<PAGE> 1
PAINEWEBBER COMMUNICATIONS & TECHNOLOGY GROWTH FUND
Supplement to Prospectus Dated January 1, 1995
The board of trustees of PaineWebber Olympus Fund ("Trust") has approved a
Plan of Reorganization and Termination ("Reorganization") for submission to the
shareholders of its series, PaineWebber Communications & Technology Growth Fund
("Fund"), at a special meeting to be held August 11, 1995. If the proposed
Reorganization is approved and implemented, all the Fund's assets will be
acquired and its liabilities assumed by PaineWebber Growth Fund ("Growth 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 the
corresponding Class of shares of Growth Fund having an aggregate value equal to
the value of the shareholder's holdings in the Fund. Growth Fund is a series of
the Trust, an open-end management investment company organized as a
Massachusetts business trust. There can be no assurance that the Fund's
shareholders will approve the Reorganization.
The meeting of Fund shareholders to consider the proposed Reorganization
will be held on August 11, 1995. If the Reorganization is approved, sales of
all Classes of Fund shares will cease on August 14, 1995, so that Fund shares
will no longer be available for purchase or exchange starting on August 15,
1995 through the closing date of the Reorganization. Redemptions of Fund
shares and exchanges of Fund shares for shares of another PaineWebber or
Mitchell Hutchins/Kidder, Peabody mutual fund ("exchange redemptions") may be
effected through the closing date of the Reorganization. Effective Wednesday,
June 19, 1995, the $5.00 service fee on exchanges will be waived on all
exchange redemptions.
THE FOLLOWING INFORMATION REVISES AND SUPPLEMENTS THE INFORMATION APPEARING
UNDER THE CAPTIONS "PURCHASE OF SHARES" AND "REDEMPTION OF SHARES" IN THE
PROSPECTUS:
PURCHASE OF SHARES--PURCHASE OF SHARES THROUGH PAINEWEBBER OR
CORRESPONDENT FIRMS. The time by which payment for shares purchased is due at
PaineWebber has changed due to the implementation of "T+3" settlement
procedures. Payment is due on the third Business Day after the order is
received in PaineWebber's New York City offices. A "Business Day" is any day
on which the New York Stock Exchange, Inc. ("NYSE") is open for business.
REDEMPTION OF SHARES--REDEMPTION OF SHARES THROUGH PAINEWEBBER OR
CORRESPONDENT FIRMS. The time by which redemption proceeds will be paid to the
redeeming shareholder has also changed due to the implementation of "T+3."
Repurchase proceeds will be paid within three Business Days after receipt of the
request. "Business Day" is defined above.
Dated: June 22, 1995
<PAGE> 2
The Fund is a series of PaineWebber Olympus Fund ("Trust"). This Prospectus
concisely sets forth information about the Fund a prospective investor should
know before investing. Please retain this Prospectus for future reference. A
Statement of Additional Information dated January 1, 1995 (which is incorporated
by reference herein) has been filed with the Securities and Exchange Commission.
The Statement of Additional Information can be obtained without charge, and
further inquiries can be made, by contacting the Fund, your PaineWebber
investment executive or PaineWebber's correspondent firms or by calling
toll-free 1-800-647-1568.
PAINEWEBBER
COMMUNICATIONS
& TECHNOLOGY
GROWTH FUND
1285 Avenue of the Americas
New York, New York 10019
PROSPECTUS
January 1, 1995
- -------------------------------------------------------
PROSPECTIVE WISCONSIN INVESTORS SHOULD NOTE THAT THE FUND MAY INVEST UP TO 10%
OF ITS NET ASSETS IN RESTRICTED SECURITIES (OTHER THAN RULE 144A SECURITIES
DETERMINED TO BE LIQUID BY THE TRUST'S BOARD OF TRUSTEES). INVESTMENT IN
RESTRICTED SECURITIES (OTHER THAN SUCH RULE 144A SECURITIES) IN EXCESS OF 5% OF
THE FUND'S TOTAL ASSETS MAY BE CONSIDERED A SPECULATIVE ACTIVITY AND MAY RESULT
IN GREATER RISK AND INCREASED FUND EXPENSES.
-------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---
<S> <C>
Prospectus Summary..................... 2
Financial Highlights................... 6
Flexible Pricing System................ 7
Investment Objective and Policies...... 8
Purchases.............................. 13
Exchanges.............................. 16
Redemptions............................ 17
Conversion of Class B Shares........... 18
Other Services and Information......... 18
Dividends and Taxes.................... 19
Valuation of Shares.................... 21
Management............................. 21
Performance Information................ 23
General Information.................... 23
Appendix............................... 25
</TABLE>
- -------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS ANY SUCH
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------------------------------------
A PAINEWEBBER MUTUAL FUND
<PAGE> 3
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
ITS DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE
MADE.
-----------------------------
PROSPECTUS SUMMARY
See the body of the Prospectus for more information on the topics discussed
in this summary.
The Fund: PaineWebber Communications & Technology Growth
Fund ("Fund") is a diversified series of an
open-end management investment company.
Investment Objective and
Policies: The Fund's investment objective is long-term
capital appreciation. The Fund seeks to achieve
this objective by investing in equity securities
of companies primarily engaged in communications
or technology, including companies primarily
engaged in information production, distribution
or use (including content owners, content
providers, content distributors and content
subscribers), as well as new information
technology development companies. Under normal
circumstances, the Fund invests at least 65% of
its total assets in such securities.
Total Net Assets: $71 million at November 30, 1994.
Investment Adviser and
Administrator: Mitchell Hutchins Asset Management Inc.
("Mitchell Hutchins"), an asset management
subsidiary of PaineWebber Incorporated
("PaineWebber"), manages approximately $35.3
billion in assets. See "Management."
Purchases: Shares of beneficial interest are available
exclusively through PaineWebber and its
correspondent firms for investors who are clients
of PaineWebber or those firms ("PaineWebber
clients") and, for other investors, through PFPC
Inc., the Fund's transfer agent ("Transfer
Agent").
Flexible Pricing System: Investors may select Class A, Class B or Class D
shares, each with a public offering price that
reflects different sales charges and expense
levels. See "Flexible Pricing System,"
"Purchases," "Redemptions" and "Conversion of
Class B Shares."
Class A Shares Offered at net asset value plus any applicable
sales charge (maximum is 4.5% of public offering
price).
