<PAGE>
- -------------------------------------------------------------------------
PAINEWEBBER/
KIDDER,
PEABODY
PREMIUM
ACCOUNT FUND
SEMI-ANNUAL REPORT
September 30, 1995
<PAGE>
- --------------------------------------------------------------------------------
Dear Shareholder,
During the six months ended September 30, 1995, the U.S. economy suffered
lackluster growth before picking up its pace in the third quarter of 1995.
Inflation, already low, subsided even further by the end of the period. The
housing sector finally responded to historically attractive mortgage rates with
robust activity in 1995's third quarter, after a dismal second quarter.
On July 6, 1995, the Federal Reserve Board cut the benchmark Federal Funds rate,
the rate banks charge each other for overnight borrowing, by 0.25%. This
decrease, the first in nearly three years, signalled that the Federal Reserve
Board believes that inflationary pressures have eased enough to accommodate an
adjustment in monetary policy from restrictive toward neutral.
In addition to concerns over the strength of the recovery, economic news
centered on debate over whether inflation was still likely to become a threat
and details of efforts in Washington to implement a plan to balance the budget.
While the outcome of the budgetary process remains in question, the perception
that the Federal Reserve is winning its war against inflation is widespread.
The bond market continued the rally that began in mid-November 1994. The U.S.
stock market has also continued to rally during 1995, pushing the Dow Jones
Industrial Average and S&P 500 Index to a string of new highs. The value of the
U.S. dollar declined for much of the period, but began to recover in August
1995. We expect the current slow-growth, low inflation environment to persist
through the last quarter of 1995.
PORTFOLIO REVIEW
As of September 30, 1995, the Fund offered a seven-day annualized yield of 5.09%
and an effective seven-day annualized yield of 5.22%. The Fund maintained a
weighted average maturity of 46 days as of September 30, 1995.
The board of trustees of PaineWebber/Kidder, Peabody Premium Account Fund has
approved a Plan of Reorganization and Termination ('Reorganization') for
submission to the Fund's shareholders, at a special meeting scheduled to be held
on February 13, 1996. If the proposed Reorganization is approved and
implemented, all of the Fund's assets will be acquired and its liabilities
assumed by PaineWebber RMA Money Market Portfolio ('RMA Money Market
Portfolio'). The Reorganization is a non-taxable event. As a result of the
Reorganization, the two funds' assets would be combined and each Fund
shareholder would, on the closing date of the transaction, receive a number of
shares of the RMA Money Market Portfolio having an aggregate value equal to the
value of the shareholder's holdings in the Fund. RMA Money Market Portfolio
is also managed by Susan Messina. The Portfolio seeks maximum current income
consistent with liquidity and conservation of capital. The Portfolio invests
in high-grade money market
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
instruments with remaining maturities of 13 months or less. These instruments
include U.S. Government securities, obligations of U.S. banks, commercial paper
and other short-term corporate obligations, corporate bonds and notes and
variable and floating rate securities.
We value you as a shareholder and as a client, and thank you for your continued
support. We welcome any comments or questions you may have.
