------
Real Property--2.44%
8,364 Reckson Associates Realty Corp. ........... 182,963
18,000 Sun Communities ........................... 595,125
-----------
778,088
-----------
Water--2.73%
30,000 American Water Works Co. Inc. ............. 868,125
-----------
Total Common Stocks (cost--$21,837,283) .................... 30,049,680
-----------
16
<PAGE>
PAINEWEBBER UTILITY INCOME FUND
<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000) Dates Rates Value
- -------------- ------------- ------------- -----------
<S> <C> <C> <C>
CORPORATE BONDS--5.38%
Beverages & Tobacco--0.57%
$ 190 Seagram (Joseph) & Sons, Inc. ............................... 12/15/05 6.625% $ 181,695
-----------
Cable--1.97%
550 TCI Communications, Inc. .................................... 03/31/27 9.650 625,998
-----------
Electric Utilities--1.04%
350 Texas Utilities Electric Capital ............................ 01/30/37 8.175 332,192
-----------
Publishing--1.80%
610 News America Holdings Inc. .................................. 12/01/95 to 10/17/96 7.900 to 8.250 571,244
-----------
Total Corporate Bonds (cost--$1,700,072) ..................................... 1,711,129
-----------
REPURCHASE AGREEMENT--0.49%
155 Repurchase Agreement dated 09/30/99 with State Street
Bank & Trust Co., collateralized by $154,455 U.S.
Treasury Notes, 6.375% due 08/15/02 (value--$158,123);
proceeds: $155,018 (cost--$155,000) ......................... 10/01/99 4.250 155,000
-----------
Total Investments (cost--$23,692,355)--100.31% ............................... 31,915,809
Liabilities in excess of other assets--(0.31)% ............................... (98,121)
-----------
Net Assets--100.00% .......................................................... $31,817,688
===========
</TABLE>
- ----------
* Non-Income producing security.
See accompanying notes to financial statements
17
<PAGE>
PAINEWEBBER
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Financial Utility
Services Income
Growth Fund Fund
------------ ------------
<S> <C> <C>
Assets
Investments in securities, at value (cost--$299,761,506
and $23,692,355, respectively) .......................................... $315,571,435 $ 31,915,809
Investments of cash collateral received for securities loaned
at value (cost--$17,652,700 and $0, respectively) ....................... 17,652,700 --
Cash ...................................................................... 643 4,022
Receivable for investments sold ........................................... 8,197,003 --
Dividends and interest receivable ......................................... 436,732 112,641
Receivable for fund shares sold ........................................... 72,507 1,505
Other assets .............................................................. 34,497 33,209
------------ ------------
Total assets .............................................................. 341,965,517 32,067,186
------------ ------------
Liabilities
Collateral for securities loaned .......................................... 17,652,700 --
Payable for investments purchased ......................................... 1,133,325 --
Payable for fund shares repurchased ....................................... 1,428,214 113,352
Payable to affiliates ..................................................... 383,627 35,161
Accrued expenses and other liabilities .................................... 111,052 100,985
------------ ------------
Total liabilities ......................................................... 20,708,918 249,498
------------ ------------
Net Assets
Capital Stock/Beneficial Interest shares of $0.001 par value outstanding .. 292,933,092 24,795,413
Accumulated net investment income ......................................... 1,045,438 29,128
Accumulated net realized gains (losses) from investment transactions ...... 11,468,140 (1,230,307)
Net unrealized apppreciation of investments ............................... 15,809,929 8,223,454
------------ ------------
Net assets ................................................................ $321,256,599 $ 31,817,688
============ ============
Class A:
Net assets ................................................................ $145,932,020 $ 16,915,955
------------ ------------
Shares outstanding ........................................................ 5,609,909 1,245,704
------------ ------------
Net asset value and redemption value per share ............................ $ 26.01 $ 13.58
============ ============
Maximum offering price per share (net asset value plus sales charge
of 4.50% of offering price) ............................................. $ 27.24 $ 14.22
============ ============
Class B:
Net assets ................................................................ $123,321,954 $ 7,511,083
------------ ------------
Shares outstanding ........................................................ 4,903,436 552,126
------------ ------------
Net asset value and offering price per share .............................. $ 25.15 $ 13.60
============ ============
Class C:
Net assets ................................................................ $ 48,874,893 $ 7,303,333
------------ ------------
Shares outstanding ........................................................ 1,947,659 538,397
------------ ------------
Net asset value and offering price per share .............................. $ 25.09 $ 13.56
============ ============
Class Y:
Net assets ................................................................ $ 3,127,732 $ 87,317
------------ ------------
Shares outstanding ........................................................ 120,104 6,454
------------ ------------
Net asset value, offering price and redemption value per share ............ $ 26.04 $ 13.53
============ ============
</TABLE>
See accompanying notes to financial statements
18
<PAGE>
PAINEWEBBER
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Financial Utility
Services Income
Growth Fund Fund
------------ ------------
<S> <C> <C>
Investment income:
Dividends .............................................................. $ 2,874,586 $ 498,547
Interest ............................................................... 539,016 133,742
------------ ------------
3,413,602 632,289
------------ ------------
Expenses:
Investment advisory and administration ................................. 1,506,849 122,922
Service fees--Class A .................................................. 234,044 16,651
Service and distribution fees--Class B ................................. 853,525 68,209
Service and distribution fees--Class C ................................. 338,230 40,484
Transfer agency and service ............................................ 175,500 16,889
Custody and accounting ................................................. 154,159 11,787
Federal and state registration fees .................................... 80,863 23,558
Reports and notices to shareholders .................................... 37,868 12,472
Legal and audit ........................................................ 31,830 37,841
Directors/Trustees' fees ............................................... 5,250 5,250
Other expenses ......................................................... 53,069 4,758
------------ ------------
3,471,187 360,821
Less: Fee waiver from adviser .......................................... (2,664) --
------------ ------------
Net expenses ........................................................... 3,468,523 360,821
