-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H2dT8ZlyGb2BzHanixf+f1xNa3LRU+R68hArp1nCj9GjDcED6FbIywdFSzU+MbD/ lz7oUlYE03UCUUoTgXHCZw== 0001047469-99-018331.txt : 19990506 0001047469-99-018331.hdr.sgml : 19990506 ACCESSION NUMBER: 0001047469-99-018331 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990228 FILED AS OF DATE: 19990505 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAINEWEBBER AMERICA FUND /NY/ CENTRAL INDEX KEY: 0000703887 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133175781 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-03502 FILM NUMBER: 99611643 BUSINESS ADDRESS: STREET 1: 1285 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127132421 MAIL ADDRESS: STREET 1: 1285 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: PAINE WEBBER GOVERNMENT FUND INC DATE OF NAME CHANGE: 19890402 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAINEWEBBER MANAGED INVESTMENTS TRUST CENTRAL INDEX KEY: 0000746703 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133223777 STATE OF INCORPORATION: MA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-04040 FILM NUMBER: 99611644 BUSINESS ADDRESS: STREET 1: 1285 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127131074 MAIL ADDRESS: STREET 1: 1285 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: PAINEWEBBER FIXED INCOME PORTFOLIOS INC DATE OF NAME CHANGE: 19920303 FORMER COMPANY: FORMER CONFORMED NAME: PAINE WEBBER INC DATE OF NAME CHANGE: 19600201 N-30D 1 N-30D PAINEWEBBER GROWTH AND INCOME FUND, GROWTH FUND, MID CAP FUND SEMIANNUAL REPORT April 16, 1999 PAINEWEBBER GROWTH AND INCOME FUND FUND PROFILE GOAL: Current income and capital growth PORTFOLIO MANAGER: Mark Tincher, Mitchell Hutchins Asset Management Inc. TOTAL NET ASSETS: $1.5 billion as of February 28, 1999 DIVIDEND PAYMENTS: Semiannually PAINEWEBBER GROWTH AND INCOME FUND Top Five Sectors* Consumer Cyclicals 18.8% Technology 17.4% Financial Services 16.9% Utilities 11.4% Healthcare 10.5% Dear Shareholder, We are pleased to present you with the semiannual report for the PaineWebber Growth and Income Fund, PaineWebber Growth Fund and PaineWebber Mid Cap Fund for the six-month period ended February 28, 1999. MARKET REVIEW The stock market, as measured by S&P 500 Index (the "Index"), gained 30.27% for the six-month period ended February 28, 1999. As the period began, the market had just lost 14.45% in August 1998. Stock prices came back through the period, but endured considerable volatility along the way. The Federal Reserve reduced short-term interest rates to quell investor anxieties, and the market -- led by technology stocks -- rebounded with strong gains at the end of 1998. Prices remained volatile, however, and the Index posted a much lower gain in January 1999. Investors began to worry that inflation might heat up and cause interest rates to rise again. Concerns about decreasing demand for PCs and a potential for year 2000 disruptions hurt technology stock prices. The Index lost 3.11% in February, its first monthly loss since August. OUTLOOK-- The economy is sending mixed signals -- auto sales look strong but airline traffic has been weak. Unemployment is down, but inflation does not seem to be rising. We'll be watching for a clear signal on interest rates from the Federal Reserve, but right now it looks as if monetary policy will remain on hold. The stock market has remained volatile since period-end -- the Dow Jones Industrial Average recently surpassed 10,000 but promptly fell back almost 180 points intraday. Technology stocks are still correcting, and no other sector has emerged yet as a market leader. This could be good for the long-term health of the market, in that it may encourage investors to diversify into other capitalization segments or styles as market volatility subsides. PORTFOLIO REVIEWS PAINEWEBBER GROWTH AND INCOME FUND PERFORMANCE-- The Fund's total return consists of the change in net asset value with dividends reinvested. For the six-month period ended February 28, 1999, without deducting sales charges, Class A shares gained 22.89%, Class B shares gained 22.42%, Class C shares gained 22.38% and Class Y shares gained 23.03%. The Fund's total return may be lower for shareowners who purchased or redeemed Fund shares during the period. After deducting the maximum applicable sales charges, Class A shares gained 17.35%, Class B shares gained 17.42% and Class C shares gained 21.38%. Class Y shares are not subject to sales charges. HIGHLIGHTS-- The Fund began the period in a relatively defensive mode, with a 10% cash position and reduced weightings in financial services and consumer cyclical stocks. During the period ended * Portfolio weightings represent percentages of net assets as of February 28, 1999. The Fund portfolio is actively managed and its composition will vary over time. 1 SEMIANNUAL REPORT February 28, 1999, we further reduced the Fund's weighting in consumer cyclical stocks (18.8%*), though the Fund was still overweighted compared to the Index (14.3%). We also further reduced the Fund's weighting in financial services stocks (16.9%). Technology (17.4%) increased during the period and healthcare (10.5%) moved into the ranks of the Fund's top five sectors (see table, "Top Five Sectors"). As the market began to recover, we reduced the Fund's cash position and redeployed the money into stocks. OUTLOOK-- We believe consumer cyclical stocks -- such as auto suppliers, media companies and restaurants -- will remain attractive as long as slow economic growth, low inflation and low interest rates prevail. Despite weakness toward the end of the period, we still believe technology stocks can benefit from continued growth. PAINEWEBBER GROWTH FUND FUND PROFILE GOAL: Long-term capital appreciation PORTFOLIO MANAGER: Ellen R. Harris, Mitchell Hutchins Asset Management Inc. TOTAL NET ASSETS: $429.5 million as of February 28, 1999 DIVIDEND PAYMENTS: Annually PAINEWEBBER GROWTH FUND Top Five Sectors* Technology 26.4% Media/Entertainment 18.2% Retail 17.5% Healthcare 10.9% Financial Services 8.3% PAINEWEBBER GROWTH FUND PERFORMANCE-- The Fund's total return consists of the change in net asset value with dividends reinvested. For the six-month period ended February 28, 1999, without deducting sales charges, Class A shares gained 38.98%, Class B shares gained 38.36%, Class C shares gained 38.35% and Class Y shares gained 39.18%. The Fund's total return may be lower for shareowners who purchased or redeemed Fund shares during the period. After deducting the maximum applicable sales charges, Class A shares gained 32.70%, Class B shares gained 33.36% and Class C shares gained 37.35%. Class Y shares are not subject to sales charges. HIGHLIGHTS-- The Fund seeks investments in companies that have the potential to show growth in earnings at a faster rate than that of the market. To that end, we utilize our proprietary multi-factor growth model to determine a universe of growth companies. From that universe, using fundamental analysis, we attempt to identify companies with good longer-term growth potential that are selling at reasonable valuations. We also use the model to help us identify companies which we own that might be good "sell candidates," ones that may no longer be able to show above average growth. Fundamental analysis of the sell candidates leads to our "sell selections." Our emphasis on technology stocks helped the Fund's performance during the period. "Best-in-class" companies, such as Cisco Systems (2.8%*), EMC Corp. (2.2%), and America Online (1.9%) were strong performers. The ongoing convergence of telecommunications and media/entertainment has created good performers among the Fund's holdings. Notable examples include MCI WorldCom (2.8%), Time Warner (2.7%) and TeleCommunications, Inc. (2.7%), which recently was acquired by AT&T. Specialty retailers such as Staples (1.8%), Home Depot (2.0%) and Costco (1.5%) also were important contributors. We have tried to maintain a reasonably high average market capitalization -- about $19 billion -- because investors still favor liquidity. (Stocks with higher market capitalization tend to have higher liquidity.) There are plenty of opportunities to own larger-cap growth stocks selling at what we believe to be reasonable valuations. OUTLOOK-- We expect to continue focusing the Fund on growth companies -- guided by our * Portfolio weightings represent percentages of net assets as of February 28, 1999. The Fund portfolio is actively managed and its composition will vary over time. 2 PAINEWEBBER GROWTH AND INCOME FUND, GROWTH FUND, MID CAP FUND SEMIANNUAL REPORT model. We think the areas of greatest interest will be technology, consumer cyclicals and utilities (our sector for telecommunications). We still intend to underweight the Fund in companies that need strong economic growth or price increases to provide revenue growth or earnings growth. This will mean less emphasis, therefore, on commodities and the so-called "heavier cyclicals" (capital goods). PAINEWEBBER MID CAP FUND FUND PROFILE GOAL: Long-term capital appreciation PORTFOLIO MANAGERS: Mark A. Tincher, Christopher G. Altschul and Antony J. Scott, Mitchell Hutchins Asset Management Inc. TOTAL NET ASSETS: $167.3 million as of February 28, 1999 DIVIDEND PAYMENTS: Annually PAINEWEBBER MID CAP FUND Top Five Sectors* Technology 26.1% Consumer Cyclicals 24.0% Financial Services 13.6% Capital Goods 11.6% Healthcare 5.3% PAINEWEBBER MID CAP FUND PERFORMANCE-- The Fund's total return consists of the change in net asset value with dividends reinvested. For the six-month period ended February 28, 1999, without deducting sales charges, Class A shares gained 29.13%, Class B shares gained 28.54%, Class C shares gained 28.65% and Class Y shares gained 29.26%. The Fund's total return may be lower for shareowners who purchased or redeemed Fund shares during the period. After deducting the maximum applicable sales charges, Class A shares gained 23.26%, Class B shares gained 23.54% and Class C shares gained 27.65%. Class Y shares are not subject to sales charges. HIGHLIGHTS-- During the period we stuck to the Fund's strategy of investing in a blend of growth and value stocks -- the Fund had a slight tilt toward growth stocks. The Fund's overweighting in technology (26.1%*) helped performance during the period. America Online (2.5%) led performance within the technology sector. Also, the Fund's underweightings in energy (1.7%), basic materials (3.5%) and healthcare (5.3%) helped performance considerably. Other positions had a neutral impact on performance: the Fund's overweightings in capital goods (11.6%) and consumer cyclicals (24.0%), and its underweightings in financial services (13.6%) and utilities (4.8%). We made few changes to the Fund's portfolio during the period. We cut the Fund's Biogen (1.2%) position in half, selling into strength. We reduced the Fund's exposure to retail stocks after the holiday shopping season ended. During the period we took advantage of a slight price decline to add to the Fund's Maytag position (1.5%). OUTLOOK-- Going forward, we expect to retain the Fund's tilt toward growth stocks. We think consumer cyclical stocks will remain attractive as long as current economic conditions hold -- moderate growth, low inflation and low interest rates. We still like auto suppliers, which are likely to benefit from strong consumer auto spending and consolidation within the sector. We may increase the Fund's energy weighting as a value-stock opportunity -- if OPEC members seem likely to enforce their recent decision to cut oil production. We expect to reduce the Fund's exposure to technology, and will likely redeploy assets into relatively more value-oriented sectors. * Portfolio weightings represent percentages of net assets as of February 28, 1999. The Fund portfolio is actively managed and its composition will vary over time. 3 SEMIANNUAL REPORT Our ultimate objective in managing your investments is to help you successfully meet your financial goals. We thank you for your continued support and welcome any comments or questions you may have. For a QUARTERLY REVIEW on PaineWebber Growth and Income Fund, PaineWebber Growth Fund, PaineWebber Mid Cap Fund or another fund in the PaineWebber Family of Funds,(1) please contact your Financial Advisor. Sincerely, /s/ MARGO ALEXANDER MARGO ALEXANDER Chairman and Chief Executive Officer Mitchell Hutchins Asset Management Inc. /s/ MARK A. TINCHER MARK A. TINCHER Managing Director and Chief Investment Officer--Equities Portfolio Manager, PaineWebber Growth and Income Fund and PaineWebber Mid Cap Fund /s/ ELLEN R. HARRIS ELLEN R. HARRIS Managing Director Portfolio Manager, PaineWebber Growth Fund /s/ CHRISTOPHER G. ALTSCHUL CHRISTOPHER G. ALTSCHUL First Vice President Portfolio Manager/ Research Analyst, PaineWebber Mid Cap Fund /s/ ANTONY J. SCOTT ANTONY J. SCOTT First Vice President Portfolio Manager/ Research Analyst, PaineWebber Mid Cap Fund This letter is intended to assist shareholders in understanding how the Funds performed during the six-month period ended February 28, 1999, and reflects our views at the time of its writing. Of course, these views may change in response to changing circumstances. We encourage you to consult your Financial Advisor regarding your personal investment program. (1) Mutual funds are sold by prospectus only. The prospectuses for the funds contain more complete information regarding risks, charges and expenses, and should be read carefully before investing. 4 PAINEWEBBER GROWTH & INCOME FUND PERFORMANCE RESULTS (UNAUDITED)
NET ASSET VALUE TOTAL RETURN(1) --------------------------------------- -------------------------------- 12 MONTHS 6 MONTHS 02/28/99 08/31/98 02/28/98 ENDED 02/28/99 ENDED 02/28/99 - ----------------------------------------------------------------------------------------------------------- Class A Shares $31.16 $26.92 $31.70 4.64% 22.89% - ----------------------------------------------------------------------------------------------------------- Class B Shares 30.94 26.77 31.56 3.84 22.42 - ----------------------------------------------------------------------------------------------------------- Class C Shares 30.99 26.82 31.61 3.83 22.38 - ----------------------------------------------------------------------------------------------------------- PERFORMANCE SUMMARY CLASS A SHARES NET ASSET VALUE ---------------------- CAPITAL GAINS DIVIDENDS TOTAL PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1) - ----------------------------------------------------------------------------------------------------------- 12/20/83-12/31/84 $12.65 $13.21 -- $1.0800 13.72% - ----------------------------------------------------------------------------------------------------------- 1985 13.21 14.97 $ 0.1950 0.8850 22.36 - ----------------------------------------------------------------------------------------------------------- 1986 14.97 15.04 1.1380 0.6830 12.68 - ----------------------------------------------------------------------------------------------------------- 1987 15.04 12.05 2.3027 0.7366 (3.16) - ----------------------------------------------------------------------------------------------------------- 1988 12.05 13.67 -- 0.5120 17.83 - ----------------------------------------------------------------------------------------------------------- 1989 13.67 16.32 0.1675 0.5178 24.59 - ----------------------------------------------------------------------------------------------------------- 1990 16.32 15.85 -- 0.3030 (1.01) - ----------------------------------------------------------------------------------------------------------- 1991 15.85 21.17 -- 0.2526 35.34 - ----------------------------------------------------------------------------------------------------------- 1992 21.17 21.74 -- 0.2432 3.90 - ----------------------------------------------------------------------------------------------------------- 1993 21.74 20.86 0.0310 0.2818 (2.59) - ----------------------------------------------------------------------------------------------------------- 1994 20.86 18.18 1.2111 0.2417 (5.87) - ----------------------------------------------------------------------------------------------------------- 1995 18.18 22.39 1.5085 0.2475 33.21 - ----------------------------------------------------------------------------------------------------------- 1996 22.39 24.37 3.0247 0.2584 23.46 - ----------------------------------------------------------------------------------------------------------- 1997 24.37 29.29 2.6664 0.2064 31.86 - ----------------------------------------------------------------------------------------------------------- 1998 29.29 32.46 1.7755 0.1707 17.97 - ----------------------------------------------------------------------------------------------------------- 01/01/99-02/28/99 32.46 31.16 -- -- (4.00) - ----------------------------------------------------------------------------------------------------------- Totals: $14.0204 $6.6197 - ----------------------------------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 02/28/99: 598.67% - ----------------------------------------------------------------------------------------------------------- PERFORMANCE SUMMARY CLASS B SHARES NET ASSET VALUE ---------------------- CAPITAL GAINS DIVIDENDS TOTAL PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1) - ----------------------------------------------------------------------------------------------------------- 07/01/91-12/31/91 $18.04 $21.14 -- $0.1074 17.85% - ----------------------------------------------------------------------------------------------------------- 1992 21.14 21.69 -- 0.0992 3.09 - ----------------------------------------------------------------------------------------------------------- 1993 21.69 20.82 $ 0.0310 0.1193 (3.31) - ----------------------------------------------------------------------------------------------------------- 1994 20.82 18.15 1.2111 0.0768 (6.62) - ----------------------------------------------------------------------------------------------------------- 1995 18.15 22.35 1.5085 0.0715 32.18 - ----------------------------------------------------------------------------------------------------------- 1996 22.35 24.32 3.0247 0.0643 22.55 - ----------------------------------------------------------------------------------------------------------- 1997 24.32 29.20 2.6508 0.0044 30.79 - ----------------------------------------------------------------------------------------------------------- 1998 29.20 32.26 1.7755 -- 17.02 - ----------------------------------------------------------------------------------------------------------- 01/01/99-02/28/99 32.26 30.94 -- -- (4.09) - ----------------------------------------------------------------------------------------------------------- Totals: $10.2016 $0.5429 - ----------------------------------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 02/28/99: 164.12% - -----------------------------------------------------------------------------------------------------------
