-----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, WEv5oWs8XPooRvjwugjlCoXy3Yaz4rNde2Gq2i9of66Ioe4R8BENE8FHQWn705ah ELqgK+l4uFUFe4uppvsJiQ== 0000950130-96-004252.txt : 19961108 0000950130-96-004252.hdr.sgml : 19961108 ACCESSION NUMBER: 0000950130-96-004252 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961107 SROS: NONE 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: 1940 Act SEC FILE NUMBER: 811-03502 FILM NUMBER: 96656058 BUSINESS ADDRESS: STREET 1: 1285 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127132421 MAIL ADDRESS: STREET 2: 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 N-30D 1 GROWTH & INCOME FUND PAINEWEBBER GROWTH & INCOME FUND PERFORMANCE RESULTS (UNAUDITED)
NET ASSET VALUE TOTAL RETURN/1/ -------------------------- ----------------------------- 12 MONTHS 6 MONTHS 08/31/96 02/29/96 08/31/95 ENDED 08/31/96 ENDED 08/31/96 - ------------------------------------------------------------------------ Class A Shares $24.35 $23.77 $22.52 17.40% 2.83% - ------------------------------------------------------------------------ Class B Shares 24.26 23.70 22.37 16.49 2.43 - ------------------------------------------------------------------------ Class C Shares 24.33 23.77 22.43 16.52 2.45 - ------------------------------------------------------------------------
Performance Summary Class A Shares
NET ASSET VALUE ---------------- CAPITAL GAINS TOTAL PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS 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 - ---------------------------------------------------------------------------- 01/01/96 - 08/31/96 22.39 24.35 -- 0.0942 9.17 - ---------------------------------------------------------------------------- Totals: $6.5538 $6.0784 - ---------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 08/31/96: 313.72% - ---------------------------------------------------------------------------- Performance Summary Class B Shares NET ASSET VALUE ---------------- CAPITAL GAINS TOTAL PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS 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 - ---------------------------------------------------------------------------- 01/01/96 - 08/31/96 22.35 24.26 -- 0.0170 8.62 - ---------------------------------------------------------------------------- Totals: $2.7506 $0.4912 - ---------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 08/31/96: 57.49% - ---------------------------------------------------------------------------- Performance Summary Class C Shares NET ASSET VALUE ---------------- CAPITAL GAINS TOTAL PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS 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 - ---------------------------------------------------------------------------- 01/01/96 - 08/31/96 22.42 24.33 -- 0.0225 8.62 - ---------------------------------------------------------------------------- Totals: $2.7506 $0.4177 - ---------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 08/31/96: 42.11% - ----------------------------------------------------------------------------
/1/ Figures assume reinvestment of all dividends and capital gains distributions at net asset value on the payable dates, and do not include sales charges; results would be lower for each class if sales charges were included. Note: The Fund offers Class Y shares to the trustee of the PaineWebber Savings Investment Plan and INSIGHT Investment Advisory Program participants. For the year ended August 31, 1996 and since inception, February 12, 1992 through August 31, 1996, Class Y shares had a total return of 17.77% and 41.83%, respectively. Class Y shares do not have initial or contingent de- ferred 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. 1 PAINEWEBBER GROWTH FUND PERFORMANCE RESULTS (UNAUDITED)
NET ASSET VALUE TOTAL RETURN/1/ -------------------------- ----------------------------- 12 MONTHS 6 MONTHS 08/31/96 02/29/96 08/31/95 ENDED 08/31/96 ENDED 08/31/96 - ------------------------------------------------------------------------ Class A Shares $24.37 $23.65 $22.27 18.43% 3.04% - ------------------------------------------------------------------------ Class B Shares 23.30 22.70 21.53 17.48 2.64 - ------------------------------------------------------------------------ Class C Shares 23.48 22.88 21.68 17.50 2.62 - ------------------------------------------------------------------------
Performance Summary Class A Shares
NET ASSET VALUE ---------------- CAPITAL GAINS TOTAL PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS 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 - ---------------------------------------------------------------------------- 01/01/96 - 08/31/96 23.12 24.37 -- -- 5.41 - ---------------------------------------------------------------------------- Totals: $7.5930 $0.5872 - ---------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 08/31/96: 354.34% - ---------------------------------------------------------------------------- Performance Summary Class B Shares NET ASSET VALUE ---------------- CAPITAL GAINS TOTAL PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS 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 - ---------------------------------------------------------------------------- 01/01/96 - 08/31/96 22.22 23.30 -- -- 4.86 - ---------------------------------------------------------------------------- Totals: $4.1670 $0.0037 - ---------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 08/31/96: 82.54% - ---------------------------------------------------------------------------- Performance Summary Class C Shares NET ASSET VALUE ---------------- CAPITAL GAINS TOTAL PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS 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 - ---------------------------------------------------------------------------- 01/01/96 - 08/31/96 22.40 23.48 -- -- 4.82 - ---------------------------------------------------------------------------- Totals: $3.5667 -- - ---------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 08/31/96: 63.00% - ----------------------------------------------------------------------------
/1/ Figures assume reinvestment of all dividends and capital gains distributions at net asset value on the payable dates, and do not include sales charges; results would be lower for each class if sales charges were included. Note: The Fund offers Class Y shares to the trustee of the PaineWebber Savings Investment Plan and INSIGHT Investment Advisory Program participants. For the year ended August 31, 1996, and since inception, August 26, 1991 through August 31, 1996, Class Y shares have a total return of 18.72% and 76.19%, 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. 2 PAINEWEBBER GROWTH & INCOME FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1996
NUMBER OF SHARES VALUE --------- ----------- COMMON STOCKS - 81.54% Agriculture, Food & Beverage - 1.96% 70,000 IBP, Incorporated...................................... $ 1,636,250 116,850 Phillip Morris Companies Incorporated.................. 10,487,288 ----------- 12,123,538 ----------- Airlines - 2.86% 100,000 America West Airlines Incorporated*.................... 1,337,500 131,645 AMR Corporation*....................................... 10,794,890 100,000 Continental Airlines Incorporated...................... 2,262,500 70,000 UAL Corporation........................................ 3,360,000 ----------- 17,754,890 ----------- Apparel, Retail - 0.77% 150,000 TJX Companies, Incorporated............................ 4,800,000 ----------- Apparel, Textiles - 0.26% 15,000 Nike Incorporated...................................... 1,620,000 ----------- Banks - 8.08% 400,000 The Bank of New York Company Incorporated.............. 11,150,000 60,000 BankAmerica Corporation................................ 4,650,000 100,000 Barnett Banks Incorporated............................. 6,562,500 75,000 CCB Financial Corporation.............................. 3,993,750 93,600 The Chase Manhattan Corporation........................ 6,961,500 101,800 Citicorp............................................... 8,474,850 10,000 First Empire State Corporation......................... 2,545,000 67,500 NationsBank Corporation................................ 5,745,938 ----------- 50,083,538 ----------- Chemicals - 2.56% 30,000 Dow Chemical Company................................... 2,392,500 100,000 Freeport-McMoran Copper & Gold, Incorporated........... 2,937,500 50,000 IMC Global Incorporated................................ 2,150,000 28,000 Norsk Hydro A.S. ADR*.................................. 1,277,500 50,000 Occidental Petroleum Corporation....................... 1,162,500 75,000 Olin Corporation....................................... 5,943,750 ----------- 15,863,750 ----------- Computer Hardware - 5.30% 62,500 3Com Corporation*...................................... 2,921,875 107,500 Cisco Systems Incorporated*............................ 5,670,625 100,000 Compaq Computer Corporation*........................... 5,662,500 50,000 Dell Computer Corporation*............................. 3,356,250 100,000 Sun Microsystems Incorporated*......................... 5,437,500 125,000 Western Digital Corporation*........................... 4,390,625 98,100 Xerox Corporation...................................... 5,383,238 ----------- 32,822,613 ----------- Computer Software - 2.26% 50,000 Cadence Design Systems Incorporated*................... 1,481,250 150,075 Computer Associates International Incorporated......... 7,878,938 7,200 Microsoft Corporation*................................. 882,000