2
<PAGE> 4
Class B Shares Offered at net asset value (a maximum contingent
deferred sales charge of 5% of redemption
proceeds is imposed on certain redemptions made
within six years of date of purchase). Class B
shares automatically convert into Class A shares
(which pay lower ongoing expenses) approximately
six years after purchase.
Class D Shares Offered at net asset value without an initial or
contingent deferred sales charge. Class D shares
pay higher ongoing expenses than Class A shares
and do not convert into another Class.
Exchanges: Shares may be exchanged for shares of the
corresponding Class of most PaineWebber mutual
funds.
Redemptions: PaineWebber clients may redeem through
PaineWebber; other shareholders must redeem
through the Transfer Agent.
Dividends: Declared and paid annually; net capital gain is
also distributed annually. See "Dividends and
Taxes."
Reinvestment: All dividends and capital gain distributions are
paid in Fund shares of the same Class at net
asset value unless the shareholder has requested
cash.
Minimum Purchase: $1,000 for the first purchase; $100 for
subsequent purchases.
<TABLE>
<S> <C> <C>
Other Features:
Class A Shares Automatic investment plan Quantity discounts on initial
Systematic withdrawal plan sales charge
Rights of accumulation 365-day reinstatement privilege
Class B Shares Automatic investment plan Systematic withdrawal plan
Class D shares Automatic investment plan Systematic withdrawal plan
</TABLE>
WHO SHOULD INVEST. Under normal circumstances, the Fund invests at least
65% of its total assets in the equity securities of companies primarily engaged
in communications or technology, including companies primarily engaged in
information production, distribution or use, as well as new information
technology development companies. Accordingly, the Fund is designed for
investors who are seeking capital appreciation potential and who can assume the
risks of greater fluctuation of market value resulting from investment in a
portfolio comprised of securities of companies in these industries.
While the Fund is not intended to provide a complete or balanced investment
program, it can serve as one component of an investor's long-term program to
accumulate assets for retirement, college tuition or other major goals.
RISK FACTORS. There can be no assurance that the Fund will achieve its
investment objective, and the Fund's net asset value will fluctuate based upon
changes in the value of its portfolio securities. The Fund's emphasis on
companies primarily engaged in communications or technology, including companies
primarily engaged in information production, distribution or use, as well as
3
<PAGE> 5
new information technology development companies, subjects its shares to greater
risk than the shares of a fund whose portfolio is not so limited, and, in
particular, its shares will be affected by economic and regulatory developments
in those industries. The Fund is permitted to purchase high yield, high risk
debt securities rated lower than investment grade by Moody's Investors Service,
Inc. ("Moody's"), Standard & Poor's Ratings Group ("S&P") or comparably rated by
another nationally recognized statistical rating organization ("NRSRO"), which
may be subject to greater risks of default and price fluctuation than investment
grade securities and are considered predominantly speculative. The Fund's
ability to invest in U.S. dollar-denominated foreign securities and its use of
options and futures contracts also involve special risks.
EXPENSES OF INVESTING IN THE FUND. The following tables are intended to
assist investors in understanding the expenses associated with investing in the
Fund.
SHAREHOLDER TRANSACTION EXPENSES(1)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
------- ------- -------
<S> <C> <C> <C>
Maximum sales charge on purchases of shares (as a percentage of
public offering price)......................................... 4.5% None None
Sales charge on reinvested dividends............................. None None None
Exchange fee..................................................... $5.00 $5.00 $5.00
Maximum contingent deferred sales charge (as a percentage of
redemption proceeds)........................................... None 5% None
</TABLE>
ANNUAL FUND OPERATING EXPENSES(2)
(as a percentage of average net assets)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
------- ------- -------
<S> <C> <C> <C>
Management fees.................................................. 0.75% 0.75% 0.75%
12b-1 fees(3).................................................... 0.25 1.00 1.00
Other expenses................................................... 0.54 0.53 0.54
---- ---- ----
Total operating expenses......................................... 1.54% 2.28% 2.29%
==== ==== ====
</TABLE>
- -------------
(1) Sales charge waivers are available for Class A and Class B shares, reduced
sales charge purchase plans are available for Class A shares and exchange
fee waivers are available for all three Classes. The maximum 5% contingent
deferred sales charge on Class B shares applies to redemptions during the
first year after purchase; the charge generally declines by 1% annually
thereafter, reaching zero after six years. See "Purchases."
(2) See "Management" for additional information. The management fee payable to
Mitchell Hutchins is higher than the management fee paid by most funds.
"Other expenses" have been annualized based on actual expenses incurred for
the period November 2, 1993 (commencement of operations) to August 31, 1994.
4
<PAGE> 6
(3) 12b-1 fees have two components, as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
------- ------- -------
<S> <C> <C> <C>
12b-1 service fees.......................................... 0.25% 0.25% 0.25%
12b-1 distribution fees..................................... 0.00% 0.75% 0.75%
</TABLE>
12b-1 distribution fees are asset-based sales charges. Long-term Class B and
Class D shareholders may pay more in direct and indirect sales charges
(including distribution fees) than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers, Inc.
EXAMPLE OF EFFECT OF FUND EXPENSES
An investor would directly or indirectly pay the following expenses on a
$1,000 investment in the Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
ONE THREE
YEAR YEARS
--- ----
<S> <C> <C>
Class A Shares(1).......................................................... $60 $ 91
Class B Shares:
Assuming a complete redemption at end of period(2).................... $73 $101
Assuming no redemption................................................ $23 $ 71
Class D Shares............................................................. $23 $ 72
</TABLE>
- -------------
(1) Assumes deduction at the time of purchase of the maximum 4.5% initial sales
charge.
(2) Assumes deduction at the time of redemption of the maximum applicable
contingent deferred sales charge.
This Example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Annual Fund Operating
Expenses remain the same in the years shown. The above tables and the assumption
in the Example of a 5% annual return are required by regulations of the
Securities and Exchange Commission ("SEC") applicable to all mutual funds; the
assumed 5% annual return is not a prediction of, and does not represent, the
projected or actual performance of any Class of the Fund's shares.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND THE FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN. The actual expenses attributable to each Class of the Fund's shares will
depend upon, among other things, the level of average net assets and the extent
to which the Fund incurs variable expenses, such as transfer agency costs, and
whether Mitchell Hutchins reimburses all or a portion of the Fund's expenses
and/or waives all or a portion of its advisory and other fees.