(1) Figures assume reinvestment of all dividends and other distributions at net asset value on the payable dates and do not include sales charges; results would be lower if sales charges were included. Total investment return for periods of less than one year has not been annualized. The data above represents past performance of the Fund's shares, which is no guarantee of future results. The principal value of an investment in the Fund will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. 5 PAINEWEBBER GROWTH & INCOME FUND PERFORMANCE RESULTS (UNAUDITED) (CONCLUDED)
PERFORMANCE SUMMARY CLASS C SHARES NET ASSET VALUE ---------------------- CAPITAL GAINS DIVIDENDS TOTAL PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1) - ----------------------------------------------------------------------------------------------------------- 07/02/92-12/31/92 $19.96 $21.75 -- $0.1160 9.58% - ----------------------------------------------------------------------------------------------------------- 1993 21.75 20.87 $ 0.0310 0.1308 (3.30) - ----------------------------------------------------------------------------------------------------------- 1994 20.87 18.20 1.2111 0.0756 (6.61) - ----------------------------------------------------------------------------------------------------------- 1995 18.20 22.42 1.5085 0.0728 32.21 - ----------------------------------------------------------------------------------------------------------- 1996 22.42 24.39 3.0247 0.0781 22.55 - ----------------------------------------------------------------------------------------------------------- 1997 24.39 29.24 2.6664 0.0318 30.77 - ----------------------------------------------------------------------------------------------------------- 1998 29.24 32.32 1.7755 -- 17.06 - ----------------------------------------------------------------------------------------------------------- 01/01/99-02/28/99 32.32 30.99 -- -- (4.12) - ----------------------------------------------------------------------------------------------------------- Totals: $10.2172 $0.5051 - ----------------------------------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 02/28/99: 135.34% - -----------------------------------------------------------------------------------------------------------
(1) Figures assume reinvestment of all dividends and other distributions at net asset value on the payable dates and do not include sales charges; results would be lower if sales charges were included. Total investment return for periods of less than one year has not been annualized. AVERAGE ANNUAL TOTAL RETURN
% RETURN WITHOUT DEDUCTING % RETURN AFTER DEDUCTING MAXIMUM SALES CHARGE MAXIMUM SALES CHARGE ------------------------------- ------------------------------- CLASS A* B** C*** A* B** C*** - ------------------------------------------------------------------------------------------------ Twelve Months Ended 03/31/99 1.14% 0.35% 0.38% (3.41)% (4.38)% (0.57)% - ------------------------------------------------------------------------------------------------ Five Years Ended 03/31/99 19.55 18.62 18.63 18.45 18.41 18.63 - ------------------------------------------------------------------------------------------------ Ten Years Ended 03/31/99 13.86 N/A N/A 13.34 N/A N/A - ------------------------------------------------------------------------------------------------ Commencement of Operations Through 03/31/99+ 13.62 13.47 13.65 13.28 13.47 13.65 - ------------------------------------------------------------------------------------------------
* Maximum sales charge for Class A shares is 4.5% of the public offering price. Class A shares bear ongoing 12b-1 service fees. ** Maximum contingent deferred sales charge for Class B shares is 5% and is reduced to 0% after 6 years. Class B shares bear ongoing 12b-1 distribution and service fees. *** Maximum contingent deferred sales charge for Class C shares is 1% and is reduced to 0% after 1 year. Class C shares bear ongoing 12b-1 distribution and service fees. + Commencement of operation dates are December 20, 1983, July 1, 1991 and July 2, 1992 for Class A, Class B and Class C shares, respectively. Note: The Fund offers Class Y shares to a limited group of investors, including participants in certain investment programs that are sponsored by PaineWebber and that may invest in PaineWebber mutual funds. For the six months ended February 28, 1999 and since inception, February 12, 1992 through February 28, 1999, Class Y shares had a total return of 23.03% and 141.01%, respectively. For the one year and five year periods ended March 31, 1999 and since inception through March 31, 1999, Class Y shares have an average annual total return of 1.43%, 19.88% and 13.26%, respectively. Class Y shares do not have initial or contingent deferred sales charges or ongoing distribution and service fees. The data above represents past performance of the Fund's shares, which is no guarantee of future results. The principal value of an investment in the Fund will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. 6 PAINEWEBBER MID CAP FUND PERFORMANCE RESULTS (UNAUDITED)
NET ASSET VALUE TOTAL RETURN(1) --------------------------------------- -------------------------------- 12 MONTHS 6 MONTHS 02/28/99 08/31/98 02/28/98 ENDED 02/28/99 ENDED 02/28/99 - ----------------------------------------------------------------------------------------------------------- Class A Shares $ 9.61 $ 7.97 $14.40 (2.22)% 29.13% - ----------------------------------------------------------------------------------------------------------- Class B Shares 9.59 7.99 14.48 (3.06) 28.54 - ----------------------------------------------------------------------------------------------------------- Class C Shares 8.66 7.26 13.52 (3.03) 28.65 - ----------------------------------------------------------------------------------------------------------- PERFORMANCE SUMMARY CLASS A SHARES NET ASSET VALUE ---------------------- CAPITAL GAINS DIVIDENDS TOTAL PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1) - ----------------------------------------------------------------------------------------------------------- 04/07/92-12/31/92 $ 9.55 $10.50 -- -- 9.95% - ----------------------------------------------------------------------------------------------------------- 1993 10.50 12.19 -- -- 16.10 - ----------------------------------------------------------------------------------------------------------- 1994 12.19 11.98 $ 0.0433 -- (1.36) - ----------------------------------------------------------------------------------------------------------- 1995 11.98 14.67 0.7480 -- 28.79 - ----------------------------------------------------------------------------------------------------------- 1996 14.67 14.92 2.3244 -- 17.87 - ----------------------------------------------------------------------------------------------------------- 1997 14.92 13.55 3.4608 -- 15.14 - ----------------------------------------------------------------------------------------------------------- 1998 13.55 10.34 4.5107 -- 11.81 - ----------------------------------------------------------------------------------------------------------- 01/01/99-02/28/99 10.34 9.61 -- -- (7.06) - ----------------------------------------------------------------------------------------------------------- Total: $11.0872 $0.0000 - ----------------------------------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 02/28/99: 128.69% - ----------------------------------------------------------------------------------------------------------- PERFORMANCE SUMMARY CLASS B SHARES NET ASSET VALUE ---------------------- CAPITAL GAINS DIVIDENDS TOTAL PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1) - ----------------------------------------------------------------------------------------------------------- 04/07/92-12/31/92 $10.00 $10.93 -- -- 9.30% - ----------------------------------------------------------------------------------------------------------- 1993 10.93 12.59 -- -- 15.19 - ----------------------------------------------------------------------------------------------------------- 1994 12.59 12.28 $ 0.0433 -- (2.03) - ----------------------------------------------------------------------------------------------------------- 1995 12.28 14.94 0.7480 -- 27.73 - ----------------------------------------------------------------------------------------------------------- 1996 14.94 15.11 2.3244 -- 17.01 - ----------------------------------------------------------------------------------------------------------- 1997 15.11 13.64 3.4608 -- 14.28 - ----------------------------------------------------------------------------------------------------------- 1998 13.64 10.33 4.5107 -- 10.85 - ----------------------------------------------------------------------------------------------------------- 01/01/99-02/28/99 10.33 9.59 -- -- (7.16) - ----------------------------------------------------------------------------------------------------------- Total: $11.0872 $0.0000 - ----------------------------------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 02/28/99: 117.47% - ----------------------------------------------------------------------------------------------------------- PERFORMANCE SUMMARY CLASS C SHARES NET ASSET VALUE ---------------------- CAPITAL GAINS DIVIDENDS TOTAL PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1) - ----------------------------------------------------------------------------------------------------------- 07/02/92-12/31/92 $ 8.89 $10.46 -- -- 17.66% - ----------------------------------------------------------------------------------------------------------- 1993 10.46 12.05 -- -- 15.20 - ----------------------------------------------------------------------------------------------------------- 1994 12.05 11.75 $ 0.0433 -- (2.13) - ----------------------------------------------------------------------------------------------------------- 1995 11.75 14.26 0.7480 -- 27.82 - ----------------------------------------------------------------------------------------------------------- 1996 14.26 14.31 2.3244 -- 16.98 - ----------------------------------------------------------------------------------------------------------- 1997 14.31 12.74 3.4608 -- 14.39 - ----------------------------------------------------------------------------------------------------------- 1998 12.74 9.33 4.5107 -- 10.82 - ----------------------------------------------------------------------------------------------------------- 01/01/99-02/28/99 9.33 8.66 -- -- (7.18) - ----------------------------------------------------------------------------------------------------------- Total: $11.0872 $0.0000 - ----------------------------------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 02/28/99: 133.48% - -----------------------------------------------------------------------------------------------------------
(1) Figures assume reinvestment of all dividends and distributions, if any, at net asset value on the payable dates and do not include sales charges; results for each class would be lower if sales charges were included. Total investment return for periods of less than one year has not been annualized. The data above represents past performance of the Fund's shares, which is no guarantee of future results. The principal value of an investment in the Fund will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. 7 PAINEWEBBER MID CAP FUND AVERAGE ANNUAL TOTAL RETURN
% RETURN WITHOUT DEDUCTING % RETURN AFTER DEDUCTING MAXIMUM SALES CHARGE MAXIMUM SALES CHARGE ---------------------------------- ---------------------------------- CLASS A* B** C*** A* B** C*** - ------------------------------------------------------------------------------------------------------ Twelve Months Ended 03/31/99 (3.10)% (3.94)% (3.92)% (7.48)% (7.23)% (4.55)% - ------------------------------------------------------------------------------------------------------ Five Years Ended 03/31/99 14.11 13.22 13.23 13.07 13.01 13.23 - ------------------------------------------------------------------------------------------------------ Commencement of Operations Through 03/31/99+ 13.08 12.27 13.90 12.34 12.27 13.90 - ------------------------------------------------------------------------------------------------------
* Maximum sales charge for Class A shares is 4.5% of the public offering price. Class A shares bear ongoing 12b-1 service fees. ** Maximum contingent deferred sales charge for Class B shares is 5% and is reduced to 0% after 6 years. Class B shares bear ongoing 12b-1 distribution and service fees. *** Maximum contingent deferred sales charge for Class C shares is 1% and is reduced to 0% after 1 year. Class C shares bear ongoing 12b-1 distribution and service fees. + Commencement of operations date are April 7, 1992 for Class A and Class B shares and July 2, 1992 for Class C shares. Note: The Fund offers Class Y shares to a limited group of investors, including participants in certain investment programs that are sponsored by PaineWebber and that may invest in PaineWebber mutual funds. For the six months ended February 28, 1999 and since inception March 17, 1998 through February 28, 1999, Class Y shares had a total return of 29.26% and (5.41)%, respectively. For the year ended March 31, 1999 and since inception March 17, 1998 through March 31, 1999, Class Y shares have an average annual total return of (3.01)% and (2.36)%, respectively. Class Y shares do not have initial or contingent deferred sales charges or ongoing distribution and service fees. The data above represents past performance of the Fund's shares, which is no guarantee of future results. The principal value of an investment in the Fund will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. 8 PAINEWEBBER GROWTH FUND PERFORMANCE RESULTS (UNAUDITED)