------------ ------------
Net investment income (loss) ........................................... (54,921) 271,468
------------ ------------
Realized and unrealized gains (losses) from investment transactions:
Net realized gains from investment transactions ........................ 2,670,956 968,763
Net change in unrealized appreciation/depreciation of investments ...... (57,430,041) (861,660)
------------ ------------
Net realized and unrealized gains (losses) from investments ............ (54,759,085) 107,103
------------ ------------
Net increase (decrease) in net assets resulting from operations ........ $(54,814,006) $ 378,571
============ ============
</TABLE>
See accompanying notes to financial statements
19
<PAGE>
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year
September 30, 1999 Ended
(unaudited) March 31,1999
------------- -------------
<S> <C> <C>
From operations:
Net investment income (loss) ............................................ $ (54,921) $ 3,152,890
Net realized gains from investment transactions ......................... 2,670,956 10,373,374
Net change in unrealized appreciation/depreciation of investments ....... (57,430,041) (60,166,139)
------------- -------------
Net decrease in net assets resulting from operations .................... (54,814,006) (46,639,875)
------------- -------------
Dividends and distributions to shareholders from:
Net investment income--Class A .......................................... -- (1,912,147)
Net investment income--Class B .......................................... -- (548,684)
Net investment income--Class C .......................................... -- (265,951)
Net investment income--Class Y .......................................... -- (48,437)
Net realized gains from investment transactions--Class A ................ -- (2,846,899)
Net realized gains from investment transactions--Class B ................ -- (3,007,950)
Net realized gains from investment transactions--Class C ................ -- (1,166,071)
Net realized gains from investment transactions--Class Y ................ -- (54,597)
------------- -------------
Total dividends and distributions to shareholders ....................... -- (9,850,736)
------------- -------------
From capital stock transactions:
Net proceeds from the sale of shares .................................... 115,924,514 424,377,598
Cost of shares repurchased .............................................. (223,640,873) (365,190,187)
Proceeds from dividends reinvested ...................................... -- 8,988,686
------------- -------------
Net increase (decrease) in net assets from capital stock transactions ... (107,716,359) 68,176,097
------------- -------------
Net increase (decrease) in net assets ................................... (162,530,365) 11,685,486
Net assets:
Beginning of period ..................................................... 483,786,964 472,101,478
------------- -------------
End of period (including undistributed net investment income
of $1,045,438 and $1,100,359, respectively) ........................... $ 321,256,599 $ 483,786,964
============= =============
</TABLE>
See accompanying notes to financial statements
20
<PAGE>
PAINEWEBBER UTILITY INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year
September 30, 1999 Ended
(unaudited) March 31, 1999
------------ --------------
<S> <C> <C>
From operations:
Net investment income ............................................... $ 271,468 $ 812,045
Net realized gains from investment transactions ..................... 968,763 1,659,180
Net change in unrealized appreciation/depreciation of investments ... (861,660) (2,311,090)
------------ ------------
Net increase in net assets resulting from operations ................ 378,571 160,135
------------ ------------
Dividends to shareholders from:
Net investment income--Class A ...................................... (172,168) (201,569)
Net investment income--Class B ...................................... (49,476) (375,035)
Net investment income--Class C ...................................... (55,985) (148,781)
Net investment income--Class Y ...................................... (843) (492)
------------ ------------
Total dividends to shareholders ..................................... (278,472) (725,877)
------------ ------------
From beneficial interest transactions:
Net proceeds from the sale of shares ................................ 5,456,999 5,043,771
Cost of shares repurchased .......................................... (8,476,913) (7,642,154)
Proceeds from dividends reinvested .................................. 205,452 541,936
------------ ------------
Net decrease in net assets from beneficial interest transactions .... (2,814,462) (2,056,447)
------------ ------------
Net decrease in net assets .......................................... (2,714,363) (2,622,189)
Net assets:
Beginning of period ................................................. 34,532,051 37,154,240
------------ ------------
End of period (including undistributed net investment income of
$29,128 and $36,132, respectively) ................................ $ 31,817,688 $ 34,532,051
============ ============
</TABLE>
See accompanying notes to financial statements
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Financial Services Growth Fund Inc. ("Financial Services
Growth Fund") and PaineWebber Utility Income Fund ("Utility Income Fund")
(collectively, the "Funds") are registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, as diversified
open-end management investment companies. Financial Services Growth Fund was
incorporated in the state of Maryland on February 13, 1986 and Utility Income
Fund is a series of PaineWebber Managed Investment Trust (collectively, the
"Trusts") which was organized under Massachusetts law by a Declaration of Trust
dated August 9, 1991 and November 21, 1986, respectively.
Each Fund currently offers Class A, Class B, Class C and Class Y shares.
Each class represents interests in the same assets of the applicable Fund, and
the classes are identical except for differences in their sales charge
structures, ongoing service and distribution charges and certain transfer agency
expenses. In addition, Class B shares and all corresponding reinvested dividend
shares automatically convert to Class A shares approximately six years after
issuance. All classes of shares have equal voting privileges except that each
class has exclusive voting rights with respect to its service and/or
distribution plan, if any.
The preparation of financial statements in accordance with generally
accepted accounting principles requires Fund management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates. The following is a
summary of significant accounting policies:
Valuation of Investments--The Funds calculate net asset values based on
the current market value for its portfolio's securities. The Funds normally
obtain market values for its securities from independent pricing sources.
Independent pricing sources may use reported last sale prices, current market
quotations or valuations from computerized "matrix" systems that derive values
based on comparable securities. Securities traded in the over-the-counter
("OTC") market and listed on The Nasdaq Stock Market, Inc. ("Nasdaq") normally
are valued at the last sale price on Nasdaq prior to valuation. Other OTC
securities are valued at the last bid price available prior to valuation.
