-----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, V3xdojjJV3Y2IJ0lY03w3avCbRpgaCZhNabEs1pJ5r8P4M90I1Lml8YUfNqWB2Av yTsTLQsMG09+jmgLWiusdw== 0000950130-95-002314.txt : 19951108 0000950130-95-002314.hdr.sgml : 19951108 ACCESSION NUMBER: 0000950130-95-002314 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950831 FILED AS OF DATE: 19951107 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: 95587823 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 PAINEWEBBER AMERICA FUND PAINEWEBBER GROWTH & INCOME FUND RECENT PERFORMANCE RESULTS (UNAUDITED)
NET ASSET VALUE TOTAL RETURN/1/ -------------------------- ----------------------------- 12 MONTHS 6 MONTHS 08/31/95 02/28/95 08/31/94 ENDED 08/31/95 ENDED 08/31/95 - ------------------------------------------------------------------------ Class A Shares $22.52 $19.15 $20.43 18.30% 17.54% - ------------------------------------------------------------------------ Class B Shares 22.37 19.10 20.37 17.38 17.12 - ------------------------------------------------------------------------ Class D Shares 22.43 19.15 20.42 17.37 17.07 - ------------------------------------------------------------------------
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 19.26 -- 0.0985 22.15 - ---------------------------------------------------------------------------- 1992 19.26 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) - ---------------------------------------------------------------------------- 01/01/95 - 08/31/95 18.18 22.52 -- -- 23.87 - ---------------------------------------------------------------------------- Totals: $5.0453 $5.5826 - ---------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 08/31/95: 252.40% - ----------------------------------------------------------------------------
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) - ---------------------------------------------------------------------------- 01/01/95 - 08/31/95 18.15 22.37 -- -- 23.25 - ---------------------------------------------------------------------------- Totals: $1.2421 $0.4027 - ---------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 08/31/95: 35.20% - ---------------------------------------------------------------------------- Performance Summary Class D 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) - ---------------------------------------------------------------------------- 01/01/95 - 08/31/95 18.20 22.43 -- -- 23.24 - ---------------------------------------------------------------------------- Totals: $1.2421 $0.3224 - ---------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 08/31/95: 21.96% - ----------------------------------------------------------------------------
/1/Figures assume reinvestment of all dividends and capital gains distributions at net asset value on the payable dates, and do not include sales charges; results for Class A and Class B shares would be lower if sales charges were included. 1 PAINEWEBBER GROWTH FUND RECENT PERFORMANCE RESULTS (UNAUDITED)
NET ASSET VALUE TOTAL RETURN/1/ -------------------------- ----------------------------- 12 MONTHS 6 MONTHS 08/31/95 02/28/95 08/31/94 ENDED 08/31/95 ENDED 08/31/95 - ------------------------------------------------------------------------ Class A Shares $22.27 $19.21 $20.04 11.28% 15.93% - ------------------------------------------------------------------------ Class B Shares 21.53 18.65 19.53 10.40 15.44 - ------------------------------------------------------------------------ Class D Shares 21.68 18.78 19.67 10.37 15.44 - ------------------------------------------------------------------------
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) - ---------------------------------------------------------------------------- 01/01/95 - 08/31/95 18.81 22.27 -- -- 18.39 - ---------------------------------------------------------------------------- Totals: $5.7490 $0.5872 - ---------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 08/31/95: 283.63% - ----------------------------------------------------------------------------
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) - ---------------------------------------------------------------------------- 01/01/95 - 08/31/95 18.28 21.53 -- -- 17.78 - ---------------------------------------------------------------------------- Totals: $2.3230 $0.0037 - ---------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 08/31/95: 55.38% - ---------------------------------------------------------------------------- Performance Summary Class D 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) - ---------------------------------------------------------------------------- 01/01/95 - 08/31/95 18.41 21.68 -- -- 17.76 - ---------------------------------------------------------------------------- Totals: $1.7227 -- - ---------------------------------------------------------------------------- CUMULATIVE TOTAL RETURN AS OF 08/31/95: 38.73% - ----------------------------------------------------------------------------
/1/Figures assume reinvestment of all dividends and capital gains distributions at net asset value on the payable dates, and do not include sales charges; results for Class A and Class B shares would be lower if sales charges were included. 2 PAINEWEBBER GROWTH & INCOME FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1995
NUMBER OF SHARES VALUE --------- ----------- COMMON STOCKS - 93.48% Aerospace - 3.29% 169,500 Lockheed Martin Corporation............................ $10,318,312 68,200 McDonnell Douglas Corporation.......................... 5,473,050 ----------- 15,791,362 ----------- Agriculture, Food - 4.28% 89,900 Campbell Soup Company.................................. 4,112,925 188,700 Con Agra Incorporated.................................. 7,147,013 124,300 Philip Morris Companies Incorporated................... 9,275,887 ----------- 20,535,825 ----------- Air Transport - 0.98% 63,900 AMR Corporation Delaware*.............................. 4,504,950 15,000 Qantas Airways Limited*................................ 249,375 ----------- 4,754,325 ----------- Aluminum - 1.19% 100,000 Aluminum Company of America............................ 5,712,500 ----------- Banks - 6.76% 100,000 Bank of New York Incorporated.......................... 4,350,000 50,000 Chase Manhattan Corporation............................ 2,875,000 100,000 Citicorp............................................... 6,637,500 20,000 First Empire State Corporation......................... 3,660,000 75,000 Morgan (J.P.) & Company Incorporated................... 5,465,625 153,600 NationsBank Corporation................................ 9,427,200 ----------- 32,415,325 ----------- Beverages - 0.91% 96,000 Pepsico Incorporated................................... 4,344,000 ----------- Business Machines - 8.17% 116,400 Cirrus Logic Incorporated*............................. 6,343,800 100,000 Cisco Systems, Inc.*................................... 6,562,500 100,000 Compaq Computer Corporation*........................... 4,775,000 262,900 EMC Corporation*....................................... 5,389,450 100,000 International Business Machines Corporation............ 10,337,500 100,000 Sun Microsystems Incorporated*......................... 5,787,500 ----------- 39,195,750 ----------- Chemicals - 2.09% 50,000 Ashland Incorporated................................... 1,637,500 80,000 DuPont (EI) de Nemours & Company....................... 5,230,000 50,000 IMC Global Incorporated................................ 3,162,500 ----------- 10,030,000 ----------- Construction - 0.85% 150,000 USG Corporation*....................................... 4,068,750 ----------- Consumer Durables - 0.35% 32,300 Premark International Incorporated..................... 1,691,713 ----------- Drugs, Medicine - 9.08% 108,900 Abbott Laboratories.................................... 4,219,875
3 PAINEWEBBER GROWTH & INCOME FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