NET ASSET VALUE TOTAL RETURN(1) -------------------------------------- -------------------------------- 12 MONTHS 6 MONTHS 02/28/99 08/31/98 02/28/98 ENDED 02/28/99 ENDED 02/28/99 - ---------------------------------------------------------------------------------------------------------- Class A Shares $25.74 $20.08 $23.29 19.82% 38.98% - ---------------------------------------------------------------------------------------------------------- Class B Shares 23.35 18.44 21.48 18.78 38.36 - ---------------------------------------------------------------------------------------------------------- Class C Shares 23.64 18.65 21.72 18.80 38.35 - ---------------------------------------------------------------------------------------------------------- PERFORMANCE SUMMARY CLASS A SHARES NET ASSET VALUE CAPITAL ---------------------- GAINS DIVIDENDS TOTAL PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1) - ---------------------------------------------------------------------------------------------------------- 03/18/85-12/31/85 $ 9.15 $10.55 -- $0.1275 16.87% - ---------------------------------------------------------------------------------------------------------- 1986 10.55 10.86 $0.4064 0.1042 7.64 - ---------------------------------------------------------------------------------------------------------- 1987 10.86 9.81 1.4051 0.0847 4.34 - ---------------------------------------------------------------------------------------------------------- 1988 9.81 11.87 -- 0.1011 22.05 - ---------------------------------------------------------------------------------------------------------- 1989 11.87 14.79 1.1520 -- 34.27 - ---------------------------------------------------------------------------------------------------------- 1990 14.79 12.98 0.4625 0.1625 (7.72) - ---------------------------------------------------------------------------------------------------------- 1991 12.98 18.53 0.6003 0.0072 47.61 - ---------------------------------------------------------------------------------------------------------- 1992 18.53 18.66 0.6235 -- 4.15 - ---------------------------------------------------------------------------------------------------------- 1993 18.66 21.14 1.0734 -- 19.17 - ---------------------------------------------------------------------------------------------------------- 1994 21.14 18.81 0.0258 -- (10.90) - ---------------------------------------------------------------------------------------------------------- 1995 18.81 23.12 1.8440 -- 33.02 - ---------------------------------------------------------------------------------------------------------- 1996 23.12 24.24 2.1056 -- 14.11 - ---------------------------------------------------------------------------------------------------------- 1997 24.24 21.24 6.7819 -- 17.01 - ---------------------------------------------------------------------------------------------------------- 1998 21.24 25.85 2.0057 -- 31.95 - ---------------------------------------------------------------------------------------------------------- 01/01/99-02/28/99 25.85 25.74 -- -- (0.43) - ---------------------------------------------------------------------------------------------------------- Totals: $18.4862 $0.5872 - ---------------------------------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 02/28/99: 656.19% - ---------------------------------------------------------------------------------------------------------- PERFORMANCE SUMMARY CLASS B SHARES NET ASSET VALUE CAPITAL ---------------------- GAINS DIVIDENDS TOTAL PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1) - ---------------------------------------------------------------------------------------------------------- 07/01/91-12/31/91 $15.63 $18.47 $0.6003 $0.0037 22.18% - ---------------------------------------------------------------------------------------------------------- 1992 18.47 18.44 0.6235 -- 3.30 - ---------------------------------------------------------------------------------------------------------- 1993 18.44 20.71 1.0734 -- 18.26 - ---------------------------------------------------------------------------------------------------------- 1994 20.71 18.28 0.0258 -- (11.61) - ---------------------------------------------------------------------------------------------------------- 1995 18.28 22.22 1.8440 -- 31.95 - ---------------------------------------------------------------------------------------------------------- 1996 22.22 23.02 2.1056 -- 13.24 - ---------------------------------------------------------------------------------------------------------- 1997 23.02 19.62 6.7819 -- 16.17 - ---------------------------------------------------------------------------------------------------------- 1998 19.62 23.48 2.0057 -- 30.76 - ---------------------------------------------------------------------------------------------------------- 01/01/99-02/28/99 23.48 23.35 -- -- (0.55) - ---------------------------------------------------------------------------------------------------------- Totals: $15.0602 $0.0037 - ---------------------------------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 02/28/99: 201.68% - ----------------------------------------------------------------------------------------------------------
(1) Figures assume reinvestment of all dividends and other distributions at net asset value on the payable dates and do not include sales charges; results would be lower if sales charges were included. Total investment return for periods of less than one year has not been annualized. The data above represents past performance of the Fund's shares which is no guarantee of future results. The principal value of an investment in the Fund will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. 9 PAINEWEBBER GROWTH FUND PERFORMANCE RESULTS (UNAUDITED) (CONCLUDED)
PERFORMANCE SUMMARY CLASS C SHARES NET ASSET VALUE CAPITAL ---------------------- GAINS DIVIDENDS TOTAL PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1) - ---------------------------------------------------------------------------------------------------------- 07/02/92-12/31/92 $17.04 $18.57 $0.6235 -- 12.73% - ---------------------------------------------------------------------------------------------------------- 1993 18.57 20.85 1.0734 -- 18.19 - ---------------------------------------------------------------------------------------------------------- 1994 20.85 18.41 0.0258 -- (11.58) - ---------------------------------------------------------------------------------------------------------- 1995 18.41 22.40 1.8440 -- 32.00 - ---------------------------------------------------------------------------------------------------------- 1996 22.40 23.21 2.1056 -- 13.18 - ---------------------------------------------------------------------------------------------------------- 1997 23.21 19.83 6.7819 -- 16.13 - ---------------------------------------------------------------------------------------------------------- 1998 19.83 23.77 2.0057 -- 30.84 - ---------------------------------------------------------------------------------------------------------- 01/01/99-02/28/99 23.77 23.64 -- -- (0.55) - ---------------------------------------------------------------------------------------------------------- Totals: $14.4599 $0.0000 - ---------------------------------------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 02/28/99: 165.94% - ----------------------------------------------------------------------------------------------------------
(1) Figures assume reinvestment of all dividends and other distributions at net asset value on the payable dates and do not include sales charges; results would be lower if sales charges were included. Total investment return for periods of less than one year has not been annualized. The data above represents past performance of the Fund's shares, which is no guarantee of future results. The principal value of an investment in the Fund will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. AVERAGE ANNUAL TOTAL RETURN
% RETURN WITHOUT DEDUCTING % RETURN AFTER DEDUCTING MAXIMUM SALES CHARGE MAXIMUM SALES CHARGE ------------------------------- ------------------------------- CLASS A* B** C*** A* B** C*** - ------------------------------------------------------------------------------------------------ Twelve Months Ended 03/31/99 20.83% 19.83% 19.82% 15.39% 14.83% 18.82% - ------------------------------------------------------------------------------------------------ Five Years Ended 03/31/99 18.72 17.78 17.80 17.63 17.57 17.80 - ------------------------------------------------------------------------------------------------ Ten Years Ended 03/31/99 16.32 N/A N/`A 15.79 N/A N/A - ------------------------------------------------------------------------------------------------ Commencement of Operations Through 03/31/99+ 15.93 16.09 16.50 15.55 16.09 16.50 - ------------------------------------------------------------------------------------------------
* Maximum sales charge for Class A shares is 4.5% of the public offering price. Class A shares bear ongoing 12b-1 service fees. ** Maximum contingent deferred sales charge for Class B shares is 5% and is reduced to 0% after 6 years. Class B shares bear ongoing 12b-1 distribution and service fees. *** Maximum contingent deferred sales charge for Class C shares is 1% and is reduced to 0% after 1 year. Class C shares bear ongoing 12b-1 distribution and service fees. + Commencement of operations dates are March 18, 1985, July 1, 1991 and July 2, 1992 for Class A, Class B and Class C shares, respectively. Note: The Fund offers Class Y shares to a limited group of investors, including participants in certain investment programs that are sponsored by PaineWebber and that may invest in PaineWebber mutual funds. For the six months ended February 28, 1999 and since inception, August 26, 1991 through February 28, 1999, Class Y shares had a total return of 39.18% and 195.33%, respectively. For the one year and five year periods ended March 31, 1999 and since inception through March 31, 1999, Class Y shares have an average annual total return of 21.15%, 19.06 and 16.12%, respectively. Class Y shares do not have initial or contingent deferred sales charges or ongoing distribution and service fees. The data above represents past performance of the Fund's shares, which is no guarantee of future results. The principal value of an investment in the Fund will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. 10 PAINEWEBBER GROWTH & INCOME FUND PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1999 (UNAUDITED)
NUMBER OF SHARES VALUE - ------------- ------------- COMMON STOCKS--89.37% AIRLINES--0.36% 110,800 US Airways Group, Inc.*....... $ 5,249,150 ------------- APPAREL, RETAIL--1.35% 700,000 TJX Companies, Inc............ 19,993,750 ------------- APPAREL, TEXTILES--0.30% 176,000 Westpoint Stevens Inc.*....... 4,488,000 ------------- BANKS--4.98% 297,400 Bank of New York Co. Inc...... 10,390,413 373,800 Bank One Corp................. 20,091,750 286,800 Mellon Bank Corp.............. 19,394,850 298,700 The Chase Manhattan Corp...... 23,783,987 ------------- 73,661,000 ------------- BROADCASTING & PUBLISHING--0.22% 140,000 Infinity Broadcasting Corp.*...................... 3,325,000 ------------- COMPUTER HARDWARE--6.62% 180,000 Cisco Systems, Inc.*.......... 17,606,250 650,000 Compaq Computer Corp.......... 22,912,500 243,000 Dell Computer Corp.*.......... 19,470,375 308,000 Hewlett-Packard Co............ 20,462,750 103,000 International Business Machines.................... 17,510,000 ------------- 97,961,875 ------------- COMPUTER SOFTWARE--4.78% 400,000 Autodesk, Inc................. 16,050,000 150,000 BMC Software, Inc.*........... 6,131,250 373,200 Cadence Design Systems, Inc.*....................... 8,980,125 150,000 Compuware Corp.*.............. 8,390,625 342,550 Network Associates Inc.*...... 16,099,850 260,000 Sterling Software Inc.*....... 6,630,000 280,000 Unisys Corp.*................. 8,347,500 ------------- 70,629,350 ------------- CONSTRUCTION, REAL PROPERTY--0.35% 161,000 Lafarge Corp.................. 5,131,875 ------------- CONSUMER DURABLES--1.45% 207,700 Furniture Brands International Inc.*....................... 4,439,587 247,500 Maytag Corp................... 13,875,469 185,800 Miller Herman Inc. ........... 3,158,600 ------------- 21,473,656 ------------- DEFENSE/AEROSPACE--2.11% 306,200 Allied-Signal, Inc............ 12,669,025 260,000 Lockheed Martin Corp.......... 9,798,750 175,500 Newport News Shipbuilding Inc......................... 5,078,531 NUMBER OF SHARES VALUE - ------------- -------------
DEFENSE/AEROSPACE--(CONCLUDED) 100,000 Precision Castparts Corp...... $ 3,712,500 ------------- 31,258,806 ------------- DIVERSIFIED RETAIL--3.87% 399,250 Dayton Hudson Corp............ 24,978,078 412,300 Family Dollar Stores Inc...... 8,246,000 327,500 Federated Department Stores, Inc.*....................... 12,465,469 179,400 Fred Meyer Inc.*.............. 11,526,450 ------------- 57,215,997 ------------- DRUGS & MEDICINE--9.07% 206,300 Amerisource Health Corp.*..... 15,395,138 206,700 Biogen Inc.*.................. 19,869,037 75,000 Bristol-Myers Squibb Co....... 9,445,313 136,950 Cardinal Health, Inc.......... 9,886,078 152,000 Elan Corp. L/C ADR*........... 11,656,500 141,000 Pharmacia & Upjohn, Inc....... 7,684,500 268,000 Schering-Plough Corp.......... 14,991,250 400,000 Warner Lambert Co............. 27,625,000 363,400 Watson Pharmaceuticals, Inc.*....................... 17,556,762 ------------- 134,109,578 ------------- ELECTRIC UTILITIES--3.31% 297,500 AES Corp...................... 11,063,281 155,000 Carolina Power & Light Co..... 6,180,625 170,000 Consolidated Edison of New York, Inc................... 7,947,500 123,600 Duke Energy Co................ 7,029,750 110,500 Energy East Corp.............. 5,925,563 197,200 Unicom Corp................... 7,012,925 111,000 Utilicorp United Inc.......... 3,815,625 ------------- 48,975,269 ------------- ELECTRICAL EQUIPMENT--0.45% 215,000 SCI Systems Inc.*............. 6,651,562 ------------- ENERGY RESERVES & PRODUCTION--0.84% 150,000 Mobil Corp.................... 12,478,125 ------------- ENTERTAINMENT--0.91% 72,000 Fox Entertainment Group Inc.*....................... 1,872,000 131,500 Viacom Inc., Class B*......... 11,621,313 ------------- 13,493,313 ------------- ENVIRONMENTAL SERVICES--1.01% 225,000 Allied Waste Industries Inc.*....................... 4,387,500 214,500 Waste Management, Inc......... 10,483,688 ------------- 14,871,188 -------------
11 PAINEWEBBER GROWTH & INCOME FUND
NUMBER OF SHARES VALUE - ------------- -------------
COMMON STOCKS--(CONTINUED) FINANCIAL SERVICES--1.69% 204,396 Associates First Capital Corp........................ $ 8,303,587 277,000 CIT Group Inc................. 8,171,500 84,800 General Electric Co........... 8,506,500 ------------- 24,981,587 ------------- FOOD RETAIL--1.07% 295,000 Food Lion Inc................. 2,811,719 200,000 Kroger Co.*................... 12,937,500 ------------- 15,749,219 ------------- FOREST PRODUCTS, PAPER--1.11% 350,000 Fort James Corp............... 10,456,250 322,800 United Stationers Inc.*....... 5,911,275 ------------- 16,367,525 ------------- GAS UTILITY--0.64% 187,500 Columbia Energy Group......... 9,468,750 ------------- INDUSTRIAL PARTS--0.72% 117,000 American Standard Companies, Inc.*....................... 3,926,813 117,300 SPX Corp.*.................... 6,700,762 ------------- 10,627,575 ------------- INDUSTRIAL SERVICES/SUPPLIES--1.63% 60,000 Delphi Automotive Systems Corp........................ 1,106,250 308,050 Tyco International Ltd. ...... 22,930,472 ------------- 24,036,722 ------------- INFORMATION & COMPUTER SERVICES--1.22% 200,000 Computer Sciences Corp.*...... 13,325,000 98,300 Valassis Communications Inc.*....................... 4,718,400 ------------- 18,043,400 ------------- LEISURE--1.15% 257,000 Eastman Kodak Co.............. 17,010,188 ------------- LIFE INSURANCE--2.93% 155,300 American General Corp......... 11,375,725 355,000 Conseco Inc................... 10,627,812 65,000 Lincoln National Corp......... 6,154,688 175,000 Protective Life Corp.......... 6,037,500 200,000 Reliastar Financial Corp...... 9,075,000 ------------- 43,270,725 ------------- LONG DISTANCE & PHONE COMPANIES--7.38% 212,500 AT&T Corp..................... 17,451,562 400,600 BellSouth Corp................ 18,527,750 100,000 Century Telephone Enterprises, Inc......................... 6,175,000 NUMBER OF SHARES VALUE - ------------- -------------
LONG DISTANCE & PHONE COMPANIES--(CONCLUDED) 240,000 GTE Corp...................... $ 15,570,000 334,300 MCI WorldCom Inc.*............ 27,579,750 450,000 SBC Communications, Inc....... 23,793,750 ------------- 109,097,812 ------------- MANUFACTURING-GENERAL--4.87% 305,800 Ingersoll Rand Co. ........... 14,525,500 382,000 Lucasvarity L/C ADR........... 17,309,375 358,700 Mettler-Toledo International Inc.*....................... 9,169,269 250,700 United Technologies Corp. .... 31,055,462 ------------- 72,059,606 ------------- MEDIA--0.36% 76,000 Comcast Corp., Class A........ 5,391,250 ------------- MEDICAL PRODUCTS--0.51% 300,000 St. Jude Medical, Inc.*....... 7,537,500 ------------- MEDICAL PROVIDERS--0.80% 202,500 Tenet Healthcare Corp.*....... 3,986,719 100,000 Wellpoint Health Networks Inc.*....................... 7,887,500 ------------- 11,874,219 ------------- MINING & METALS--0.41% 118,200 Martin Marietta Materials Inc......................... 6,065,138 ------------- MOTOR VEHICLES--1.82% 142,600 Borg Warner Automotive, Inc......................... 6,212,012 348,000 Ford Motor Co................. 20,640,750 ------------- 26,852,762 ------------- OIL REFINING--1.74% 191,283 BP Amoco L/C, ADR............. 16,259,055 200,000 Coastal Corp.................. 6,400,000 147,000 K N Energy, Inc. ............. 3,077,813 ------------- 25,736,868 ------------- OTHER INSURANCE--5.06% 286,600 ACE Ltd....................... 7,809,850 401,942 Allstate Corp................. 15,072,825 127,500 Ambac Financial Group Inc..... 7,140,000 116,000 American International Group Inc......................... 13,216,750 45,000 Loews Corp.................... 3,518,438 225,000 MBIA Inc...................... 13,851,562 255,000 Travelers Property Casualty Corp........................ 9,674,062 73,900 Xl Capital Ltd. .............. 4,526,375 ------------- 74,809,862 -------------
12 PAINEWEBBER GROWTH & INCOME FUND
NUMBER OF SHARES VALUE - ------------- -------------
COMMON STOCKS--(CONCLUDED) RESTAURANTS--2.20% 230,000 Brinker International Inc.*... $ 6,655,625 231,000 CKE Restaurants, Inc.......... 6,135,937 150,000 Outback Steakhouse Inc.*...... 6,581,250 250,000 Starbucks Corp.*.............. 13,218,750 ------------- 32,591,562 ------------- SECURITIES & ASSET MANAGEMENT--0.92% 150,000 Morgan Stanley Dean Witter & Co.......................... 13,575,000 ------------- SEMICONDUCTOR--3.53% 350,000 Applied Materials, Inc.*...... 19,468,750 210,500 Intel Corp.................... 25,246,844 85,000 Uniphase Corp.*............... 7,490,625 ------------- 52,206,219 ------------- SPECIALTY RETAIL--3.45% 225,000 Home Depot Inc................ 13,429,687 55,000 Lowe's Companies Inc.......... 3,262,188 360,400 Office Depot Inc.*............ 12,861,775 260,550 Staples, Inc.*................ 7,661,798
NUMBER OF SHARES VALUE - ------------- -------------
SPECIALTY RETAIL--(CONCLUDED) 247,000 Williams Sonoma Inc.*......... $ 8,444,313 160,000 Zale Corp.*................... 5,300,000 ------------- 50,959,761 ------------- THRIFT--1.19% 400,500 Dime Bancorp Inc.............. 9,912,375 250,000 Greenpoint Financial Corp..... 7,671,875 ------------- 17,584,250 ------------- TOBACCO--0.99% 375,000 Philip Morris Companies Inc......................... 14,671,875 ------------- Total Common Stocks (cost--$1,026,187,377)..... 1,321,536,869 ------------- PREFERRED STOCK--0.62% MOTOR VEHICLES--0.62% 158,000 Federal Mogul Financing Trust# (cost--$7,900,000).......... 9,223,250 -------------
