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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 8, 1994
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PAINE WEBBER GROUP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-7367 13-2760086
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1285 Avenue of the Americas, New York, New York 10019
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 713-2000
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Not Applicable
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(Former name or address, if changed since last report)
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Paine Webber Group Inc.
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Item 5. Other Events
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(a) Copy of the Registrant's press release relating to
its actions to increase net asset value and reduce
volatility of the Short-Term U.S. Government Income
Fund.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAINE WEBBER GROUP INC.
By: /s/ REGINA DOLAN
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Regina Dolan
Vice President and
Chief Financial Officer
Dated: June 15, 1994
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EXHIBIT INDEX
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(a) Copy of the Registrant's press release relating to its actions to increase
net asset value and reduce volatility of the Short-Term U.S. Government
Income Fund.
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PaineWebber
Contact:
Jerome B Johnston Jeffrey Z. Taufield
PaineWebber Incorporated Kekst and Company
1285 Avenue of the Americas 437 Madison Avenue
New York, NY 10019 New York, NY 10022
212 713-4176 212 593-2655
212 713-3447
News Release
FOR IMMEDIATE RELEASE
PAINEWEBBER ANNOUNCES ACTIONS TO INCREASE
NET ASSET VALUE AND REDUCE VOLATILITY OF
SHORT-TERM U.S. GOV'T FUND
NEW YORK, NEW YORK, June 8, 1994 -- PaineWebber Group Inc. announced today that
it would take action that is expected to increase the net asset value (NAV) of
the Short-Term U.S. Government Income Fund, a mutual fund managed by its
investment subsidiary, Mitchell Hutchins Asset Management Inc. PaineWebber
also will purchase certain securities that have contributed to recent
volatility in the Fund's shares. PaineWebber said that it anticipates and that
these purchases will help reduce the Fund's volatility in the future.
PaineWebber said that it had also reached an agreement in principle to settle
class action litigation that had been brought on behalf of Fund investors.
In a letter issued to the Fund's shareholders today, Mitchell Hutchins said
that from late April to the present, the Fund's NAV per share had declined
to $2.30. The firm attributed that decline primarily to the "rapid and
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substantial deterioration in the government securities markets as a result
of interest rate increases initiated by the Federal Reserve Board in recent
months." Mitchell Hutchins stated that "Beyond these unusual market conditions,
however, certain of the Fund's securities, albeit government agency or
AAA-rated, provided to have had an unacceptable level of volatility, as well as
reduced liquidity. These securities, known as non-Planned Amortization Class
(non-PAC) interest-only and principal-only (I/O and P/O) securities,
contributed about $0.6 of the total decline."
As a result of these circumstances, PaineWebber and Mitchell Hutchins have
decided to take the following actions:
1. Payments expected to approximate 533 million will be made,
contingent upon court approval of the proposed class action
settlement, for the benefit of current and certain former Fund
shareholders who are class members. Cash will be infused into
the Fund for the benefit of class members who are shareholders
of the Fund at the time of court approval of the settlement,
which is expected within 90 days. This is expected to
increase the Fund's NAV by about $.06 per share, the
approximate amount of the Fund's NAV declined as a result of
the non-PAC I/O and P/O securities. Since the Fund's NAV
prior to April 28, 1994 (when it was $2.41 or higher)
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was not materially affected by these securities, payments will
be made to class members who redeemed Fund shares after that
time and prior to court approval of the settlement. The exact
amount to be received by each redeeming class member will
depend upon the date of redemption.
2. In addition to these payments, PaineWebber will purchase all
of the Fund's remaining individual I/O and P/O securities.
In its letter to Fund shareholders, Mitchell Hutchins stated, "These actions
have been taken in order to reduce the Fund's volatility and restore
shareholders to the position they would have had if the non-PAC I/Os and P/Os
had not been purchased and held by the Fund."
Mitchell Hutchins also said that the Fund has requested that Standard & Poor's
discontinue its rating of the Fund. The Fund took this action because S&P
indicated that it intended to lower the Fund's AAAf rating due to three
securities held by the Fund. Mitchell Hutchins noted that two of these
securities are rated AAA by either Fitch or Duff & Phelps and the other is a
government agency security. Mitchell Hutchins said that the Fund has
determined that, in this environment, it is in the best interests of the Fund
and its shareholders to continue to hold these securities. The Fund will
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continue to operate under its existing investment guidelines and will continue
to own only government issued or guaranteed and AAA-rated securities.
Mitchell Hutchins said that purchases of the Fund's shares will be suspended
until court approval of the proposed settlement. Mitchell Hutchins said it
took this action "so as not to disadvantage existing Fund shareholders in
relation to those who would otherwise benefit from the increase in the NAV
following the settlement."
PaineWebber and Mitchell Hutchins said that they believe that these actions are
"consistent with the Fund's objectives of achieving the highest level of income
consistent with the preservation of capital and low volatility of net asset
value. Obviously, PaineWebber cannot guarantee against future market losses,
and shareholders must recognize that the Fund will fluctuate in price.
Nevertheless, PaineWebber is taking these special measures to demonstrate its
commitment to its clients and its investment products."
The PaineWebber Short-Term U.S. Government Income Fund has approximately $1
billion in assets. It primarily invests in mortgage- backed securities that
are issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, or that are AAA-rated. The portfolio includes investments
in collateralized mortgage obligations, adjustable rate mortgage securities and
Ginnie Mae, Fannie Mae and Freddie Mac certificates.