Sincerely,
/s/ Susan P. Messina /s/ Kris Dorr
SUSAN P. MESSINA KRIS DORR
Senior Vice President, Portfolio Manager,
Taxable Money Funds PaineWebber/Kidder, Peabody
Mitchell Hutchins Asset Management, Inc. Premium Account Fund
- --------------------------------------------------------------------------------
2
<PAGE>
PAINEWEBBER/KIDDER, PEABODY PREMIUM ACCOUNT FUND
- --------------------------------------------------------------------------------
Statement of Net Assets
September 30, 1995 (unaudited)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--1.86%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000) Dates Rates Value
- ---------- -------------------- ---------------- ------------
<S> <C> <C> <C> <C>
$ 10,000 Federal Home Loan Mortgage
Corp. (cost--$9,999,651).... 05/13/96 6.210% $ 9,999,651
------------
<CAPTION>
- --------------------------------------------------------------------------------------------------
BANK NOTES--2.42%
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Domestic--2.42%
5,000 Bank One, Milwaukee N.A....... 02/09/96 7.250 5,003,211
8,000 PNC Bank, N.A................. 05/24/96 6.040 8,023,858
------------
TOTAL BANK NOTES (cost--$13,027,069)...... 13,027,069
------------
<CAPTION>
- --------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT--12.08%
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Domestic--1.86%
10,000 Harris Trust & Savings Bank... 11/15/95 5.700 10,000,000
------------
Yankee--10.22%
15,000 Creditanstalt--Bankverein..... 10/31/95 5.750 15,000,168
10,000 Fuji Bank of Japan Ltd. ...... 10/13/95 5.870 9,999,907
20,000 Industrial Bank of Japan
Ltd. ....................... 10/23/95 to 10/27/95 5.840 to 5.870 19,999,309
10,000 Societe Generale.............. 10/05/95 5.770 10,000,000
------------
54,999,384
------------
Total Certificates of Deposit
(cost--$64,999,384)....................... 64,999,384
------------
<CAPTION>
- --------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--80.73%
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset-Backed--8.31%
15,000 Asset Securitization
Cooperative Corp............ 11/01/95 to 11/09/95 5.700 14,920,042
10,000 Delaware Funding Corp......... 11/06/95 5.690 9,943,100
20,000 Eiger Capital Corp............ 10/27/95 to 11/15/95 5.680 to 5.710 19,872,881
------------
44,736,023
------------
Auto-Truck--3.70%
10,000 Daimler-Benz North America
Corp........................ 10/16/95 5.720 9,976,167
10,000 Toyota Motor Credit Corp...... 11/20/95 5.650 9,921,528
------------
19,897,695
------------
Banking--3.68%
10,000 BEX America Finance Inc....... 11/13/95 5.690 9,932,036
10,000 Cregem North America Corp..... 12/11/95 5.660 9,888,372
------------
19,820,408
------------
Broker/Dealer--8.34%
20,000 Goldman Sachs Group L.P....... 10/04/95 to 11/22/95 5.700 to 5.770 19,896,990
25,000 Morgan Stanley Group Inc...... 10/06/95 to 10/10/95 5.720 to 5.740 24,970,578
------------
44,867,568
------------
Chemical--3.27%
18,000 DuPont (E. I.) de Nemours &
Co. ........................ 10/04/95 to 08/06/96 5.510 to 6.090 17,622,341
------------
Conglomerate--3.80%
20,647 BTR Dunlop Finance Inc. ...... 10/16/95 to 12/14/95 5.600 to 5.730 20,475,065
------------
</TABLE>
3
<PAGE>
PAINEWEBBER/KIDDER, PEABODY PREMIUM ACCOUNT FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMERCIAL PAPER--(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000) Dates Rates Value
- ---------- -------------------- ---------------- ------------
<S> <C> <C> <C> <C>
Consumer Products--1.85%
$ 10,000 Clorox Co..................... 10/17/95 5.610% $ 9,975,067
------------
Drugs, Health Care--5.55%
10,000 Bayer Corp.................... 10/12/95 5.610 9,982,858
10,000 Lilly (Eli) & Co.............. 10/20/95 to 01/12/96 5.720 to 6.080 9,897,928
10,000 Pfizer Inc.................... 10/13/95 5.730 9,980,900
------------
29,861,686
------------
Electronics--7.39%
10,000 Emerson Electric Co. ......... 11/01/95 5.670 9,951,175
10,000 Motorola Inc. ................ 10/26/95 5.690 9,960,486
10,000 Panasonic Finance Inc. ....... 11/13/95 5.670 9,932,275
10,000 Vermont American Corp. ....... 11/02/95 5.700 9,949,333
------------
39,793,269
------------
Energy--3.69%
10,000 Chevron Oil Finance Co. ...... 10/18/95 5.720 9,972,989
10,000 Exxon Asset Management Co. ... 12/12/95 5.600 9,888,000
------------
19,860,989
------------
Finance-Conduit--3.49%
18,841 MetLife Funding Inc........... 10/10/95 to 10/31/95 5.700 to 5.720 18,772,179