5
<PAGE> 7
FINANCIAL HIGHLIGHTS
The table below provides selected per share data and ratios for one Class A
share, one Class B share and one Class D share of the Fund for the period shown.
This information is supplemented by the financial statements and accompanying
notes appearing in the Fund's Annual Report to Shareholders for the period
November 2, 1993 (commencement of operations) to August 31, 1994, which are
incorporated by reference into the Statement of Additional Information. The
financial statements and notes, as well as the information in the tables
appearing below, have been audited by Ernst & Young LLP, independent auditors,
whose report thereon is included in the Annual Report to Shareholders. Further
information about the performance of the Fund is also included in the Annual
Report to Shareholders, which may be obtained without charge.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
------- ------- -------
FOR THE FOR THE FOR THE
PERIOD PERIOD PERIOD
NOVEMBER NOVEMBER NOVEMBER
2, 1993# 2, 1993# 2, 1993#
TO TO TO
AUGUST AUGUST AUGUST
31, 31, 31,
1994 1994 1994
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of
period................................... $ 10.00 $ 10.00 $ 10.00
------- ------- -------
Net income (loss) from investment
operations:
Net investment loss........................ -- (0.05) (0.05)
Net realized and unrealized losses from
investment transactions.................. (0.68) (0.68) (0.68)
------- ------- -------
Total loss from investment operations...... (0.68) (0.73) (0.73)
------- ------- -------
Net asset value, end of period............. $ 9.32 $ 9.27 $ 9.27
======= ======= =======
Total investment return(1)................. (6.80)% (7.30)% (7.30)%
======= ======= =======
Ratios/Supplemental Data:
Net assets, end of period (000's).......... $19,119 $47,975 $11,079
Ratio of expenses to average net assets.... 1.54%* 2.28%* 2.29%*
Ratio of net investment income (loss) to
average net assets....................... 0.06%* (0.68)%* (0.68)%*
Portfolio turnover rate.................... 11.92% 11.92% 11.92%
</TABLE>
- -------------
# Commencement of operations.
* Annualized.
(1) Total investment return is calculated assuming a $1,000 investment in Fund
shares on the first day of the period reported, reinvestment of all
dividends and other distributions at net asset value on the payable dates,
and a sale at net asset value on the last day of each period reported. The
figures do not include sales charges; results for Class A and Class B shares
would be lower if sales charges were included. Total investment returns for
less than one year have not been annualized.
6
<PAGE> 8
FLEXIBLE PRICING SYSTEM
DIFFERENCES AMONG THE CLASSES
The primary distinctions among the Classes of the Fund's shares lie in
their initial and contingent deferred sales charge structures and
in their ongoing expenses, including asset-based sales charges in the form of
distribution fees. These differences are summarized in the table below. Each
Class has distinct advantages and disadvantages for different investors, and
investors may choose the Class that best suits their circumstances and
objectives.
<TABLE>
<CAPTION>
ANNUAL 12b-1 FEES
(AS A % OF AVERAGE DAILY
SALES CHARGE NET ASSETS) OTHER INFORMATION
-------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
CLASS A Maximum initial sales Service fee of 0.25% Initial sales charge
charge of 4.5% of the waived or reduced for
public offering price certain purchases
CLASS B Maximum contingent Service fee of 0.25%; Shares convert to Class A
deferred sales charge of distribution fee of 0.75% shares approximately six
5% of redemption proceeds; years after issuance
declines to zero after six
years
CLASS D None Service fee of 0.25%; --
distribution fee of 0.75%
</TABLE>
FACTORS TO CONSIDER IN CHOOSING
A CLASS OF SHARES
In deciding which Class of shares to purchase, investors should consider
the cost of sales charges together with the cost of the ongoing annual expenses
described below, as well as any other relevant facts and circumstances.
SALES CHARGES. Class A shares are sold at net asset value plus an initial
sales charge of up to 4.5% of the public offering price. Because of this initial
sales charge, not all of a Class A shareholder's purchase price is invested in
the Fund. Class B shares are sold with no initial sales charge, but a contingent
deferred sales charge of up to 5% of the redemption proceeds applies to
redemptions made within six years of purchase. Class D shareholders pay no
initial or contingent deferred sales charges. Thus, the entire amount of a Class
B or Class D shareholder's purchase price is immediately invested in the Fund.
WAIVERS AND REDUCTIONS OF CLASS A SALES CHARGES. Class A share purchases
over $50,000 and Class A share purchases made under the Fund's reduced sales
charge plan may be made at a reduced sales charge. In considering the combined
cost of sales charges and ongoing annual expenses, investors should take into
account any reduced sales charges on Class A shares for which they may be
eligible.
The entire initial sales charge on Class A shares is waived for certain
eligible purchasers. Because Class A shares bear lower ongoing annual expenses
than Class B shares or Class D shares, investors eligible for complete waivers
should purchase Class A shares.
ONGOING ANNUAL EXPENSES. All three Classes of Fund shares pay an annual
12b-1 service fee of 0.25% of average daily net assets. Class B and Class D
shares pay an annual 12b-1 distribution fee of 0.75% of average daily net
assets. Annual 12b-1 distribution fees are a form of asset-based sales charge.
An investor should
7
<PAGE> 9
consider both ongoing annual expenses and initial or contingent deferred sales
charges in estimating the costs of investing in the respective Classes of Fund
shares over various time periods.
For example, assuming a constant net asset value, the cumulative
distribution fees on the Fund's Class B or Class D shares and the 4.5% maximum
initial sales charge on the Fund's Class A shares would all be approximately
equal if the shares were held for six years. Because Class B shares convert to
Class A shares (which do not bear the expense of ongoing distribution fees)
approximately six years after purchase, an investor expecting to hold Fund
shares for longer than six years would generally pay lower cumulative expenses
by purchasing Class A or Class B shares than by purchasing Class D shares. An
investor expecting to hold Fund shares for less than six years would generally
pay lower cumulative expenses by purchasing Class D shares than by purchasing
Class A shares and, due to the contingent deferred sales charges that would
become payable on redemption of Class B shares, such an investor would
generally pay lower cumulative expenses by purchasing Class D shares than Class
B shares.
The foregoing examples do not reflect, among other variables, the cost or
benefit of bearing sales charges or distribution fees at the time of purchase,
upon redemption or over time, nor can they reflect fluctuations in the net asset
value of Fund shares, which will affect the actual amount of expenses paid.