NUMBER OF SHARES VALUE --------- ----------- COMMON STOCKS - (CONTINUED) Drugs, Medicine -- (concluded) 53,700 Allergan Incorporated.................................. $ 1,631,138 67,300 Bristol-Myers Squibb Company........................... 4,618,462 125,000 Johnson & Johnson...................................... 8,625,000 100,000 Lilly (Eli) & Company.................................. 8,187,500 293,850 Mylan Labs Incorporated................................ 6,721,819 100,000 Pfizer Incorporated.................................... 4,937,500 102,800 Smithkline Beecham, PLC................................ 4,600,300 ----------- 43,541,594 ----------- Electric Utilities - 2.48% 84,400 DPL Incorporated....................................... 1,877,900 151,300 Duke Power Company..................................... 6,146,562 100,000 FPL Group Incorporated................................. 3,887,500 ----------- 11,911,962 ----------- Electronics - 6.31% 106,200 AMP Incorporated....................................... 4,314,375 45,500 Avnet Incorporated..................................... 2,343,250 100,000 Intel Corporation...................................... 6,137,500 134,100 Loral Corporation...................................... 7,341,975 84,300 Raytheon Company....................................... 6,817,762 100,000 VLSI Technology Incorporated*.......................... 3,300,000 ----------- 30,254,862 ----------- Gas Utilities - 0.52% 100,000 Panhandle Eastern Corporation.......................... 2,500,000 ----------- Healthcare (Non-drug) - 3.12% 88,000 Apria Healthcare Group Incorporated*................... 2,464,000 106,300 Becton Dickinson & Company............................. 5,992,662 39,600 Medtronic Incorporated................................. 3,737,250 136,600 Ventritex Incorporated*................................ 2,766,150 ----------- 14,960,062 ----------- Hotels, Restaurants - 0.90% 125,000 Mirage Resorts Incorporated*........................... 4,296,875 ----------- International Oil - 3.62% 155,000 Chevron Corporation.................................... 7,498,125 60,500 Mobil Corporation...................................... 5,762,625 63,700 Texaco Incorporated.................................... 4,124,575 ----------- 17,385,325 ----------- Life Insurance - 0.78% 100,600 Equitable of Iowa Companies............................ 3,747,350 ----------- Miscellaneous Finance - 0.78% 34,000 American Express Company............................... 1,372,750 100,000 Comdata Holdings Corporation*.......................... 2,387,500 ----------- 3,760,250 -----------
4 PAINEWEBBER GROWTH & INCOME FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
NUMBER OF SHARES VALUE --------- ----------- COMMON STOCKS - (CONTINUED) Miscellaneous Mining, Metals - 0.47% 40,000 Potash Corporation Saskatchewan Inc.................... $ 2,275,000 ----------- Mortgage Financing - 0.61% 50,000 Green Tree Financial Corporation....................... 2,912,500 ----------- Motor Vehicles - 0.71% 173,600 Fleetwood Enterprises Incorporated..................... 3,406,900 ----------- Other Insurance - 5.46% 112,600 AFLAC Incorporated..................................... 4,602,525 100,971 Allstate Corporation................................... 3,420,393 85,200 American International Group Incorporated.............. 6,869,250 17,000 ITT Corporation........................................ 2,033,625 170,700 St. Paul Companies Incorporated........................ 9,260,475 ----------- 26,186,268 ----------- Paper - 1.93% 70,100 Champion International Corporation..................... 3,969,412 58,400 Scott Paper Company.................................... 2,708,300 58,100 Westvaco Corporation................................... 2,563,663 ----------- 9,241,375 ----------- Producers Goods - 15.46% 50,000 AGCO Corporation....................................... 2,431,250 119,600 American Brands Incorporated........................... 5,023,200 70,600 Caterpillar Incorporated............................... 4,739,025 50,000 Deere & Company........................................ 4,275,000 145,000 Donaldson Incorporated................................. 3,679,375 90,500 Dover Corporation...................................... 7,217,375 100,100 DSC Communications Corporation*........................ 5,255,250 106,500 Emerson Electric Company............................... 7,601,437 140,100 Federal Signal Corporation............................. 3,029,663 42,400 General Electric Company............................... 2,496,300 100,000 INDRESCO Incorporated*................................. 1,675,000 100,000 Material Sciences Corporation*......................... 1,925,000 144,300 Pentair Incorporated................................... 6,565,650 125,000 Textron Incorporated................................... 8,562,500 39,445 United States Robotics Corporation*.................... 5,532,161 50,000 United Technologies Corporation........................ 4,168,750 ----------- 74,176,936 ----------- Publishing - 1.24% 185,900 Reynolds & Reynolds Company, Class A................... 5,972,038 ----------- Railroads, Transit - 2.10% 150,000 Conrail Inc. .......................................... 10,087,500 ----------- Retail (Food) - 1.63% 176,300 Albertsons Incorporated................................ 5,619,563 75,000 American Stores Company................................ 2,203,125 ----------- 7,822,688 -----------
5 PAINEWEBBER GROWTH & INCOME FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
NUMBER OF SHARES VALUE --------- ------------ COMMON STOCK - (CONCLUDED) Retail (All Other) - 3.80% 50,000 Borders Group, Inc.*.................................. $ 1,012,500 209,000 Rite Aid Corporation.................................. 5,852,000 158,919 Sears, Roebuck & Company.............................. 5,145,003 100,000 Tandy Corporation..................................... 6,212,500 ------------ 18,222,003 ------------ Services - 3.23% 55,800 BMC Software Incorporated*............................ 2,378,475 138,400 Cadence Design Systems Incorporated*.................. 5,017,000 43,000 Computer Associates International Incorporated........ 2,988,500 135,400 HealthCare COMPARE Corporation*....................... 5,094,425 ------------ 15,478,400 ------------ Telephone, Telegraph - 0.38% 100,000 NYNEX CableComms Group PLC*........................... 1,806,250 ------------ Total Common Stocks (cost - $370,380,437)........................ 448,485,688 ------------ PREFERRED STOCK - 1.76% Life Insurance - 1.65% 150,000 American General Delaware Llc......................... 7,950,000 ------------ Paper - 0.11% 10,000 International Paper Capital Trust+.................... 470,000 ------------ Total Preferred Stock (cost - $8,000,000)........................ 8,420,000 ------------
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES --------- ------------------- -------------- CORPORATE BONDS - 3.54% Cosmetics - 0.72% $ 3,500 Alberto Culver Company+. 06/30/06 5.500% 3,465,000 ---------- Electronics - 0.43% 2,000 Sanmina Corporation+.... 08/15/02 5.500 2,050,000 ---------- Mortgage Financing - 0.49% 2,400 Developers Diversified Realty Company......... 08/15/99 7.000 2,364,000 ---------- Pollution Control - 0.81% 4,000 Browning-Ferris Industries+............ 07/18/05 6.750 3,940,000 ---------- Producers Goods - 0.64% 3,000 Cooper Industries Incorporated+.......... 01/01/15 7.050 3,060,000 ---------- Retail (All Other) - 0.45% 2,500 Baker (J.) Incorporated. 06/01/02 7.000 2,125,000 ---------- Total Corporate Bonds (cost - $17,083,160)....................... 17,004,000 ---------- U.S. GOVERNMENT OBLIGATIONS - 5.81% 28,000 United States Treasury Bills (cost - $27,882,069)........... 09/21/95 - 10/19/95 5.405 to 5.425@ 27,882,123 ----------
6 PAINEWEBBER GROWTH & INCOME FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) AUGUST 31, 1995
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATE RATE VALUE --------- -------- -------- ------------ REPURCHASE AGREEMENT - 1.46% $ 6,995 Repurchase Agreement dated 08/31/95, with Nomura Securities International, Inc., collateralized by $6,940,000 U.S. Treasury Note, 7.500% due 01/31/97; proceeds: $6,996,127 (cost - $6,995,000)............. 09/01/95 5.800% $ 6,995,000 ------------ Total Investments (cost - $430,340,666) - 106.05%.................................... 508,786,811 Liabilities in excess of other assets - (6.05)%.................................... (29,038,935) ------------ Net Assets - 100.00%........................ $479,747,876 ============