3 PAINEWEBBER GROWTH & INCOME FUND
NUMBER OF SHARES VALUE --------- ----------- COMMON STOCKS - (CONTINUED) Computer Software - (concluded) 13,000 Sterling Commerce Incorporated*........................ $ 403,000 50,000 Sterling Software Incorporated*........................ 3,393,750 ----------- 14,038,938 ----------- Defense/Aerospace - 7.33% 117,000 ITT Industries Incorporated............................ 2,676,375 130,000 Lockheed Martin Corporation............................ 10,936,250 268,200 Loral Corporation*..................................... 3,754,800 136,400 McDonnell Douglas Corporation.......................... 6,837,050 168,600 Raytheon Company....................................... 8,682,900 125,000 Rockwell International Corporation..................... 6,500,000 53,800 United Technologies Corporation........................ 6,065,950 ----------- 45,453,325 ----------- Diversified Retail - 2.00% 234,000 Dayton Hudson Corporation.............................. 8,073,000 125,000 Federated Department Stores, Incorporated.............. 4,328,125 ----------- 12,401,125 ----------- Drugs & Medicine - 5.63% 83,400 Bristol-Myers Squibb Company........................... 7,318,350 40,000 Cardinal Health Incorporated........................... 2,935,000 107,800 Pfizer, Incorporated................................... 7,653,800 100,000 Rhone-Poulenc Rorer Incorporated....................... 7,037,500 100,000 Schering-Plough Corporation............................ 5,587,500 75,000 Smithkline Beecham, plc, ADS........................... 4,368,750 ----------- 34,900,900 ----------- Electric Utilities - 1.18% 100,000 FPL Group, Incorporated................................ 4,425,000 125,000 Unicom Corporation..................................... 2,875,000 ----------- 7,300,000 ----------- Energy Reserves & Production - 3.46% 125,000 Louisiana Land & Exploration Company................... 7,109,375 66,200 Mobil Corporation...................................... 7,464,050 125,000 Panenergy Corporation.................................. 4,140,625 18,500 Royal Dutch Petroleum Company.......................... 2,763,438 ----------- 21,477,488 ----------- Financial Services - 2.52% 43,800 American Express Company............................... 1,916,250 42,400 General Electric Company............................... 3,524,500 100,000 Irvine Apartment Communities Incorporated.............. 2,250,000 100,000 Oasis Residential Incorporated......................... 2,187,500 67,000 Textron Incorporated................................... 5,720,125 ----------- 15,598,375 ----------- Forest Products, Paper - 0.49% 70,100 Champion International Corporation..................... 3,014,300 -----------
4 PAINEWEBBER GROWTH & INCOME FUND
NUMBER OF SHARES VALUE --------- ----------- COMMON STOCKS - (CONTINUED) Food Retail - 0.94% 160,000 Safeway Incorporated*.................................. $ 5,800,000 ----------- Hotels - 1.19% 120,000 Bally Entertainment Group*............................. 3,270,000 75,000 Marriott International, Incorporated................... 4,115,625 ----------- 7,385,625 ----------- Household Products - 0.66% 159,800 Dial Corporation....................................... 1,837,700 159,800 Viad Corporation....................................... 2,277,150 ----------- 4,114,850 ----------- Information & Computer Services - 1.05% 123,100 Computervision Corporation* ........................... 861,700 125,000 Omnicom Group.......................................... 5,671,875 ----------- 6,533,575 ----------- Leisure - 0.43% 100,000 Mattel, Incorporated................................... 2,637,500 ----------- Life Insurance - 1.96% 55,000 Reliastar Financial Corporation........................ 2,426,875 78,800 SunAmerica Incorporated................................ 5,368,250 100,000 Travelers Group Incorporated........................... 4,337,500 ----------- 12,132,625 ----------- Long Distance & Phone Companies - 1.31% 200,000 Sprint Corporation..................................... 8,125,000 ----------- Manufacturing - General - 3.61% 150,000 ADT Limited*........................................... 2,943,750 146,000 Case Corporation....................................... 6,643,000 100,000 Ingersoll Rand Company................................. 4,275,000 127,000 Pentair Incorporated................................... 3,460,750 100,000 Varity Corporation*.................................... 5,025,000 ----------- 22,347,500 ----------- Manufacturing - High Technology - 0.92% 108,200 United States Robotics Corporation*.................... 5,680,500 ----------- Medical Products - 2.55% 100,000 Johnson & Johnson...................................... 4,925,000 195,000 Mentor Corporation..................................... 6,166,875 130,000 U.S. Surgical Corporation.............................. 4,745,000 ----------- 15,836,875 ----------- Medical Providers - 2.05% 200,000 HEALTHSOUTH Corporation*............................... 6,475,000 125,000 Humana Incorporated*................................... 2,343,750 150,000 Ornda Healthcorp*...................................... 3,862,500 ----------- 12,681,250 ----------- Mining & Metals - 0.44% 100,000 USX-U.S. Steel Group, Incorporated..................... 2,750,000 -----------
5 PAINEWEBBER GROWTH & INCOME FUND
NUMBER OF SHARES VALUE --------- ----------- COMMON STOCKS - (CONCLUDED) Motor Vehicles - 1.87% 100,000 Borg Warner Automotive Incorporated.................... $ 3,750,000 149,400 Breed Technologies Incorporated........................ 3,977,775 100,000 Lear Corporation*...................................... 3,837,500 ----------- 11,565,275 ----------- Oil Refining - 3.14% 13,138 British Petroleum plc.................................. 1,547,000 100,000 Coastal Corporation.................................... 3,962,500 90,500 DuPont (E.I.) de Nemours & Company..................... 7,432,312 38,000 Repsol S.A., ADR....................................... 1,239,750 15,000 Shell Transport & Trading plc.......................... 1,312,500 77,500 Tejas Gas Corporation*................................. 2,693,124 35,000 Total S.A. ............................................ 1,299,375 ----------- 19,486,561 ----------- Oil Services - 3.75% 50,000 Camco International Incorporated....................... 1,693,750 100,000 Diamond Offshore Drilling Incorporated*................ 5,100,000 430,000 Forest Oil Corporation*................................ 6,073,750 150,000 Halliburton Company.................................... 7,893,750 165,000 Nabors Industries Incorporated*........................ 2,454,375 ----------- 23,215,625 ----------- Other Insurance - 3.69% 125,000 ACE Limited............................................ 5,828,125 200,971 Allstate Corporation................................... 8,968,330 85,200 American International Group Incorporated.............. 8,094,000 ----------- 22,890,455 ----------- Publishing - 0.51% 100,000 New York Times Company, Class A........................ 3,125,000 ----------- Railroads - 0.55% 50,000 Consolidated Rail, Incorporated........................ 3,406,250 ----------- Real Property - 1.76% 100,000 Avalon Properties Incorporated......................... 2,287,500 65,000 Chelsea GCA Realty Incorporated........................ 1,893,125 65,000 Equity Residential Properties Trust.................... 2,299,375 60,000 Starwood Lodging Corporation........................... 2,280,000 100,000 Wellsford Residential Property......................... 2,162,500 ----------- 10,922,500 ----------- Specialty Retail - 2.50% 100,000 Consolidated Stores Corporation*....................... 3,800,000 120,375 Dollar General Corporation............................. 3,882,093 190,000 Eckerd Corporation*.................................... 4,655,000 150,000 Waban Incorporated..................................... 3,187,500 ----------- 15,524,593 ----------- Total Common Stocks (cost - $422,014,825)......................... 505,414,339 -----------
6 PAINEWEBBER GROWTH & INCOME FUND
NUMBER OF SHARES VALUE --------- ----------- PREFERRED STOCKS - 3.17% Apparel, Retail - 0.51% 17,450 TJX Companies, Incorporated............................ $ 3,175,900 ----------- Financial Services - 0.42% 53,000 Devon Financing Trust#................................. 2,597,000 ----------- Forest Products, Paper - 0.76% 102,000 International Paper Capital Trust#..................... 4,692,000 ----------- Media - 0.21% 25,000 American Radio Systems Corporation*#................... 1,325,000 ----------- Miscellaneous - 0.87% 108,800 BCP International Limited.............................. 5,412,800 ----------- Precious Metals - 0.40% 144,000 Coeur d'Alene Mines Corporation........................ 2,484,000 ----------- Total Preferred Stocks (cost - $19,831,128)....................... 19,686,700 -----------