Expenses borne by Classes may differ slightly because of the allocation of other
Class-specific expenses. The "Example of Effect of Fund Expenses" under
"Prospectus Summary" shows the cumulative expenses an investor would pay over
time on a hypothetical investment in each Class of Fund shares, assuming an
annual return of 5%.
OTHER INFORMATION
PaineWebber investment executives may receive different levels of
compensation for selling one particular Class of Fund shares rather than
another. Investors should understand that distribution fees and initial and
contingent deferred sales charges all are intended to compensate Mitchell
Hutchins for distribution services.
See "Purchases," "Redemptions" and "Management" for a more complete
description of the initial and contingent deferred sales charges, service fees
and distribution fees for the three Classes of shares of the Fund. See also
"Conversion of Class B Shares," "Dividends and Taxes," "Valuation of Shares" and
"General Information" for other differences among the three Classes.
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE AND PRIMARY
INVESTMENTS
The Fund's investment objective is long-term capital appreciation. The Fund
seeks to achieve this objective by investing in equity securities (common
stocks, preferred stocks and securities convertible into common stocks) of
companies primarily engaged in communications or technology, including companies
primarily engaged in new information technology development or information
production, distribution or use. These companies include companies that are:
- content owners, such as companies in the entertainment, education,
information services and media industries;
- content providers, such as companies involved in hardware infrastructure
(for example, computer companies, multi-media servers, interactive
services and storage, communications and networking companies) and in
software infrastructure (for
8
<PAGE> 10
example, databases, message storage and retrieval and content-based
retrieval);
- content distributors, such as cable television and radio companies,
cellular, local, regional and long-distance telephone companies,
providers of local area networks, satellite and radio paging companies,
as well as order entry, billing and accounting system companies; and
- content subscribers, such as home television providers, portable, desktop
and other computer companies, computer peripheral companies and telephone
equipment manufacturers.
Under normal circumstances, the Fund invests at least 65% of its total assets in
the equity securities of such companies. While the Fund's emphasis is on
companies primarily engaged in communications or technology, those companies
encompass a number of different industries. The Fund will not concentrate in any
one industry.
The Fund may invest up to 35% of its total assets in equity securities of
other companies (including companies that will benefit from these new
technologies such as companies in the financial services, retailing and health
care industries), as well as convertible debt securities, convertible preferred
stocks, U.S. government securities, corporate debt securities and money market
instruments. See "Other Investment Policies and Risk Factors--Debt Securities."
The Fund invests in instruments other than common stocks when, in the opinion of
Mitchell Hutchins, their projected total return is equal to or greater than that
of common stocks or when such holdings might reduce the volatility of the Fund's
portfolio.
Mitchell Hutchins invests the Fund's assets in equity securities that, in
Mitchell Hutchins' judgment, provide the potential for long-term capital
appreciation. In selecting equity securities for investment, Mitchell Hutchins
considers all those factors that it believes are relevant in determining the
potential for capital appreciation, including the issuer's current and
anticipated revenues, earnings, cash flow and asset values, as well as general
market conditions and new developments in the foregoing industries.
There can be no assurance that the Fund will achieve its investment
objective. The Fund's net asset value fluctuates based upon changes in the value
of its portfolio securities. The Fund's investment objective and certain
investment limitations as described in the Statement of Additional Information
are fundamental policies that may not be changed without shareholder approval.
All other investment policies may be changed by the Trust's board of trustees
without shareholder approval.
OTHER INVESTMENT POLICIES AND RISK FACTORS
RISK FACTORS. The Fund invests substantially all of its assets in
companies primarily engaged in communications or technology, including companies
primarily engaged in information production, distribution or use, as well as new
information technology development companies. For these purposes, "primarily
engaged" means that more than 50% of a company's revenues or more than 50% of a
company's operating income before interest, depreciation, amortization and
taxes, is derived from its communications or technology business.
Many companies in these businesses are suppliers of products or services
used by other companies in the same or similar businesses. Therefore, a
technological, regulatory or other problem experienced by one type of company in
one of these businesses could also have an effect on other companies in one or
more of these businesses.
Many companies in these businesses, particularly those involved in the
development of new information technologies, often need continuous sources of
capital. Therefore, those companies are susceptible to the risk that capital
will not be
9
<PAGE> 11
available to them in the market or that the costs of such capital will be
excessive. Moreover, a substantial number of the companies in which the Fund
will invest may have lower than average market capitalizations, whose stock
price volatility typically is greater, and whose liquidity is lower, than
securities of issuers with larger capitalizations.
Although many of the companies in these businesses may be in the forefront
of technological development, many technologies may become quickly obsolete so
that the rewards of being a leader may be short-lived. Because of the fast pace
of developments (technological and otherwise) in these industries, it will be
necessary for Mitchell Hutchins to evaluate the technology of each company and
the ability of each company's management to respond to the fast pace of
development.
CONVERTIBLE SECURITIES. The Fund may invest in convertible securities. A
convertible security is preferred stock or debt or other equity security that
may be converted into or exchanged for a prescribed amount of common stock of
the same or a different issuer within a particular period of time at a specified
price or formula. A convertible security entitles the holder to receive
dividends paid on preferred stock or interest paid or accrued on the debt
security until the convertible security matures or is redeemed, converted or
exchanged. Convertible securities have unique investment characteristics in that
they generally (1) have higher yields than common stock, but lower yields than
comparable non-convertible securities, (2) are less subject to fluctuation in
value than the underlying stock because they have fixed income characteristics,
and (3) provide the potential for capital appreciation if the market price of
the underlying common stock increases. While no securities investment is without
some risk, investments in convertible securities generally entail less risk than
the issuer's common stock, although the extent to which such risk is reduced
depends in large measure upon the degree to which the convertible security sells
above its value as a fixed income security.
DEBT SECURITIES. The Fund is permitted to purchase investment grade
corporate debt securities. Securities rated BBB by S&P, Baa by Moody's or
comparably rated by another NRSRO are investment grade but Moody's considers
securities rated Baa to have speculative characteristics. Changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
for such securities to make principal and interest payments than is the case for
higher-rated debt securities. The Fund is also permitted to purchase debt
securities rated as low as B+ by S&P, B1 by Moody's or comparably rated by
another NRSRO. These securities are deemed by those NRSROs to be predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal and may involve major risk exposure to adverse conditions. Such
securities are commonly referred to as "junk bonds." The Fund is also permitted
to purchase debt securities that are not rated by S&P, Moody's or another NRSRO
but that Mitchell Hutchins determines to be of comparable quality to that of
rated securities in which the Fund may invest. See the Statement of Additional
Information for more information about S&P's and Moody's ratings.