Securities which are listed on U.S. and foreign stock exchanges normally are
valued at the last sale price on the day the securities are valued or, lacking
any sales on such day, at the last available bid price. In cases where
securities are traded on more than one exchange, the securities are valued on
the exchange designated as the primary market by Mitchell Hutchins Asset
Management Inc. ("Mitchell Hutchins"), a wholly owned asset management
subsidiary of PaineWebber Incorporated ("PaineWebber"), and investment adviser
and administrator of the Funds. If a market value is not available from an
independent pricing source for a particular security, that security is valued at
fair value as determined in good faith by or under the direction of the
Fund's/Trusts' Board of Directors/Trustees. The amortized cost method of
valuation, which approximates market value, generally is used to value
short-term debt instruments with sixty days or less remaining to maturity,
unless each Fund's/Trust's board determines that this does not represent fair
value.
Repurchase Agreements--Each Fund's custodian takes possession of the
collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to ensure that the value,
including accrued interest, is at least equal to the repurchase price. In the
event of default of the obligation to repurchase, each Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings. Each Fund occasionally
participates in joint repurchase agreement transactions with other funds managed
by Mitchell Hutchins.
Investment Transactions and Investment Income--Investment transactions are
recorded on the trade date. Realized gains and losses from investment
transactions are calculated using the identified cost method. Interest income is
recorded
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
on an accrual basis. Dividend income is recorded on the ex-dividend date.
Discounts are accreted and premiums are amortized as adjustments to interest
income and the identified cost of investment.
Income, expenses (excluding class-specific expenses) and
realized/unrealized gains/losses are allocated proportionately to each class of
shares based upon the relative net asset value of outstanding shares (or the
value of dividend-eligible shares, as appropriate) of each class at the
beginning of the day (after adjusting for current capital share activity of the
respective classes). Class-specific expenses are charged directly to the
applicable class of shares.
Dividends and Distributions--Dividends and distributions to shareholders
are recorded on the ex-dividend date. The amount of dividends and distributions
is determined in accordance with federal income tax regulations, which may
differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification.
CONCENTRATION OF RISK
Financial Services Growth Fund invests primarily in equity securities of
financial services companies and Utility Income Fund invests primarily in
securities of utility companies. Economic, legislative and regulatory
developments impacting those industries may affect the market value of each
Fund's investments. In addition, each Fund's ability to invest in U.S.
dollar-denominated foreign equity securities and ability to use options and
futures contracts also entail special risks.
INVESTMENT ADVISER AND ADMINISTRATOR
Each Fund has an Investment Advisory and Administration Contract
("Advisory Contract") with Mitchel Hutchins, under which Mitchell Hutchins
serves as investment adviser and administrator of the Funds. In accordance with
the Advisory Contracts, Financial Services Growth Fund and Utility Income Fund
pay Mitchell Hutchins an investment advisory and administration fee, which is
accrued daily and paid monthly, at the annual rate of 0.70% of each Fund's
average daily net assets. At September 30, 1999, Financial Services Growth Fund
and Utility Income Fund owed Mitchell Hutchins $198,147 and $18,750,
respectively, in investment advisory and administration fees. Mitchell Hutchins
waived a portion of its investment advisory and administration fees in
connection with the Financial Services Growth Fund's and Utility Income Fund's
investment of cash collateral from security lending in the Mitchell Hutchins
Private Money Market Fund LLC. For the six months ended September 30, 1999,
Mitchell Hutchins waived $2,664 and $0, respectively.
For the six months ended September 30, 1999, Financial Services Growth
Fund and the Utility Income Fund paid $18,690 and $0, respectively, in brokerage
commissions to PaineWebber for transactions executed on behalf of the Funds.
DISTRIBUTION PLANS
Mitchell Hutchins is the distributor of each Fund's shares and has
appointed PaineWebber as the exclusive dealer for the sale of those shares.
Under separate plans of service and/or distribution pertaining to Class A, Class
B and Class C shares, the Funds pay Mitchell Hutchins monthly service fees at an
annual rate of 0.25% of the average daily net assets of Class A, Class B and
Class C shares and monthly distribution fees at the annual rate of 0.75% of the
average daily net assets of Class B and Class C shares. At September 30, 1999,
Financial Services Growth Fund and Utility Income Fund owed Mitchell Hutchins
$184,803 and $16,099, respectively, in service and distribution fees.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
Mitchell Hutchins also receives the proceeds of the initial sales charges
paid by shareholders upon the purchase of Class A shares and the contingent
deferred sales charges paid by shareholders upon certain redemptions of Class A,
Class B and Class C shares. Mitchell Hutchins has informed each Fund that for
the six months ended September 30, 1999, it earned $973,256 and $13,250, in
sales charges for the Financial Services Growth Fund and Utility Income Fund,
respectively.
SECURITY LENDING
Each Fund may lend securities up to 33 1/3% of its total assets to
qualified institutions. The loans are secured at all times by cash or U.S.
government securities in an amount at least equal to the market value of the
securities loaned, plus accrued interest, determined on a daily basis and
adjusted accordingly. Each Fund will regain record ownership of loaned
securities to exercise certain beneficial rights, however, each Fund may bear
the risk of delay in recovery of, or even loss of rights in, the securities
loaned should the borrower fail financially. Each Fund receives compensation,
which is included in interest income, for lending its securities from interest
earned on the cash or U.S. government securities held as collateral, net of fee
rebates paid to the borrower plus reasonable administrative and custody fees.
For the six months ended September 30, 1999, Financial Services Growth Fund and
Utility Income Fund earned $24,993 and $9,475, respectively, for lending
securities. Financial Services Growth and the Utility Income Fund lending agent
is PaineWebber, which received compensation from the Funds for the six months
ended September 30, 1999 of $8,481 and $3,158, respectively.
At September 30, 1999, Financial Services Growth Fund and the Utility
Income Fund owed Painewebber $677 and $312, respectively, in compensation as
security lending agent.
As of September 30, 1999, the Financial Services Growth Fund's custodian
held cash and/or cash equivalents having an aggregate value of $17,652,700 as
collateral for portfolio securities loaned having a market value of $16,917,206.