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES - ------------- ------------- ------------- CONVERTIBLE BONDS--2.55% FINANCIAL SERVICES--1.16% $ 16,100 Bell Atlantic Financial Services Inc.#.............. 09/15/05 4.250% 17,146,500 ------------- MEDICAL PROVIDERS--0.29% 4,700 Omnicare, Inc.#............... 12/01/07 5.000 4,230,000 ------------- SPECIALTY RETAIL--1.10% 5,900 Amazon.Com Incorporated# ..... 02/01/09 4.750 5,959,000 4,000 Home Depot Inc. .............. 10/01/01 3.250 10,300,000 ------------- 16,259,000 ------------- Total Convertible Bonds (cost--$30,550,000).... 37,635,500 -------------
13 PAINEWEBBER GROWTH & INCOME FUND
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE - ------------- ------------- ------------- ------------- REPURCHASE AGREEMENTS--7.57% $ 40,000 Repurchase agreement dated 02/26/99 with Bear Stearns & Co., collateralized by $39,595,000 U.S. Treasury Notes, 5.875% due 11/30/01 (value--$40,822,445); proceeds: $40,015,767....... 03/01/99 4.73% $ 40,000,000 50,000 Repurchase agreement dated 02/26/99 with Societe Generale, collateralized by $37,091,000 U.S. Treasury Bonds. 9.250% due 02/15/16 (value--$51,000,125); proceeds: $50,019,792....... 03/01/99 4.75 50,000,000 21,978 Repurchase agreement dated 02/26/99 with State Street Bank and Trust Co., collateralized by $15,345,000 U.S. Treasury Bonds, 12.000% due 08/15/13 (value-- $22,422,881); proceeds: $21,986,645....... 03/01/99 4.72 21,978,000 ------------- Total Repurchase Agreements (cost--$111,978,000)......................... 111,978,000 ------------- Total Investments (cost--$1,176,615,377)--100.11%.............. 1,480,373,619 Liabilities in excess of other assets--(0.11)%................................ (1,689,146) ------------- Net Assets--100.00%............................ $1,478,684,473 ------------- -------------
- ------------- * Non-Income producing security. # Security exempt from registration under 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. ADR American Depositary Receipt. See accompanying notes to financial statements 14 PAINEWEBBER MID CAP FUND PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1999 (UNAUDITED)
NUMBER OF SHARES VALUE - ------------- ------------- COMMON STOCKS--98.42% AIRLINES--0.83% 40,000 Continental Airlines Inc.* ... $ 1,385,000 ------------- BANKS--6.39% 52,500 Commerce Bancorp, Inc. ....... 2,336,250 4,000 M & T Bank Corp.* ............ 1,903,000 60,000 Unionbancal Corp. ............ 1,886,250 60,000 Westamerica BanCorp. ......... 2,010,000 40,000 Zions Bancorporation. ........ 2,560,000 ------------- 10,695,500 ------------- BROADCASTING & PUBLISHING--0.66% 46,500 Infinity Broadcasting Corp.* ..................... 1,104,375 ------------- CHEMICALS--1.90% 77,000 Crompton & Knowles Corp. ..... 1,424,500 130,000 W.R. Grace & Co.* ............ 1,746,875 ------------- 3,171,375 ------------- COMPUTER HARDWARE--4.57% 46,900 Ascend Communications, Inc.* ...................... 3,608,369 21,000 EMC Corp.* ................... 2,149,875 100,000 Maxtor Corp.*(1) ............. 825,000 110,000 Western Digital Corp.*(1) .... 1,058,750 ------------- 7,641,994 ------------- COMPUTER SOFTWARE--9.92% 70,000 Autodesk, Inc.(1) ............ 2,808,750 45,000 BMC Software, Inc.*(1) ....... 1,839,375 123,600 Cadence Design Systems Inc.* ...................... 2,974,125 40,000 Clarify, Inc.* ............... 1,085,000 29,000 Compuware Corp.* ............. 1,622,187 90,000 Network Associates Inc.* ..... 4,230,000 15,000 Smith-Gardner & Associates Inc.* ...................... 191,250 70,000 Sterling Software Inc.* ...... 1,785,000 1,000 Vignette Corp. ............... 54,250 ------------- 16,589,937 ------------- CONSTRUCTION--1.34% 35,000 Centex Corp.(1) .............. 1,288,437 40,000 Pulte Corp. .................. 962,500 ------------- 2,250,937 ------------- CONSUMER DURABLES--2.14% 45,000 Maytag Corp. ................. 2,522,813 40,000 Masco Corp. .................. 1,050,000 ------------- 3,572,813 ------------- NUMBER OF SHARES VALUE - ------------- -------------
DEFENSE/AEROSPACE--4.23% 25,000 Gulfstream Aerospace Corp.* ..................... $ 1,118,750 20,000 Litton Inds Inc.* ............ 1,122,500 40,000 Newport News Shipbuilding Inc. ....................... 1,157,500 30,000 Sundstrand Corp. ............. 2,030,625 35,000 TRW, Inc. .................... 1,653,750 ------------- 7,083,125 ------------- DIVERSIFIED RETAIL--2.03% 80,000 Family Dollar Stores Inc. .... 1,600,000 50,000 Saks Inc.*(1) ................ 1,796,875 ------------- 3,396,875 ------------- DRUGS & MEDICINE--4.08% 20,000 Amerisource Health Corp.* .... 1,492,500 20,000 Biogen Inc.* ................. 1,922,500 28,860 McKesson HBOC, Inc. .......... 1,962,480 30,000 Watson Pharmaceuticals, Inc.* ...................... 1,449,375 ------------- 6,826,855 ------------- ELECTRIC UTILITIES--5.35% 50,000 AES Corp.* ................... 1,859,375 30,000 Carolina Power & Light Co. ... 1,196,250 40,000 Energy East Corp. ............ 2,145,000 55,000 Minnesota Power & Light Co. ........................ 2,210,312 100,000 Public Service Co. of New Mexico ..................... 1,537,500 ------------- 8,948,437 ------------- ELECTRICAL EQUIPMENT--5.50% 20,000 Gemstar Group Ltd.* .......... 1,280,000 60,000 Jabil Circuit Inc.* .......... 1,957,500 66,000 SCI Systems Inc.* ............ 2,041,875 60,000 Solectron Corp.* ............. 2,681,250 26,000 Teradyne Inc.* ............... 1,238,250 ------------- 9,198,875 ------------- ENVIRONMENTAL SERVICES--1.17% 100,000 Allied Waste Industries Inc.*(1) ................... 1,950,000 ------------- FINANCIAL SERVICES--1.53% 37,000 CIT Group Inc. ............... 1,091,500 40,000 Mutual Risk Management Ltd. ....................... 1,462,500 ------------- 2,554,000 ------------- FOOD RETAIL--1.48% 260,000 Food Lion Inc.(1) ............ 2,478,125 ------------- FOREST PRODUCTS, PAPER--0.72% 66,000 United Stationers Inc.* ...... 1,208,625 -------------
15 PAINEWEBBER MID CAP FUND
NUMBER OF SHARES VALUE - ------------- -------------
COMMON STOCKS--(CONTINUED) HOUSEHOLD PRODUCTS--0.95% 50,000 Premark International Inc. ... $ 1,596,875 ------------- INDUSTRIAL PARTS--2.46% 40,000 American Standard Companies Inc.* ...................... 1,342,500 35,000 PRI Automation Inc.*(1) ...... 1,050,000 30,000 SPX Corp.* ................... 1,713,750 ------------- 4,106,250 ------------- INDUSTRIAL SERVICES/SUPPLIES--1.55% 101,000 Mettler Toledo International Inc.* ...................... 2,581,812 ------------- INFORMATION & COMPUTER SERVICES--5.19% 51,900 A.C. Nielson Corp.* .......... 1,349,400 46,000 America Online Inc.* ......... 4,091,125 18,300 Computer Sciences Corp.* ..... 1,219,238 1,000 Ebay Inc.*(1) ................ 334,000 33,850 Fiserv Inc.* ................. 1,590,950 1,000 Geocities* ................... 97,750 ------------- 8,682,463 ------------- LIFE INSURANCE--2.23% 60,000 Conseco Inc. ................. 1,796,250 30,000 Reinsurance Group of America, Inc. ....................... 1,933,125 ------------- 3,729,375 ------------- LONG DISTANCE & PHONE COMPANIES--0.99% 20,000 MCI WorldCom, Inc.* .......... 1,650,000 ------------- MANUFACTURING-GENERAL--0.35% 30,000 Helix Technology Corp. ....... 590,625 ------------- MANUFACTURING-HIGH TECHNOLOGY--1.18% 50,000 ASM Lithography Holdings N.V.* ...................... 1,981,250 ------------- MEDIA--3.74% 35,000 Chancellor Media Corp.* ...... 1,531,250 31,200 Comcast Corp. Class A ........ 2,213,250 40,000 Tele-Communications, Inc.*(1) ................... 2,512,500 ------------- 6,257,000 ------------- MEDICAL PRODUCTS--1.18% 60,000 Steris Corp.* ................ 1,972,500 ------------- MINING & METALS--0.89% 29,000 Martin Marietta Materials Inc. ....................... 1,488,063 ------------- MOTOR VEHICLES--3.28% 35,000 Borg Warner Automotive, Inc.(1) .................... 1,524,687 40,000 Dura Automotive Systems, Inc.* ...................... 1,137,500 17,000 Federal Mogul Corp. .......... 836,188
NUMBER OF SHARES VALUE - ------------- -------------
MOTOR VEHICLES--(CONCLUDED) 30,000 Lear Corp.* .................. $ 1,059,375 50,000 Tower Automotive Inc.* ....... 931,250 ------------- 5,489,000 ------------- OIL REFINING--0.33% 100,000 R & B Falcon Corp.* .......... 550,000 ------------- OIL SERVICES--1.38% 40,000 Cooper Cameron Corp.* ........ 925,000 80,000 Ensco International Inc. ..... 710,000 40,000 EVI Weatherford Inc.* ........ 680,000 ------------- 2,315,000 ------------- OTHER INSURANCE--1.07% 32,000 Ambac Financial Group Inc. ... 1,792,000 ------------- RESTAURANTS--3.18% 40,000 Brinker International Inc.* ...................... 1,157,500 77,000 CKE Restaurants, Inc.(1) ..... 2,045,312 40,000 Starbucks Corp.* ............. 2,115,000 ------------- 5,317,812 ------------- SECURITIES & ASSET MANAGEMENT--0.79% 25,000 Lehman Brothers Holdings, Inc. ....................... 1,325,000 ------------- SEMICONDUCTOR--4.38% 41,300 Maxim Integrated Productions Inc.* ...................... 1,721,694 31,000 Micron Technology, Inc.* ..... 1,786,375 51,800 MMC Networks Inc.* ........... 728,437 35,000 Uniphase Corp.* .............. 3,084,375 ------------- 7,320,881 ------------- SPECIALTY RETAIL--4.70% 100,000 Borders Group Inc.* .......... 1,381,250 25,000 Lowe's Companies Inc.(1) ..... 1,482,812 60,000 Office Depot Inc.* ........... 2,141,250 35,000 Williams Sonoma Inc.* ........ 1,196,563 50,000 Zale Corp.* .................. 1,656,250 ------------- 7,858,125 ------------- TELECOMMUNICATIONS--1.40% 110,000 Advanced Fibre Communications* ............ 893,750 2,000 Broadcast Common Inc.* ....... 167,625 2,500 Covad Communications Group Inc.* ...................... 101,250 20,000 Global Crossing Ltd.* ........ 1,180,000 ------------- 2,342,625 ------------- THRIFT--1.79% 65,000 Dime Bancorp Inc. ............ 1,608,750
16 PAINEWEBBER MID CAP FUND
NUMBER OF SHARES VALUE - ------------- -------------
COMMON STOCKS--(CONCLUDED) THRIFT--(CONCLUDED) 45,000 Greenpoint Financial Corp. ... $ 1,380,938 ------------- 2,989,688 -------------
NUMBER OF SHARES VALUE - ------------- -------------
TOBACCO--1.57% 50,000 Gallaher Group PLC ........... $ 1,393,750 45,000 Universal Corp. .............. 1,223,438 ------------- 2,617,188 ------------- Total Common Stocks (cost--$143,544,243)....... 164,610,380 -------------
PRINCIPAL AMOUNT (000) MATURITY DATE INTEREST RATE VALUE - ------------- ------------- ------------- ------------- REPURCHASE AGREEMENT--3.84% $ 6,424 Repurchase Agreement dated 02/26/99 with Deutsche Bank, collateralized by $6,465,000 U.S. Treasury Notes, 6.875% due 07/31/99 (value--$6,552,536); proceeds: $6,426,532........ 03/01/99 4.730% 6,424,000 ------------- Total Investments (cost--$149,968,243)--102.26%................ 171,034,380 Liabilities in excess of other assets--(2.26)%.............................. (3,779,526) ------------- Net Assets--100.00%............................ $ 167,254,854 ------------- -------------
- ----------------- * Non-Income producing security. (1) Security, or portion thereof, was on loan at February 28, 1999. See accompanying notes to financial statements 17 PAINEWEBBER GROWTH FUND PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1999 (UNAUDITED)
NUMBER OF SHARES VALUE - ----------- ------------ COMMON STOCKS--94.47% AGRICULTURE, FOOD & BEVERAGE--0.71% 78,000 Keebler Foods Co............................................... $ 3,042,000 ------------ AIRLINES--1.11% 36,000 AMR Corp.*..................................................... 1,995,750 80,000 Continental Airlines Inc.*..................................... 2,770,000 ------------ 4,765,750 ------------ ALCOHOL--0.45% 25,000 Anheuser-Busch Companies, Inc.................................. 1,917,188 ------------ APPAREL, RETAIL--1.06% 31,500 Abercrombie and Fitch Co.*..................................... 2,394,000 76,000 TJX Companies, Inc............................................. 2,170,750 ------------ 4,564,750 ------------ BANKS--0.53% 15,000 Bank One Corp.................................................. 806,250 22,500 Fifth Third Bancorp............................................ 1,486,406 ------------ 2,292,656 ------------ BROADCASTING & PUBLISHING--1.30% 112,500 Capstar Broadcasting Corp.*.................................... 2,271,094 140,000 Infinity Broadcasting Corp.*................................... 3,325,000 ------------ 5,596,094 ------------ CHEMICALS--0.87% 60,000 Aptargroup Inc................................................. 1,642,500 45,000 Hoechst AG, ADR................................................ 2,115,000 ------------ 3,757,500 ------------ COMPUTER HARDWARE--9.72% 54,000 Apple Computer, Inc.* (1)...................................... 1,879,875 123,000 Cisco Systems, Inc.*........................................... 12,030,937 65,000 Compaq Computer Corp........................................... 2,291,250 153,000 Dell Computer Corp.*........................................... 12,259,125 90,000 EMC Corp.*..................................................... 9,213,750 42,000 Sun Microsystems Inc.*......................................... 4,087,125 ------------ 41,762,062 ------------ COMPUTER SOFTWARE--4.60% 65,000 Autodesk, Inc.................................................. 2,608,125 60,000 BMC Software, Inc.*............................................ 2,452,500 100,000 Cadence Design Systems, Inc.*.................................. 2,406,250 36,000 Compuware Corp.*............................................... 2,013,750 27,000 Microsoft Corp.*............................................... 4,053,375 60,450 Network Associates Inc.* (1)................................... 2,841,150 130,000 Sterling Commerce Inc.*........................................ 3,380,000 ------------ 19,755,150 ------------ NUMBER OF SHARES VALUE - ----------- ------------
CONSUMER DURABLES--0.43% 70,000 Masco Corp..................................................... $ 1,837,500 ------------ DEFENSE/AEROSPACE--0.39% 45,000 Precision Castparts Corp....................................... 1,670,625 ------------ DIVERSIFIED RETAIL--5.09% 80,000 Costco Co. Inc.* (1)........................................... 6,425,000 50,000 Dayton Hudson Corp............................................. 3,128,125 50,000 Federated Department Stores, Inc.*............................. 1,903,125 40,000 Kohl's Corp.*.................................................. 2,760,000 80,000 Saks Inc.*..................................................... 2,875,000 55,000 Wal-Mart Stores, Inc........................................... 4,750,625 ------------ 21,841,875 ------------ DRUGS & MEDICINE--7.18% 40,000 Amerisource Health Corp.*...................................... 2,985,000 49,312 Cardinal Health, Inc........................................... 3,559,710 45,000 Elan Corp. PLC, ADR* (1)....................................... 3,450,938 66,600 McKesson HBOC, Inc............................................. 4,528,800 70,000 Pharmacyclics Inc.*............................................ 1,330,000 80,000 Schering-Plough Corp........................................... 4,475,000 30,000 Warner Lambert Co.............................................. 2,071,875 175,000 Watson Pharmaceuticals, Inc.*.................................. 8,454,687 ------------ 30,856,010 ------------ ELECTRICAL EQUIPMENT--2.19% 17,000 KLA-Tencor Corp. *............................................. 880,813 27,000 Lucent Technologies, Inc....................................... 2,742,188 50,000 SCI Systems Inc.*.............................................. 1,546,875 35,000 Tellabs, Inc.*................................................. 2,802,187 30,000 Teradyne Inc.*................................................. 1,428,750 ------------ 9,400,813 ------------ ENTERTAINMENT--4.14% 125,000 Carnival Corp.................................................. 5,562,500 200,000 Cinar Films Inc.*.............................................. 4,150,000 90,000 Fox Entertainment Group Inc.*.................................. 2,340,000 65,000 Viacom, Inc. Class B*.......................................... 5,744,375 ------------ 17,796,875 ------------ ENVIRONMENTAL SERVICES--1.08% 98,100 Republic Services Inc.*........................................ 1,710,619 60,000 Waste Management, Inc.......................................... 2,932,500 ------------ 4,643,119 ------------ FINANCIAL SERVICES--2.92% 61,000 CIT Group, Inc................................................. 1,799,500 80,000 Federal Home Loan Mortgage Corp................................ 4,710,000
18 PAINEWEBBER GROWTH FUND
NUMBER OF SHARES VALUE - ----------- ------------