The market value of debt securities generally varies inversely with
interest rate changes. Ratings of debt securities represent the NRSROs' opinions
regarding their quality, are not a guarantee of quality and may be reduced after
the Fund has acquired the security. Mitchell Hutchins will consider such an
event in determining whether the Fund should continue to hold a security but is
not required to dispose of it. Credit ratings attempt to evaluate the safety of
principal and interest payments and do not reflect an assessment of the
volatility of the security's market value or the liquidity of an investment in
the security. Also, NRSROs may fail to make timely changes in credit ratings in
10
<PAGE> 12
response to subsequent events, so that an issuer's current financial condition
may be better or worse than the rating indicates.
Lower grade debt securities generally offer a higher current yield than
that available for higher grade issues, but they involve higher risks, in that
they are especially subject to adverse changes in general economic conditions
and in the industries in which the issuers are engaged, to changes in the
financial condition of the issuers and to price fluctuation in response to
changes in interest rates. During periods of economic downturn or rising
interest rates, highly leveraged issuers may experience financial stress, which
could adversely affect their ability to make payments of interest and principal
and increase the possibility of default. In addition, such issuers may not have
more traditional methods of financing available to them, and may be unable to
repay debt at maturity by refinancing. The risk of loss due to default by such
issuers is significantly greater because such securities frequently are
unsecured and subordinated to the prior payment of senior indebtedness.
The market for lower grade debt securities has expanded rapidly in recent
years, and its growth paralleled a long economic expansion. In the past, the
prices of many lower grade debt securities declined substantially, reflecting an
expectation that many issuers of such securities might experience financial
difficulties. As a result, the yields on lower grade debt securities rose
dramatically. However, such higher yields did not reflect the value of the
income stream that holders of such securities expected, but rather the risk that
holders of such securities could lose a substantial portion of their value as a
result of the issuers' financial restructuring or default. There can be no
assurance that such declines will not recur. The market for lower grade debt
issues generally is thinner and less active than that for higher quality
securities. This may limit the Fund's ability to sell such securities at fair
value in response to changes in the economy or financial markets. Adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may also decrease the values and liquidity of lower grade securities,
especially in a thinly traded market.
U.S. government securities in which the Fund may invest include direct
obligations of the U.S. Treasury as well as obligations of U.S. government
agencies and instrumentalities backed by the U.S. Treasury or primarily or
solely by the credit of the issuer.
DOLLAR-DENOMINATED FOREIGN SECURITIES. The Fund may invest up to 25% of its
total assets in U.S. dollar-denominated securities of foreign issuers that are
traded on recognized U.S. exchanges or in the U.S. over-the-counter ("OTC")
market. These investments may involve special risks, arising both from political
and economic developments abroad and differences between foreign and U.S.
regulatory systems. Foreign securities may be less liquid and their prices more
volatile than comparable U.S. securities. The prices of these securities may
also be affected by fluctuations in the values of foreign currencies.
HEDGING STRATEGIES. The Fund may attempt to reduce the overall risk of its
investments (hedge) by using options (both exchange-traded and OTC) and futures
contracts. The Fund's ability to use these instruments may be limited by market
conditions, regulatory limits and tax considerations. The Appendix to this
Prospectus describes the hedging instruments the Fund may use. The Statement of
Additional Information contains further information on these strategies.
The Fund may write (sell) covered put and call options or buy put and call
options on securities in which it may invest and on securities indices. In
addition, the Fund may buy and sell securities index futures contracts and may
write covered put and call options or buy put and call options on such futures
contracts. Because the Fund intends to use options and fu-
11
<PAGE> 13
tures for hedging purposes, the Fund may enter into options and futures
contracts that approximate (but do not exceed) the full value of its portfolio.
The Fund might not employ any of the strategies described above, and no
assurance can be given that any strategy used will succeed. If Mitchell Hutchins
incorrectly forecasts market values or other economic factors in utilizing a
hedging strategy for the Fund, the Fund would be in a better position had it not
hedged at all. The use of these strategies involves certain special risks,
including (1) the fact that skills needed to use hedging instruments are
different from those needed to select the Fund's securities, (2) possible
imperfect correlation, or even no correlation, between price movements of
hedging instruments and price movements of the investments being hedged, (3) the
fact that, while hedging strategies can reduce the risk of loss, they can also
reduce the opportunity for gain, or even result in losses, by offsetting
favorable price movements in hedged investments and (4) the possible inability
of the Fund to purchase or sell a portfolio security at a time that otherwise
would be favorable for it to do so, or the possible need for the Fund to sell a
portfolio security at a disadvantageous time, due to the need for the Fund to
maintain "cover" or to segregate securities in connection with hedging
transactions and the possible inability of the Fund to close out or to liquidate
its hedged position.
New financial products and risk management techniques continue to be
developed. The Fund may use these instruments and techniques to the extent
consistent with its investment objective and regulatory and federal tax
considerations.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
illiquid securities, including certain cover for OTC options and securities
whose disposition is restricted under the federal securities laws (other than
"Rule 144A securities" Mitchell Hutchins has determined to be liquid under
procedures approved by the Trust's trustees). Rule 144A establishes a "safe
harbor" from the registration requirements of the Securities Act of 1933 ("1933
Act"). Institutional markets for restricted securities have developed as a
result of Rule 144A, providing both readily ascertainable values for restricted
securities and the ability to liquidate an investment to satisfy share
redemption orders. An insufficient number of qualified institutional buyers
interested in purchasing Rule 144A-eligible restricted securities held by the
Fund, however, could affect adversely the marketability of such portfolio
securities and the Fund might be unable to dispose of such securities promptly
or at favorable prices.
OTHER INFORMATION. When Mitchell Hutchins believes unusual circumstances
warrant a defensive posture, the Fund temporarily may commit all or a portion of
its assets to cash or money market instruments, including repurchase agreements.