The cash collateral was invested in the following time deposit and money market
funds:
<TABLE>
<CAPTION>
Number
of Shares/
Principal Market
Amount Value
- ----------- ------------
<S> <C> <C>
$ 5,000,000 Gillette Company, Commercial Paper, 5.550%, due 10/01/99 .................. $ 5,000,000
7,327,166 Liquid Assets Money Market Portfolio ...................................... 7,327,166
4,883,294 Mitchell Hutchins Private Money Market Fund LLC ........................... 4,883,294
442,240 Prime Portfolio Money Market .............................................. 442,240
------------
Total investments of cash collateral received for securities loaned (cost--$17,652,700) .. $ 17,652,700
============
</TABLE>
BANK LINE OF CREDIT
Each Fund may participate with other funds managed by Mitchell Hutchins in
a $200 million committed credit facility ("Facility") to be utilized for
temporary financing until the settlement of sale or purchase of portfolio
securities, the repurchase or redemption of shares of each Fund at the request
of the shareholders and other temporary or emergency purposes. In connection
therewith, each Fund has agreed to pay a commitment fee, pro rata, based on the
relative asset size of the Funds in the Facility. Interest is charged to each
Fund at rates based on prevailing market rates in effect at the time of
borrowings. For the six months ended September 30, 1999, the Funds did not
borrow under the Facility.
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
TRANSFER AGENCY SERVICE FEES
PaineWebber provides certain transfer agency related services to each Fund
pursuant to a delegation of authority from PFPC, Inc., the Fund's transfer
agent, and is compensated for these services by PFPC, Inc., not the Funds. For
the six months ended September 30, 1999, PaineWebber received from PFPC, Inc.,
not the Funds, approximately 52% and 48% of the total transfer agency services
fees collected by PFPC, Inc. from Financial Services Growth Fund and Utility
Income Fund, respectively.
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned at September
30, 1999 was substantially the same as the cost of securities for financial
statement purposes.
At September 30, 1999, the components of net unrealized appreciation of
investments were as follows:
<TABLE>
<CAPTION>
Financial
Services Utility
Growth Income
Fund Fund
------------ -----------
<S> <C> <C>
Gross appreciation (investment having an excess of value over cost) ......... $ 34,348,864 $ 9,100,605
Gross depreciation (investment having an excess of cost over value) ......... (18,538,935) (877,151)
------------ -----------
Net unrealized appreciation of investments .................................. $ 15,809,929 $ 8,223,454
============ ===========
</TABLE>
For the six months ended September 30, 1999, total aggregate purchases and
sales of portfolio securities, excluding short-term securities, were as follows:
<TABLE>
<CAPTION>
Financial
Services Utility
Growth Income
Fund Fund
------------ -----------
<S> <C> <C>
Purchases ................................................................... $174,307,198 $9,243,928
Sales ....................................................................... $284,585,238 $8,464,134
</TABLE>
FEDERAL TAX STATUS
Each Fund intends to distribute substantially all of their taxable income
and to comply with the other requirements of the Internal Revenue Code
applicable to regulated investment companies. Accordingly, no provision for
federal income taxes is required. In addition, by distributing during each
calendar year substantially all of their net investment income, capital gains
and certain other amounts, if any, the Funds intend not to be subject to a
federal excise tax.
At March 31, 1999, Utility Income Fund had a net capital loss carryforward
of $2,185,162 which will expire by March 31, 2004. To the extent such losses are
used, as provided in the regulations, to offset future net realized capital
gains, it is probable these gains will not be distributed.
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
CAPITAL STOCK/BENEFICIAL INTEREST
There are 300 million shares of $0.001 par value common stock authorized
for the Financial Services Growth Fund. Transactions in common stock were as
follows:
<TABLE>
<CAPTION>
Class A Class B
------------------------------ ------------------------------
Shares Amount Shares Amount
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Financial Services Growth Fund
For the Six Months Ended September 30, 1999:
Shares sold ...................................... 3,004,719 $ 91,389,517 242,394 $ 7,109,682
Shares repurchased ............................... (4,386,224) (132,640,629) (1,758,918) (50,492,394)
Shares converted from Class B to Class A ......... 230,434 6,981,892 (237,761) (6,981,892)
Dividends reinvest ............................... -- -- -- --
------------- ------------- ------------- -------------
Net decrease ..................................... (1,151,071) $ (34,269,220) (1,754,285) $ (50,364,604)
============= ============= ============= =============
<CAPTION>
Class C Class Y
------------------------------ ------------------------------
Shares Amount Shares Amount
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Financial Services Growth Fund
For the Six Months Ended September 30, 1999:
Shares sold ...................................... 560,565 $ 16,427,541 33,050 $ 997,774
Shares repurchased ............................... (1,299,501) (37,896,076) (88,031) (2,611,774)
Shares converted from Class B to Class A ......... -- -- -- --
Dividends reinvest ............................... -- -- -- --
------------- ------------- ------------- -------------
Net decrease ..................................... (738,936) $ (21,468,535) (54,981) $ (1,614,000)
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
------------------------------ ------------------------------
Shares Amount Shares Amount
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
For the Year Ended March 31, 1999:
Shares sold ...................................... 7,542,064 $ 234,602,858 3,209,931 $ 99,463,482
Shares repurchased ............................... (7,526,690) (231,874,337) (2,387,230) (70,678,092)
Shares converted from Class B to Class A ......... 351,974 11,009,415 (362,660) (11,009,415)
Dividends reinvested ............................. 141,796 4,241,108 112,654 3,277,100
------------- ------------- ------------- -------------
Net increase ..................................... 509,144 $ 17,979,044 572,695 $ 21,053,075
============= ============= ============= =============
<CAPTION>
Class C Class Y