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES --------- -------------------- -------------- CONVERTIBLE BONDS - 1.17% Computer Hardware - 0.52% $ 3,500 Quantum Corporation#.... 03/01/03 5.000% 3,255,000 ------------ Drugs & Medicine - 0.17% 1,000 North American Vaccine Incorporated#.......... 05/01/03 6.500 1,037,500 ------------ Environmental Services - 0.48% 3,000 Molten Metal Technology Incorporated#.......... 05/01/06 5.500 2,970,000 ------------ Total Convertible Bonds (cost - $7,385,000)........................ 7,262,500 ------------ U.S. GOVERNMENT OBLIGATIONS - 3.22% 20,000 United States Treasury Bills (cost - $19,959,028)........... 09/12/96 to 09/19/96 5.080 to 5.090@ 19,959,028 ------------ REPURCHASE AGREEMENTS - 8.54% 26,915 Repurchase agreement dated 08/30/96, with Daiwa Securities America, Inc., collateralized by $23,925,000 U.S. Treasury Bond, 8.500% due 02/15/20; proceeds: $26,930,611............ 09/03/96 5.220 26,915,000 26,000 Repurchase agreement dated 08/30/96, with Dresdner Securities (USA), Inc., collateralized by $26,222,000 U.S. Treasury Note, 6.500% due 05/31/01; proceeds: $26,015,167.. 09/03/96 5.250 26,000,000 ------------ Total Repurchase Agreements (cost - $52,915,000)....................... 52,915,000 ------------ Total Investments (cost - $522,104,981) - 97.64%............ 605,237,567 Other assets in excess of liabilities - 2.36%................ 14,620,905 ------------ Net Assets - 100.00%............... $619,858,472 ============
- ------- * Non-income producing # Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. @ Yield to maturity at date of purchase ADR--American Depositary Receipts ADS--American Depositary Shares See accompanying notes to financial statements 7 PAINEWEBBER GROWTH FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1996
NUMBER OF SHARES VALUE --------- ----------- COMMON STOCKS - 93.90% Agriculture, Food & Beverage - 1.26% 100,000 The Coca-Cola Company.................................. $ 5,000,000 ----------- Banks - 3.02% 70,000 The Bank of New York Company Incorporated.............. 1,951,250 80,000 CCB Financial Corporation.............................. 4,260,000 43,680 The Chase Manhattan Corporation........................ 3,248,700 10,000 Wells Fargo and Company................................ 2,487,500 ----------- 11,947,450 ----------- Chemicals - 3.37% 98,000 IMC Global Incorporated................................ 4,214,000 115,762 Mark IV Industries Incorporated........................ 2,488,883 175,000 Sealed Air Corporation*................................ 6,628,125 ----------- 13,331,008 ----------- Computer Hardware - 5.13% 60,000 3Com Corporation*...................................... 2,805,000 80,000 Business Objects S.A.*................................. 1,420,000 180,000 Cisco Systems Incorporated*............................ 9,495,000 200,000 EMC Corporation*....................................... 3,850,000 50,000 Sun Microsystems Incorporated*......................... 2,718,750 ----------- 20,288,750 ----------- Computer Software - 4.49% 80,000 Epic Design Technology, Incorporated*.................. 1,540,000 430,000 Excalibur Technologies Corporation*.................... 6,503,750 100,000 Hummingbird Communications Limited*.................... 2,950,000 100,000 Sterling Software Incorporated*........................ 6,787,500 ----------- 17,781,250 ----------- Consumer Durables - 0.15% 30,000 Watsco Incorporated.................................... 585,000 ----------- Defense/Aerospace - 1.11% 125,000 Kellstrom Industries Incorporated*..................... 1,000,000 30,000 United Technologies Corporation........................ 3,382,500 ----------- 4,382,500 ----------- Drugs & Medicine - 5.51% 141,300 Columbia Laboratories, Incorporated*................... 1,801,575 60,000 Elan Corporation, plc, ADS*............................ 1,882,500 230,000 Entremed, Incorporated*................................ 3,507,500
8 PAINEWEBBER GROWTH FUND
NUMBER OF SHARES VALUE --------- ----------- COMMON STOCKS - (CONTINUED) Drugs & Medicine - (concluded) 120,000 Global Pharmaceutical Corporation*..................... $ 1,005,000 130,000 Pharmacyclics Incorporated*............................ 1,641,250 40,000 R.P. Scherer Corporation*.............................. 1,925,000 172,000 Teva Pharmaceutical Industries Limited, ADS............ 6,267,250 130,000 Watson Pharmaceuticals, Incorporated*.................. 3,770,000 ----------- 21,800,075 ----------- Entertainment - 3.16% 220,000 Cinar Films Incorporated*.............................. 5,252,500 333,334 N2K Incorporated*...................................... 1,000,002 188,000 Time Warner Incorporated............................... 6,274,500 ----------- 12,527,002 ----------- Environmental Services - 3.70% 560,000 Republic Industries, Incorporated*..................... 14,630,000 ----------- Financial Services - 3.00% 39,500 Federal Home Loan Mortgage Corporation................. 3,490,812 270,000 Federal National Mortgage Association.................. 8,370,000 ----------- 11,860,812 ----------- Forest Products, Paper - 0.65% 195,000 Universal Forest Products, Incorporated................ 2,559,375 ----------- Food Retail - 1.14% 125,000 Safeway Incorporated*.................................. 4,531,250 ----------- Heavy Machinery - 0.40% 37,500 Corestaff Incorporated*................................ 1,575,000 ----------- Hotels - 5.49% 500,000 Extended Stay America, Incorporated*................... 7,625,000 150,000 HFS, Incorporated*..................................... 8,981,250 220,000 Mirage Resorts, Incorporated*.......................... 5,115,000 ----------- 21,721,250 ----------- Household Products - 1.71% 120,000 Dial Corporation....................................... 1,380,000 30,000 Premark International, Incorporated.................... 547,500 80,000 Syratech Corporation*.................................. 1,830,000 30,000 Tupperware Corporation................................. 1,312,500 120,000 Viad Corporation....................................... 1,710,000 ----------- 6,780,000 ----------- Industrial Services/Supplies - 1.94% 45,000 Career Horizons, Incorporated*......................... 1,569,375 230,000 Data Documents Incorporated*........................... 2,530,000 200,000 Staffing Resources, Incorporated*...................... 3,600,000 ----------- 7,699,375 -----------
9 PAINEWEBBER GROWTH FUND
NUMBER OF SHARES VALUE --------- ----------- COMMON STOCKS - (CONTINUED) Information & Computer Services - 3.27% 66,900 Ceridian Corporation*.................................. $ 2,851,612 78,000 Computervision Corporation*............................ 546,000 40,000 First Data Corporation................................. 3,120,000 45,000 Outdoor Systems Incorporated*.......................... 1,901,250 84,375 Paychex, Incorporated.................................. 4,514,062 ----------- 12,932,924 ----------- Leisure - 3.73% 250,000 Activision, Incorporated*.............................. 3,000,000 400,000 Marker International*.................................. 2,850,000 131,500 Mattel, Incorporated................................... 3,468,312 225,000 Norwood Promotional Products, Incorporated*............ 3,262,500 229,500 Rawlings Sporting Goods Company, Incorporated*......... 2,194,594 ----------- 14,775,406 ----------- Life Insurance - 1.48% 35,000 Equitable of Iowa Companies............................ 1,286,250 150,000 PennCorp Financial Group, Incorporated................. 4,575,000 ----------- 5,861,250 ----------- Long Distance & Phone Companies - 5.82% 45,000 Brooks Fiber Properties, Incorporated*................. 1,350,000 345,096 ICG Communications, Incorporated*...................... 7,592,112 77,000 Intermedia Communications of Florida, Incorporated*.... 2,387,000 75,000 International CableTel Incorporated*................... 1,818,750 22,500 McLeod Incorporated*................................... 649,688 144,000 MFS Communications Company, Incorporated*.............. 6,102,000 135,000 Teleport Communications Group*......................... 3,122,550 ----------- 23,022,100 ----------- Manufacturing - High Technology - 6.22% 100,000 Amphenol Corporation, Class A*......................... 1,962,500 183,500 Belden, Incorporated................................... 4,977,437 45,000 Boston Communications Group, Incorporated*............. 776,250 45,000 Glenayre Technologies, Incorporated*................... 1,653,750 150,000 Microcom Incorporated*................................. 1,275,000 430,000 Noel Group, Incorporated*.............................. 3,386,250 56,250 Thermo Instrument Systems Incorporated*................ 2,179,688 268,000 Waters Corporation*.................................... 8,408,500 ----------- 24,619,375 ----------- Media - 9.53% 277,500 Ascent Entertainment Group Incorporated*............... 5,341,875 125,000 Bell CableMedia plc*................................... 1,839,844 160,000 British Sky Broadcasting Group plc..................... 8,580,000 257,500 Comcast Corporation, Class A Special................... 4,152,188 125,000 Comcast UK Cable Partners Limited*..................... 1,343,750 91,500 Infinity Broadcasting Corporation, Class A*............ 2,504,812 131,250 Liberty Media Group*................................... 3,461,719