Repurchase agreements are transactions in which the Fund purchases securities
from a bank or recognized securities dealer and simultaneously commits to resell
the securities to the bank or dealer at an agreed-upon date and price reflecting
a market rate of interest unrelated to the coupon rate or maturity of the
purchased securities. Although repurchase agreements carry certain risks not
associated with direct investments in securities, including possible decline in
the market value of the underlying securities and delays and costs to the Fund
if the other party to the repurchase agreement becomes insolvent, the Fund
intends to enter into repurchase agreements only with banks and dealers in
transactions believed by Mitchell Hutchins to present minimal credit risks in
accordance with guidelines established by the Trust's board of trustees. The
Fund may also engage in short sales of securities "against the box" to defer
realization of gains or losses for tax or other purposes. The
12
<PAGE> 14
Fund may borrow money for temporary purposes, but not in excess of 10% of its
total assets.
PURCHASES
GENERAL. Class A shares of the Fund are sold to investors subject to an
initial sales charge. Class B shares of the Fund are sold without an initial
sales charge but are subject to higher ongoing expenses than Class A shares and
a contingent deferred sales charge payable upon certain redemptions. Class B
shares automatically convert to Class A shares approximately six years after
issuance. Class D shares are sold without an initial or a contingent deferred
sales charge but are subject to higher ongoing expenses than Class A shares and
do not convert into another Class. See "Flexible Pricing System" and "Conversion
of Class B Shares."
Shares of the Fund are available through PaineWebber and its correspondent
firms or, for shareholders who are not PaineWebber clients, through the Transfer
Agent. Investors may contact a local PaineWebber office to open an account. The
minimum initial investment for the Fund is $1,000, and the minimum for
additional purchases is $100. These minimums may be waived or reduced for
investments by employees of PaineWebber or its affiliates, certain pension plans
and retirement accounts and participants in the Fund's automatic investment
plan. Purchase orders will be priced at the net asset value per share next
determined (see "Valuation of Shares") after the order is received by
PaineWebber's New York City offices or by the Transfer Agent, plus any
applicable sales charge for Class A shares. The Fund and Mitchell Hutchins
reserve the right to reject any purchase order and to suspend the offering of
Fund shares for a period of time.
When placing purchase orders, investors should specify whether the order is
for Class A, Class B or Class D shares. All share purchase orders that fail to
specify a Class will automatically be invested in Class A shares.
PURCHASES THROUGH PAINEWEBBER OR CORRESPONDENT FIRMS. Purchases through
PaineWebber investment executives or correspondent firms may be made in person
or by mail, telephone or wire; the minimum wire purchase is $1 million.
Investment executives and correspondent firms are responsible for transmitting
purchase orders to PaineWebber's New York City offices promptly. Investors may
pay for purchases with checks drawn on U.S. banks or with funds held in
brokerage accounts at PaineWebber or its correspondent firms. Payment is due on
the fifth Business Day after the order is received at PaineWebber's New York
City offices. A "Business Day" is any day, Monday through Friday, on which the
New York Stock Exchange, Inc. ("NYSE") is open for business.
PURCHASES THROUGH THE TRANSFER AGENT. Investors who are not PaineWebber
clients may purchase shares of the Fund through the Transfer Agent. Shares of
the Fund may be purchased, and an account with the Fund established, by
completing and signing the purchase application at the end of this Prospectus
and mailing it, together with a check to cover the purchase, to the Transfer
Agent: PFPC Inc., Attn: PaineWebber Mutual Funds, P.O. Box 8950, Wilmington,
Delaware 19899. Subsequent investments need not be accompanied by an
application.
INITIAL SALES CHARGE--CLASS A SHARES. The public offering price of Class A
shares is the next determined net asset value, plus any applicable sales charge,
which will vary with the size of the purchase as shown in the following table:
13
<PAGE> 15
INITIAL SALES CHARGE SCHEDULE--CLASS A SHARES
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF
------------------------------------------- DISCOUNT TO SELECTED
OFFERING NET AMOUNT INVESTED DEALERS AS A PERCENTAGE OF
AMOUNT OF PURCHASE PRICE (NET ASSET VALUE) OFFERING PRICE
- ------------------------- ------------------- ------------------- --------------------------
<S> <C> <C> <C>
Less than $50,000 4.50% 4.71% 4.25%
$50,000 to $99,999 4.00 4.17 3.75
$100,000 to $249,999 3.50 3.63 3.25
$250,000 to $499,999 2.50 2.56 2.25
$500,000 to $999,999 1.75 1.78 1.50
$1,000,000 and over(1) None None 1.00
</TABLE>
- -------------
(1) Mitchell Hutchins pays compensation to PaineWebber out of its own resources.
Mitchell Hutchins may at times agree to reallow a higher discount to
PaineWebber, as exclusive dealer for the Fund's shares, than those shown above.
To the extent PaineWebber or any dealer receives 90% or more of the sales
charge, it may be deemed an "underwriter" under the 1933 Act.
SALES CHARGES WAIVERS--CLASS A SHARES. Class A shares of the Fund are
available without a sales charge through exchanges for Class A shares of most
other PaineWebber mutual funds. See "Exchanges." In addition, Class A shares may
be purchased without a sales charge, and exchanges of any Class of shares made
without the $5.00 exchange fee, by employees, directors and officers of
PaineWebber or its affiliates, directors or trustees and officers of any
PaineWebber funds, their spouses, parents and children and advisory clients of
Mitchell Hutchins.
Class A shares also may be purchased without a sales charge if the purchase
is made through a PaineWebber investment executive who formerly was employed as
a broker with another firm registered as a broker-dealer with the SEC, provided
(1) the purchaser was the investment executive's client at the competing
brokerage firm, (2) within 90 days of the purchase of Class A shares the
purchaser redeemed shares of one or more mutual funds for which that competing
firm or its affiliates was principal underwriter, provided the purchaser either
paid a sales charge to invest in those funds, paid a contingent deferred sales
charge upon redemption or held shares of those funds for the period required not
to pay the otherwise applicable contingent deferred sales charge and (3) the
total amount of shares of all PaineWebber funds purchased under this sales
charge waiver does not exceed the amount of the purchaser's redemption proceeds
from the competing firm's funds. To take advantage of this waiver, an investor
must provide satisfactory evidence that all the above-noted conditions are met.
Qualifying investors should contact their PaineWebber investment executives for
more information.