- ------- *Non-income producing security + 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 See accompanying notes to financial statements 7 PAINEWEBBER GROWTH FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1995
NUMBER OF SHARES VALUE --------- ------------ COMMON STOCKS - 89.17% Aerospace - 0.16% 125,000 Kellstrom Industries, Inc.*........................... $ 625,000 ------------ Agriculture, Food - 0.12% 168,000 Lincoln Snacks Co.*................................... 462,000 ------------ Air Transport - 0.06% 15,000 Qantas Airways Limited*............................... 249,450 ------------ Apparel, Textiles - 0.77% 56,736 Belding Heminway Company, Inc.*....................... 290,772 175,000 Norwood Promotional Products, Inc.*................... 2,712,500 ------------ 3,003,272 ------------ Banks - 2.48% 90,000 Chase Manhattan Corporation........................... 5,175,000 60,000 Comerica Inc. ........................................ 2,137,500 90,000 Synovus Financial Corp................................ 2,295,000 ------------ 9,607,500 ------------ Beverages - 1.49% 90,000 The Coca Cola Company................................. 5,782,500 ------------ Business Machines - 3.90% 20,000 C-Cube Microsystems Inc.*............................. 860,000 105,000 Cisco Systems, Inc.*.................................. 6,890,625 100,000 EMC Corporation*...................................... 2,050,000 10,000 Hewlett Packard Co. .................................. 800,000 55,000 Seagate Technology, Inc.*............................. 2,433,750 25,000 Silicon Graphics, Inc.*............................... 1,056,250 50,000 Western Digital Corporation*.......................... 1,031,250 ------------ 15,121,875 ------------ Chemicals - 2.71% 35,000 Air Products & Chemicals, Inc. ....................... 1,876,875 132,000 Sealed Air Corporation*............................... 6,963,000 75,000 The Scotts Company, Class A*.......................... 1,687,500 ------------ 10,527,375 ------------ Consumer Durables - 0.39% 130,800 The Forschner Group, Inc.*............................ 1,520,550 ------------ Drugs, Medicine - 6.38% 43,819 Advanced Therapeutic Systems Ltd*..................... 1,199,545 64,900 Columbia Labs Incorporated*........................... 563,819 52,500 Elan Corporation, PLC ADS*............................ 2,060,625 60,000 Forest Laboratories, Inc.*............................ 2,685,000 200,000 North American Vaccine Inc.*.......................... 2,025,000 100,000 R.P. Scherer Corp.*................................... 4,300,000 172,000 Teva Pharmaceutical Industries Ltd., ADS.............. 6,514,500 130,000 Watson Pharmaceuticals, Inc.*......................... 5,378,750 ------------ 24,727,239 ------------
8 PAINEWEBBER GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
NUMBER OF SHARES VALUE --------- ------------ COMMON STOCKS - (CONTINUED) Electronics - 7.35% 100,000 Amphenol Corporation, Class A*........................ $ 2,450,000 283,500 Belden, Inc........................................... 7,867,125 12,500 CP Clare Corporation*................................. 300,000 30,000 Emerson Electric Co. ................................. 2,141,250 39,500 Intel Corporation..................................... 2,424,313 200,000 Jabil Circuit Incorporated*........................... 2,700,000 135,000 Lattice Semiconductor Corporation*.................... 4,438,125 33,500 Micron Technology Incorporated........................ 2,575,312 175,000 Richey Electronics Incorporated*...................... 1,356,250 45,000 Thermo Instrument Systems Inc.*....................... 1,153,125 50,000 Veeco Instruments Inc.*............................... 1,125,000 ------------ 28,530,500 ------------ Forest Products - 0.28% 125,000 Universal Forest Products Inc......................... 1,093,750 ------------ Healthcare (Non-drug) - 3.07% 160,000 Humana Inc. .......................................... 2,920,000 88,000 Phycor Incorporated................................... 3,674,000 70,000 Sunrise Medical Inc.*................................. 1,811,250 187,854 VISX, Incorporated*................................... 3,498,781 ------------ 11,904,031 ------------ Hotels, Restaurants - 2.39% 170,000 Hospitality Franchise Systems, Inc.*.................. 7,968,750 100,000 Rio Hotel & Casino, Inc.*............................. 1,300,000 ------------ 9,268,750 ------------ Iron & Steel - 1.02% 42,000 Easco Incorporated.................................... 504,000 220,000 Northwestern Steel & Wire Company*.................... 2,145,000 130,000 Olympic Steel, Inc.*.................................. 1,316,250 ------------ 3,965,250 ------------ Leisure, Luxury - 2.01% 85,000 Anthony Inds, Inc..................................... 1,710,625 220,000 Marker International*................................. 1,870,000 229,500 Rawlings Sporting Goods Company, Inc.*................ 2,151,562 79,100 Sports Club Incorporated.............................. 360,894 60,000 SweetWater, Inc.*..................................... 240,000 80,000 Syratech Corporation*................................. 1,480,000 ------------ 7,813,081 ------------
9 PAINEWEBBER GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
NUMBER OF SHARES VALUE --------- ------------ COMMON STOCKS - (CONTINUED) Life Insurance - 0.34% 35,000 Equitable of Iowa Companies........................... $ 1,303,750 ------------ Media - 13.69% 137,000 British Sky Broadcasting Group, PLC*.................. 4,349,750 115,000 Cinar Films Inc.*..................................... 1,293,750 105,000 Comcast Corporation, Class A.......................... 2,231,250 257,500 Comcast Corporation, Class A Special.................. 5,504,062 25,000 Comcast UK Cable Partners Ltd.*....................... 392,188 30,000 General Instruments Corporation*...................... 1,095,000 15,000 Glenayre Technologies, Inc.*.......................... 978,750 36,000 Infinity Broadcasting Corporation*.................... 1,291,500 80,000 Jacor Communications, Inc.*........................... 1,330,000 25,000 Renaissance Communications Corp.*..................... 925,000 53,125 Saga Communications, Inc.*............................ 903,125 390,000 Savoy Pictures Entertainment, Inc.*................... 3,510,000 225,000 Tele Communications Incorporated New*................. 4,162,500 20,000 Tele Communications International Incorporated*....... 312,500 56,250 Tele Communications Liberty Media Group*.............. 1,494,141 190,000 The News Corporation Limited.......................... 3,847,500 188,000 Time Warner Inc. ..................................... 7,919,500 15,000 Tribune Company....................................... 1,005,000 40,000 United International Holdings Inc., Class A*.......... 715,000 174,095 Viacom Inc., Class B*................................. 8,465,369 40,000 Young Broadcasting Inc., Class A*..................... 1,380,000 ------------ 53,105,885 ------------ Miscellaneous Mining, Metals - 1.15% 70,000 Madeco S.A............................................ 1,601,250 50,000 Potash Corporation of Saskatchewan Inc. .............. 2,843,750 ------------ 4,445,000 ------------ Mortgage Financing - 3.86% 157,500 Countrywide Credit Industries, Inc. .................. 3,465,000 79,000 Federal Home Loan Mortgage Corporation................ 5,075,750 67,500 Federal National Mortgage Association................. 6,437,813 ------------ 14,978,563 ------------ Oil Service - 0.41% 70,000 Camco International Inc............................... 1,592,500 ------------ Other Insurance - 0.88% 150,000 PennCorp Financial Group, Inc......................... 3,412,500 ------------ Photographic, Optical - 0.68% 430,000 Noel Group, Inc.*..................................... 2,633,750 ------------
10 PAINEWEBBER GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 1995