10 PAINEWEBBER GROWTH FUND
NUMBER OF SHARES VALUE --------- ----------- COMMON STOCKS - (CONTINUED) Media - (concluded) 100,000 Metromedia International Group, Incorporated*......... $ 1,125,000 90,000 NYNEX Cablecomms Group plc, ADR*...................... 1,462,500 100,000 Tele-Communications International, Incorporated....... 1,662,500 225,000 Tele-Communications, Incorporated, Class A*........... 3,346,875 70,000 TeleWest Communications plc, ADR*..................... 1,513,750 100,000 United International Holdings, Incorporated, Class A*. 1,375,000 ----------- 37,709,813 ----------- Medical Products - 0.83% 170,000 VISX, Incorporated*................................... 3,293,750 ----------- Medical Providers - 5.01% 75,000 Columbia/HCA Healthcare Corporation................... 4,228,125 25,000 Lanvision Systems, Incorporated*...................... 315,625 155,000 Ornda Healthcorp*..................................... 3,991,250 198,000 Phycor Incorporated*.................................. 6,484,500 85,500 Service Corporation International..................... 4,820,063 ----------- 19,839,563 ----------- Mining & Metals - 0.96% 50,000 Potash Corporation of Saskatchewan Incorporated....... 3,800,000 ----------- Motor Vehicles - 0.13% 28,000 Dura Automotive Systems, Incorporated*................ 518,000 ----------- Oil Services - 0.60% 70,000 Camco International Incorporated...................... 2,371,250 ----------- Other Insurance - 1.08% 60,000 ACE Limited .......................................... 2,797,500 61,400 Everest Reinsurance Holdings Incorporated............. 1,496,625 ----------- 4,294,125 ----------- Publishing - 0.72% 205,000 Getty Communications Systems Incorporated............. 2,844,375 ----------- Real Property - 0.48% 50,000 Starwood Lodging Corporation.......................... 1,900,000 ----------- Specialty Retail - 7.35% 100,000 Corporate Express, Incorporated*...................... 3,750,000 120,000 Eckerd Corporation*................................... 2,940,000 300,000 General Nutrition Companies, Incorporated*............ 4,425,000 40,000 Gucci Group N.V. ..................................... 2,660,000 460,405 Staples, Incorporated*................................ 9,092,999 240,000 Viking Office Products, Incorporated*................. 6,210,000 ----------- 29,077,999 -----------
11 PAINEWEBBER GROWTH FUND
NUMBER OF SHARES VALUE --------- ----------- COMMON STOCKS - (CONCLUDED) Wireless Telecommunications - 1.46% 32,000 Millicom International Cellular, S.A.*................. $ 1,272,000 90,000 Omnipoint Corporation*................................. 2,452,500 70,000 Paging Network, Incorporated*.......................... 1,233,750 47,000 Western Wireless Corporation*.......................... 822,500 ----------- 5,780,750 ----------- Total Common Stocks (cost - $242,999,138)......................... 371,640,777 ----------- PREFERRED STOCK - 0.43% Media - 0.43% 95,000 The News Corporation Limited (cost - $1,680,075)....... 1,686,250 -----------
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES --------- -------- -------- REPURCHASE AGREEMENTS - 5.65% $11,000 Repurchase agreement dated 08/30/96, with Citicorp Securities, Inc., collateralized by $9,025,000 U.S. Treasury Bonds, 11.125%, due 08/15/03; proceeds: $11,006,392............ 09/03/96 5.230% 11,000,000 11,342 Repurchase agreement dated 08/30/96, with State Street Bank and Trust Company, collateralized by $11,310,000 U.S. Treasury Notes, 6.125%, due 03/31/98; proceeds: $11,348,566.. 09/03/96 5.210 11,342,000 ------------ Total Repurchase Agreements (cost - $22,342,000)................................. 22,342,000 ------------ Total Investments (cost - $267,021,213) - 99.98%....................................... 395,669,027 Other assets in excess of liabilities - 0.02%........................................ 95,756 ------------ Net Assets - 100.00%......................... $395,764,783 ============
- ------- * Non-income producing # Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. ADR--American Depositary Receipts ADS--American Depositary Shares See accompanying notes to financial statements 12 PAINEWEBBER STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996
GROWTH & INCOME GROWTH FUND FUND ------------ ------------ Assets Investments in securities, at value (cost-- $522,104,981 and $267,021,213, respectively)........ $605,237,567 $395,669,027 Cash................................................. 660 263,854 Receivable for investments sold...................... 14,772,306 522,990 Dividends and interest receivable.................... 986,069 142,755 Receivable for shares of beneficial interest sold.... 625,892 93,090 Deferred organizational expenses..................... 29,726 74,818 Other assets......................................... 51,714 121,538 ------------ ------------ Total assets......................................... 621,703,934 396,888,072 ------------ ------------ Liabilities Payable for shares of beneficial interest repurchased......................................... 900,632 450,011 Payable to affiliate................................. 709,005 442,236 Accrued expenses and other liabilities............... 235,825 231,042 ------------ ------------ Total liabilities.................................... 1,845,462 1,123,289 ------------ ------------ Net Assets Beneficial interest--$0.001 par value (unlimited amount authorized).................................. 474,846,608 234,504,688 Accumulated undistributed net investment income...... 853,493 -- Accumulated net realized gains from investment transactions........................................ 61,025,785 32,612,281 Net unrealized appreciation of investments........... 83,132,586 128,647,814 ------------ ------------ Net assets........................................... $619,858,472 $395,764,783 ============ ============ Class A: Net assets........................................... $276,015,697 $203,882,380 ------------ ------------ Shares outstanding................................... 11,334,133 8,367,838 ------------ ------------ Net asset value and redemption value per share....... $24.35 $24.37 ============ ============ Maximum offering price per share (net asset value plus sales charge of 4.50% of offering price)....... $25.50 $25.51 ============ ============ Class B: Net assets........................................... $277,752,763 $140,550,595 ------------ ------------ Shares outstanding................................... 11,448,219 6,032,563 ------------ ------------ Net asset value and offering price per share......... $24.26 $23.30 ============ ============ Class C: Net assets........................................... $ 43,147,752 $ 29,923,167 ------------ ------------ Shares outstanding................................... 1,773,624 1,274,634 ------------ ------------ Net asset value and offering price per share......... $24.33 $23.48 ============ ============ Class Y: Net assets........................................... $ 22,942,260 $ 21,408,641 ------------ ------------ Shares outstanding................................... 942,279 865,284 ------------ ------------ Net asset value, offering price and redemption value per share........................................... $24.35 $24.74 ============ ============
See accompanying notes to financial statements 13 PAINEWEBBER STATEMENT OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 1996
GROWTH & INCOME GROWTH FUND FUND ----------- ----------- Investment income: Dividends............................................ $ 9,050,237 $ 1,697,485 Interest............................................. 3,577,821 1,441,701 ----------- ----------- 12,628,058 3,139,186 ----------- ----------- Expenses: Investment advisory and administration............... 4,075,174 2,985,925 Service fees--Class A................................ 591,662 457,184 Service and distribution fees--Class B............... 2,676,820 1,475,760 Service and distribution fees--Class C............... 376,394 306,286 Transfer agency and service fees..................... 545,777 340,899 Reports and notices to shareholders.................. 289,618 237,799 Custody and accounting............................... 244,550 177,418 Fund acquisition expenses............................ 215,034 -- Legal and audit...................................... 165,303 153,653 Federal and state registration....................... 113,406 211,028 Trustees' fees....................................... 15,750 15,681 Amortization of organizational expenses.............. 18,435 34,576 Other expenses....................................... 28,070 27,103 ----------- ----------- 9,355,993 6,423,312 ----------- ----------- Net investment income (loss)......................... 3,272,065 (3,284,126) ----------- ----------- Realized and unrealized gains (losses) from invest- ment activities: Net realized gains from investment transactions...... 86,725,439 53,608,241 Net change in unrealized appreciation/depreciation of investments......................................... (1,953,419) 15,049,708 ----------- ----------- Net realized and unrealized gains from investment ac- tivities............................................ 84,772,020 68,657,949 ----------- ----------- Net increase in net assets resulting from operations. $88,044,085 $65,373,823 =========== ===========