------------------------------ ------------------------------
Shares Amount Shares Amount
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
For the Year Ended March 31, 1999:
Shares sold ...................................... 2,728,837 $ 83,914,734 202,297 $ 6,396,524
Shares repurchased ............................... (2,048,835) (61,701,102) (30,708) (936,656)
Shares converted from Class B to Class A ......... -- -- -- --
Dividends reinvested ............................. 47,112 1,367,649 3,508 102,829
------------- ------------- ------------- -------------
Net increase ..................................... 727,114 $ 23,581,281 175,031 $ 5,562,697
============= ============= ============= =============
</TABLE>
There is an unlimited amount of $0.001 par value shares of beneficial
interest authorized for the Utility Income Fund. Transactions in shares of
beneficial interest were as follows:
<TABLE>
<CAPTION>
Class A Class B
------------------------------ ------------------------------
Shares Amount Shares Amount
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Utility Income Fund
For the Six Months Ended September 30, 1999:
Shares sold ...................................... 10,490 $ 152,907 36,953 $ 536,532
Shares repurchased ............................... (111,262) (1,603,701) (119,650) (1,713,527)
Shares converted from Class B to Class A ......... 799,885 11,607,486 (800,106) (11,607,486)
Dividends reinvest ............................... 9,187 127,266 2,508 35,059
------------- ------------- ------------- -------------
Net increase (decrease) .......................... 708,300 $ 10,283,958 (880,295) $ (12,749,422)
============= ============= ============= =============
<CAPTION>
Class C Class Y
------------------------------ ------------------------------
Shares Amount Shares Amount
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Utility Income Fund
For the Six Months Ended September 30, 1999:
Shares sold ...................................... 324,570 $ 4,711,733 3,921 $ 55,827
Shares repurchased ............................... (356,118) (5,152,969) (474) (6,716)
Shares converted from Class B to Class A ......... -- -- -- --
Dividends reinvest ............................... 3,045 42,284 61 843
------------- ------------- ------------- -------------
Net increase (decrease) .......................... (28,503) $ (398,952) 3,508 $ 49,954
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
------------------------------ ------------------------------
Shares Amount Shares Amount
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
For the Year Ended March 31, 1999:
Shares sold ...................................... 18,839 $ 254,264 153,918 $ 2,071,525
Shares repurchased ............................... (112,877) (1,521,717) (254,192) (3,414,583)
Shares converted from Class B to Class A ......... 50,414 680,729 (50,459) (680,729)
Dividends reinvested ............................. 11,343 154,177 20,004 271,487
------------- ------------- ------------- -------------
Net increase (decrease) .......................... (32,281) $ (432,547) (130,729) $ (1,752,300)
============= ============= ============= =============
<CAPTION>
Class C Class Y
------------------------------ ------------------------------
Shares Amount Shares Amount
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
For the Year Ended March 31, 1999:
Shares sold ...................................... 198,842 $ 2,678,220 2,964 $ 39,762
Shares repurchased ............................... (201,958) (2,705,118) (53) (736)
Shares converted from Class B to Class A ......... -- -- -- --
Dividends reinvested ............................. 8,546 115,780 35 492
------------- ------------- ------------- -------------
Net increase (decrease) .......................... 5,430 $ 88,882 2,946 $ 39,518
============= ============= ============= =============
</TABLE>
26
<PAGE>
[This page intentionally left blank.]
27
<PAGE>
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC.
FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding throughout each period is
presented below:
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------------------
For the Six
Months Ended
September 30, For the Years Ended March 31,
1999 --------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 30.24 $ 33.56 $ 23.41 $ 21.16 $ 17.11 $ 16.92
-------- -------- -------- -------- -------- --------
Net investment income (loss) ................... 0.11 0.33@ 0.20 0.18 0.30 0.25
Net realized and unrealized gains (losses)
from investments .......................... (4.34) (2.96)@ 11.75 5.69 6.25 1.34
-------- -------- -------- -------- -------- --------
Net increase (decrease) from
investment operations ..................... (4.23) (2.63) 11.95 5.87 6.55 1.59
-------- -------- -------- -------- -------- --------
Dividends from net investment income ........... -- (0.28) (0.21) (0.23) (0.29) (0.13)
Distributions from net realized gains
from investment transactions .............. -- (0.41) (1.59) (3.39) (2.21) (1.27)
-------- -------- -------- -------- -------- --------
Total dividends and distributions .............. 0.00 (0.69) (1.80) (3.62) (2.50) (1.40)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ................. $ 26.01 $ 30.24 $ 33.56 $ 23.41 $ 21.16 $ 17.11
======== ======== ======== ======== ======== ========
Total investment return (1) .................... (13.99)% (7.81)% 51.92% 28.72% 39.02% 10.22%
======== ======== ======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of period (000's) .............. $145,932 $204,433 $209,818 $ 85,661 $ 64,003 $ 49,295
Expenses to average net assets,
net of waivers from adviser (2) ................ 1.18%* 1.17% 1.17% 1.52% 1.37% 1.45%
Net investment income to average net assets,
net of waivers from adviser (2) ................ 0.40%* 1.07% 1.12% 0.90% 1.50% 1.40%
Portfolio turnover rate ........................ 44% 59% 23% 40% 53% 14%
</TABLE>
- ----------
* Annualized.
+ Commencement of issuance of shares.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and other
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each period reported. The figures do not
include sales charges; results would be lower if sales charges were
included. Total investment return for periods of less than one year has
not been annualized.
(2) During the six months ended September 30, 1999 Mitchell Hutchins waived a
portion of its advisory and administration fees. The ratios excluding the
waiver are the same since the fee waiver represents less than 0.005%.
@ Calculated using the average monthly shares outstanding for the year.