NUMBER OF SHARES VALUE --------- ------------ COMMON STOCKS - (CONTINUED) Pollution Control - 0.58% 105,000 Republic Waste Industries Inc.*....................... $ 2,231,250 ------------ Producers Goods - 3.09% 200,000 Champion Road Machinery Limited....................... 1,856,250 45,000 Fisher Scientific International Inc. ................. 1,468,125 40,000 Kaydon Corporation.................................... 1,220,000 110,250 Mark IV Industries Inc................................ 2,453,062 150,000 Microcom Inc.*........................................ 3,000,000 90,000 Pall Corporation...................................... 1,968,750 ------------ 11,966,187 ------------ Railroads, Transit - 3.25% 72,500 Burlington Northern Inc............................... 5,020,625 75,000 Conrail Inc........................................... 5,043,750 117,900 Railtex Inc.*......................................... 2,534,850 ------------ 12,599,225 ------------ Retail (Food) - 2.04% 190,000 General Nutrition Companies Inc.*..................... 7,932,500 ------------ Retail (All Other) - 6.14% 40,000 Borders Group, Inc.*.................................. 810,000 60,000 Corporate Express Inc.*............................... 1,402,500 30,000 Micro Warehouse, Inc.*................................ 1,432,500 323,137 Staples, Inc.*........................................ 8,280,385 96,666 The Home Depot, Inc. ................................. 3,854,557 115,000 Toys 'R' Us, Inc.*.................................... 2,990,000 140,000 Viking Office Products, Inc.*......................... 5,040,000 ------------ 23,809,942 ------------ Services - 9.50% 250,000 Activision, Inc.*..................................... 3,375,000 70,000 Ceridian Corporation*................................. 3,062,500 9,000 Computron Software Inc.*.............................. 171,000 40,000 Epic Design Technology Inc.*.......................... 1,725,000 430,000 Excalibur Technologies Corporation*................... 7,095,000 117,000 First Data Corporation................................ 6,829,875 100,000 Hummingbird Communications Ltd*....................... 3,287,500 30,000 Hyperion Software Corp.*.............................. 1,395,000 40,000 Informix Corporation*................................. 1,120,000 30,000 Oracle Systems Corporation*........................... 1,203,750 56,250 Paychex, Inc. ........................................ 2,306,250 85,500 Service Corporation International..................... 2,992,500 30,000 Sierra On-Line, Inc.*................................. 1,170,000 140,000 Staffing Resources Incorporated*...................... 1,120,000 ------------ 36,853,375 ------------
11 PAINEWEBBER GROWTH FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) AUGUST 31, 1995
NUMBER OF SHARES VALUE --------- ------------ COMMON STOCKS - (CONCLUDED) Telephone, Telegraph - 8.98% 40,000 AirTouch Communications*.................... $ 1,300,000 95,000 AT & T Corp................................. 5,367,500 191,250 IntelCom Group, Inc.*....................... 2,486,250 77,000 Intermedia Communications of Florida, Inc.*. 1,135,750 249,333 International CableTel Incorporated*........ 6,731,991 72,000 MFS Communications Company, Inc.*........... 3,186,000 32,000 Millicom International Cellular S.A.*....... 944,000 Mobile Telecommunications Technologies 125,000 Corp.*..................................... 3,843,750 270,000 NYNEX CableComms Group PLC*................. 4,876,875 35,000 Paging Network Incorporated*................ 1,382,500 96,000 TeleWest Communications, PLC, ADS*.......... 2,316,000 30,000 Vodafone Group PLC.......................... 1,256,250 ------------ 34,826,866 ------------ Total Common Stocks (cost - $231,573,331)................ 345,893,416 ------------ NUMBER OF WARRANTS --------- WARRANTS - 0.14% Drugs, Medicine - 0.14% Elan Corporation, PLC ADS* (cost - 43,819 $265,004) ................................. 536,783 ------------
PRINCIPAL AMOUNT (000) MATURITY DATES INTEREST RATES --------- ------------------- -------------- CORPORATE BONDS - 0.16% Domestic Petroleum Reserves - 0.16% $ 1,500 Garnet Resources Corporation (cost - $1,500,000)........... 12/21/98 9.500% 613,650 ------------ CONVERTIBLE BONDS - 0.63% Services - 0.22% 300 Sierra On-Line, Inc.+ .. 04/01/01 6.500 846,000 ------------ Telephone, Telegraph - 0.41% 2,240 IntelCom Group, Inc. ... 09/17/98 8.000 1,586,592 ------------ Total Convertible Bonds (cost - $2,540,000)........................ 2,432,592 ------------ U.S. GOVERNMENT OBLIGATIONS - 2.06% 8,000 United States Treasury Bills (cost - $7,982,228)............ 09/07/95 - 09/21/95 5.405 to 5.425 7,982,228 ------------ REPURCHASE AGREEMENT - 3.18% 12,327 Repurchase agreement dated 08/31/95 with First Chicago Capital Markets collateralized by $12,780,000 U.S. Treasury Bills, due 12/14/95; proceeds: $12,328,986 (cost - $12,327,000)........... 09/01/95 5.800 12,327,000 ------------ Total Investments (Cost - $256,187,563) - 95.34%............. 369,785,669 Other assets in excess of liabilities - 4.66%................ 18,084,968 ------------ Net Assets - 100.00%............... $387,870,637 ============
- ------- *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. ADS American Depository Shares See accompanying notes to financial statements 12 PAINEWEBBER STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1995
GROWTH & INCOME GROWTH FUND FUND ------------ ------------ Assets Investments at value (cost - $430,340,665 and $256,187,563, respectively)....................... $508,786,811 $369,785,669 Cash............................................... -- 605,861 Receivable for investments sold.................... 4,171,745 27,332,249 Dividends and interest receivable.................. 1,330,440 266,608 Receivable for shares of beneficial interest sold.. 175,225 90,939 Other assets....................................... 27,704 228,234 ------------ ------------ Total assets....................................... 514,491,925 398,309,560 ------------ ------------ Liabilities Payable for investments purchased.................. 32,321,452 8,062,800 Payable for shares of beneficial interest repurchased....................................... 1,522,160 1,470,013 Payable to affiliates.............................. 573,273 464,437 Accrued expenses and other liabilities............. 327,164 441,673 ------------ ------------ Total liabilities.................................. 34,744,049 10,438,923 ------------ ------------ Net Assets Beneficial interest shares of $0.001 par value outstanding (unlimited amount authorized)......... 388,850,379 261,595,965 Accumulated undistributed net investment income (loss)............................................ 12,910,318 (195,335) Accumulated net realized gains (losses) from investments ...................................... (458,966) 12,871,901 Net unrealized appreciation of investments......... 78,446,145 113,598,106 ------------ ------------ Net assets......................................... $479,747,876 $387,870,637 ============ ============ Class A: Net assets......................................... $187,057,217 $183,958,133 ------------ ------------ Shares outstanding................................. 8,306,737 8,259,462 ------------ ------------ Net asset value and redemption value per share..... $22.52 $22.27 ============ ============ Maximum offering price per share (net asset value plus sales charge of 4.50% of offering price)..... $23.58 $23.32 ============ ============ Class B: Net assets......................................... $247,542,966 $152,357,371 ------------ ------------ Shares outstanding................................. 11,065,771 7,076,534 ------------ ------------ Net asset value and offering price per share....... $22.37 $21.53 ============ ============ Class C: Net assets......................................... $ 14,679,816 $ 20,947,586 ------------ ------------ Shares outstanding................................. 651,225 929,590 ------------ ------------ Net asset value, offering price and redemption value per share................................... $22.54 $22.53 ============ ============ Class D: Net assets......................................... $ 30,467,877 $ 30,607,547 ------------ ------------ Shares outstanding................................. 1,358,205 1,411,524 ------------ ------------ Net asset value, offering price and redemption value per share................................... $22.43 $21.68 ============ ============
See accompanying notes to financial statements 13 PAINEWEBBER STATEMENT OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 1995