See accompanying notes to financial statements 14 PAINEWEBBER GROWTH & INCOME FUND STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED AUGUST 31, --------------------------- 1996 1995 ------------ ------------- From operations: Net investment income............................. $ 3,272,065 $ 3,038,055 Net realized gains from investment transactions... 86,725,439 17,636,364 Net change in unrealized appreciation/depreciation of investments................................... (1,953,419) 52,701,413 ------------ ------------- Net increase in net assets resulting from operations....................................... 88,044,085 73,375,832 ------------ ------------- Dividends and distributions to shareholders from: Net investment income--Class A.................... (3,309,904) (1,163,754) Net investment income--Class B.................... (985,947) (457,553) Net investment income--Class C.................... (142,026) (53,897) Net investment income--Class Y.................... (323,508) (102,452) Net realized gains from investment transactions-- Class A.......................................... (14,113,535) (11,701,555) Net realized gains from investment transactions-- Class B.......................................... (16,674,335) (15,518,597) Net realized gains from investment transactions-- Class C.......................................... (2,139,119) (1,953,255) Net realized gains from investment transactions-- Class Y.......................................... (1,066,345) (828,242) ------------ ------------- Total dividends and distributions to shareholders. (38,754,719) (31,779,305) ------------ ------------- From beneficial interest transactions: Net proceeds from the sale of shares.............. 86,569,299 30,582,369 Proceeds from the issuance of shares from the acquisition of Mitchell Hutchins/Kidder, Peabody Equity Income Fund............................... 60,522,138 -- Proceeds from the issuance of shares from the acquisition of PaineWebber Global Energy Fund.... 17,163,198 -- Cost of shares repurchased........................ (109,425,591) (185,758,645) Proceeds from dividends reinvested................ 35,992,186 29,628,162 ------------ ------------- Net increase (decrease) in net assets from beneficial interest transactions................. 90,821,230 (125,548,114) ------------ ------------- Net increase (decrease) in net assets............. 140,110,596 (83,951,587) Net assets: Beginning of year................................. 479,747,876 563,699,463 ------------ ------------- End of year (including undistributed net investment income of $853,493 and $2,077,243, respectively)........................ $619,858,472 $ 479,747,876 ============ =============
See accompanying notes to financial statements 15 PAINEWEBBER GROWTH FUND STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED AUGUST 31, -------------------------- 1996 1995 ------------ ------------ From operations: Net investment loss................................ $ (3,284,126) $ (331,823) Net realized gains from investment transactions.... 53,608,241 17,051,928 Net change in unrealized appreciation/depreciation of investments.................................... 15,049,708 7,109,490 ------------ ------------ Net increase in net assets resulting from operations........................................ 65,373,823 23,829,595 ------------ ------------ Distributions to shareholders from: Net realized gains from investment transactions-- Class A........................................... (14,736,470) (170,322) Net realized gains from investment transactions-- Class B........................................... (11,773,021) (120,995) Net realized gains from investment transactions-- Class C........................................... (2,425,155) (33,706) Net realized gains from investment transactions-- Class Y........................................... (1,487,963) (37,136) ------------ ------------ Total distributions to shareholders................ (30,422,609) (362,159) ------------ ------------ From beneficial interest transactions: Net proceeds from sale of shares................... 33,439,586 29,210,160 Proceeds from the issuance of shares from the acquisition of PaineWebber Communications & Technology Growth Fund............................ -- 62,703,777 Proceeds from the issuance of shares from the acquisition of PaineWebber Blue Chip Growth Fund.. -- 86,500,222 Cost of shares repurchased......................... (89,217,437) (112,053,043) Proceeds from dividends reinvested................. 28,720,783 345,390 ------------ ------------ Net increase (decrease) in net assets from beneficial interest transactions.................. (27,057,068) 66,706,506 ------------ ------------ Net increase in net assets......................... 7,894,146 90,173,942 Net assets: Beginning of year.................................. 387,870,637 297,696,695 ------------ ------------ End of year........................................ $395,764,783 $387,870,637 ============ ============
See accompanying notes to financial statements 16 PAINEWEBBER NOTES TO FINANCIAL STATEMENTS ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES PaineWebber Growth & Income Fund ("Growth & Income Fund") and PaineWebber Growth Fund ("Growth Fund") (collectively, the "Funds") are diversified series of PaineWebber America Fund and PaineWebber Olympus Fund (the "Trusts"), respectively. The two 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. 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 structure, ongoing service/distribution charges and certain transfer agency expenses. In addition, Class B shares and all corresponding dividend reinvested shares automatically convert to Class A shares approximately six years after initial issuance. All classes of shares have equal voting privileges, except that Class A, Class B, and Class C shares have exclusive voting rights with respect to their distribution plans. Organizational costs have been deferred and are being amortized using the straight line method over a period not to exceed 60 months from the date the costs were incurred. 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 as the primary market by Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"), an affiliate and wholly owned 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 ("Nasdaq") are valued at the last sale price on Nasdaq prior to the time of valuation; other OTC securities are valued at the last bid price available in the OTC market prior to the time of valuation. The amortized cost method of valuation is used to value short-term debt instruments with sixty days or less remaining to maturity. Securities for which market quotations are not readily available (including restricted securities subject to limitations as to their sale) are valued at fair value as determined in good faith by a management committee under the direction of each Trust's Board of Trustees. 17 PAINEWEBBER 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, the Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. Under certain circumstances, in the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral may be subject to legal proceedings. Each Fund occasionally participates in joint repurchase agreement transactions with other funds managed by Mitchell Hutchins. Investment Transactions and Investment Income - Investment transactions are recorded on trade date. Realized gains and losses from investment transactions are calculated using the identified cost method. Interest income is recorded on an accrual basis and dividend income is recorded on the ex-dividend date. Premiums are amortized and discounts are accreted 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. 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 reclassifications. ACQUISITIONS Effective October 13, 1995, Growth & Income Fund acquired all of the net assets of PaineWebber Global Energy Fund ("Global Energy Fund") in a tax-free exchange for shares of Growth & Income Fund. The acquisition was accomplished by a tax- free exchange of 338,423 Class A, 414,593 Class B and 24,548 Class C shares of Growth & Income Fund for 680,852 Class A, 832,585 Class B and 50,070 Class C shares, respectively, of Global Energy Fund outstanding. Global Energy Fund's net assets at that date, valued at $17,163,198 including accumulated net realized losses of $2,079,189 and net unrealized appreciation of investments of $653,059, were combined with those of Growth & Income Fund. 18 PAINEWEBBER Effective October 13, 1995, Growth & Income Fund acquired all of the net assets of Mitchell Hutchins/Kidder, Peabody Equity Income Fund ("MH/KP Equity Income Fund") in a tax free exchange for shares of Growth & Income Fund. The acquisition was accomplished by a tax-free exchange of 2,533,885 Class A, 137,926 Class Y and 67,543 Class C shares of Growth & Income Fund for 2,816,987 Class A, 153,429 Class Y and 75,614 Class B shares, respectively, of MH/KP Equity Income Fund outstanding. MH/KP Equity Income Fund's net assets at that date, valued at $60,522,138 including net unrealized appreciation of investments of $5,986,801 were combined with those of Growth & Income Fund. 