Certificate holders of unit investment trusts ("UITs") sponsored by
PaineWebber may acquire Class A shares of the Fund without regard to minimum
investment requirements and without sales charges by electing to have dividends
and other distributions from their UIT investment automatically invested in
Class A shares.
REDUCED SALES CHARGE PLANS--CLASS A SHARES. If an investor or eligible
group of related Fund investors purchases Class A shares of the Fund
concurrently with Class A shares of other PaineWebber mutual funds, the
purchases may be combined to take advantage of the re-
14
<PAGE> 16
duced sales charge applicable to larger purchases. In addition, the right of
accumulation permits a Fund investor or eligible group of related Fund investors
to pay the lower sales charge applicable to larger purchases by basing the sales
charge on the dollar amount of Class A shares currently being purchased, plus
the net asset value of the investor's or group's total existing Class A
shareholdings in other PaineWebber mutual funds.
An "eligible group of related Fund investors" includes an individual, the
individual's spouse, parents and children, the individual's individual
retirement account ("IRA"), certain companies controlled by the individual and
employee benefit plans of those companies, and trusts or Uniform Gifts to Minors
Act/Uniform Transfers to Minors Act accounts created by the individual or
eligible group of individuals for the benefit of the individual and/or the
individual's spouse, parents or children. The term also includes a group of
related employers and one or more qualified retirement plans of such employers.
For more information, an investor should consult the Statement of Additional
Information or contact a PaineWebber investment executive or correspondent firm
or the Transfer Agent.
CONTINGENT DEFERRED SALES CHARGE--CLASS B SHARES. The public offering
price of the Class B shares of the Fund is the next determined net asset value,
and no initial sales charge is imposed. A contingent deferred sales charge,
however, is imposed upon certain redemptions of Class B shares.
Class B shares that are redeemed will not be subject to a contingent
deferred sales charge to the extent that the value of such shares represents (1)
capital appreciation of Fund assets, (2) reinvestment of dividends or capital
gain distributions or (3) shares redeemed more than six years after their
purchase. Otherwise, redemptions of Class B shares of the Fund will be subject
to a contingent deferred sales charge. The amount of any applicable contingent
deferred sales charge will be calculated by multiplying the net asset value of
such shares at the time of redemption by the applicable percentage shown in the
table below:
<TABLE>
<CAPTION>
CONTINGENT
DEFERRED
SALES CHARGE AS A
PERCENTAGE OF
REDEMPTION NET ASSET VALUE
DURING AT REDEMPTION
- ----------------------------- -----------------
<S> <C>
1st Year Since Purchase...... 5%
2nd Year Since Purchase...... 4
3rd Year Since Purchase...... 3
4th Year Since Purchase...... 2
5th Year Since Purchase...... 2
6th Year Since Purchase...... 1
7th Year Since Purchase...... None
</TABLE>
In determining the applicability and rate of any contingent deferred sales
charge, it will be assumed that a redemption is made first of Class B shares
representing capital appreciation, next of shares representing the reinvestment
of dividends and capital gain distributions and finally of other shares held by
the shareholder for the longest period of time. The holding period of Class B
shares acquired through an exchange with another PaineWebber mutual fund will be
calculated from the date that the Class B shares were initially acquired in one
of the other PaineWebber funds, and Class B shares being redeemed will be
considered to represent, as applicable, capital appreciation or dividend and
capital gain distribution reinvestments in such other funds. This will result in
any contingent deferred sales charge being imposed at the lowest possible rate.
The amount of any contingent deferred sales charge will be paid to Mitchell
Hutchins.
SALES CHARGE WAIVERS--CLASS B SHARES. The contingent deferred sales charge
will be waived for exchanges, as described below, and
15
<PAGE> 17
for redemptions in connection with the Fund's systematic withdrawal plan. The
contingent deferred sales charge will be waived for a total or partial
redemption made within one year of the death of the shareholder. The contingent
deferred sales charge waiver is available where the decedent is either the sole
shareholder or owns the shares with his or her spouse as a joint tenant with
right of survivorship. This waiver applies only to redemption of shares held at
the time of death. The contingent deferred sales charge will also be waived in
connection with a lump-sum or other distribution in the case of an IRA, a
self-employed individual retirement plan (so-called "Keogh Plan") or a custodial
account under Section 403(b) of the Internal Revenue Code following attainment
of age 59 1/2; a total or partial redemption resulting from any distribution
following retirement in the case of a tax-qualified retirement plan; and a
redemption resulting from a tax-free return of an excess contribution to an IRA.
Contingent deferred sales charge waivers will be granted subject to
confirmation (by PaineWebber in the case of shareholders who are PaineWebber
clients or by the Transfer Agent in the case of all other shareholders) of the
shareholders' status or holdings, as the case may be.
PURCHASE OF CLASS D SHARES. The public offering price of the Class D
shares of the Fund is the next determined net asset value. No initial or
contingent deferred sales charge is imposed.
EXCHANGES
Shares of the Fund may be exchanged for shares of the corresponding Class
of other PaineWebber mutual funds, or may be acquired through an exchange of
shares of the corresponding Class of those funds. No initial sales charge is
imposed on the shares acquired, and no contingent deferred sales charge is
imposed on the shares being disposed of, through an exchange. However,
contingent deferred sales charges may apply to redemptions of Class B shares
acquired through an exchange. A $5.00 exchange fee is charged for each exchange,
and exchanges may be subject to minimum investment requirements of the fund into
which exchanges are made.