GROWTH & INCOME GROWTH FUND FUND ----------- ----------- Investment income: Interest and dividends................................ $10,935,651 $ 3,850,380 ----------- ----------- Expenses: Investment advisory and administration fees........... 3,378,079 1,993,930 Service fees--Class A................................. 433,166 291,331 Service and distribution fees--Class B................ 2,488,140 879,165 Service and distribution fees--Class D................ 310,960 235,905 Transfer agency and service fees...................... 578,482 250,338 Reports and notices to shareholders................... 230,453 73,122 Custody fees.......................................... 172,013 121,456 Legal and audit fees.................................. 145,985 82,425 Federal and state registration fees................... 108,396 77,191 Trustees' fees........................................ 21,513 8,125 Reorganization expenses............................... -- 155,031 Other expenses........................................ 30,409 14,184 ----------- ----------- 7,897,596 4,182,203 ----------- ----------- Net investment income (loss).......................... 3,038,055 (331,823) ----------- ----------- Realized and unrealized gains from investment activi- ties: Net realized gains from investment transactions....... 17,636,364 17,051,928 Net change in unrealized appreciation/depreciation of investments.......................................... 52,701,413 7,109,490 ----------- ----------- Net realized and unrealized gains from investment ac- tivities............................................. 70,337,777 24,161,418 ----------- ----------- Net increase in net assets resulting from operations.. $73,375,832 $23,829,595 =========== ===========
See accompanying notes to financial statements 14 PAINEWEBBER GROWTH & INCOME FUND STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED AUGUST 31, ---------------------------- 1995 1994 ------------- ------------- From operations: Net investment income............................ $ 3,038,055 $ 5,885,251 Net realized gains from investment transactions.. 17,636,364 39,114,080 Net change in unrealized appreciation/depreciation of investments........ 52,701,413 (55,515,214) ------------- ------------- Net increase (decrease) in net assets resulting from operations................................. 73,375,832 (10,515,883) ------------- ------------- Dividends and distributions to shareholders from: Net investment income--Class A................... (1,163,754) (3,856,398) Net investment income--Class B................... (457,553) (1,961,819) Net investment income--Class C................... (102,452) (252,881) Net investment income--Class D................... (53,897) (271,483) Net realized gains from investment transactions-- Class A......................................... (11,701,555) (465,992) Net realized gains from investment transactions-- Class B......................................... (15,518,597) (609,981) Net realized gains from investment transactions-- Class C......................................... (828,242) (23,298) Net realized gains from investment transactions-- Class D......................................... (1,953,255) (82,066) ------------- ------------- (31,779,305) (7,523,918) ------------- ------------- From beneficial interest transactions: Net proceeds from the sale of shares............. 30,582,369 42,483,056 Cost of shares repurchased....................... (185,758,645) (367,026,971) Proceeds from dividends reinvested............... 29,628,162 6,947,309 ------------- ------------- Net decrease in net assets from beneficial interest transactions........................... (125,548,114) (317,596,606) ------------- ------------- Net decrease in net assets....................... (83,951,587) (335,636,407) Net assets: Beginning of period.............................. 563,699,463 899,335,870 ------------- ------------- End of period (including undistributed net investment income of $12,910,318 and $816,845, respectively)................................... $ 479,747,876 $ 563,699,463 ============= =============
See accompanying notes to financial statements 15 PAINEWEBBER GROWTH FUND STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED AUGUST 31, -------------------------- 1995 1994 ------------ ------------ From operations: Net investment loss................................ $ (331,823) $ (533,971) Net realized gains from investment transactions.... 17,051,928 5,195,790 Net change in unrealized appreciation/depreciation of investments.................................... 7,109,490 (2,125,984) ------------ ------------ Net increase in net assets resulting from operations........................................ 23,829,595 2,535,835 ------------ ------------ Distributions to shareholders from: Net realized gains from investment transactions-- Class A........................................... (170,322) (6,987,744) Net realized gains from investment transactions-- Class B........................................... (120,995) (3,876,826) Net realized gains from investment transactions-- Class C........................................... (37,136) (1,187,915) Net realized gains from investment transactions-- Class D........................................... (33,706) (1,156,865) ------------ ------------ (362,159) (13,209,350) ------------ ------------ From beneficial interest transactions: Net proceeds from sale of shares................... 29,210,160 136,624,359 Proceeds from the acquisitions of PaineWebber Communications & Technology Growth Fund and PaineWebber Blue Chip Growth Fund (net of reorganization costs)............................. 149,203,999 -- Cost of shares repurchased......................... (112,053,043) (68,709,767) Proceeds from dividends reinvested................. 345,390 12,642,821 ------------ ------------ Net increase in net assets from beneficial interest transactions...................................... 66,706,506 80,557,413 ------------ ------------ Net increase in net assets......................... 90,173,942 69,883,898 Net assets: Beginning of period................................ 297,696,695 227,812,797 ------------ ------------ End of period...................................... $387,870,637 $297,696,695 ============ ============
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 ("1940 Act"), as diversified open- end investment companies. Each fund offers Class A, Class B, Class C and Class D Shares. Class C shares are available only to the trustee of the PaineWebber Savings Investment Plan on behalf of that Plan. 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 transfer agency expenses. In addition, Class B shares, along with their pro-rata reinvested dividends shares, automatically convert to Class A shares approximately six years after initial issuance. All classes of shares have equal rights as to voting privileges, except that each class has exclusive voting rights with respect to its service/ distribution plan. Acquisitions of PaineWebber Blue Chip Growth Fund and PaineWebber Communications & Technology Growth Fund--Effective as of the close of business on August 18, 1995, PaineWebber Growth Fund ("Growth Fund") acquired all of the net assets of PaineWebber Blue Chip Growth Fund ("Blue Chip Growth Fund") and PaineWebber Communications & Technology Growth Fund ("Communications & Technology Growth Fund") in tax free exchanges for shares of Growth Fund. The acquisitions were accomplished by tax-free exchanges of 2,348,128 Class A, 1,425,501 Class B and 159,005 Class D shares of Growth Fund for 3,333,744 Class A, 2,017,042 Class B and 224,198 Class D shares of Blue Chip Growth Fund; and 533,772 Class A, 2,011,998 Class B and 343,927 Class D shares of Growth Fund for 969,663 Class A, 3,580,393 Class B and 616,795 Class D shares of Communications & Technology Growth Fund outstanding on August 18, 1995. Blue Chip Growth Fund's net assets at that date, valued at $86,500,222 including accumulated net realized losses of $485 and net unrealized appreciation of investments of $33,294,119, and Communications & Technology Growth Fund's net assets at that date, valued at $62,703,777 including accumulated net realized losses of $3,916,647 and net unrealized appreciation of investments of $16,964,035, were combined with those of Growth Fund. Valuation of Investments - Securities which are listed on stock exchanges are valued at the last sales 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 generally valued on the 17 PAINEWEBBER NOTES TO FINANCIAL STATEMENTS (CONTINUED) exchange designated 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 as the primary market. Securities traded in the over- the-counter ("OTC") market and listed on the National Association of Securities Dealers Quotation System ("NASDAQ") are valued at the last trade 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 generally is used to value short term debt instruments with sixty days or less remaining to maturity. Securities and assets 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 or under the direction of each Trust's Board of Trustees. 