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 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% and 0.75%, respectively, of each Funds average daily net assets. At August 31, 1996, Growth & Income Fund and Growth Fund owed Mitchell Hutchins $367,024 and $249,031, respectively, in investment advisory and administration fees. For the year ended August 31, 1996, Growth & Income Fund and Growth Fund paid $32,465 and $10,104, 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 distribution pertaining to the 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 August 31, 1996, Growth & Income Fund and Growth Fund owed Mitchell Hutchins $324,858 and $182,531, 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 year ended August 31, 1996, it earned $979,512 and $579,350 in sales charges for the Growth & Income Fund and Growth Fund, respectively. 19 PAINEWEBBER TRANSFER AGENCY SERVICE FEES Each Fund pays PaineWebber an annual fee of $4.00 per active PaineWebber shareholder account for certain services not provided by the Fund's transfer agent. For these services for the year ended August 31, 1996, PaineWebber earned $206,622 and $134,864 from Growth & Income Fund and Growth Fund, respectively. At August 31, 1996, Growth & Income Fund and Growth Fund owed PaineWebber $17,123 and $10,674, respectively, for transfer agency service fees. INVESTMENTS IN SECURITIES For federal income tax purposes, the cost of securities owned at August 31, 1996, was substantially the same as the cost of securities for financial statement purposes. At August 31, 1996, the components of net unrealized appreciation of investments were as follows:
GROWTH & INCOME FUND GROWTH FUND ------------ ------------ Gross appreciation (investments having an excess of value over cost).................................. $ 92,723,365 $135,027,196 Gross depreciation (investments having an excess of cost over value).................................. (9,590,779) (6,379,382) ------------ ------------ Net unrealized appreciation of investments......... $ 83,132,586 $128,647,814 ============ ============ For the year ended August 31, 1996, total aggregate purchases and sales of portfolio securities, excluding short-term securities, were as follows: GROWTH & INCOME FUND GROWTH FUND ------------ ------------ Purchases.......................................... $586,303,031 $225,553,349 Sales.............................................. $619,085,974 $270,210,453
FEDERAL TAX STATUS Each Fund intends to distribute 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. To reflect reclassifications for the Growth & Income Fund arising from permanent "book/tax" differences for the year ended August 31, 1996, accumulated undistributed net investment income was increased by $265,570, accumulated net realized gains from investment transactions were increased by $383,609 and beneficial interest was decreased by $649,179. To reflect reclassifications for the Growth Fund arising from permanent "book/tax" differences for the year ended August 31, 1996, accumulated undistributed net investment income was increased by $3,479,461, accumulated net realized gains from investment transactions were decreased by $3,445,252 and beneficial interest was decreased by $34,209. 20 PAINEWEBBER BENEFICIAL INTEREST There is an unlimited amount of $0.001 par value shares of beneficial interest authorized. Transactions in shares of beneficial interest were as follows:
CLASS A CLASS B CLASS C CLASS Y ------------------------ ------------------------ --------------------- ---------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ -------- ----------- -------- ------------ GROWTH & INCOME FUND YEAR ENDED AUGUST 31, 1996: Shares sold..... 1,129,631 $ 26,796,965 1,730,871 $ 40,860,505 586,203 $13,785,499 215,504 $ 5,126,330 Shares issued in connection with the acquisition of: MH/KP Equity Income Fund... 2,533,885 55,983,774 -- -- 67,543 1,493,701 137,926 3,044,663 PaineWebber Global Energy Fund.......... 338,423 7,478,321 414,593 9,142,000 24,548 542,877 -- -- Shares repurchased.... (1,907,414) (44,519,365) (2,302,787) (53,544,909) (361,631) (8,422,118) (125,157) (2,939,199) Shares converted from Class B to Class A........ 204,193 4,892,665 (204,905) (4,892,665) -- -- -- -- Dividends reinvested..... 728,678 16,107,474 744,676 16,323,941 98,756 2,173,217 62,781 1,387,554 ---------- ------------ ---------- ------------ -------- ----------- -------- ------------ Net increase ... 3,027,396 $ 66,739,834 382,448 $ 7,888,872 415,419 $ 9,573,176 291,054 $ 6,619,348 ========== ============ ========== ============ ======== =========== ======== ============ YEAR ENDED AUGUST 31, 1995: Shares sold..... 406,738 $ 8,281,477 791,571 $ 16,018,352 142,739 $ 2,898,240 169,458 $ 3,384,300 Shares repurchased.... (3,712,415) (73,393,874) (4,676,193) (92,319,141) (715,856) (14,159,528) (288,614) (5,886,102) Shares converted from Class B to Class A........ 72,134 1,428,360 (72,367) (1,428,360) -- -- -- -- Dividends reinvested..... 653,877 11,890,156 821,955 14,887,430 105,724 1,919,882 51,195 930,694 ---------- ------------ ---------- ------------ -------- ----------- -------- ------------ Net decrease.... (2,579,666) $(51,793,881) (3,135,034) $(62,841,719) (467,393) $(9,341,406) (67,961) $ (1,571,108) ========== ============ ========== ============ ======== =========== ======== ============ CLASS A CLASS B CLASS C CLASS Y ------------------------ ------------------------ --------------------- ---------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ -------- ----------- -------- ------------ GROWTH FUND YEAR ENDED AUGUST 31, 1996: Shares sold..... 514,293 $ 12,445,673 548,531 $ 12,529,149 189,909 $ 4,324,908 172,505 $ 4,139,856 Shares repurchased.... (1,557,212) (36,779,779) (1,643,121) (35,301,053) (434,895) (9,869,571) (302,302) (7,267,034) Shares converted from Class B to Class A........ 527,377 12,303,931 (454,796) (12,303,931) -- -- -- -- Dividends reinvested..... 623,918 13,988,235 505,415 10,896,749 108,096 2,347,836 65,491 1,487,963 ---------- ------------ ---------- ------------ -------- ----------- -------- ------------ Net increase (decrease)..... 108,376 $ 1,958,060 (1,043,971) $(24,179,086) (136,890) $(3,196,827) (64,306) $ (1,639,215) ========== ============ ========== ============ ======== =========== ======== ============ YEAR ENDED AUGUST 31, 1995: Shares sold..... 343,756 $ 6,797,998 593,500 $ 11,354,188 184,507 $ 3,593,377 373,860 $ 7,464,597 Shares issued in connection with the acquisition of: PaineWebber Communications & Technology Growth Fund.... 533,772 11,895,983 2,011,998 43,342,827 343,927 7,464,967 -- -- PaineWebber Blue Chip Growth Fund... 2,348,128 52,326,034 1,425,501 30,724,310 159,005 3,449,878 -- -- Shares repurchased.... (2,089,914) (41,666,293) (1,875,647) (36,501,877) (729,746) (14,263,697) (955,791) (19,621,176) Shares converted from Class B to Class A........ 63,558 1,245,674 (65,425) (1,245,674) -- -- -- -- Dividends reinvested..... 8,698 161,962 6,276 113,599 1,793 32,693 1,975 37,136 ---------- ------------ ---------- ------------ -------- ----------- -------- ------------ Net increase (decrease)..... 1,207,998 $ 30,761,358 2,096,203 $ 47,787,373 (40,514) $ 277,218 (579,956) $(12,119,443) ========== ============ ========== ============ ======== =========== ======== ============
21 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 YEARS ENDED AUGUST 31, ---------------------------------------------------- 1996 1995 1994 1993 1992 -------- -------- -------- -------- -------- Net asset value, beginning of period..... $ 22.52 $ 20.43 $ 20.86 $ 20.48 $ 19.26 -------- -------- -------- -------- -------- Net investment income.... 0.22 0.24 0.28 0.28 0.24 Net realized and unrealized gains (losses) from investment transactions............ 3.46 3.18 (0.41) 0.37 1.25 -------- -------- -------- -------- -------- Total increase (decrease) from investment operations.............. 3.68 3.42 (0.13) 0.65 1.49 -------- -------- -------- -------- -------- Dividends from investment income.................. (0.34) (0.12) (0.27) (0.27) (0.27) Distributions from net realized gains on investment transactions. (1.51) (1.21) (0.03) -- -- -------- -------- -------- -------- -------- Total dividends and distributions to shareholders............ (1.85) (1.33) (0.30) (0.27) (0.27) -------- -------- -------- -------- -------- Net asset value, end of period.................. $ 24.35 $ 22.52 $ 20.43 $ 20.86 $ 20.48 ======== ======== ======== ======== ======== Total investment return(1)............... 17.40% 18.30% (0.58)% 3.15% 7.78% ======== ======== ======== ======== ======== Ratios/Supplemental Data: Net assets, end of period (000's)................. $276,016 $187,057 $222,432 $359,073 $358,643 Expenses to average net assets.................. 1.20%(2) 1.19% 1.20% 1.13% 1.22% Net investment income to average net assets...... 0.98%(2) 1.07% 1.29% 1.33% 1.26% Portfolio turnover....... 112% 111% 94% 37% 16% Average commission rate paid per share of common stock investments purchased/sold(3)....... $ 0.0598 -- -- -- --