------------
Finance-Consumer--2.78%
15,000 American General Finance
Corp........................ 10/12/95 5.740 14,973,692
------------
Finance-Subsidiary--2.79%
15,000 Dresdner U.S. Finance Inc. ... 10/03/95 5.750 14,995,208
------------
Food, Beverage--3.14%
12,000 Campbell Soup Co. ............ 10/06/95 to 01/12/96 5.730 to 6.090 11,874,052
5,000 Philip Morris Companies
Inc. ....................... 10/04/95 5.680 4,997,633
------------
16,871,685
------------
Insurance--2.77%
5,000 A. I. Credit Corp............. 10/02/95 5.670 4,999,213
5,000 AIG Funding Inc. ............. 02/01/96 5.850 4,900,063
5,000 USAA Capital Corp. ........... 10/05/95 5.680 4,996,844
------------
14,896,120
------------
Metals & Mining--0.92%
5,000 RTZ America Inc............... 12/15/95 5.620 4,941,458
------------
Miscellaneous--2.78%
15,000 Beta Finance Inc.............. 10/16/95 5.730 14,964,188
------------
Oil Equipment & Services--1.85%
10,000 Colonial Pipeline Co. ........ 11/21/95 5.670 9,919,675
------------
Paper & Forest Products--3.59%
19,400 Kimberly-Clark Corp. ......... 10/19/95 to 10/23/95 5.680 to 5.700 19,341,687
------------
Printing, Publishing--1.85%
10,000 Reed Elsevier Inc. ........... 10/23/95 5.700 9,965,166
------------
Retail Merchandise--2.41%
13,000 Toys 'R' Us Inc............... 10/11/95 5.710 12,979,380
------------
</TABLE>
4
<PAGE>
PAINEWEBBER/KIDDER, PEABODY PREMIUM ACCOUNT FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMERCIAL PAPER--(CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000) Dates Rates Value
- ---------- -------------------- ---------------- ------------
<S> <C> <C> <C> <C>
Utility-Telephone--2.78%
$ 15,000 Southern New England
Telecommunications Corp. ... 10/11/95 5.760% $ 14,976,000
------------
TOTAL COMMERCIAL PAPER
(cost--$434,506,549)...................... 434,506,549
------------
<CAPTION>
- --------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE OBLIGATIONS--1.85%
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Banking--1.85%
4,000 Morgan (J.P.) & Co. Inc. ..... 05/13/96 6.200 4,000,343
6,000 NationsBank Corp. ............ 08/15/96 4.750 5,948,015
------------
TOTAL CORPORATE NOTES
(cost--$9,948,358)........................ 9,948,358
------------
<CAPTION>
- --------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT--1.07%
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
5,764 Repurchase Agreement dated
09/29/95 with Citicorp
Securities, Inc.,
collateralized by $5,210,000
U.S. Treasury Bonds, 7.500%
due 11/15/24; proceeds:
$5,767,074
(cost--$5,764,000).......... 10/02/95 6.400 5,764,000
------------
TOTAL INVESTMENTS (cost--$538,245,011,
which approximates cost for federal
income tax purposes)--100.01%........... 538,245,011
Liabilities in excess of other
assets--(0.01%)......................... (116,258)
------------
NET ASSETS (applicable to 538,125,301
shares; equivalent to $1.00 per
share)--100.00%......................... $538,128,753
------------
------------
</TABLE>
Weighted average maturity--46 days
See accompanying notes to financial statements
5
<PAGE>
PAINEWEBBER/KIDDER, PEABODY PREMIUM ACCOUNT FUND
- --------------------------------------------------------------------------------
Statement of Operations
For the Six Months Ended September 30, 1995 (unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest........................................... $ 17,681,300
-------------
EXPENSES:
Investment advisory and administration fees........ 1,466,582
Distribution fees.................................. 351,978
Transfer agency and service fees................... 106,911
State registration fees............................ 89,247
Custody and accounting fees........................ 74,842
Legal and audit fees............................... 42,085
Reports and notices to shareholders................ 28,170
Trustees' fees and expenses........................ 11,030
Other.............................................. 26,394
-------------
2,197,239
-------------
NET INVESTMENT INCOME.............................. 15,484,061
NET REALIZED GAINS FROM INVESTMENT TRANSACTIONS.... 3,453
-------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS....................................... $ 15,487,514
-------------
-------------
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
For the
Six Months
Ended For the Year
September 30, 1995 Ended
(unaudited) March 31, 1995