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 the trade date. Realized gains and losses on sales of investments, futures contracts and foreign exchange 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. 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. Futures Contracts - Each of the Funds is permitted to use financial futures contracts to hedge its portfolio. Upon entering into a financial futures contract, the Fund is required to pledge to the broker an amount of cash and/or U.S. Government securities equal to a certain percentage of the contract amount. This amount is known as the "initial margin." Subsequent payments, known as "variation margin," are made or received by the Fund each day, depending on the 18 PAINEWEBBER NOTES TO FINANCIAL STATEMENTS (CONTINUED) daily fluctuations in the value of the underlying financial futures contract. Such variation margin is recorded for financial statement purposes on a daily basis as unrealized gain or loss, until the financial futures contract is closed, at which time the gain or loss is reclassified to realized. Using financial futures contracts involves various market risks. The Fund is subject to a number of guidelines which attempt to reduce this risk by seeking to ensure that financial futures contracts are used solely for hedging purposes and not for leverage. However, imperfect correlations between financial futures and the instruments being hedged or market disruptions do not normally permit full control of these risks at all times. Financial futures contracts in which the Fund invests do not represent exposure to default or other credit risk. At August 31, 1995, there were no open futures contracts. 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 Statements 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 the 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. Certain characteristics of the futures market might increase the risk that movements in the prices of futures contracts or related options might not correlate perfectly with movements in the prices of the investments being hedged. For example, all participants in the futures and related options markets are subject to daily variation margin calls and might be compelled to liquidate futures or related options positions whose prices are moving unfavorably to avoid being subject to further calls. These liquidations could increase price volatility of the instruments and distort the normal price relationship between the futures or options and the investments being hedged. Also, because initial margin deposit requirements in the futures market are less onerous than margin requirements in the securities markets, there might be increased participation by speculators in the futures markets. This participation also might cause temporary price distortions. In addition, activities of large traders in both the futures and securities markets 19 PAINEWEBBER NOTES TO FINANCIAL STATEMENTS (CONTINUED) involving arbitrage, "program trading" and other investment strategies might result in temporary price distortions. 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. The Growth Fund has a net capital loss carryforward of $3,785,329 at August 31, 1995 pursuant to its reorganization with PaineWebber Blue Chip Growth Fund and PaineWebber Communication & Technology Growth Fund. This additional loss carryforward is available as a reduction, to the extent provided in the regulations, of future net capital gains realized, and will expire in 2002. To reflect reclassifications arising from permanent "book/tax" differences for the year ended August 31, 1995 undistributed net investment income (loss) was increased by $136,488 and beneficial interest was decreased by $136,488. Dividends and Distributions - Dividends and distributions to shareholders are recorded on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains 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. Dividends and distributions which exceed net investment income and net realized capital gains for financial reporting purposes but not for tax purposes are reported as dividends in excess of net investment income or distributions in excess of net realized capital gains. To the extent they exceed net investment income and net realized capital gains for tax purposes, they are reported as distributions of paid-in-capital. INVESTMENT ADVISER AND ADMINISTRATOR Each of the Funds has entered into an Investment Advisory and Administration Contract ("Advisory Contract") with Mitchell Hutchins. In accordance with the Advisory Contract each Fund pays Mitchell Hutchins an investment advisory and administration fee, which is accrued daily and paid monthly, in accordance with the following schedule:
GROWTH & INCOME FUND GROWTH FUND ----------- ----------- As a % of Average Daily Net Assets...................... 0.700% 0.750%
20 PAINEWEBBER NOTES TO FINANCIAL STATEMENTS (CONTINUED) At August 31, 1995, Growth & Income Fund and Growth Fund owed Mitchell Hutchins $284,676 and $253,734, respectively, in investment advisory and administration fees. For the year ended August 31, 1995, Growth & Income Fund and Growth Fund paid $65,991 and $4,200, respectively, in brokerage commissions to PaineWebber for transactions executed on behalf of the Funds. In compliance with applicable state securities laws, Mitchell Hutchins will reimburse the Funds if and to the extent that the aggregate operating expenses in any fiscal year, exclusive of taxes, distribution fees, interest, brokerage fees and extraordinary expenses, exceed limitations imposed by various state regulations. Currently, the most restrictive limitation applicable to the Funds is 2.5% of the first $30 million of average daily net assets, 2.0% of the next $70 million and 1.5% of any excess over $100 million. For the year ended August 31, 1995, no reimbursements were required pursuant to the above limitation for any 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/distribution pertaining to the Class A, Class B and Class D shares ("Class A Plan", "Class B Plan" and "Class D Plan", collectively "Plans"), each class of shares of each Fund pays 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 D shares and monthly distribution fees at the annual rate of up to 0.75% of the average daily net assets on Class B and Class D shares. At August 31, 1995, Growth & Income Fund and Growth Fund owed Mitchell Hutchins $272,530 and $198,384, 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 upon certain redemptions of Class B shares. Mitchell Hutchins has informed each Fund that for the year ended August 31, 1995, it earned the following amounts in sales charges:
GROWTH & INCOME FUND GROWTH FUND ----------- ----------- Initial sales charges--Class A.......................... $ 68,358 $ 62,298 Contingent deferred sales charges--Class B.............. $1,632,389 $628,261