COMMON STOCKS--(CONTINUED) FINANCIAL SERVICES--(CONCLUDED) 50,000 Federal National Mortgage Association.......................... $ 3,500,000 105,000 MBNA Corp...................................................... 2,546,250 ------------ 12,555,750 ------------ FOOD RETAIL--3.21% 75,000 American Stores Co............................................. 2,531,250 85,000 Kroger Co.* (1)................................................ 5,498,438 100,000 Safeway Inc.*.................................................. 5,775,000 ------------ 13,804,688 ------------ FOREST PRODUCTS, PAPER--0.45% 105,000 Louisiana Pacific Corp......................................... 1,929,375 ------------ HOTELS--0.25% 125,000 Extended Stay America Inc.*.................................... 1,093,750 ------------ INDUSTRIAL PARTS--0.54% 90,000 Mettler Toledo International Inc.*............................. 2,300,625 ------------ INDUSTRIAL SERVICES/SUPPLIES--2.73% 100,500 Cendant Corp.*................................................. 1,664,531 150,000 Republic Industries Inc.*...................................... 1,837,500 200,000 Staffing Resources, Inc.* (2).................................. 1,050,000 96,266 Tyco International Ltd......................................... 7,165,800 ------------ 11,717,831 ------------ INFORMATION & COMPUTER SERVICES--7.21% 90,000 America Online Inc.*........................................... 8,004,375 15,000 CMG Information Services Inc.* (1)............................. 1,839,375 30,000 Computer Sciences Corp.*....................................... 1,998,750 65,000 Keane Inc.*.................................................... 2,010,937 40,000 Omnicom Group Inc.............................................. 2,650,000 281,250 Outdoor Systems Inc.*.......................................... 7,857,422 100,000 Paychex, Inc................................................... 4,237,500 48,800 Valassis Communications Inc.*.................................. 2,342,400 ------------ 30,940,759 ------------ LIFE INSURANCE--1.05% 30,000 American General Corp.......................................... 2,197,500 44,000 Conseco Inc.................................................... 1,317,250 16,700 Hartford Life Inc. ............................................ 968,600 ------------ 4,483,350 ------------ LONG DISTANCE & PHONE COMPANIES--4.79% 40,000 AT&T Corp. (1)................................................. 3,285,000 35,000 France Telecom, ADR (1)........................................ 3,195,937 145,000 MCI WorldCom Inc.*............................................. 11,962,500
NUMBER OF SHARES VALUE - ----------- ------------
LONG DISTANCE & PHONE COMPANIES--(CONCLUDED) 40,000 SBC Communications, Inc........................................ $ 2,115,000 ------------ 20,558,437 ------------ MANUFACTURING-GENERAL--1.36% 45,000 Ingersoll Rand Co.............................................. 2,137,500 30,000 United Technologies Corp....................................... 3,716,250 ------------ 5,853,750 ------------ MEDIA--12.77% 134,000 Clear Channel Communications* (1).............................. 8,040,000 80,000 Comcast Corp. Class A.......................................... 5,675,000 70,500 Getty Images Inc.* (1)......................................... 1,348,312 120,000 Liberty Media Group, Series A*................................. 6,465,000 40,000 Media One Group, Inc.*......................................... 2,180,000 182,800 Tele-Communications, Inc. Class A*............................. 11,482,125 180,000 Time Warner, Inc............................................... 11,610,000 100,000 USA Networks, Inc.*............................................ 3,975,000 108,000 Young & Rubicam Inc.*.......................................... 4,077,000 ------------ 54,852,437 ------------ MEDICAL PRODUCTS--1.33% 100,000 Guidant Corp................................................... 5,700,000 ------------ OIL REFINING--0.43% 35,000 Repsol S.A., ADR............................................... 1,837,500 ------------ OTHER INSURANCE--1.39% 35,000 Ambac Financial Group Inc...................................... 1,960,000 35,350 American International Group Inc............................... 4,027,691 ------------ 5,987,691 ------------ PUBLISHING--0.76% 125,000 News Corp. Ltd., ADR........................................... 3,281,250 ------------ RESTAURANTS--0.62% 50,000 Starbucks Corp.*............................................... 2,643,750 ------------ SEMICONDUCTOR--2.27% 15,000 Altera Corp.*.................................................. 729,375 15,000 Applied Materials, Inc.*....................................... 834,375 30,000 Intel Corp..................................................... 3,598,125 40,000 Uniphase Corp.*................................................ 3,525,000 15,000 Xilinx Inc.*................................................... 1,046,250 ------------ 9,733,125 ------------ SPECIALTY RETAIL--8.14% 62,500 99 Cents Only Stores*.......................................... 2,957,031 60,000 Borders Group Inc.*............................................ 828,750 13,500 CDW Computer Centers Inc.*..................................... 939,938
19 PAINEWEBBER GROWTH FUND
NUMBER OF SHARES VALUE - ----------- ------------
COMMON STOCKS--(CONCLUDED) SPECIALTY RETAIL--(CONCLUDED) 96,400 General Nutrition Companies, Inc.*............................. $ 1,289,350 140,000 Home Depot, Inc. (1)........................................... 8,356,250 58,500 Lowe's Companies, Inc. (1)..................................... 3,469,781 35,000 Office Depot Inc.*............................................. 1,249,063 270,000 Staples, Inc.*................................................. 7,939,687 60,000 Tiffany & Co................................................... 3,431,250 140,000 Walgreen Co.................................................... 4,480,000 ------------ 34,941,100 ------------ TELECOMMUNICATIONS--0.65% 9,200 Covad Communications Group Inc.*............................... 372,600
NUMBER OF SHARES VALUE - ----------- ------------
TELECOMMUNICATIONS--(CONCLUDED) 41,000 Global Crossing Ltd.*.......................................... $ 2,419,000 ------------ 2,791,600 ------------ THRIFT--0.43% 75,000 Dime Bancorp, Inc.............................................. 1,856,250 ------------ WIRELESS TELECOMMUNICATIONS--0.32% 15,000 Airtouch Communications, Inc.*................................. 1,365,938 ------------ Total Common Stocks (cost--$223,291,580)..................................... 405,728,923 ------------
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES - --------- ---------- -------- REPURCHASE AGREEMENTS--5.80% $12,917 Repurchase Agreement dated 02/26/99 with Deutsche Bank, collateralized by $12,995,000 U.S. Treasury Notes, 6.375% due 07/15/99 (value--$13,175,371) proceeds: $12,922,091...................... 03/01/99 4.730% 12,917,000 12,000 Repurchase Agreement dated 02/26/99 with Dresdner Bank AG, collateralized by $11,701,000 U.S. Treasury Notes, 6.205% due 10/31/01 (value--$12,240,533) proceeds: $12,004,730...................... 03/01/99 4.730 12,000,000 ------------ Total Repurchase Agreements (cost--$24,917,000).............................. 24,917,000 ------------ Total Investments (cost--$248,208,580)--100.27%.............................. 430,645,923 (1,167,851) Liabilities in excess of other assets--(0.27)%............................... ------------ Net Assets--100.00%.......................................................... $429,478,072 ------------ ------------
- ------------- * Non-Income producing security. ADR American Depositary Receipt. (1) Security, or portion thereof, was on loan at February 28, 1999. (2) Illiquid securities representing 0.24% of net assets. See accompanying notes to financial statements 20 PAINEWEBBER STATEMENTS OF ASSETS AND LIABILITIES FEBRUARY 28, 1999 (UNAUDITED)
GROWTH & INCOME MID CAP GROWTH FUND FUND FUND --------------- --------------- --------------- ASSETS Investments in securities, at value (cost--$1,176,615,377, $149,968,243, and $248,208,580, respectively)....... $ 1,480,373,619 $ 171,034,380 $ 430,645,923 Investments of cash collateral received for securities loaned, at value (cost--$0, $15,006,600 and $34,784,900, respectively)............ -- 15,006,600 34,784,900 Cash.................................... -- 2,888 360 Receivable for investments sold......... 6,267,542 1,039,365 736,337 Receivable for shares of beneficial interest sold......................... 1,550,602 30,864 464,705 Dividends and interest receivable....... 2,138,527 88,029 148,356 Other assets............................ 210,918 38,126 108,484 --------------- --------------- --------------- Total assets............................ 1,490,541,208 187,240,252 466,889,065 --------------- --------------- --------------- LIABILITIES Payable for investments purchased....... 7,269,154 4,053,463 1,505,564 Collateral for securities loaned........ -- 15,006,600 34,784,900 Payable to affiliates................... 1,405,575 205,358 397,843 Payable for shares of beneficial interest repurchased.................. 3,084,947 664,182 501,939 Accrued expenses and other liabilities........................... 97,059 55,795 220,747 --------------- --------------- --------------- Total liabilities....................... 11,856,735 19,985,398 37,410,993 --------------- --------------- --------------- NET ASSETS Beneficial interest--$0.001 par value (unlimited amount authorized)......... 1,130,588,804 144,419,948 231,564,046 Accumulated net investment loss......... (1,023,818) (926,328) (1,302,851) Accumulated net realized gains from investment transactions............... 45,361,245 2,695,097 16,779,534 Net unrealized appreciation of investments........................... 303,758,242 21,066,137 182,437,343 --------------- --------------- --------------- Net assets.............................. $ 1,478,684,473 $ 167,254,854 $ 429,478,072 --------------- --------------- --------------- --------------- --------------- --------------- CLASS A: Net assets.............................. $ 853,913,388 $ 103,863,798 $ 276,729,427 --------------- --------------- --------------- Shares outstanding...................... 27,405,483 10,809,876 10,751,341 --------------- --------------- --------------- Net asset value and redemption value per share................................. $31.16 $9.61 $25.74 --------------- --------------- --------------- --------------- --------------- --------------- Maximum offering price per share (net asset value plus sales charge of 4.50% of offering price).................... $32.63 $10.06 $26.95 --------------- --------------- --------------- --------------- --------------- --------------- CLASS B: Net assets.............................. $ 370,054,357 $ 45,781,986 $ 89,405,992 --------------- --------------- --------------- Shares outstanding...................... 11,961,654 4,775,166 3,828,447 --------------- --------------- --------------- Net asset value and offering price per share................................. $30.94 $9.59 $23.35 --------------- --------------- --------------- --------------- --------------- --------------- CLASS C: Net assets.............................. $ 182,191,528 $ 17,407,128 $ 31,821,049 --------------- --------------- --------------- Shares outstanding...................... 5,878,412 2,010,876 1,346,197 --------------- --------------- --------------- Net asset value and offering price per share................................. $30.99 $8.66 $23.64 --------------- --------------- --------------- --------------- --------------- --------------- CLASS Y: Net assets.............................. $ 72,525,200 $ 201,942 $ 31,521,604 --------------- --------------- --------------- Shares outstanding...................... 2,327,363 20,992 1,185,011 --------------- --------------- --------------- Net asset value, offering price and redemption value per share............ $31.16 $9.62 $26.60 --------------- --------------- --------------- --------------- --------------- ---------------
See accompanying notes to financial statements 21 PAINEWEBBER STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999(UNAUDITED)
GROWTH & MID CAP INCOME FUND FUND GROWTH FUND ------------- ------------- ------------- INVESTMENT INCOME: Dividends (net of foreign withholding tax).................................. $ 7,211,784 $ 514,514 $ 637,686 Interest................................ 3,333,381 277,531 706,673 ------------- ------------- ------------- 10,545,165 792,045 1,344,359 ------------- ------------- ------------- EXPENSES: Investment advisory and administration........................ 4,938,791 883,593 1,427,851 Service fees -- Class A................. 991,412 130,066 281,032 Service and distribution fees -- Class B..................................... 1,875,127 270,509 414,780 Service and distribution fees -- Class C..................................... 861,845 92,248 135,492 Custody and accounting.................. 373,325 55,606 117,532 Transfer agency and service fees........ 355,367 102,782 137,222 Reports and notices to shareholders..... 83,530 51,523 46,658 Federal and state registration.......... 55,545 40,067 26,718 Legal and audit......................... 41,010 53,429 44,315 Amortization of organizational expenses.............................. -- -- 5,854 Trustees' fees.......................... 6,750 6,750 6,750 Other expenses.......................... 1,205 31,800 3,006 ------------- ------------- ------------- 9,583,907 1,718,373 2,647,210 ------------- ------------- ------------- Net investment income (loss)............ 961,258 (926,328) (1,302,851) ------------- ------------- ------------- REALIZED AND UNREALIZED GAINS FROM INVESTMENT TRANSACTIONS: Net realized gains from Investment transactions.......................... 28,048,803 2,749,698 13,365,998 Net change in unrealized appreciation/depreciation of Investments........................... 249,532,185 43,311,398 109,506,654 ------------- ------------- ------------- NET REALIZED AND UNREALIZED GAINS FROM INVESTMENT TRANSACTIONS............... 277,580,988 46,061,096 122,872,652 ------------- ------------- ------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $ 278,542,246 $ 45,134,768 $ 121,569,801 ------------- ------------- ------------- ------------- ------------- -------------
See accompanying notes to financial statements 22 PAINEWEBBER GROWTH & INCOME FUND STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED FOR THE YEAR FEBRUARY 28, ENDED 1999 AUGUST 31, (UNAUDITED) 1998 ------------- ------------- FROM OPERATIONS: Net investment income................... $ 961,258 $ 4,845,333 Net realized gains from investment and options transactions.................. 28,048,803 109,163,741 Net change in unrealized appreciation/depreciation of investments........................... 249,532,185 (198,547,739) ------------- ------------- Net increase (decrease) in net assets resulting from operations............. 278,542,246 (84,538,665) ------------- ------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income -- Class A........ (2,152,840) (4,317,455) Net investment income -- Class B........ -- -- Net investment income -- Class C........ -- (62,373) Net investment income -- Class Y........ (274,465) (565,972) Net realized gains from investment transactions -- Class A............... (45,342,437) (42,191,521) Net realized gains from investment transactions -- Class B............... (21,458,879) (32,083,048) Net realized gains from investment transactions -- Class C............... (9,905,709) (8,161,061) Net realized gains from investment transactions -- Class Y............... (4,000,922) (4,314,878) ------------- ------------- Total dividends and distributions to shareholders.......................... (83,135,252) (91,696,308) ------------- ------------- FROM BENEFICIAL INTEREST TRANSACTIONS: Net proceeds from the sale of shares.... 238,575,764 784,608,161 Cost of shares repurchased.............. (272,125,701) (405,755,914) Proceeds from dividends reinvested...... 78,095,718 85,907,754 ------------- ------------- Net increase in net assets from beneficial interest transactions...... 44,545,781 464,760,001 ------------- ------------- Net increase in net assets.............. 239,952,775 288,525,028 NET ASSETS: Beginning of period..................... 1,238,731,698 950,206,670 ------------- ------------- End of period (including undistributed net investment income of $442,229 at August 31, 1998)...................... $1,478,684,473 $1,238,731,698 ------------- ------------- ------------- -------------
See accompanying notes to financial statements 23 PAINEWEBBER MID CAP FUND STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED FOR THE FIVE FOR THE FEBRUARY 28, MONTHS ENDED YEAR ENDED 1999 AUGUST 31, MARCH 31, (UNAUDITED) 1998 1998 ------------- ------------- ------------- FROM OPERATIONS: Net investment loss..................... $ (926,328) $ (964,427) $ (4,452,123) Net realized gains from investment transactions.......................... 2,749,698 50,055,407 58,100,065 Net change in unrealized appreciation/depreciation of investments........................... 43,311,398 (113,176,825) 35,069,089 ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations............. 45,134,768 (64,085,845) 88,717,031 ------------- ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net realized gains from investment transactions -- Class A............... (7,165,732) (33,325,298) (19,367,061) Net realized gains from investment transactions -- Class B............... (3,684,717) (21,180,778) (29,491,494) Net realized gains from investment transactions -- Class C............... (1,501,190) (6,615,466) (5,842,338) Net realized gains from investment transactions -- Class Y............... (6,732) (10,624) -- ------------- ------------- ------------- Total distributions to shareholders..... (12,358,371) (61,132,166) (54,700,893) ------------- ------------- ------------- FROM BENEFICIAL INTEREST TRANSACTIONS: Net proceeds from the sale of shares.... 34,712,318 32,729,553 37,895,804 Cost of shares repurchased.............. (74,421,487) (75,586,995) (87,095,316) Proceeds from dividends reinvested...... 11,619,786 58,037,907 51,574,852 ------------- ------------- ------------- Net increase (decrease) in net assets from beneficial interest transactions.......................... (28,089,383) 15,180,465 2,375,340 ------------- ------------- ------------- Net increase (decrease) in net assets... 4,687,014 (110,037,546) 36,391,478 NET ASSETS: Beginning of period..................... 162,567,840 272,605,386 236,213,908 ------------- ------------- ------------- End of period........................... $167,254,854 $ 162,567,840 $ 272,605,386 ------------- ------------- ------------- ------------- ------------- -------------