------------------ --------------
FROM OPERATIONS:
Net investment income...... $ 15,484,061 $ 32,896,578
Net realized gains (losses)
from investment
transactions............. 3,453 (1,663,026)
--------------- -------------
Net increase in net assets
resulting from
operations............... 15,487,514 31,233,552
--------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income...... (15,484,061) (32,896,578)
Net realized capital
gains.................... -- (1,160)
--------------- -------------
Total dividends and
distributions to
shareholders............. (15,484,061) (32,897,738)
--------------- -------------
NET DECREASE IN NET ASSETS
DERIVED FROM BENEFICIAL
INTEREST TRANSACTIONS....... (107,398,021) (230,482,667)
--------------- -------------
CONTRIBUTION TO CAPITAL FROM
PREDECESSOR ADVISER......... -- 1,664,186
--------------- -------------
Net decrease in net assets.... (107,394,568) (230,482,667)
NET ASSETS:
Beginning of period........ 645,523,321 876,005,988
--------------- -------------
End of period.............. $538,128,753 $645,523,321
--------------- -------------
--------------- -------------
See accompanying notes to financial statements
6
<PAGE>
PAINEWEBBER/KIDDER, PEABODY PREMIUM ACCOUNT FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber/Kidder, Peabody Premium Account Fund (the 'Fund') was organized
as a Massachusetts business trust on January 13, 1982, and is registered with
the Securities and Exchange Commission under the Investment Company Act of 1940,
as amended ('1940 Act'), as an open-end, diversified management investment
company.
Valuation and Accounting for Investments--Investments are valued at
amortized cost which approximates market value. 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. Premiums are amortized and discounts are accreted as
adjustments to interest income and the identified cost of investments.
The ability of the issuers of the debt securities held by the Fund to meet
their obligations may be affected by economic developments, including those
particular to a specific industry or region.
Repurchase Agreements--The 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.
Federal Tax Status--The 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, the Fund intends not to be subject to a federal
excise tax.
Dividends and Distributions to Shareholders--Dividends and distributions to
shareholders are recorded on the ex-dividend date. Dividends from net investment
income and distributions from realized gains from investment transactions 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 income tax classification. Net capital
gains, if any, will be distributed at least annually, but the Fund may make more
frequent distributions of such gains, if necessary, to maintain its net asset
value per share at $1.00 or to avoid income or excise taxes.
7
<PAGE>
PAINEWEBBER/KIDDER, PEABODY PREMIUM ACCOUNT FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
- --------------------------------------------------------------------------------
INVESTMENT ADVISER AND ADMINISTRATOR
At a special meeting of shareholders that took place on April 13, 1995,
shareholders approved the appointment of PaineWebber Incorporated
('PaineWebber') as investment adviser and administrator of the Fund and Mitchell
Hutchins Asset Management Inc. ('Mitchell Hutchins') as the Fund's sub-adviser
and sub-administrator. The Fund's investment adviser and administrator receives
compensation from the Fund accrued daily and paid monthly at the annual rate of
0.50% of the Fund's average daily net assets. PaineWebber (not the Fund) pays
Mitchell Hutchins a fee for sub-advisory and sub-administration services at the
annual rate of 20% of the fee received by PaineWebber from the Fund. At
September 30, 1995, the Fund owed PaineWebber $239,872 in investment advisory
and administration fees.
In compliance with applicable state securities laws, PaineWebber, the
Fund's investment adviser, will reimburse the Fund, if and to the extent that
the aggregate operating expenses in any fiscal year, exclusive of taxes,
interest, brokerage fees, distribution fees and extraordinary expenses, exceed
limitations imposed by various state regulations. Currently, the most
restrictive limitation is 2.5% on 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 six months ended September 30, 1995, no reimbursements were required
pursuant to the above limitation.