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. 21 PAINEWEBBER NOTES TO FINANCIAL STATEMENTS (CONTINUED) For these services during the year ended August 31, 1995, PaineWebber earned $219,613 and $114,163 from Growth & Income Fund and Growth Fund, respectively. At August 31, 1995, PaineWebber was owed $16,067 and $12,319 by Growth & Income Fund and Growth Fund, respectively, for transfer agency service fees. INVESTMENTS IN SECURITIES For federal income tax purposes, the cost of securities owned at August 31, 1995, was substantially the same as the cost of securities for financial statement purposes. At August 31, 1995, 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).................................. $ 81,719,298 $123,883,234 Gross depreciation (investments having an excess of cost over value).................................. (3,273,152) (10,285,128) ------------ ------------ Net unrealized appreciation of investments......... $ 78,446,146 $113,598,106 ============ ============ For the year ended August 31, 1995, total aggregate purchases and sales of portfolio securities, excluding short-term securities, were as follows: GROWTH & INCOME FUND GROWTH FUND ------------ ------------ Purchases.......................................... $509,193,853 $ 85,458,681 Sales.............................................. $653,971,439 $161,777,976
WRITTEN OPTION ACTIVITY Written option activity for the year ended August 31, 1995 for the Growth & Income Fund were as follows:
NUMBER OF AMOUNT OF OPTIONS PREMIUMS --------- --------- Options outstanding at August 31, 1994..................... 1,751 $(240,683) Options written during the year ended August 31, 1995...... 1,096 (172,916) Options cancelled in closing purchase transactions......... (1,391) 225,583 Options expired prior to exercise.......................... (125) 14,219 Options exercised.......................................... (1,331) 173,797 ------ --------- Options outstanding at August 31, 1995..................... 0 $ 0 ====== =========
22 PAINEWEBBER NOTES TO FINANCIAL STATEMENTS (CONCLUDED) SHARES OF 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 D ------------------------- ------------------------- ---------------------- ------------------------ SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT ---------- ------------- ---------- ------------- -------- ------------ ---------- ------------ GROWTH & INCOME FUND YEAR ENDED AUGUST 31, 1995: Shares sold...... 406,738 $ 8,281,477 791,571 $ 16,018,352 169,458 $ 3,384,300 142,739 $ 2,898,240 Shares repurchased..... (3,712,415) (73,393,874) (4,676,193) (92,319,141) (288,614) (5,886,102) (715,856) (14,159,528) Dividends reinvested...... 653,877 11,890,156 821,955 14,887,430 51,195 930,694 105,724 1,919,882 Shares converted from Class B to Class A......... 72,134 1,428,360 (72,367) (1,428,360) -- -- -- -- ---------- ------------- ---------- ------------- -------- ------------ ---------- ------------ Net decrease..... (2,579,666) $ (51,793,881) (3,135,034) $ (62,841,719) (67,961) $ (1,571,108) (467,393) $ (9,341,406) ========== ============= ========== ============= ======== ============ ========== ============ YEAR ENDED AUGUST 31, 1994: Shares sold...... 484,780 $ 9,908,236 1,075,994 $ 21,913,008 165,180 $ 3,374,003 355,387 $ 7,287,809 Shares repurchased..... (7,207,269) (147,209,194) (8,992,340) (183,225,848) (274,997) (5,620,223) (1,515,548) (30,971,706) Dividends reinvested...... 193,794 3,948,532 116,857 2,388,886 13,616 276,179 16,282 333,712 Shares converted from Class B to Class A......... 199,102 4,024,895 (199,711) (4,024,895) -- -- -- -- ---------- ------------- ---------- ------------- -------- ------------ ---------- ------------ Net decrease..... (6,329,593) $(129,327,531) (7,999,200) $(162,948,849) (96,201) $ (1,970,041) (1,143,879) $(23,350,185) ========== ============= ========== ============= ======== ============ ========== ============ CLASS A CLASS B CLASS C CLASS D ------------------------- ------------------------- ---------------------- ------------------------ SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT ---------- ------------- ---------- ------------- -------- ------------ ---------- ------------ GROWTH FUND YEAR ENDED AUGUST 31, 1995: Shares sold...... 343,756 $ 6,797,998 593,500 $ 11,354,188 373,860 $ 7,464,597 184,507 $ 3,593,377 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) (955,791) (19,621,176) (729,746) (14,263,697) Dividends reinvested...... 8,698 161,962 6,276 113,599 1,975 37,136 1,793 32,693 Shares converted from Class B to Class A......... 63,558 1,245,674 (65,425) (1,245,674) -- -- -- -- ---------- ------------- ---------- ------------- -------- ------------ ---------- ------------ Net increase (decrease)...... 1,207,998 $ 30,761,358 2,096,203 $ 47,787,373 (579,956) $(12,119,443) (40,514) $ 277,218 ========== ============= ========== ============= ======== ============ ========== ============ YEAR ENDED AUGUST 31, 1994: Shares sold...... 1,549,566 $ 32,037,298 2,917,179 $ 58,889,602 461,518 $ 9,540,308 1,795,537 $336,157,151 Shares repurchased..... (1,255,407) (25,558,955) (985,658) (19,234,590) (8,765) (172,621) (1,207,404) (23,743,601) Dividends reinvested...... 322,249 6,664,104 180,416 3,655,229 57,056 1,187,915 55,665 1,135,573 Shares converted from Class B to Class A......... 106,274 2,135,836 (108,639) (2,135,836) -- -- -- -- ---------- ------------- ---------- ------------- -------- ------------ ---------- ------------ Net increase..... 722,682 $ 15,278,283 2,003,298 $ 41,174,405 509,809 $ 10,555,602 643,798 $ 13,549,123 ========== ============= ========== ============= ======== ============ ========== ============
23 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 YEAR ENDED AUGUST 31, ------------------------------------------------- 1995 1994 1993 1992 1991 -------- -------- -------- -------- -------- Net asset value, beginning of period.................. $ 20.43 $20.86 $20.48 $19.26 $15.87 -------- -------- -------- -------- -------- Net investment income....... 0.24 0.28 0.28 0.24 0.19 Net realized and unrealized gains (losses) from investment transactions.... 3.18 (0.41) 0.37 1.25 3.50 -------- -------- -------- -------- -------- Total increase/decrease from investment operations...... 3.42 (0.13) 0.65 1.49 3.69 -------- -------- -------- -------- -------- Dividends from investment income..................... (0.12) (0.27) (0.27) (0.27) (0.30) Distributions from realized gains on investments....... (1.21) (0.03) -- -- -- -------- -------- -------- -------- -------- Total dividends and distributions.............. (1.33) (0.30) (0.27) (0.27) (0.30) -------- -------- -------- -------- -------- Net asset value, end of period..................... $ 22.52 $20.43 $20.86 $20.48 $19.26 ======== ======== ======== ======== ======== Total investment return(1).. 18.30% (0.58)% 3.15% 7.78% 23.62% ======== ======== ======== ======== ======== Ratios/Supplemental Data: Net assets, end of period (000's).................... $187,057 $222,432 $359,073 $358,643 $232,555 Expenses to average net assets..................... 1.19% 1.20% 1.13% 1.22% 1.42% Net investment income to average net assets......... 1.07% 1.29% 1.33% 1.26% 1.79% Portfolio turnover.......... 111.27% 94.32% 36.52% 15.57% 52.00%
- ------- * Annualized. + Commencement of offering 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 capital gain distributions at net asset value on the payable date, and a sale at net asset value on the last day of each period reported. The figures do not include sales charges; results for Class A and Class B shares would be lower if sales charges were included. Total return information for periods less than one year is not annualized. 24 PAINEWEBBER GROWTH & INCOME FUND