See accompanying notes to financial statements 24 PAINEWEBBER GROWTH FUND STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED FOR THE YEAR FEBRUARY 28, ENDED 1999 AUGUST 31, (UNAUDITED) 1998 ------------- ------------- FROM OPERATIONS: Net investment loss..................... $ (1,302,851) $ (2,449,774) Net realized gains from investment transactions.......................... 13,365,998 55,757,294 Net change in unrealized appreciation/depreciation of investments........................... 109,506,654 (37,036,941) ------------- ------------- Net increase in net assets resulting from operations....................... 121,569,801 16,270,579 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net realized gains from investment transactions -- Class A............... (19,967,578) (52,257,695) Net realized gains from investment transactions -- Class B............... (7,360,795) (28,007,650) Net realized gains from investment transactions -- Class C............... (2,428,166) (6,619,090) Net realized gains from investment transactions -- Class Y............... (2,076,520) (4,929,080) ------------- ------------- Total distributions to shareholders..... (31,833,059) (91,813,515) ------------- ------------- FROM BENEFICIAL INTEREST TRANSACTIONS: Net proceeds from sale of shares........ 50,692,117 49,298,324 Cost of shares repurchased.............. (60,612,580) (102,850,579) Proceeds from dividends reinvested...... 30,161,764 86,299,182 ------------- ------------- Net increase in net assets from beneficial interest transactions...... 20,241,301 32,746,927 ------------- ------------- Net increase (decrease) in net assets... 109,978,043 (42,796,009) NET ASSETS: Beginning of period..................... 319,500,029 362,296,038 ------------- ------------- End of period........................... $429,478,072 $319,500,029 ------------- ------------- ------------- -------------
See accompanying notes to financial statements 25 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES PaineWebber Growth and Income Fund ("Growth & Income Fund"), PaineWebber Mid Cap Fund ("Mid Cap Fund") and PaineWebber Growth Fund ("Growth Fund") (collectively, the "Funds") are diversified series of PaineWebber America Fund, PaineWebber Managed Assets Trust and PaineWebber Olympus Fund (the "Trusts"), respectively. The three Trusts were organized under separate Declarations of Trust and are registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended, as diversified open-end investment companies. At a meeting held on August 19, 1998, the Mid Cap Fund's board of trustees elected to change the Trust's fiscal year end from March 31st to August 31st, effective August 31, 1998. Currently, each Fund offers Class A, Class B, Class C and Class Y shares. Each class represents interests in the same assets of the applicable Fund, and the classes are identical except for differences in their sales charge structures, ongoing service and distribution charges and certain transfer agency expenses. In addition, Class B shares and all corresponding reinvested dividend shares automatically convert to Class A shares approximately six years after issuance. All classes of shares have equal voting privileges except that each class has exclusive voting rights with respect to its service and/or distribution plan. The preparation of financial statements in accordance with generally accepted accounting principles requires Fund management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The following is a summary of significant accounting policies: VALUATION OF INVESTMENTS--Securities which are listed on stock exchanges are valued at the last sale price on the day the securities are being valued or, lacking any sales on such day, at the last available bid price. In cases where securities are traded on more than one exchange, the securities are valued on the exchange designated by Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"), a wholly-owned asset management subsidiary of PaineWebber Incorporated ("PaineWebber") and investment adviser, administrator and distributor of the Funds. Securities traded in the over-the-counter ("OTC") market and listed on the Nasdaq Stock Market, Inc. ("Nasdaq") are valued at the last available sale price, or last bid price available if no sale occurs, on Nasdaq prior to the time of valuation. Where market quotations are readily available, debt securities are valued thereon, provided such quotations adequately reflect the fair value of the securities in the judgment of Mitchell Hutchins. When market quotations are not readily available, securities are valued based upon appraisals derived from information concerning those securities or similar securities received from recognized dealers in those securities. All other securities are valued at fair value as determined in good faith by, or under the direction of, each Trust's board of trustees. The amortized cost method of valuation is used to value short-term debt securities with sixty days or less remaining to maturity, unless each Trust's board of trustees determines that this does not represent fair value. REPURCHASE AGREEMENTS--Each Fund's custodian takes possession of the collateral pledged for investments in repurchase agreements. The underlying collateral is valued daily on a mark-to-market basis to ensure that the value, including accrued interest, is at least equal to the repurchase price. In the event of default of the obligation to repurchase, each Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. 26 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) Under certain circumstances, in the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral may be subject to legal proceedings. Each Fund occasionally participates in joint repurchase agreement transactions with other funds managed by Mitchell Hutchins. INVESTMENT TRANSACTIONS AND INVESTMENT INCOME--Investment transactions are recorded on the trade date. Realized gains and losses from investment transactions are calculated using the identified cost method. Interest income is recorded on an accrual basis. Dividend income is recorded on the ex-dividend date. Discounts are accreted and premiums are amortized as adjustments to interest income and identified cost of investments. Income, expenses (excluding class-specific expenses) and realized/unrealized gains/losses are allocated proportionately to each class of shares based upon the relative net asset value of outstanding shares (or the value of dividend-eligible shares, as appropriate) of each class at the beginning of the day (after adjusting for current capital share activity of the respective classes). Class specific expenses are charged directly to the applicable class of shares. OPTION WRITING--When a Fund writes a call or a put option, an amount equal to the premium received by the Fund is included in the Fund's Statement of Assets and Liabilities as an asset and as an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. If an option which the Fund has written either expires on its stipulated expiration date or the Fund enters into a closing purchase transaction, the Fund realizes a gain (or loss if the cost of a closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a call option which the Fund has written is exercised, the Fund realizes a capital gain or loss (long-term or short-term, depending on the holding period of the underlying security) from the sale of the underlying security and the proceeds from the sale are increased by the premium originally received. If a put option which a Fund has written is exercised, the amount of the premium originally received reduces the cost of the security which the Fund purchases upon exercise of the option. There were no options written for the Funds during the six months ended February 28, 1999. DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to shareholders are recorded on the ex-dividend date. The amount of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. INVESTMENT ADVISER AND ADMINISTRATOR Each Trust's board of trustees has approved an Investment Advisory and Administration Contract ("Advisory Contract") with Mitchell Hutchins, under which Mitchell Hutchins serves as investment adviser and administrator of the Funds. In accordance with the Advisory Contracts, Growth & Income Fund, Mid Cap Fund and Growth Fund pay Mitchell Hutchins an investment advisory and administration fee, which is accrued daily and paid monthly, at the annual rate of 0.70%, 1.00% and 0.75%, respectively, of each Funds' average daily net assets. At February 28, 1999, Growth & Income Fund, Mid Cap Fund and Growth Fund owed Mitchell Hutchins $807,773, $133,210 and $250,362, respectively, in investment advisory and administration fees. 27 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) For the six months ended February 28, 1999, Growth & Income Fund, Mid Cap Fund and Growth Fund paid $13,500, 17,022, and $16,020, respectively, in brokerage commissions to PaineWebber for transactions executed on behalf of the Funds. DISTRIBUTION PLANS Mitchell Hutchins is the distributor of each Fund's shares and has appointed PaineWebber as the exclusive dealer for the sale of those shares. Under separate plans of service and/or distribution pertaining to Class A, Class B and Class C shares, the Funds pay Mitchell Hutchins monthly service fees at the annual rate of up to 0.25% of the average daily net assets of Class A, Class B and Class C shares and monthly distribution fees at the annual rate of 0.75% of the average daily net assets on Class B and Class C shares. At February 28, 1999, Growth & Income Fund, Mid Cap Fund and Growth Fund owed Mitchell Hutchins $597,677, $71,062 and $145,810, respectively, in service and distribution fees. Mitchell Hutchins also receives the proceeds of the initial sales charges paid upon the purchase of Class A shares and the contingent deferred sales charges paid by shareholders upon certain redemptions of Class A, Class B and Class C shares, Mitchell Hutchins has informed each Fund that for the six months ended February 28, 1999, it earned $851,711, $59,370, and $98,537 in sales charges for the Growth & Income Fund, Mid Cap Fund and Growth Fund, respectively. SECURITY LENDING Each Fund may lend securities up to 33 1/3% of its total assets to qualified institutions. The loans are secured at all times by cash or U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest, determined on a daily basis and adjusted accordingly. Each Fund will regain record ownership of loaned securities to exercise certain beneficial rights, however, each Fund may bear the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower fail financially. Each Fund receives compensation, which is included in interest income, for lending its securities from interest earned on the cash or U.S. government securities held as collateral, net of fee rebates paid to the borrower plus reasonable administrative and custody fees. Each Fund's lending agent is PaineWebber, who received $11,179, $9,700, and $9,378 for Growth & Income Fund, Mid Cap Fund and Growth Fund, respectively, in compensation from the Funds in that capacity for the six months ended February 28, 1999. At February 28, 1999, Growth & Income Fund, Mid Cap Fund and Growth Fund owed PaineWebber $125, $1,086, and $1,671, respectively, in compensation. As of February 28, 1999 the Growth and Mid Cap Fund held cash and/or cash equivalents as collateral for market value of securities loaned as follows:
COLLATERAL MARKET VALUE FOR OF SECURITIES SECURITIES LOANED LOANED ------------ ------------ Mid Cap Fund............................................................................ $15,006,600 $14,210,728 Growth.................................................................................. $34,784,900 $33,807,875
28 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) As of February 28, 1999 the Funds invested the collateral in the following money market funds:
NUMBER OF MARKET SHARES/ VALUE - ----------- ----------- MID CAP FUND 4,102,030 Janus Money Market Institutional Shares................................................................ $ 4,102,030 1,159,165 Liquid Assets Portfolio................................................................................ 1,159,165 7,500,000 MH Money Market Fund LLC............................................................................... 7,500,000 2,245,405 Prime Portfolio........................................................................................ 2,245,405 ----------- Total investments of cash collateral for securities loaned (cost--$15,006,600)...................................... $15,006,600 ----------- ----------- GROWTH FUND 16,374,674 Janus Money Market Institutional Shares................................................................ $16,374,674 2,857,314 Liquid Assets Portfolio................................................................................ 2,857,314 15,552,803 MH Money Market Fund LLC............................................................................... 15,552,803 109 Prime Portfolio........................................................................................ 109 ----------- Total investments of cash collateral for securities loaned (cost--$38,784,900)...................................... $34,784,900 ----------- -----------
BANK LINE OF CREDIT Each Fund may participate with other funds managed by Mitchell Hutchins in a $200 million committed credit facility ("Facility") to be utilized for temporary financing until the settlement of sale or purchase of portfolio securities, the repurchase or redemption of shares of each Fund at the request of the shareholders and other temporary or emergency purposes. In connection therewith, each Fund has agreed to pay a commitment fee, pro rata, based on the relative asset size of the Funds in the Facility. Interest is charged to each Fund at rates based on prevailing market rates in effect at the time of borrowings. For the six months ended February 28, 1999, the Funds did not borrow under the Facility. TRANSFER AGENCY SERVICE FEES PaineWebber provides transfer agency related services to the Funds pursuant to a delegation of authority from PFPC, Inc., the Fund's transfer agent, and is compensated for these services by PFPC, Inc., not the Funds. For the six months period ended February 28, 1999, PaineWebber received approximately 55%, 57% and 56% of the total transfer agency service fees collected by PFPC, Inc. from Growth & Income Fund, Mid Cap Fund and Growth Fund, respectively. INVESTMENTS IN SECURITIES For federal income tax purposes, the cost of securities owned at February 28, 1999 was substantially the same as the cost of securities for financial statement purposes. At February 28, 1999, the components of net unrealized appreciation of investments were as follows:
GROWTH & INCOME FUND MID CAP FUND GROWTH FUND ------------- ------------- ------------- Gross appreciation (investments having an excess of value over cost)..... $ 347,458,986 $ 36,695,088 $ 190,924,078 Gross depreciation (investments having an excess of cost over value)..... (43,700,744) (15,628,951) (8,486,735) ------------- ------------- ------------- Net unrealized appreciation of investments............................... $ 303,758,242 $ 21,066,137 $ 182,437,343 ------------- ------------- ------------- ------------- ------------- -------------
29 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) For the six months ended February 28, 1999, total aggregate purchases and sales of portfolio securities, excluding short-term securities, were as follows:
GROWTH & MID CAP INCOME FUND FUND GROWTH FUND -------------- ------------- ------------- Purchases......................................................... $ 425,906,217 $ 69,306,076 $ 79,613,322 Sales............................................................. $ 468,788,159 $ 103,450,755 $ 82,763,832
FEDERAL TAX STATUS Each Fund intends to distribute substantially all of its taxable income and to comply with the other requirements of the Internal Revenue Code applicable to regulated investment companies. Accordingly, no provision for federal income taxes is required. In addition, by distributing during each calendar year, substantially all of its net investment income, capital gains and certain other amounts, if any, each Fund intends not to be subject to any federal excise tax. 30 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) BENEFICIAL INTEREST There was an unlimited amount of $0.001 par value shares of beneficial interest authorized. Transactions in shares of benefical interest were as follows:
CLASS A CLASS B CLASS C CLASS Y ------------------------ ------------------------ ------------------------ ------------------------ SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ GROWTH & INCOME FUND SIX MONTHS ENDED FEBRUARY 28, 1999 Shares sold............. 5,087,393 $153,938,606 1,244,945 $ 37,592,545 884,543 $ 26,979,447 658,249 $ 20,065,166 Shares repurchased...... (5,978,782) (180,988,199) (1,210,089) (36,481,276) (895,962) (27,232,749) (906,296) (27,423,477) Shares converted from Class B to Class A.... 1,910,739 58,624,803 (1,923,057) (58,624,803) -- -- -- -- Dividends reinvested.... 1,477,072 44,548,497 659,253 19,770,993 316,470 9,509,920 141,503 4,266,308 ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ Net increase (decrease)............ 2,496,422 $ 76,123,707 (1,228,948) $(37,742,541) 305,051 $ 9,256,618 (106,544) $ (3,092,003) ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ YEAR ENDED AUGUST 31, 1998: Shares sold............. 12,026,995 $384,579,894 7,040,942 $219,400,226 3,720,225 $116,019,841 2,051,111 $ 64,608,200 Shares repurchased...... (8,401,975) (271,585,856) (1,741,560) (55,665,850) (1,191,640) (37,412,993) (1,306,458) (41,091,215) Shares converted from Class B to Class A.... 5,402,974 170,099,068 (5,473,938) (170,099,068) -- -- -- -- Dividends reinvested.... 1,444,371 43,459,036 991,533 29,715,205 262,925 7,880,006 161,288 4,853,507 ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ Net increase............ 10,472,365 $326,552,142 816,977 $ 23,350,513 2,791,510 $ 86,486,854 905,941 $ 28,370,492 ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ MID CAP FUND SIX MONTHS ENDED FEBRUARY 28, 1999 Shares sold............. 3,131,297 $ 30,744,920 174,425 $ 1,687,251 237,838 $ 2,156,903 12,673 $ 123,244 Shares repurchased...... (5,771,537) (55,823,796) (1,321,317) (12,480,791) (706,921) (6,110,770) (591) (6,130) Shares converted from Class B to Class A.... 1,336,080 12,964,606 (1,335,808) (12,964,606) -- -- -- -- Dividends reinvested.... 735,220 6,844,898 372,644 3,469,312 154,440 1,298,844 722 6,732 ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ Net increase (decrease)............ (568,940) $ (5,269,372) (2,110,056) $(20,288,834) (314,643) $ (2,655,023) 12,804 $ 123,846 ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ FOR THE FIVE MONTHS ENDED AUGUST 31, 1998 Shares sold............. 2,182,101 $ 24,315,812 354,492 $ 3,832,818 383,808 $ 4,499,817 7,738 $ 81,106 Shares repurchased...... (4,267,087) (50,849,996) (1,267,833) (16,289,937) (687,258) (8,417,661) (2,894) (29,401) Shares converted from Class B to Class A.... 3,641,925 52,669,649 (3,596,252) (52,669,649) -- -- -- -- Dividends reinvested.... 3,041,806 31,817,286 1,903,180 19,983,663 652,656 6,226,334 1,016 10,624 ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ Net increase (decrease)............ 4,598,745 $ 57,952,751 (2,606,413) $(45,143,105) 349,206 $ 2,308,490 5,860 $ 62,329 ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
31 NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
CLASS A CLASS B CLASS C CLASS Y ------------------------ ------------------------ ------------------------ ------------------------ SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ MID CAP FUND (CONCLUDED) FOR THE YEAR ENDED MARCH 31, 1998 Shares sold............. 1,152,078 $ 18,144,195 435,394 $ 7,043,465 876,575 $ 12,661,915 3,103 $ 46,229 Shares repurchased...... (2,175,121) (33,257,452) (2,312,967) (35,407,408) (1,284,257) (18,418,905) (775) (11,551) Shares converted from Class B to Class A.... 658,362 10,279,880 (653,737) (10,279,880) -- -- -- -- Dividends reinvested.... 1,422,364 18,376,942 2,125,930 27,658,352 455,931 5,539,558 -- -- ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ Net increase (decrease)............ 1,057,683 $ 13,543,565 (405,380) $(10,985,471) 48,249 $ (217,432) 2,328 $ 34,678 ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ GROWTH FUND SIX MONTHS ENDED FEBRUARY 28, 1999 Shares sold............. 477,569 $ 11,754,561 221,533 $ 5,015,158 1,093,702 $ 24,858,983 358,678 $ 9,063,415 Shares repurchased...... (1,005,027) (24,245,157) (276,857) (6,035,797) (1,014,877) (22,991,957) (295,195) (7,339,669) Shares converted from Class B to Class A.... 413,094 9,930,983 (451,975) (9,930,983) -- -- -- -- Dividends reinvested.... 794,422 18,931,080 318,639 6,898,545 102,902 2,255,619 84,377 2,076,520 ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ Net increase (decrease)............ 680,058 $ 16,371,467 (188,660) $ (4,053,077) 181,727 $ 4,122,645 147,860 $ 3,800,266 ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ YEAR ENDED AUGUST 31, 1998 Shares sold............. 250,025 $ 6,168,232 293,191 $ 6,570,230 932,368 $ 22,361,890 564,489 $ 14,197,972 Shares repurchased...... (1,634,676) (40,028,657) (1,037,642) (23,385,942) (1,095,911) (25,896,378) (531,157) (13,539,602) Shares converted from Class B to Class A.... 1,252,439 30,472,358 (1,350,669) (30,472,358) -- -- -- -- Dividends reinvested.... 2,428,222 49,098,643 1,398,245 26,119,234 325,859 6,152,224 237,204 4,929,081 ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ Net increase (decrease)............ 2,296,010 $ 45,710,576 (696,875) $(21,168,836) 162,316 $ 2,617,736 270,536 $ 5,587,451 ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
32 (This page has been left blank intentionally.) 33 PAINEWEBBER GROWTH & INCOME FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period is presented below:
CLASS A --------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED FEBRUARY 28, FOR THE YEARS ENDED AUGUST 31, 1999 --------------------------------------------------------------- (UNAUDITED) 1998 1997 1996 1995 1994 -------------- --------- --------- --------- --------- --------- Net asset value, beginning of period.............................. $ 26.92 $ 30.60 $ 24.35 $ 22.52 $ 20.43 $ 20.86 -------------- --------- --------- --------- --------- --------- Net investment income................. 0.06 0.19 0.23 0.22 0.24 0.28 Net realized and unrealized gains (losses) from investments and options............................. 6.04 (0.99) 9.29 3.46 3.18 (0.41) -------------- --------- --------- --------- --------- --------- Total increase (decrease) from investment operations............... 6.10 (0.80) 9.52 3.68 3.42 (0.13) -------------- --------- --------- --------- --------- --------- Dividends from net investment income.............................. (0.08) (0.21) (0.25) (0.34) (0.12) (0.27) Distributions from net realized gains from investment transactions........ (1.78) (2.67) (3.02) (1.51) (1.21) (0.03) -------------- --------- --------- --------- --------- --------- Total dividends and distributions to shareholders........................ (1.86) (2.88) (3.27) (1.85) (1.33) (0.30) -------------- --------- --------- --------- --------- --------- Net asset value, end of period........ $ 31.16 $ 26.92 $ 30.60 $ 24.35 $ 22.52 $ 20.43 -------------- --------- --------- --------- --------- --------- -------------- --------- --------- --------- --------- --------- Total investment return (1)........... 22.89% (3.51)% 42.42% 17.40% 18.30% (0.58)% -------------- --------- --------- --------- --------- --------- -------------- --------- --------- --------- --------- --------- Ratios/Supplemental data: Net assets, end of period (000's)..... $ 853,913 $ 670,606 $ 441,699 $ 276,016 $ 187,057 $ 222,432 Expenses to average net assets........ 1.07%* 1.07% 1.15% 1.20%(2) 1.19% 1.20% Net investment income (loss) to average net assets.................. 0.42%* 0.71% 0.88% 0.98%(2) 1.07% 1.29% Portfolio turnover rate............... 32% 62% 70% 112% 111% 94%
- ----------------- * Annualized. (1) Total investment return is calculated assuming a $1,000 investment on the first day of each period reported, reinvestment of all dividends and distributions at net asset value on the payable dates and a sale at net asset value on the last day of each period reported. The figures do not include sales charges; results for each class would be lower if sales charges were included. Total investment return for periods of less than one year has not been annualized. (2) These ratios include non-recurring acquisition expenses of 0.04%. 34
CLASS B ------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED FEBRUARY 28, FOR THE YEARS ENDED AUGUST 31, 1999 ------------------------------------------------------------- (UNAUDITED) 1998 1997 1996 1995 1994 -------------- --------- --------- --------- --------- --------- Net asset value, beginning of period.............................. $ 26.77 $ 30.46 $ 24.26 $ 22.37 $ 20.37 $ 20.78 -------------- --------- --------- --------- --------- --------- Net investment income................. (0.06) (0.02) 0.04 0.04 0.06 0.10 Net realized and unrealized gains (losses) from investments and options............................. 6.01 (1.02) 9.23 3.45 3.18 (0.37) -------------- --------- --------- --------- --------- --------- Total increase (decrease) from investment operations............... 5.95 (1.04) 9.27 3.49 3.24 (0.27) -------------- --------- --------- --------- --------- --------- Dividends from net investment income.............................. -- -- (0.05) (0.09) (0.03) (0.11) Distributions from net realized gains from investment transactions........ (1.78) (2.65) (3.02) (1.51) (1.21) (0.03) -------------- --------- --------- --------- --------- --------- Total dividends and distributions to shareholders........................ (1.78) (2.65) (3.07) (1.60) (1.24) (0.14) -------------- --------- --------- --------- --------- --------- Net asset value, end of period........ $ 30.94 $ 26.77 $ 30.46 $ 24.26 $ 22.37 $ 20.37 -------------- --------- --------- --------- --------- --------- -------------- --------- --------- --------- --------- --------- Total investment return (1)........... 22.42% (4.28)% 41.33% 16.49% 17.38% (1.31)% -------------- --------- --------- --------- --------- --------- -------------- --------- --------- --------- --------- --------- Ratios/Supplemental data: Net assets, end of period (000's)..... $ 370,054 $ 353,150 $ 376,840 $ 277,753 $ 247,543 $ 289,290 Expenses to average net assets........ 1.85%* 1.87% 1.93% 1.99%(2) 1.97% 1.97% Net investment income (loss) to average net assets.................. (0.36)%* (0.08)% 0.11% 0.17%(2) 0.29% 0.51% Portfolio turnover rate............... 32% 62% 70% 112% 111% 94% CLASS C ----------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED FEBRUARY 28, FOR THE YEARS ENDED AUGUST 31, 1999 ------------------------------------------------------------- (UNAUDITED) 1998 1997 1996 1995 1994 ------------ --------- --------- --------- --------- --------- Net asset value, beginning of period.............................. $ 26.82 $ 30.53 $ 24.33 $ 22.43 $ 20.42 $ 20.83 ------------ --------- --------- --------- --------- --------- Net investment income................. (0.05) 0.01 0.05 0.05 0.06 0.11 Net realized and unrealized gains (losses) from investments and options............................. 6.00 (1.03) 9.24 3.46 3.19 (0.38) ------------ --------- --------- --------- --------- --------- Total increase (decrease) from investment operations............... 5.95 (1.02) 9.29 3.51 3.25 (0.27) ------------ --------- --------- --------- --------- --------- Dividends from net investment income.............................. -- (0.02) (0.07) (0.10) (0.03) (0.11) Distributions from net realized gains from investment transactions........ (1.78) (2.67) (3.02) (1.51) (1.21) (0.03) ------------ --------- --------- --------- --------- --------- Total dividends and distributions to shareholders........................ (1.78) (2.69) (3.09) (1.61) (1.24) (0.14) ------------ --------- --------- --------- --------- --------- Net asset value, end of period........ $ 30.99 $ 26.82 $ 30.53 $ 24.33 $ 22.43 $ 20.42 ------------ --------- --------- --------- --------- --------- ------------ --------- --------- --------- --------- --------- Total investment return (1)........... 22.38% (4.23)% 41.30% 16.52% 17.37% (1.29)% ------------ --------- --------- --------- --------- --------- ------------ --------- --------- --------- --------- --------- Ratios/Supplemental data: Net assets, end of period (000's)..... $ 182,192 $ 149,458 $ 84,922 $ 43,148 $ 30,468 $ 37,287 Expenses to average net assets........ 1.84%* 1.85% 1.92% 1.99%(2) 1.98% 1.94% Net investment income (loss) to average net assets.................. (0.34)%* (0.07)% 0.10% 0.18%(2) 0.28% 0.54% Portfolio turnover rate............... 32% 62% 70% 112% 111% 94%
- ----------------- * Annualized. (1) Total investment return is calculated assuming a $1,000 investment on the first day of each period reported, reinvestment of all dividends and distributions at net asset value on the payable dates and a sale at net asset value on the last day of each period reported. The figures do not include sales charges; results for each class would be lower if sales charges were included. Total investment return for periods of less than one year has not been annualized. (2) These ratios include non-recurring acquisition expenses of 0.04%. 35 PAINEWEBBER GROWTH & INCOME FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period is presented below:
CLASS Y ------------------------------------------------------------------ FOR THE SIX MONTHS ENDED FEBRUARY FOR THE YEARS ENDED AUGUST 31, 28, 1999 ------------------------------------------------------ (UNAUDITED) 1998 1997 1996 1995 1994 --------- --------- -------- -------- -------- -------- Net asset value, beginning of period.............. $ 26.92 $ 30.59 $ 24.35 $ 22.54 $ 20.42 $ 20.86 --------- --------- -------- -------- -------- -------- Net investment income............................. 0.11 0.30 0.32 0.30 0.30 0.33 Net realized and unrealized gains (losses) from investments and options.......................... 6.03 (1.02) 9.26 3.45 3.18 (0.40) --------- --------- -------- -------- -------- -------- Total increase (decrease) from investment operations....................................... 6.14 (0.72) 9.58 3.75 3.48 (0.07) --------- --------- -------- -------- -------- -------- Dividends from net investment income.............. (0.12) (0.28) (0.32) (0.43) (0.15) (0.34) Distributions from net realized gains from investment transactions.......................... (1.78) (2.67) (3.02) (1.51) (1.21) (0.03) --------- --------- -------- -------- -------- -------- Total dividends and distributions to shareholders..................................... (1.90) (2.95) (3.34) (1.94) (1.36) (0.37) --------- --------- -------- -------- -------- -------- Net asset value, end of period.................... $ 31.16 $ 26.92 $ 30.59 $ 24.35 $ 22.54 $ 20.42 --------- --------- -------- -------- -------- -------- --------- --------- -------- -------- -------- -------- Total investment return (1)....................... 23.03% (3.24)% 42.74% 17.77% 18.66% (0.31)% --------- --------- -------- -------- -------- -------- --------- --------- -------- -------- -------- -------- Ratios/Supplemental data: Net assets, end of period (000's)................. $ 72,525 $ 65,518 $ 46,745 $ 22,942 $ 14,680 $ 14,690 Expenses to average net assets.................... 0.78%* 0.80% 0.88% 0.92%(2) 0.89% 0.90% Net investment income to average net assets....... 0.72%* 0.99% 1.14% 1.26%(2) 1.39% 1.60% Portfolio turnover rate........................... 32% 62% 70% 112% 111% 94%
- ----------------- * Annualized. (1) Total investment return is calculated assuming a $1,000 investment on the first day of each period reported, reinvestment of all dividends and distributions at net asset value on the payable dates and a sale at net asset value on the last day of each period reported. The figures do not include sales charges or program fees; results would be lower if sales charges or program fees were included. Total investment return for periods of less than one year has not been annualized. (2) These ratios include non-recurring acquisition expenses of 0.04%. 36 PAINEWEBBER MID CAP FUND FINANCIAL HIGHLIGHTS Selected data for a beneficial interest outstanding throughout each period is presented below:
CLASS A ------------------------------------------------------------------------ FOR THE SIX FOR THE MONTHS FIVE ENDED MONTHS FEBRUARY 28, ENDED FOR THE YEARS ENDED MARCH 31, 1999 AUGUST 31, ---------------------------------- (UNAUDITED) 1998# 1998 1997 --------------- --------------- --------------- --------------- Net asset value, beginning of period.... $ 7.97 $ 15.00 $ 13.44 $ 15.61 --------------- ------- --------------- ------- Net investment loss..................... (0.03) (0.03) (0.13) (0.17) Net realized unrealized gains (losses) from investments....................... 2.33 (3.15) 5.15 0.32 --------------- ------- --------------- ------- Net increase (decrease) from investment operations.................. 2.30 (3.18) 5.02 0.15 --------------- ------- --------------- ------- Distributions from net realized gains from investments....................... (0.66) (3.85) (3.46) (2.32) --------------- ------- --------------- ------- Net asset value, end of period.......... $ 9.61 $ 7.97 $ 15.00 $ 13.44 --------------- ------- --------------- ------- --------------- ------- --------------- ------- Total investment return (1)............. 29.13% (27.31)% 41.50% (0.21)% --------------- ------- --------------- ------- --------------- ------- --------------- ------- Ratios/Supplemental Data: Net assets, end of period (000's)....... $ 103,864 $ 90,650 $ 101,698 $ 76,909 Expenses to average net assets.......... 1.58%* 1.48%* 1.51% 1.60% Net investment loss to average net assets................................. (0.69)%* (0.61)%* (1.16)% (1.20)% Portfolio turnover...................... 41% 80% 64% 56% 1996 1995 1994 --------------- --------------- --------------- Net asset value, beginning of period.... $ 12.81 $ 11.65 $ 10.53 ------- ------- ------- Net investment loss..................... (0.16) (0.09) (0.09) Net realized unrealized gains (losses) from investments....................... 3.71 1.29 1.21 ------- ------- ------- Net increase (decrease) from investment operations.................. 3.55 1.20 1.12 ------- ------- ------- Distributions from net realized gains from investments....................... (0.75) (0.04) -- ------- ------- ------- Net asset value, end of period.......... $ 15.61 $ 12.81 $ 11.65 ------- ------- ------- ------- ------- ------- Total investment return (1)............. 28.16% 10.36% 10.64% ------- ------- ------- ------- ------- ------- Ratios/Supplemental Data: Net assets, end of period (000's)....... 76,558 $ 62,673 $ 58,523 Expenses to average net assets.......... 1.58% 1.58% 1.54% Net investment loss to average net assets................................. (1.11)% (0.79)% (0.84)% Portfolio turnover...................... 57% 42% 60%