28
<PAGE>
<TABLE>
<CAPTION>
Class B
--------------------------------------------------------------------------
For the Six
Months Ended
September 30, For the Years Ended March 31,
1999 --------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 29.35 $ 32.62 $ 22.87 $ 20.75 $ 16.85 $ 16.71
-------- -------- -------- -------- -------- --------
Net investment income (loss) ................... (0.07) 0.09@ 0.09 0.04 0.13 0.11
Net realized and unrealized gains (losses)
from investments .......................... (4.13) (2.87)@ 11.34 5.53 6.16 1.33
-------- -------- -------- -------- -------- --------
Net increase (decrease) from
investment operations ..................... (4.20) (2.78) 11.43 5.57 6.29 1.44
-------- -------- -------- -------- -------- --------
Dividends from net investment income ........... -- (0.08) (0.09) (0.06) (0.18) (0.03)
Distributions from net realized gains
from investment transactions .............. -- (0.41) (1.59) (3.39) (2.21) (1.27)
-------- -------- -------- -------- -------- --------
Total dividends and distributions .............. 0.00 (0.49) (1.68) (3.45) (2.39) (1.30)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ................. $ 25.15 $ 29.35 $ 32.62 $ 22.87 $ 20.75 $ 16.85
======== ======== ======== ======== ======== ========
Total investment return (1) .................... (14.31)% (8.51)% 50.80% 27.74% 37.97% 9.37%
======== ======== ======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of period (000's) .............. $123,322 $195,392 $198,473 $ 41,579 $ 28,147 $ 16,368
Expenses to average net assets,
net of waivers from adviser (2) ................ 1.96%* 1.94% 1.92% 2.27% 2.12% 2.22%
Net investment income to average net assets,
net of waivers from adviser (2) ................ (0.38)%* 0.29% 0.37% 0.15% 0.74% 0.67%
Portfolio turnover rate ........................ 44% 59% 23% 40% 53% 14%
</TABLE>
- ----------
* Annualized.
+ Commencement of issuance of shares.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and other
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each period reported. The figures do not
include sales charges; results would be lower if sales charges were
included. Total investment return for periods of less than one year has
not been annualized.
(2) During the six months ended September 30, 1999 Mitchell Hutchins waived a
portion of its advisory and administration fees. The ratios excluding the
waiver are the same since the fee waiver represents less than 0.005%.
@ Calculated using the average monthly shares outstanding for the year.
29
<PAGE>
PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC.
FINANCIAL HIGHLIGHTS (concluded)
Selected data for a share of capital stock outstanding throughout each period is
presented below:
<TABLE>
<CAPTION>
Class C
--------------------------------------------------------------------------
For the Six
Months Ended
September 30, For the Years Ended March 31,
1999 --------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 29.28 $ 32.56 $ 22.84 $ 20.75 $ 16.86 $ 16.71
-------- -------- -------- -------- -------- --------
Net investment income (loss) ................... (0.08) 0.08@ 0.12 0.06 0.12 0.11
Net realized and unrealized gains (losses)
from investments .......................... (4.11) (2.86)@ 11.28 5.51 6.16 1.33
-------- -------- -------- -------- -------- --------
Net increase (decrease) from
investment operations ..................... (4.19) (2.78) 11.40 5.57 6.28 1.44
-------- -------- -------- -------- -------- --------
Dividends from net investment income ........... -- (0.09) (0.09) (0.09) (0.18) (0.02)
Distributions from net realized gains
from investment transactions .............. -- (0.41) (1.59) (3.39) (2.21) (1.27)
-------- -------- -------- -------- -------- --------
Total dividends and distributions .............. 0.00 (0.50) (1.68) (3.48) (2.39) (1.29)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ................. $ 25.09 $ 29.28 $ 32.56 $ 22.84 $ 20.75 $ 16.86
======== ======== ======== ======== ======== ========
Total investment return (1) .................... (14.31)% (8.50)% 50.76% 27.74% 37.92% 9.34%
======== ======== ======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of period (000's) .............. $ 48,875 $ 78,670 $ 63,809 $ 12,357 $ 6,989 $ 4,160
Expenses to average net assets,
net of waivers from adviser (2) ................ 1.95%* 1.94% 1.92% 2.28% 2.14% 2.23%
Net investment income to average net assets,
net of waivers from adviser (2) ................ (0.37)%* 0.27% 0.36% 0.15% 0.72% 0.61%
Portfolio turnover rate ........................ 44% 59% 23% 40% 53% 14%
</TABLE>
- ----------
* Annualized.
+ Commencement of issuance of shares.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and other
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each period reported. The figures do not
include sales charges or program fees; results would be lower if sales
charges or program fees were included. Total investment return for periods
of less than one year has not been annualized.
(2) During the six months ended September 30, 1999 Mitchell Hutchins waived a
portion of its advisory and administration fees. The ratios excluding the
waiver are the same since the fee waiver represents less than 0.005%.
@ Calculated using the average monthly shares outstanding for the year.
30
<PAGE>
<TABLE>
<CAPTION>
Class Y
---------------------------------------------------
For the Six
Months Ended For the For the
September 30, Year Ended Period Ended
1999 March 31, March 30, 1998+
(unaudited) 1999 to March 31, 1998
------------ ---------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period ........... $ 30.23 $ 33.56 $ 33.22
-------- -------- --------
Net investment income (loss) ................... 0.10 0.34@ 0.00
Net realized and unrealized gains (losses)
from investments .......................... (4.29) (2.89)@ 0.34
-------- -------- --------
Net increase (decrease) from
investment operations ..................... (4.19) (2.55) 0.34
-------- -------- --------
Dividends from net investment income ........... -- (0.37) --
Distributions from net realized gains
from investment transactions .............. -- (0.41) --
-------- -------- --------
Total dividends and distributions .............. 0.00 (0.78) 0.00
-------- -------- --------
Net asset value, end of period ................. $ 26.04 $ 30.23 $ 33.56
======== ======== ========
Total investment return (1) .................... (13.86)% (7.57)% 1.02%
======== ======== ========
Ratios/Supplemental Data:
Net assets, end of period (000's) .............. $ 3,128 $ 5,292 $ 2
Expenses to average net assets,
net of waivers from adviser (2) ................ 0.89%* 0.90% 0.80%*
Net investment income to average net assets,
net of waivers from adviser (2) ................ 0.69%* 1.22% 0.00%*
Portfolio turnover rate ........................ 44% 59% 23%
</TABLE>
- ----------
* Annualized.
+ Commencement of issuance of shares.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and other
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each period reported. The figures do not
include sales charges or program fees; results would be lower if sales
charges or program fees were included. Total investment return for periods
of less than one year has not been annualized.
(2) During the six months ended September 30, 1999 Mitchell Hutchins waived a
portion of its advisory and administration fees. The ratios excluding the
waiver are the same since the fee waiver represents less than 0.005%.