CLASS B CLASS C - --------------------------------------------------- ---------------------------------------- FOR THE FOR THE FOR THE YEAR PERIOD FOR THE YEAR PERIOD ENDED JULY 1, ENDED FEBRUARY 12, AUGUST 31, 1991+ TO AUGUST 31, 1992+ TO - --------------------------------------- AUGUST 31, -------------------------- AUGUST 31, 1995 1994 1993 1992 1991 1995 1994 1993 1992 - -------- -------- -------- -------- ---------- ------- ------- ------- ------------ $ 20.37 $ 20.78 $ 20.41 $19.23 $ 18.04 $ 20.42 $20.86 $20.48 $20.95 - -------- -------- -------- -------- ------- ------- ------- ------- ------- 0.06 0.10 0.12 0.13 0.02 0.30 0.33 0.33 0.16 3.18 (0.37) 0.36 1.20 1.17 3.18 (0.40) 0.37 (0.49) - -------- -------- -------- -------- ------- ------- ------- ------- ------- 3.24 (0.27) 0.48 1.33 1.19 3.48 (0.07) 0.70 (0.33) - -------- -------- -------- -------- ------- ------- ------- ------- ------- (0.03) (0.11) (0.11) (0.15) -- (0.15) (0.34) (0.32) (0.14) (1.21) (0.03) -- -- -- (1.21) (0.03) -- -- - -------- -------- -------- -------- ------- ------- ------- ------- ------- (1.24) (0.14) (0.11) (0.15) -- (1.36) (0.37) (0.32) (0.14) - -------- -------- -------- -------- ------- ------- ------- ------- ------- $ 22.37 $ 20.37 $ 20.78 $ 20.41 $ 19.23 $ 22.54 $20.42 $ 20.86 $ 20.48 ======== ======== ======== ======== ======= ======= ======= ======= ======= 17.38% (1.31)% 2.34% 6.99% 6.60% 18.66% (0.31)% 3.44% (1.15)% ======== ======== ======== ======== ======= ======= ======= ======= ======= $247,543 $289,290 $461,389 $386,275 $57,539 $14,680 $14,690 $17,005 $10,560 1.97% 1.97% 1.90% 1.97% 2.10%* 0.89% 0.90% 0.86% 0.93%* 0.29% 0.51% 0.57% 4.90% 1.18%* 1.39% 1.60% 1.62% 1.56%* 111.27% 94.32% 36.52% 15.57% 52.00% 111.27% 94.32% 36.52% 15.57% CLASS D - -------------------------------------- FOR THE FOR THE YEAR PERIOD ENDED JULY 2, AUGUST 31, 1992+ TO - --------------------------- AUGUST 31, 1995 1994 1993 1992 - --------- -------- --------- -------- $ 20.42 $ 20.83 $ 20.47 $ 20.95 - -------- --------- -------- --------- 0.06 0.11 0.11 0.02 3.19 (0.38) 0.37 (0.44) - -------- --------- -------- -------- 3.25 (0.27) 0.48 (0.42) - -------- --------- -------- -------- (0.03) (0.11) (0.12) (0.06) (1.21) (0.03) -- -- - -------- --------- -------- -------- (1.24) (0.14) (0.12) (0.06) - -------- --------- -------- -------- $ 22.43 $ 20.42 $ 20.83 $ 20.47 ======== ========= ======== ======== 17.37% (1.29)% 2.35% 2.85% ======== ========= ======== ======== $30,468 $37,287 $61,869 $13,019 1.98% 1.94% 1.87% 1.73%* 0.28% 0.54% 0.61% 0.94%* 111.27% 94.32% 36.52% 15.57%
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 YEAR ENDED AUGUST 31, -------------------------------------------------- 1995 1994 1993 1992 1991 -------- -------- -------- -------- ------- Net asset value, beginning of period................. $ 20.04 $ 20.60 $ 16.78 $ 17.50 $ 13.43 -------- -------- -------- -------- ------- Net investment income (loss).................... 0.01 -- 0.07 -- 0.02 Net realized and unrealized gains (losses) from investment transactions... 2.25 0.51 4.37 (0.11) 4.68 -------- -------- -------- -------- ------- Net increase/decrease from investment operations..... 2.26 0.51 4.44 (0.11) 4.70 -------- -------- -------- -------- ------- Dividends from investment income.................... -- -- -- (0.01) (0.17) Distributions from realized gains on investments...... (0.03) (1.07) (0.62) (0.60) (0.46) -------- -------- -------- -------- ------- Total dividends and distributions............. (0.03) (1.07) (0.62) (0.61) (0.63) -------- -------- -------- -------- ------- Net asset value, end of period.................... $ 22.27 $ 20.04 $ 20.60 $ 16.78 $ 17.50 ======== ======== ======== ======== ======= Total investment return(1). 11.28% 2.33% 26.97% (0.85)% 37.02% ======== ======== ======== ======== ======= Ratios/Supplemental Data: Net assets, end of period (000's)................... $183,958 $141,342 $130,353 $102,640 $96,796 Expenses to average net assets.................... 1.28%(2) 1.21% 1.22% 1.43% 1.56% Net investment income (loss) to average net assets.................... 0.19%(2) 0.06% 0.38% 0.00% 0.10% Portfolio turnover......... 36.10% 24.41% 35.81% 32.49% 28.59%
- ------- * Annualized + Commencement of offering of shares. ++ A per share breakdown for Class C shares has been omitted for the period August 26, 1991 (commencement of operations) to August 31, 1991 due to immaterial amounts. (1) Total Investment return is calculated assuming a $1,000 investment on the first day of each period reported, reinvestment of all dividends and capital gain distributions at net asset value on the payable date, and a sale at net asset value on the last day of each period reported. The figures do not include sales charges; results for Class A and Class B shares would be lower if sales charges were included. Total return information for periods less than one year is not annualized. (2) These ratios include non-recurring reorganization expenses of 0.06%, 0.06%, 0.05% and 0.06% for Class A, B, C and D, respectively. 26 PAINEWEBBER GROWTH FUND
CLASS B CLASS C++ - ------------------------------------------------------ ------------------------------------- FOR THE FOR THE YEAR PERIOD FOR THE YEAR ENDED JULY 1, ENDED AUGUST 31, 1991+ TO AUGUST 31, - ----------------------------------------- AUGUST 31, ------------------------------------- 1995 1994 1993 1992 1991 1995 1994 1993 1992 - -------- ------- ------- ------- ---------- ------- ------- ------- ------- $ 19.53 $ 20.25 $ 16.64 $ 17.48 $15.63 $ 20.22 $ 20.71 $ 16.83 $ 17.50 - -------- ------- ------- ------- ------ ------- ------- ------- ------- (0.02) (0.06) (0.05) (0.06) (0.02) 0.24 0.03 0.08 0.05 2.05 0.41 4.28 (0.18) 1.87 2.10 0.55 4.42 (0.11) - -------- ------- ------- ------- ------ ------- ------- ------- ------- 2.03 0.35 4.23 (0.24) 1.85 2.34 0.58 4.50 (0.06) - -------- ------- ------- ------- ------ ------- ------- ------- ------- -- -- -- -- -- -- -- -- (0.01) (0.03) (1.07) (0.62) (0.60) -- (0.03) (1.07) (0.62) (0.60) - -------- ------- ------- ------- ------ ------- ------- ------- ------- (0.03) (1.07) (0.62) (0.60) -- (0.03) (1.07) (0.62) (0.61) - -------- ------- ------- ------- ------ ------- ------- ------- ------- $ 21.53 $ 19.53 $ 20.25 $ 16.64 $17.48 $ 22.53 $ 20.22 $ 20.71 $ 16.83 ======== ======= ======= ======= ====== ======= ======= ======= ======= 10.40% 1.55% 25.91% (1.58)% 11.84% 11.58% 2.67% 27.26% (0.52)% ======== ======= ======= ======= ====== ======= ======= ======= ======= $152,357 $97,272 $60,280 $35,867 $3,804 $20,948 $30,521 $20,706 $11,581 2.06%(2) 2.00% 2.02% 2.20% 2.24%* 0.97%(2) 0.94% 0.95% 1.12% (0.60)%(2) (0.66)% (0.46)% (0.70)% (0.81)%* 0.53%(2) 0.40% 0.60% 0.38% 36.10% 24.41% 35.81% 32.49% 28.59% 36.10% 24.41% 35.81% 32.49% CLASS D - -------------------------------------------- FOR THE FOR THE YEAR PERIOD ENDED JULY 2, AUGUST 31, 1992+ TO - -------------------------------- AUGUST 31, 1995 1994 1993 1992 - ------------ --------- --------- ----------- $ 19.67 $ 20.38 $ 16.75 $17.04 - ------------ --------- --------- ----------- (0.10) (0.08) (0.06) (0.01) 2.14 0.44 4.31 (0.28) - ------------ --------- --------- ----------- 2.04 0.36 4.25 (0.29) - ------------ --------- --------- ----------- -- -- -- -- (0.03) (1.07) (0.62) -- - ------------ --------- --------- ----------- (0.03) (1.07) (0.62) -- - ------------ --------- --------- ----------- $ 21.68 $ 19.67 $ 20.38 $16.75 ============ ========= ========= =========== 10.37% 1.59% 25.86% (2.95)% ============ ========= ========= =========== $30,608 $28,561 $16,474 $2,275 2.05%(2) 1.98% 2.06% 1.98%* (0.57)%(2) (0.65)% (0.69)% (0.65)%* 36.10% 24.41% 35.81% 32.49%
27 PAINEWEBBER REPORT OF INDEPENDENT AUDITORS The Boards 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 and Income Fund and PaineWebber Growth Fund as of August 31, 1995, and the related statements 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 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, 1995, 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 and Income Fund and PaineWebber Growth Fund at August 31, 1995 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 the financial highlights for each of the indicated periods, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP New York, New York October 23, 1995 28 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, 1995) 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.................................................... $0.1154 -- Class B.................................................... $0.0344 -- Class C.................................................... $0.1471 -- Class D.................................................... $0.0321 -- Short-term capital gains*.................................... $0.0912 -- Long-term capital gains...................................... $1.1199 $0.0258 Percentage of ordinary income dividends qualifying for the dividends received deduction available to corporate shareholders................................................ 100% 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 to calendar year 1995. Such notification, 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 1996. Shareholders are advised to consult their own tax advisers with respect to the tax consequences of their investment in each of the Funds. 29 -----END PRIVACY-ENHANCED MESSAGE-----