- ------- * Annualized + Commencement of issuance of shares (1) Total investment return is calculated assuming a $1,000 investment on the first day of each period reported, reinvestment of all dividends and distributions at net asset value on the payable dates, and a sale at net asset value on the last day of each period reported. The figures do not include sales charges; results would be lower if sales charges were included. Total investment return information for periods of less than one year has not been annualized. (2) These ratios include non-recurring acquisition expenses of 0.04%. (3) Disclosure effective for fiscal years beginning on or after September 1, 1995. 22 PAINEWEBBER GROWTH & INCOME FUND
CLASS B CLASS C - ---------------------------------------------------- -------------------------------------------------- FOR THE PERIOD JULY 2, FOR THE YEARS ENDED AUGUST 31, FOR THE YEARS ENDED AUGUST 31, 1992+ TO - ---------------------------------------------------- -------------------------------------- AUGUST 31, 1996 1995 1994 1993 1992 1996 1995 1994 1993 1992 - -------- -------- -------- -------- -------- ------- ------- ------- ------- ---------- $ 22.37 $ 20.37 $ 20.78 $ 20.41 $ 19.23 $ 22.43 $ 20.42 $ 20.83 $ 20.47 $ 20.95 - -------- -------- -------- -------- -------- ------- ------- ------- ------- ------- 0.04 0.06 0.10 0.12 0.13 0.05 0.06 0.11 0.11 0.02 3.45 3.18 (0.37) 0.36 1.20 3.46 3.19 (0.38) 0.37 (0.44) - -------- -------- -------- -------- -------- ------- ------- ------- ------- ------- 3.49 3.24 (0.27) 0.48 1.33 3.51 3.25 (0.27) 0.48 (0.42) - -------- -------- -------- -------- -------- ------- ------- ------- ------- ------- (0.09) (0.03) (0.11) (0.11) (0.15) (0.10) (0.03) (0.11) (0.12) (0.06) (1.51) (1.21) (0.03) -- -- (1.51) (1.21) (0.03) -- -- - -------- -------- -------- -------- -------- ------- ------- ------- ------- ------- (1.60) (1.24) (0.14) (0.11) (0.15) (1.61) (1.24) (0.14) (0.12) (0.06) - -------- -------- -------- -------- -------- ------- ------- ------- ------- ------- $ 24.26 $ 22.37 $ 20.37 $ 20.78 $ 20.41 $ 24.33 $ 22.43 $ 20.42 $ 20.83 $ 20.47 ======== ======== ======== ======== ======== ======= ======= ======= ======= ======= 16.49% 17.38% (1.31)% 2.34% 6.99% 16.52% 17.37% (1.29)% 2.35% 2.85% ======== ======== ======== ======== ======== ======= ======= ======= ======= ======= $277,753 $247,543 $289,290 $461,389 $386,275 $43,148 $30,468 $37,287 $61,869 $13,019 1.99%(2) 1.97% 1.97% 1.90% 1.97% 1.99%(2) 1.98% 1.94% 1.87% 1.73%* 0.17%(2) 0.29% 0.51% 0.57% 4.90% 0.18%(2) 0.28% 0.54% 0.61% 0.94%* 112% 111% 94% 37% 16% 112% 111% 94% 37% 16% $ 0.0598 -- -- -- -- $0.0598 -- -- -- --
23 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 PERIOD FOR THE YEARS FEBRUARY ENDED 12, AUGUST 31, 1992+ TO -------------------------------------- AUGUST 31, 1996 1995 1994 1993 1992 ------- ------- ------- ------- ---------- Net asset value, beginning of period.................. $ 22.54 $ 20.42 $ 20.86 $ 20.48 $ 20.95 ------- ------- ------- ------- ------- Net investment income....... 0.30 0.30 0.33 0.33 0.16 Net realized and unrealized gains (losses) from investment transactions.... 3.45 3.18 (0.40) 0.37 (0.49) ------- ------- ------- ------- ------- Total increase (decrease) from investment operations. 3.75 3.48 (0.07) 0.70 (0.33) ------- ------- ------- ------- ------- Dividends from investment income..................... (0.43) (0.15) (0.34) (0.32) (0.14) Distributions from net realized gains on investment transactions.... (1.51) (1.21) (0.03) -- -- ------- ------- ------- ------- ------- Total dividends and distributions to shareholders............... (1.94) (1.36) (0.37) (0.32) (0.14) ------- ------- ------- ------- ------- Net asset value, end of period..................... $ 24.35 $ 22.54 $ 20.42 $ 20.86 $ 20.48 ======= ======= ======= ======= ======= Total investment return(1).. 17.77% 18.66% (0.31)% 3.44% (1.15)% ======= ======= ======= ======= ======= Ratios/Supplemental Data: Net assets, end of period (000's).................... $22,942 $14,680 $14,690 $17,005 $10,560 Expenses to average net assets..................... 0.92%(2) 0.89% 0.90% 0.86% 0.93%* Net investment income to average net assets......... 1.26%(2) 1.39% 1.60% 1.62% 1.56%* Portfolio turnover.......... 112% 111% 94% 37% 16% Average commission rate paid per share of common stock investments purchased/sold(3).......... $0.0598 -- -- -- --
- ------- * Annualized + Commencement of issuance of shares (1) Total investment return is calculated assuming a $1,000 investment on the first day of each period reported, reinvestment of all dividends and distributions at net asset value on the payable dates, and a sale at net asset value on the last day of each period reported. Total investment return information for periods of less than one year has not been annualized. (2) These ratios include non-recurring acquisition expenses of 0.04%. (3) Disclosure effective for fiscal years beginning on or after September 1, 1995. 24 [This Page Intentionally Left Blank] 25 PAINEWEBBER GROWTH FUND FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD IS PRESENTED BELOW:
CLASS A ---------------------------------------------------- FOR THE YEARS ENDED AUGUST 31, ---------------------------------------------------- 1996 1995 1994 1993 1992 -------- -------- -------- -------- -------- Net asset value, beginning of period.... $22.27 $ 20.04 $ 20.60 $ 16.78 $ 17.50 -------- -------- -------- -------- -------- Net investment income (loss)................. (0.12) 0.01 -- 0.07 -- Net realized and unrealized gains (losses) from investment transactions........... 4.06 2.25 0.51 4.37 (0.11) -------- -------- -------- -------- -------- Net increase (decrease) from investment operations............. 3.94 2.26 0.51 4.44 (0.11) -------- -------- -------- -------- -------- Dividends from investment income...... -- -- -- -- (0.01) Distributions from net realized gains from investment transactions........... (1.84) (0.03) (1.07) (0.62) (0.60) -------- -------- -------- -------- -------- Total dividends and distributions to shareholders........... (1.84) (0.03) (1.07) (0.62) (0.61) -------- -------- -------- -------- -------- Net asset value, end of period................. $ 24.37 $ 22.27 $ 20.04 $ 20.60 $ 16.78 ======== ======== ======== ======== ======== Total investment return(1).............. 18.43% 11.28% 2.33% 26.97% (0.85)% ======== ======== ======== ======== ======== Ratios/supplemental data: Net assets, end of period (000's)......... $203,882 $183,958 $141,342 $130,353 $102,640 Expenses to average net assets................. 1.28% 1.28%(2) 1.21% 1.22% 1.43% Net investment income (loss) to average net assets................. (0.49)% 0.19%(2) 0.06% 0.38% 0.00% Portfolio turnover rate. 60% 36% 24% 36% 32% Average commission rate paid per share on common stock investments purchased/sold(3)...... $ 0.0598 -- -- -- --
- ------- * Annualized + Commencement of issuance of shares (1) Total investment return is calculated assuming a $1,000 investment on the first day of each period reported, reinvestment of all dividends and 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 information for periods of less than one year has not been annualized. (2) These ratios include non-recurring acquisition expenses of 0.06%. (3) Disclosure effective for fiscal years beginning on or after September 1, 1995. 26 PAINEWEBBER GROWTH FUND
CLASS B CLASS C - ---------------------------------------------------- ----------------------------------------------------- FOR THE PERIOD JULY 2, FOR THE YEARS ENDED AUGUST 31, FOR THE YEARS ENDED AUGUST 31, 1992+ TO - ---------------------------------------------------- ---------------------------------------- AUGUST 31, 1996 1995 1994 1993 1992 1996 1995 1994 1993 1992 - -------- -------- ------- ------- ------- ------- ------- ------- ------- ---------- $ 21.53 $ 19.53 $ 20.25 $ 16.64 $ 17.48 $ 21.68 $ 19.67 $ 20.38 $ 16.75 $17.04 - -------- -------- ------- ------- ------- ------- ------- ------- ------- ------ (0.39) (0.02) (0.06) (0.05) (0.06) (0.34) (0.10) (0.08) (0.06) (0.01) 4.00 2.05 0.41 4.28 (0.18) 3.98 2.14 0.44 4.31 (0.28) - -------- -------- ------- ------- ------- ------- ------- ------- ------- ------ 3.61 2.03 0.35 4.23 (0.24) 3.64 2.04 0.36 4.25 (0.29) - -------- -------- ------- ------- ------- ------- ------- ------- ------- ------ -- -- -- -- -- -- -- -- -- -- (1.84) (0.03) (1.07) (0.62) (0.60) (1.84) (0.03) (1.07) (0.62) -- - -------- -------- ------- ------- ------- ------- ------- ------- ------- ------ (1.84) (0.03) (1.07) (0.62) (0.60) (1.84) (0.03) (1.07) (0.62) -- - -------- -------- ------- ------- ------- ------- ------- ------- ------- ------ $ 23.30 $ 21.53 $ 19.53 $ 20.25 $ 16.64 $ 23.48 $ 21.68 $ 19.67 $ 20.38 $16.75 ======== ======== ======= ======= ======= ======= ======= ======= ======= ====== 17.48% 10.40% 1.55% 25.91% (1.58)% 17.50% 10.37% 1.59% 25.86% (2.95)% ======== ======== ======= ======= ======= ======= ======= ======= ======= ====== $140,551 $152,357 $97,272 $60,280 $35,867 $29,923 $30,608 $28,561 $16,474 $2,275 2.06% 2.06%(2) 2.00% 2.02% 2.20% 2.07% 2.05%(2) 1.98% 2.06% 1.98%* (1.27)% (0.60)%(2) (0.66)% (0.46)% (0.70)% (1.28)% (0.57)%(2) (0.65)% (0.69)% (0.65)%* 60% 36% 24% 36% 32% 60% 36% 24% 36% 32% $ 0.0598 -- -- -- -- $0.0598 -- -- -- --