DISTRIBUTION PLAN
PaineWebber serves as the exclusive distributor of the Fund's shares. For
its services, PaineWebber receives from the Fund a distribution fee, accrued
daily and paid monthly, at the annual rate of 0.12% of the Fund's average daily
net assets. At September 30, 1995, $57,569 was payable to PaineWebber for these
services.
8
<PAGE>
PAINEWEBBER/KIDDER, PEABODY PREMIUM ACCOUNT FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements--(concluded)
- --------------------------------------------------------------------------------
OTHER LIABILITIES
At September 30, 1995, the amount payable for dividends was $729,637.
SHARES OF BENEFICIAL INTEREST
There is an unlimited number of shares of beneficial interest authorized.
Transactions in shares of beneficial interest, at $1.00 per share were as
follows:
For the
Six Months For the
Ended Year Ended
September 30, 1995 March 31, 1995
------------------ ---------------
Shares sold............................. 1,298,230,888 3,997,365,909
Shares repurchased...................... (1,420,732,918) (4,258,741,761)
Dividends reinvested in additional Fund
shares............................... 15,104,009 30,893,185
----------------- ---------------
Net decrease in shares outstanding...... (107,398,021) (230,482,667)
----------------- ---------------
----------------- ---------------
CAPITAL CONTRIBUTION AND AFFILIATED TRANSACTIONS
Kidder Peabody Asset Management, Inc. ('KPAM') purchased certain of the
Fund's variable rate securities on July 6, 1994 for an aggregate purchase price
of $32,244,799. The purchases were made at prices equal to the securities'
amortized cost plus accrued and unpaid interest. Since the purchases by KPAM
were made at prices above the securities' then current fair values, the Fund
recorded a capital contribution from KPAM in the amount of $1,664,186 or $0.002
per share.
PROPOSED REORGANIZATION
The Board of Trustees of the Fund have approved a Plan of Reorganization
and Termination (the 'Reorganization') for submission to its shareholders at a
special meeting scheduled to be held on February 13, 1996. If the proposed
Reorganization is approved and implemented, all of the Fund's assets will be
acquired and its liabilities assumed by PaineWebber RMA Money Market Fund, Inc.
('RMA Money Market Fund') in a tax-free reorganization. As a result of the
Reorganization, the two funds' assets would be combined and each Fund
shareholder would, on the closing date of the transaction, receive a number of
full and fractional shares of RMA Money Market Fund having an aggregate value
equal to the value of the shareholder's holdings in the Fund. There can be no
assurance that the Fund's shareholders will approve the Reorganization.
9
<PAGE>
PAINEWEBBER/KIDDER, PEABODY PREMIUM ACCOUNT FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest throughout each period is
presented below:
<TABLE>
<CAPTION>
For the
Six Months
Ended For the Years Ended March 31,
September 30, 1995 ----------------------------------------------------------
(unaudited) 1995 1994 1993 1992 1991
------------------ -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- -------- -------- -------- -------- ----------
Net investment income............. 0.03 0.04 0.03 0.03 0.05 0.07
Dividends from net investment
income.......................... (0.03) (0.04) (0.03) (0.03) (0.05) (0.07)
--------- -------- -------- -------- -------- ----------
Net asset value, end of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- -------- -------- -------- -------- ----------
--------- -------- -------- -------- -------- ----------
Total investment return(1)........ 2.64% 4.31% 2.60% 2.94% 4.90% 7.48%
--------- -------- -------- -------- -------- ----------
--------- -------- -------- -------- -------- ----------
Ratios/Supplemental data:
Net assets, end of period
(000's)......................... $538,129 $645,523 $876,006 $840,354 $948,674 $1,198,164
Ratio of expenses to average net
assets.......................... 0.75%* 0.70% 0.69% 0.70% 0.69% 0.68%
Ratio of net investment
income to average
net assets...................... 5.28%* 4.16% 2.57% 2.86% 4.82% 7.24%
</TABLE>
- ------------------
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment in Fund
shares on the first day of each period reported, reinvestment of all
dividends and capital gain distributions, if any, at net asset value on
the payable date, and a sale at net asset value on the last day of each
period reported. Total investment returns for periods of less than one
year have not been annualized.