- ----------------- * Annualized. # Effective May 1, 1998, Mitchell Hutchins took over day-to-day management of the Fund's assets. (1) Total investment return is calculated assuming a $1,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the payable dates, and a sale at net asset value on the last day of each period reported. The figures do not include sales charges, results would be lower if sales charges were included. Total investment return for period of less than one year has not been annualized. 37 PAINEWEBBER MID CAP FUND FINANCIAL HIGHLIGHTS Selected data for a beneficial interest outstanding throughout each period is presented below:
CLASS B --------------------------------------------------------------------------------------- FOR THE SIX FOR THE MONTHS FIVE ENDED MONTHS FEBRUARY ENDED 28, AUGUST FOR THE YEARS ENDED MARCH 31, 1999 31, ------------------------------------------------------------- (UNAUDITED) 1998# 1998 1997 1996 1995 1994 --------- --------- --------- --------- --------- --------- --------- Net asset value, beginning of period.... $ 7.99 $ 15.07 $ 13.59 $ 15.88 $ 13.11 $ 12.02 $ 10.94 --------- --------- --------- --------- --------- --------- --------- Net investment loss..................... (0.09) (0.07) (0.31) (0.31) (0.29) (0.20) (0.17) Net realized and unrealized gains (losses) from investments.............. 2.35 (3.16) 5.25 0.34 3.81 1.33 1.25 --------- --------- --------- --------- --------- --------- --------- Net increase (decrease) from investment operations............................. 2.26 (3.23) 4.94 0.03 3.52 1.13 1.08 --------- --------- --------- --------- --------- --------- --------- Distributions from net realized gains from investments....................... (0.66) (3.85) (3.46) (2.32) (0.75) (0.04) -- --------- --------- --------- --------- --------- --------- --------- Net asset value, end of period.......... $ 9.59 $ 7.99 $ 15.07 $ 13.59 $ 15.88 $ 13.11 $ 12.02 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Total investment return (1)............. 28.54 (27.54)% 40.39% (0.99)% 27.28% 9.46% 9.87% --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Ratios/Supplemental Data: Net assets, end of period (000's)....... $ 45,782 $ 54,978 $ 143,058 $ 134,495 $ 157,021 $ 139,302 $ 133,828 Expenses to average net assets.......... 2.49%* 2.32%* 2.28% 2.36% 2.34% 2.34% 2.30% Net investment loss to average net assets................................. (1.59)%* (1.48)%* (1.92)% (1.95)% (1.87)% (1.56)% (1.60)% Portfolio turnover...................... 41% 80% 64% 56% 57% 42% 60%
- ----------------- * Annualized. # Effective May 1, 1998, Mitchell Hutchins took over day-to-day management of the Fund's assets. + Commencement of issuance of shares. (1) Total investment return is calculated assuming a $1,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the payable dates, and a sale at net asset value on the last day of each period reported. The figures do not include sales charges or program fees; results would be lower if sales charges or program fees were included. Total investment return for period of less than one year has not been annualized. 38
CLASS C CLASS Y --------------------------------------------------------------------------------------- ----------------------------------- FOR THE FOR THE SIX FOR THE SIX FOR THE MONTHS FIVE MONTHS FIVE FOR THE ENDED MONTHS ENDED MONTHS PERIOD FEBRUARY ENDED FEBRUARY ENDED MARCH 17, 28, AUGUST FOR THE YEARS ENDED MARCH 31, 28, AUGUST 1998+ TO 1999 31, ------------------------------------------------------------- 1999 31, MARCH 31, (UNAUDITED) 1998# 1998 1997 1996 1995 1994 (UNAUDITED) 1998# 1998 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- $ 7.26 $ 14.07 $ 12.87 $ 15.14 $ 12.54 $ 11.50 $ 10.47 $ 7.97 $ 15.00 $ 14.90 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- (0.07) (0.06) (0.26) (0.29) (0.27) (0.19) (0.10) (0.01) (0.01) 0.00 2.13 (2.90) 4.92 0.34 3.62 1.27 1.13 2.32 (3.17) 0.10 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 2.06 (2.96) 4.66 0.05 3.35 1.08 1.03 2.31 (3.18) 0.10 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- (0.66) (3.85) (3.46) (2.32) (0.75) (0.04) -- (0.66) (3.85) -- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- $ 8.66 $ 7.26 $ 14.07 $ 12.87 $ 15.14 $ 12.54 $ 11.50 $ 9.62 $ 7.97 $ 15.00 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 28.65% (27.58)% 40.46% (0.91)% 27.16% 9.45% 9.84% 29.26% (27.31)% 0.67% --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- $ 17,407 $ 16,875 $ 27,814 $ 24,810 $ 27,601 $ 24,993 $ 29,884 $ 202 $ 65 $ 35 2.40%* 2.28%* 2.29% 2.37% 2.36% 2.35% 2.28% 1.38%* 1.23%* 1.22%* (1.50)%* (1.42)%* (1.94)% (1.97)% (1.89)% (1.57)% (1.58)% (0.48)%* (0.29)%* 0.00%* 41% 80% 64% 56% 57% 42% 60% 41% 80% 64%
39 PAINEWEBBER GROWTH FUND FINANCIAL HIGHLIGHTS Selected data for a beneficial interest outstanding throughout each period is presented below:
CLASS A --------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED FEBRUARY 28, FOR THE YEARS ENDED AUGUST 31, 1999 --------------------------------------------------------------- (UNAUDITED) 1998 1997 1996 1995 1994 -------------- --------- --------- --------- --------- --------- Net asset value, beginning of period.............................. $ 20.08 $ 25.94 $ 24.37 $ 22.27 $ 20.04 $ 20.60 -------------- --------- --------- --------- --------- --------- Net investment income (loss).......... (0.05) (0.09) (0.08)+ (0.12) 0.01 -- Net realized and unrealized gains from investments......................... 7.72 1.01 3.76+ 4.06 2.25 0.51 -------------- --------- --------- --------- --------- --------- Total increase from investment operations.......................... 7.67 0.92 3.68 3.94 2.26 0.51 -------------- --------- --------- --------- --------- --------- Distributions from net realized gains from investment transactions........ (2.01) (6.78) (2.11) (1.84) (0.03) (1.07) -------------- --------- --------- --------- --------- --------- Net asset value, end of period........ $ 25.74 $ 20.08 $ 25.94 $ 24.37 $ 22.27 $ 20.04 -------------- --------- --------- --------- --------- --------- -------------- --------- --------- --------- --------- --------- Total investment return (1)........... 38.98% 3.37% 15.85% 18.43% 11.28% 2.33% -------------- --------- --------- --------- --------- --------- -------------- --------- --------- --------- --------- --------- Ratios/Supplemental data: Net assets, end of period (000's)..... $ 276,729 $ 202,253 $ 201,725 $ 203,882 $ 183,958 $ 141,342 Expenses to average net assets........ 1.18%* 1.19% 1.27% 1.28% 1.28%(2) 1.21% Net investment income (loss) to average net assets.................. (0.47)%* (0.39)% (0.32)% (0.49)% 0.19%(2) 0.06% Portfolio turnover.................... 22% 52% 86% 60% 36% 24%
- ----------------- * Annualized. (1) Total investment return is calculated assuming a $1,000 investment on the first day of each period reported, reinvestment of all dividends and distributions at net asset value on the payable dates and a sale at net asset value on the last day of each period reported. The figures do not include sales charges: results for each class would be lower if sales charges were included. Total investment return for periods of less than one year has not been annualized. (2) These ratios include non-recurring acquisition expenses of 0.06%. + Calculated using the average shares outstanding for the year. 40
CLASS B ------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED FEBRUARY 28, FOR THE YEARS ENDED AUGUST 31, 1999 ------------------------------------------------------------- (UNAUDITED) 1998 1997 1996 1995 1994 -------------- --------- --------- --------- --------- --------- Net asset value, beginning of period.............................. $ 18.44 $ 24.51 $ 23.30 $ 21.53 $ 19.53 $ 20.25 -------------- --------- --------- --------- --------- --------- Net investment income (loss).......... (0.14) (0.30) (0.26)+ (0.39) (0.02) (0.06) Net realized and unrealized gains from investments......................... 7.06 1.01 3.58+ 4.00 2.05 0.41 -------------- --------- --------- --------- --------- --------- Total increase from investment operations.......................... 6.92 0.71 3.32 3.61 2.03 0.35 -------------- --------- --------- --------- --------- --------- Distributions from net realized gains from investment transactions........ (2.01) (6.78) (2.11) (1.84) (0.03) (1.07) -------------- --------- --------- --------- --------- --------- Net asset value, end of period........ $ 23.35 $ 18.44 $ 24.51 $ 23.30 $ 21.53 $ 19.53 -------------- --------- --------- --------- --------- --------- -------------- --------- --------- --------- --------- --------- Total investment return (1)........... 38.36% 2.55% 14.98% 17.48% 10.40% 1.55% -------------- --------- --------- --------- --------- --------- -------------- --------- --------- --------- --------- --------- Ratios/Supplemental data: Net assets, end of period (000's)..... $ 89,406 $ 74,094 $ 115,529 $ 140,551 $ 152,357 $ 97,272 Expenses to average net assets........ 1.99%* 1.99% 2.06% 2.06% 2.06%(2) 2.00% Net investment income (loss) to average net assets.................. (1.28)%* (1.18)% (1.12)% (1.27)% (0.60)%(2) (0.66)% Portfolio turnover.................... 22% 52% 86% 60% 36% 24% CLASS C ----------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED FEBRUARY 28, FOR THE YEARS ENDED AUGUST 31, 1999 ------------------------------------------------------------- (UNAUDITED) 1998 1997 1996 1995 1994 ------------ --------- --------- --------- --------- --------- Net asset value, beginning of period.............................. $ 18.65 $ 24.71 $ 23.48 $ 21.68 $ 19.67 $ 20.38 ------------ --------- --------- --------- --------- --------- Net investment income (loss).......... (0.13) (0.27) (0.27)+ (0.34) (0.10) (0.08) Net realized and unrealized gains from investments......................... 7.13 0.99 3.61+ 3.98 2.14 0.44 ------------ --------- --------- --------- --------- --------- Total increase from investment operations.......................... 7.00 0.72 3.34 3.64 2.04 0.36 ------------ --------- --------- --------- --------- --------- Distributions from net realized gains from investment transactions........ (2.01) (6.78) (2.11) (1.84) (0.03) (1.07) ------------ --------- --------- --------- --------- --------- Net asset value, end of period........ $ 23.64 $ 18.65 $ 24.71 $ 23.48 $ 21.68 $ 19.67 ------------ --------- --------- --------- --------- --------- ------------ --------- --------- --------- --------- --------- Total investment return (1)........... 38.35% 2.59% 14.95% 17.50% 10.37% 1.59% ------------ --------- --------- --------- --------- --------- ------------ --------- --------- --------- --------- --------- Ratios/Supplemental data: Net assets, end of period (000's)..... $ 31,821 $ 21,714 $ 24,760 $ 29,923 $ 30,608 $ 28,561 Expenses to average net assets........ 1.98%* 1.99% 2.07% 2.07% 2.05%(2) 1.98% Net investment income (loss) to average net assets.................. (1.28)%* (1.19)% (1.13)% (1.28)% (0.57)%(2) (0.65)% Portfolio turnover.................... 22% 52% 86% 60% 36% 24%
- ----------------- * Annualized. (1) Total investment return is calculated assuming a $1,000 investment on the first day of each period reported, reinvestment of all dividends and distributions at net asset value on the payable dates and a sale at net asset value on the last day of each period reported. The figures do not include sales charges: results for each class would be lower if sales charges were included. Total investment return for periods of less than one year has not been annualized. (2) These ratios include non-recurring acquisition expenses of 0.06%. + Calculated using the average shares outstanding for the year. 41 PAINEWEBBER GROWTH FUND FINANCIAL HIGHLIGHTS Selected data for a beneficial interest outstanding throughout each period is presented below:
CLASS Y ------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED FEBRUARY FOR THE YEARS ENDED AUGUST 31, 28, 1999 ------------------------------------------------------------------ (UNAUDITED) 1998 1997 1996 1995 1994 ---------- ---------- --------- --------- --------- --------- Net asset value, beginning of period.... $20.67 $ 26.46 $ 24.74 $ 22.53 $ 20.22 $ 20.71 ---------- ---------- --------- --------- --------- --------- Net investment income (loss)............ (0.02) (0.03) (0.01)+ (0.02) 0.24 0.03 Net realized and unrealized gains from investments............................ 7.96 1.02 3.84+ 4.07 2.10 0.55 ---------- ---------- --------- --------- --------- --------- Total increase from investment operations............................. 7.94 0.99 3.83 4.05 2.34 0.58 ---------- ---------- --------- --------- --------- --------- Distributions from net realized gain from investment transactions........... (2.01) (6.78) (2.11) (1.84) (0.03) (1.07) ---------- ---------- --------- --------- --------- --------- Net asset value, end of period.......... $26.60 $ 20.67 $ 26.46 $ 24.74 $ 22.53 $ 20.22 ---------- ---------- --------- --------- --------- --------- ---------- ---------- --------- --------- --------- --------- Total investment return (1)............. 39.18% 3.61% 16.24% 18.72% 11.58% 2.67% ---------- ---------- --------- --------- --------- --------- ---------- ---------- --------- --------- --------- --------- Ratios/Supplemental data: Net assets, end of period (000's)....... $31,522 $21,440 $ 20,281 $ 21,409 $ 20,948 $ 30,521 Expenses to average net assets.......... 0.89%* 0.91% 1.00% 1.02% 0.97%(2) 0.94% Net investment income (loss) to average net assets............................. (0.18)%* (0.12)% (0.05)% (0.23)% 0.53%(2) 0.40% Portfolio turnover...................... 22% 52% 86% 60% 36% 24%
- ----------------- * Annualized. + Calculated using the average shares outstanding for the year. (1) Total investment return is calculated assuming a $1,000 investment on the first day of each period reported, reinvestment of all dividends and distributions, if any, at net asset value on the payable dates, and a sale at net asset value on the last day of each period reported. The figures do not include program fees; results would be lower if program fees were included. Total investment return for period of less than one year has not been annualized. (2) These ratios include non-recurring acquisition expenses of 0.05%. 42 TRUSTEES E. Garrett Bewkes, Jr. CHAIRMAN Margo N. Alexander Richard Q. Armstrong Richard R. Burt Mary C. Farrell Meyer Feldberg George W. Gowen Frederic V. Malek Carl W. Schafer PRINCIPAL OFFICERS Margo N. Alexander PRESIDENT Victoria E. Schonfeld VICE PRESIDENT Dianne E. O'Donnell VICE PRESIDENT AND SECRETARY Paul H. Schubert VICE PRESIDENT AND TREASURER Mark A. Tincher VICE PRESIDENT Ellen R. Harris VICE PRESIDENT INVESTMENT ADVISER, ADMINISTRATOR AND DISTRIBUTOR Mitchell Hutchins Asset Management Inc. 1285 Avenue of the Americas New York, New York 10019 THIS REPORT IS NOT TO BE USED IN CONNECTION WITH THE OFFERING OF SHARES OF THE FUNDS UNLESS ACCOMPANIED OR PRECEDED BY AN EFFECTIVE PROSPECTUS. THE FINANCIAL INFORMATION INCLUDED HEREIN IS TAKEN FROM THE RECORDS OF THE FUNDS WITHOUT EXAMINATION BY INDEPENDENT AUDITORS WHO DO NOT EXPRESS AN OPINION THEREON. A PROSPECTUS CONTAINING MORE COMPLETE INFORMATION FOR ANY OF THE FUNDS LISTED ON THE BACK COVER CAN BE OBTAINED FROM A PAINEWEBBER FINANCIAL ADVISOR OR CORRESPONDENT FIRM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. PaineWebber offers a family of 27 funds which encompass a diversified range of investment goals. BOND FUNDS - - High Income Fund - - Investment Grade Income Fund - - Low Duration U.S. Government Income Fund - - Strategic Income Fund - - U.S. Government Income Fund TAX-FREE BOND FUNDS - - California Tax-Free Income Fund - - Municipal High Income Fund - - National Tax-Free Income Fund - - New York Tax-Free Income Fund STOCK FUNDS - - Financial Services Growth Fund - - Growth Fund - - Growth and Income Fund - - Mid Cap Fund - - Small Cap Fund - - S&P 500 Index Fund - - Tax-Managed Equity Fund - - Utility Income Fund ASSET ALLOCATION FUNDS - - Balanced Fund - - Tactical Allocation Fund GLOBAL FUNDS - - Asia Pacific Growth Fund - - Emerging Markets Equity Fund - - Global Equity Fund - - Global Income Fund MITCHELL HUTCHINS PORTFOLIOS - - Aggressive Portfolio - - Moderate Portfolio - - Conservative Portfolio PAINEWEBBER MONEY MARKET FUND [LOGO] - -C-1999 PaineWebber Incorporated Member SIPC [LOGO] SEMIANNUAL REPORT GROWTH AND INCOME FUND MID CAP FUND GROWTH FUND FEBRUARY 28, 1999 -----END PRIVACY-ENHANCED MESSAGE-----