@ Calculated using the average monthly shares outstanding for the year.
31
<PAGE>
PAINEWEBBER UTILITY INCOME FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------------------
For the
For the Six For the Four Months For the
Months Ended Years Ended Ended Years Ended
September 30, March 31, March 31, November 30,
1999 -------------------------------- --------- --------------------
(unaudited) 1999 1998 1997 1996 1995 1994
------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 13.60 $ 13.79 $ 10.20 $ 9.76 $ 9.77 $ 8.31 $ 9.66
-------- -------- -------- -------- -------- -------- --------
Net investment income ....................... 0.16@ 0.39 0.33 0.34 0.15 0.47 0.48
Net realized and unrealized gains (losses)
from investments ....................... (0.02)@ (0.22) 3.61 0.41 -- 1.44 (1.31)
-------- -------- -------- -------- -------- -------- --------
Net increase (decrease) from
investment operations .................. 0.14 0.17 3.94 0.75 0.15 1.91 (0.83)
-------- -------- -------- -------- -------- -------- --------
Dividends from net investment income ........ (0.16) (0.36) (0.35) (0.31) (0.16) (0.45) (0.52)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period .............. $ 13.58 $ 13.60 $ 13.79 $ 10.20 $ 9.76 $ 9.77 $ 8.31
======== ======== ======== ======== ======== ======== ========
Total investment return (1) ................. 0.97% 1.24% 39.15% 7.83% 1.46% 23.64% (8.76)%
======== ======== ======== ======== ======== ======== ========
Ratios/Supplemental data:
Net assets, end of period (000's) ........... $ 16,916 $ 7,308 $ 7,856 $ 6,039 $ 9,416 $ 10,750 $ 12,532
Expenses to average net assets, net of
waivers from adviser ................... 1.56%* 1.59% 1.92% 1.93% 1.09%* 1.49% 1.58%
Expenses to average net assets, before
waivers from adviser ................... 1.56%* 1.59% 1.92% 2.00% 1.44%* 1.49% 1.58%
Net investment income to average net assets,
net of waivers from adviser ............ 2.05%* 2.90% 2.77% 3.27% 4.26%* 5.13% 5.49%
Net investment income to average net assets,
before waivers from adviser ............ 2.05%* 2.90% 2.77% 3.20% 3.91%* 5.13% 5.49%
Portfolio turnover rate ..................... 25% 21% 10% 41% 21% 30% 92%
</TABLE>
- ----------
* Annualized.
+ Commencement of issuance of shares.
@ Calculated using the average shares outstanding for the period.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. The figures do not
include sales charges or program fees; results would be lower if sales
charges or program fees were included. Total investment return for periods
of less than one year has not been annualized.
32
<PAGE>
<TABLE>
<CAPTION>
Class B
------------------------------------------------------------------------------------
For the
For the Six For the Four Months For the
Months Ended Years Ended Ended Years Ended
September 30, March 31, March 31, November 30,
1999 -------------------------------- -------- --------------------
(unaudited) 1999 1998 1997 1996 1995 1994
------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 13.60 $ 13.79 $ 10.20 $ 9.75 $ 9.77 $ 8.31 $ 9.65
-------- -------- -------- -------- -------- -------- --------
Net investment income ....................... 0.08@ 0.29 0.25 0.26 0.12 0.40 0.42
Net realized and unrealized gains (losses)
from investments ....................... (0.01)@ (0.23) 3.60 0.42 (0.01) 1.45 (1.31)
-------- -------- -------- -------- -------- -------- --------
Net increase (decrease) from
investment operations .................. 0.07 0.06 3.85 0.68 0.11 1.85 (0.89)
-------- -------- -------- -------- -------- -------- --------
Dividends from net investment income ........ (0.07) (0.25) (0.26) (0.23) (0.13) (0.39) (0.45)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period .............. $ 13.60 $ 13.60 $ 13.79 $ 10.20 $ 9.75 $ 9.77 $ 8.31
======== ======== ======== ======== ======== ======== ========
Total investment return (1) ................. 0.51% 0.49% 38.13% 7.05% 1.10% 22.73% (9.35)%
======== ======== ======== ======== ======== ======== ========
Ratios/Supplemental data:
Net assets, end of period (000's) ........... $ 7,511 $ 19,484 $ 21,562 $ 21,071 $ 34,765 $ 37,554 $ 37,156
Expenses to average net assets, net of
waivers from adviser ................... 2.38%* 2.35% 2.68% 2.69% 1.85%* 2.23% 2.33%
Expenses to average net assets, before
waivers from adviser ................... 2.38%* 2.35% 2.68% 2.76% 2.20%* 2.23% 2.33%
Net investment income to average net assets,
net of waivers from adviser ............ 1.23%* 2.16% 2.05% 2.51% 3.51%* 4.37% 4.72%
Net investment income to average net assets,
before waivers from adviser ............ 1.23%* 2.16% 2.05% 2.44% 3.16%* 4.37% 4.72%
Portfolio turnover rate ..................... 25% 21% 10% 41% 21% 30% 92%
</TABLE>
- ----------
* Annualized.
+ Commencement of issuance of shares.
@ Calculated using the average shares outstanding for the period.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. The figures do not
include sales charges or program fees; results would be lower if sales
charges or program fees were included. Total investment return for periods
of less than one year has not been annualized.