10
<PAGE>
PAINEWEBBER/KIDDER, PEABODY PREMIUM ACCOUNT FUND
- --------------------------------------------------------------------------------
Shareholder Information
- --------------------------------------------------------------------------------
A special meeting of shareholders of the Fund was held on April 13, 1995.
At the meeting David J. Beaubien, William W. Hewitt, Jr., Thomas R. Jordan,
Frank P.L. Minard and Carl W. Schafer were elected as trustees to serve without
limit in time, subject to resignation, retirement or removal. The selection of
Deloitte & Touche LLP as the Fund's independent auditors was ratified.
The votes were as follows:
Shares Shares
Voted Withhold
For Authority
---------- ----------
David J. Beaubien.................. 355,069,002 15,870,760
William W. Hewitt, Jr.............. 355,069,002 15,870,760
Thomas R. Jordan................... 355,069,002 15,870,760
Frank P.L. Minard.................. 355,069,002 15,870,760
Carl W. Schafer.................... 355,069,002 15,870,760
Shares Shares Shares
Voted Voted Withhold
For Against Authority
---------- ---------- ----------
Ratification of the selection of
Deloitte & Touche LLP............ 352,580,920 3,152,024 15,206,817
(Note: On July 20, 1995, the Board of Trustees appointed Ernst & Young LLP
as the Fund's independent auditors.)
In addition, the following agreements were approved for the Fund:
1) An interim investment advisory agreement between the Fund and Mitchell
Hutchins containing substantially the same terms, conditions and fees as
the previous investment advisory agreement with Kidder Peabody Asset
Management, Inc. ('KPAM').
The votes were as follows:
Shares Shares Shares
Voted Voted Withhold
For Against Authority
---------- ---------- ----------
353,199,735 2,414,063 15,325,963
11
<PAGE>
PAINEWEBBER/KIDDER, PEABODY PREMIUM ACCOUNT FUND
- --------------------------------------------------------------------------------
Shareholder Information--(concluded)
- --------------------------------------------------------------------------------
2) A new investment advisory and administration agreement between the Fund
and PaineWebber containing the same fees and substantively similar material
terms and conditions as the previous investment advisory agreement with
KPAM to commence on the termination of the interim agreement.
The votes were as follows:
Shares Shares Shares
Voted Voted Withhold
For Against Authority
---------- ---------- ----------
352,606,810 2,813,845 15,519,106
3) A new sub-advisory and sub-administration agreement between PaineWebber
and Mitchell Hutchins to commence on the termination of the interim
agreement for the Fund.
The votes were as follows:
Shares Shares Shares
Voted Voted Withhold
For Against Authority
---------- ---------- ----------
351,594,059 3,119,081 16,226,621
Broker non-votes and abstentions are included within the 'Shares Withhold
Authority' totals.
12
<PAGE>
- ----------------------------------------------------
TRUSTEES
David J. Beaubien
William W. Hewitt, Jr.
Thomas R. Jordan
Frank P. L. Minard
Carl W. Schafer
- ----------------------------------------------------
OFFICERS
Margo N. Alexander, President
Victoria E. Schonfeld, Vice President
Dianne E. O'Donnell, Vice President and Secretary
Julian F. Sluyters, Vice President and Treasurer
Dennis L. McCauley, Vice President
Susan P. Messina, Vice President
- ----------------------------------------------------
INVESTMENT ADVISER, ADMINISTRATOR AND DISTRIBUTOR
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
- ----------------------------------------------------
SUB-ADVISER AND SUB-ADMINISTRATOR
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
- ----------------------------------------------------
This report is not to be used in connection with the offering of shares of the
Fund unless accompanied or preceded by an effective prospectus.
The financial information included herein is taken from the records of the Fund
without examination by independent accountants who do not express an opinion
thereon.
(Copyright) 1995 PaineWebber Incorporated