27 PAINEWEBBER GROWTH FUND FINANCIAL HIGHLIGHTS SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH PERIOD IS PRESENTED BELOW:
CLASS Y ----------------------------------------------- FOR THE YEARS ENDED AUGUST 31, ----------------------------------------------- 1996 1995 1994 1993 1992 ------- ------- ------- ------- ------- Net asset value, beginning of period...................... $ 22.53 $ 20.22 $ 20.71 $ 16.83 $ 17.50 ------- ------- ------- ------- ------- Net investment income (loss). (0.02) 0.24 0.03 0.08 0.05 Net realized and unrealized gains (losses) from investment transactions..... 4.07 2.10 0.55 4.42 (0.11) ------- ------- ------- ------- ------- Net increase (decrease) from investment operations....... 4.05 2.34 0.58 4.50 (0.06) ------- ------- ------- ------- ------- Dividends from investment income...................... -- -- -- -- (0.01) Distributions from net realized gains from investment transactions..... (1.84) (0.03) (1.07) (0.62) (0.60) ------- ------- ------- ------- ------- Total dividends and distributions to shareholders................ (1.84) (0.03) (1.07) (0.62) (0.61) ------- ------- ------- ------- ------- Net asset value, end of period...................... $ 24.74 $ 22.53 $ 20.22 $ 20.71 $ 16.83 ======= ======= ======= ======= ======= Total investment return(1)... 18.72% 11.58% 2.67% 27.26% (0.52)% ======= ======= ======= ======= ======= Ratios/supplemental data: Net assets, end of period (000's)..................... $21,409 $20,948 $30,521 $20,706 $11,581 Expenses to average net assets...................... 1.02% 0.97%(2) 0.94% 0.95% 1.12% Net investment income (loss) to average net assets....... (0.23)% 0.53%(2) 0.40% 0.60% 0.38% Portfolio turnover rate...... 60% 36% 24% 36% 32% Average commission rate paid per share on common stock investments purchased/sold(3)........... $0.0598 -- -- -- --
- ------- (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. (2) These ratios include non-recurring acquisition expenses of 0.05%. (3) Disclosure effective for fiscal years beginning on or after September 1, 1995. 28 PAINEWEBBER REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS The Board of Trustees and Shareholders PaineWebber Growth & Income Fund PaineWebber Growth Fund We have audited the accompanying statement of assets and liabilities, including the portfolios of investments, of the PaineWebber Growth & Income Fund and PaineWebber Growth Fund as of August 31, 1996, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of each Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned at August 31, 1996 by correspondence with the custodians and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the PaineWebber Growth & Income Fund and PaineWebber Growth Fund at August 31, 1996 and the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for each of the indicated periods, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP New York, New York October 21, 1996 29 PAINEWEBBER TAX INFORMATION (UNAUDITED) We are required by Subchapter M of the Internal Revenue Code of 1986, as amended, to advise you within 60 days of each Fund's fiscal year end (August 31, 1996) as to the federal tax status of distributions received by shareholders during such fiscal year. Accordingly, we are advising you that the following distributions paid during the fiscal year by the Funds were derived from the following sources:
GROWTH & INCOME GROWTH PER SHARE DATA: FUND FUND - --------------- -------- ------- Net investment income Class A..................................................... $0.3417 -- Class B..................................................... $0.0885 -- Class C..................................................... $0.0953 -- Class Y..................................................... $0.4344 -- Short-term capital gains*..................................... $1.1221 -- Long-term capital gains....................................... $0.3864 $1.8442 Percentage of ordinary income dividends qualifying for the dividends received deduction available to corporate shareholders................................................. 100% --
- ------- * Taxable as ordinary income Dividends received by tax-exempt recipients (e.g., IRAs and Keoghs) need not be reported as taxable income. Some retirement trusts (e.g., corporate, Keogh and 403(b)(7) plans) may need this information for their annual information reporting. Since each Fund's fiscal year is not the calendar year, another notification will be sent with respect of calendar year 1996. Such notifications, which will reflect the amount to be used by calendar year taxpayers on their federal income tax returns, will be made in conjunction with Form 1099 DIV and will be mailed in January 1997. Shareholders are advised to consult their own tax advisers with respect to the tax consequences of their investment in each of the Funds. 30 PAINEWEBBER SHAREHOLDER INFORMATION A special meeting of shareholders of the Growth & Income Fund and of the Growth Fund was held on April 15, 1996. At the meetings the following proposals were approved:
SHARES SHARES VOTED WITHHOLD FOR AUTHORITY PROPOSAL 1 ------------ --------- To elect ten members of its Board of Trustees: Margo N. Alexander Growth & Income Fund.................................. 11,991,556 716,426 Growth Fund........................................... 8,257,283 515,477 Richard Q. Armstrong Growth & Income Fund.................................. 11,993,852 714,130 Growth Fund........................................... 8,261,031 511,729 E. Garrett Bewkes, Jr. Growth & Income Fund.................................. 11,992,689 715,293 Growth Fund........................................... 8,250,423 522,337 Richard Burt Growth & Income Fund.................................. 11,999,584 708,398 Growth Fund........................................... 8,257,316 515,444 Mary C. Farrell Growth & Income Fund.................................. 11,995,665 712,317 Growth Fund........................................... 8,261,546 511,214 Meyer Feldberg Growth & Income Fund.................................. 11,987,752 720,230 Growth Fund........................................... 8,257,597 515,163 George W. Gowen Growth & Income Fund.................................. 11,988,990 718,992 Growth Fund........................................... 8,250,757 522,003 Frederic V. Malek Growth & Income Fund.................................. 11,985,923 722,059 Growth Fund........................................... 8,256,460 516,300 Carl W. Schafer Growth & Income Fund.................................. 11,990,091 717,891 Growth Fund........................................... 8,254,201 518,559 John R. Torell III Growth & Income Fund.................................. 11,992,895 715,087 Growth Fund........................................... 8,261,277 511,483
PROPOSAL 2 Ratification of the selection of Ernst & Young LLP as the independent auditors for its current fiscal year:
SHARES VOTED FOR SHARES AGAINST SHARES ABSTAIN ------------ -------------- -------------- Growth & Income Fund................. 11,972,892 41,681 693,409 Growth Fund.......................... 8,245,442 39,455 487,863
31 PAINEWEBBER SHAREHOLDER INFORMATION (CONCLUDED) PROPOSAL 3 Approval of the proposed changes to the Fund's fundamental investment restrictions and policies: Modification of fundamental restriction on portfolio diversification; Modification of fundamental restriction on concentration; Modification of fundamental restriction on senior securities and borrowing; Modification of fundamental restriction on making loans; Modification of fundamental restriction on underwriting securities; Modification of fundamental restriction on real estate investments; Modification of fundamental restriction on investing in commodities; Elimination of fundamental restriction on margin transactions; Elimination of fundamental restriction on short sales; Elimination of fundamental restriction on investments in oil, gas and mineral leases and programs; Elimination of fundamental restriction on investments in other investment companies;
SHARES VOTED SHARES VOTED FOR AGAINST SHARES ABSTAIN ------------ ------------ -------------- Growth & Income Fund................... 11,733,361 153,852 820,769 Growth Fund............................ 8,099,595 111,418 561,747
Elimination of fundamental restriction relating to purchases of securities not permitted under investment objective:
SHARES VOTED SHARES VOTED FOR AGAINST SHARES ABSTAIN ------------ ------------ -------------- Growth & Income Fund................... 11,733,361 153,852 820,769
- ------- (Broker non-votes and abstentions are included within the "Shares Withhold Authority" or "Shares Abstain" totals.) 32 -----END PRIVACY-ENHANCED MESSAGE-----