33
<PAGE>
PAINEWEBBER UTILITY INCOME FUND
FINANCIAL HIGHLIGHTS (concluded)
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
Class C
------------------------------------------------------------------------------------
For the
For the Six For the Four Months For the
Months Ended Years Ended Ended Years Ended
September 30, March 31, March 31, November 30,
1999 -------------------------------- --------- --------------------
(unaudited) 1999 1998 1997 1996 1995 1994
------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 13.58 $ 13.78 $ 10.20 $ 9.75 $ 9.77 $ 8.31 $ 9.65
-------- -------- -------- -------- -------- -------- --------
Net investment income ....................... 0.09@ 0.28 0.23 0.25 0.12 0.40 0.42
Net realized and unrealized gains (losses)
from investments ....................... (0.01)@ (0.22) 3.61 0.43 (0.01) 1.45 (1.31)
-------- -------- -------- -------- -------- -------- --------
Net increase (decrease) from
investment operations .................. 0.08 0.06 3.84 0.68 0.11 1.85 (0.89)
-------- -------- -------- -------- -------- -------- --------
Dividends from net investment income ........ (0.10) (0.26) (0.26) (0.23) (0.13) (0.39) (0.45)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period .............. $ 13.56 $ 13.58 $ 13.78 $ 10.20 $ 9.75 $ 9.77 $ 8.31
======== ======== ======== ======== ======== ======== ========
Total investment return (1) ................. 0.56% 0.44% 38.09% 7.06% 1.10% 22.71% (9.36)%
======== ======== ======== ======== ======== ======== ========
Ratios/Supplemental data:
Net assets, end of period (000's) ........... $ 7,303 $ 7,700 $ 7,736 $ 6,909 $ 11,072 $ 12,222 $ 13,922
Expenses to average net assets, net of
waivers from adviser ................... 2.34%* 2.35% 2.68% 2.70% 1.85%* 2.24% 2.32%
Expenses to average net assets, before
waivers from adviser ................... 2.34%* 2.35% 2.68% 2.76% 2.20%* 2.24% 2.32%
Net investment income to average net assets,
net of waivers from adviser ............ 1.25%* 2.13% 1.99% 2.51% 3.50%* 4.37% 4.69%
Net investment income to average net assets,
before waivers from adviser ............ 1.25%* 2.13% 1.99% 2.44% 3.15%* 4.37% 4.69%
Portfolio turnover rate ..................... 25% 21% 10% 41% 21% 30% 92%
<CAPTION>
Class Y
------------------------------
For the Six For the Period
Months Ended September 10
September 30, 1998+ to
1999 March 31,
(unaudited) 1999
------------- --------------
<S> <C> <C>
Net asset value, beginning of period ......... $ 13.55 $ 12.55
-------- --------
Net investment income ........................ 0.15@ 0.24
Net realized and unrealized gains (losses)
from investments ........................ (0.01)@ 1.03
-------- --------
Net increase (decrease) from
investment operations ................... 0.14 1.27
-------- --------
Dividends from net investment income ......... (0.16) (0.27)
-------- --------
Net asset value, end of period ............... $ 13.53 $ 13.55
======== ========
Total investment return (1) .................. 1.04% 10.14%
======== ========
Ratios/Supplemental data:
Net assets, end of period (000's) ............ $ 87 $ 40
Expenses to average net assets, net of
waivers from adviser .................... 1.49%* 1.25%*
Expenses to average net assets, before
waivers from adviser .................... 1.49%* 1.25%*
Net investment income to average net assets,
net of waivers from adviser ............. 2.36%* 2.57%*
Net investment income to average net assets,
before waivers from adviser ............. 2.36%* 2.57%*
Portfolio turnover rate ...................... 25% 21%
</TABLE>
- ----------
* Annualized.
+ Commencement of issuance of shares.
@ Calculated using the average shares outstanding for the period.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. The figures do not
include sales charges or program fees; results would be lower if sales
charges or program fees were included. Total investment return for periods
of less than one year has not been annualized.
34
<PAGE>
================================================================================
DIRECTORS/TRUSTEES
E. Garrett Bewkes, Jr.
Chairman
Margo N. Alexander
Richard Q. Armstrong
Richard R. Burt
Mary C. Farrell
Meyer Feldberg
George W. Gowen
Frederic V. Malek
Carl W. Schafer
Brian M. Storms
PRINCIPAL OFFICERS
Margo N. Alexander
President
Victoria E. Schonfeld
Vice President
Dianne E. O'Donnell
Vice President and Secretary
Paul H. Schubert
Vice President and Treasurer
Julieanna M. Berry
Vice President
James F. Keegan
Vice President
Mark A. Tincher
Vice President
INVESTMENT ADVISOR, ADMINISTRATOR AND DISTRIBUTOR
Mitchell Hutchins Asset Management Inc.
51 West 52nd Street
New York, New York 10019
This report is not to be used in connection with the offering of shares of the
Fund unless accompanied or preceded by an effective prospectus.
The financial information included herein is taken from the records of the Funds
without examination by independent auditors who do not express an opinion
thereon.
A prospectus containing more complete information for any of the Funds listed on
the back cover can be obtained from a PaineWebber Financial Advisor or
corresponding firm. Read the prospectus carefully before investing.
<PAGE>
PaineWebber offers a family of 28 funds which encompass a diversified range of
investment goals.
BOND FUNDS
o High Income Fund
o Investment Grade Income Fund
o Low Duration U.S. Government Income Fund
o Strategic Income Fund
o U.S. Government Income Fund
TAX-FREE BOND FUNDS
o California Tax-Free Income Fund
o Municipal High Income Fund
o National Tax-Free Income Fund
o New York Tax-Free Income Fund
STOCK FUNDS
o Financial Services Growth Fund
o Growth Fund
o Growth and Income Fund
o Mid Cap Fund
o Small Cap Fund
o S&P 500 Index Fund
o Strategy Fund
o Tax-Managed Equity Fund
o Utility Income Fund
ASSET ALLOCATION FUNDS
o Balanced Fund
o Tactical Allocation Fund
GLOBAL FUNDS
o Asia Pacific Growth Fund
o Emerging Markets Equity Fund
o Global Equity Fund
o Global Income Fund
MITCHELL HUTCHINS PORTFOLIOS
o Aggressive Portfolio
o Moderate Portfolio
o Conservative Portfolio
PAINEWEBBER MONEY MARKET FUND
PaineWebber
(Copyright) 1999 PaineWebber Incorporated
Member SIPC
All rights reserved.
[GRAPHIC OMITTED] PaineWebber
========================================================
FINANCIAL
SERVICES
GROWTH FUND INC.
UTILITY
INCOME FUND
SEMIANNUAL REPORT
SEPTEMBER 30, 1999