The other PaineWebber funds with which Fund shares may be exchanged
include:
PaineWebber Income Funds
- GLOBAL INCOME FUND
- HIGH INCOME FUND
- INVESTMENT GRADE INCOME FUND
- SHORT-TERM U.S. GOVERNMENT INCOME FUND
- SHORT-TERM U.S. GOVERNMENT INCOME FUND FOR CREDIT UNIONS
- STRATEGIC INCOME FUND
- U.S. GOVERNMENT INCOME FUND
PaineWebber Tax-Free Income Funds
- CALIFORNIA TAX-FREE INCOME FUND
- MUNICIPAL HIGH INCOME FUND
- NATIONAL TAX-FREE INCOME FUND
- NEW YORK TAX-FREE INCOME FUND
PaineWebber Growth Funds
- ATLAS GLOBAL GROWTH FUND
- BLUE CHIP GROWTH FUND
- CAPITAL APPRECIATION FUND
- EUROPE GROWTH FUND
- GROWTH FUND
- REGIONAL FINANCIAL GROWTH FUND
- SMALL CAP VALUE FUND
16
<PAGE> 18
PaineWebber Growth and Income Funds
- ASSET ALLOCATION FUND
- DIVIDEND GROWTH FUND
- GLOBAL ENERGY FUND
- GLOBAL GROWTH AND INCOME FUND
- UTILITY INCOME FUND
PaineWebber Money Market Fund
PaineWebber clients must place exchange orders through their PaineWebber
investment executives or correspondent firms. Shareholders who are not
PaineWebber clients must place exchange orders in writing with the Transfer
Agent: PFPC Inc., Attn: PaineWebber Mutual Funds, P.O. Box 8950, Wilmington,
Delaware 19899. All exchanges will be effected based on the relative net asset
values per share next determined after the exchange order is received at
PaineWebber's New York City offices or by the Transfer Agent. See "Valuation of
Shares." Shares of the Fund purchased through PaineWebber or its correspondent
firms may be exchanged only after the settlement date has passed and payment for
such shares has been made.
OTHER EXCHANGE INFORMATION. This exchange privilege may be modified or
terminated at any time, upon at least 60 days' notice when such notice is
required by SEC rules. See the Statement of Additional Information for further
details. This exchange privilege is available only in those jurisdictions where
the sale of the PaineWebber fund shares to be acquired may be legally made.
Before making any exchange, shareholders should contact their PaineWebber
investment executives or correspondent firms or the Transfer Agent to obtain
more information and prospectuses of the PaineWebber funds to be acquired
through the exchange.
REDEMPTIONS
As described below, Fund shares may be redeemed at their net asset value
(subject to any applicable contingent deferred sales charge) and redemption
proceeds will be paid within seven days of the receipt of a redemption request.
PaineWebber clients may redeem shares through PaineWebber or its correspondent
firms; all other shareholders must redeem through the Transfer Agent. If a
redeeming shareholder owns shares of more than one Class, the shares will be
redeemed in the following order unless the shareholder specifically requests
otherwise: Class D shares, then Class A shares, and finally Class B shares.
REDEMPTION THROUGH PAINEWEBBER OR CORRESPONDENT FIRMS. PaineWebber clients
may submit redemption requests to their investment executives or correspondent
firms in person or by telephone, mail or wire. As the Fund's agent, PaineWebber
may honor a redemption request by repurchasing Fund shares from a redeeming
shareholder at the shares' net asset value next determined after receipt of the
request by PaineWebber's New York City offices. Within seven days, repurchase
proceeds (less any applicable contingent deferred sales charge) will be paid by
check or credited to the shareholder's brokerage account at the election of the
shareholder. PaineWebber investment executives and correspondent firms are
responsible for promptly forwarding redemption requests to PaineWebber's New
York City offices.
PaineWebber reserves the right not to honor any redemption request, in
which case PaineWebber promptly will forward the request to the Transfer Agent
for treatment as described below.
17
<PAGE> 19
REDEMPTION THROUGH THE TRANSFER AGENT. Fund shareholders who are not
PaineWebber clients must redeem their shares through the Transfer Agent by mail;
other shareholders also may redeem Fund shares through the Transfer Agent.
Shareholders should mail redemption requests directly to the Transfer Agent:
PFPC Inc., Attn: PaineWebber Mutual Funds, P.O. Box 8950, Wilmington, Delaware
19899. A redemption request will be executed at the net asset value next
computed after it is received in "good order." "Good order" means that the
request must be accompanied by the following: (1) a letter of instruction or a
stock assignment specifying number of shares or amount of investment to be
redeemed (or that all shares credited to the Fund account be redeemed), signed
by all registered owners of the shares in the exact names in which they are
registered, (2) a guarantee of the signature of each registered owner by an
eligible institution acceptable to the Transfer Agent and in accordance with SEC
rules, such as a commercial bank, trust company or member of a recognized stock
exchange and (3) other supporting legal documents for estates, trusts,
guardianships, custodianships, partnerships and corporations. Shareholders are
responsible for ensuring that a request for redemption is received in "good
order."
ADDITIONAL INFORMATION ON REDEMPTIONS. Redemption proceeds of $1 million or
more may be wired to the shareholder's PaineWebber brokerage account or a
commercial bank account designated by the shareholder. Questions about this
option, or redemption requirements generally, should be referred to the
shareholder's PaineWebber investment executive or correspondent firm, or to the
Transfer Agent if the shares are not held in a PaineWebber brokerage account. If
a shareholder requests redemption of shares that were purchased recently, the
Fund may delay payment until it is assured that good payment has been received.
In the case of purchases by check, this can take up to 15 days.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, it reserves the right to redeem all Fund shares in any shareholder
account of less than $500 net asset value. If the Fund elects to do so, it will
notify the shareholder and provide the shareholder the opportunity to increase
the amount invested to $500 or more within 60 days of the notice. The Fund will
not redeem accounts that fall below $500 solely as a result of a reduction in
net asset value per share.
Shareholders who have redeemed Class A shares may reinstate their Fund
account without a sales charge up to the dollar amount redeemed by purchasing
Class A shares within 365 days after the redemption. To take advantage of this
reinstatement privilege, shareholders must notify their PaineWebber investment
executive or correspondent firm at the time the privilege is exercised.
CONVERSION OF CLASS B SHARES
A shareholder's Class B shares will automatically convert to Class A shares
of the Fund approximately six years after the date of issuance, together with a
pro rata portion of all Class B shares representing dividends and other
distributions paid in additional Class B shares. The Class B shares so converted
will no longer be subject to the higher expenses borne by Class B shares. The
conversion will be effected at the relative net asset values per share of the
two Classes on the first Business Day of the month in which the sixth
anniversary of the issuance of the Class B shares occurs. If a shareholder
effects one or more exchanges among Class B shares of the PaineWebber mutual
funds during the six-year period, the holding periods for the shares so
exchanged will be counted toward the six-year period.
OTHER SERVICES AND INFORMATION
Investors interested in the services described below should consult their
PaineWebber
18
<PAGE> 20
investment executives or correspondent firms or call the Transfer Agent
toll-free at 1-800-647-1568.
AUTOMATIC INVESTMENT PLAN. Shareholders may purchase shares of the Fund
through an automatic investment plan, under which an amount specified by the
shareholder of $50 or more each month will be sent to the Transfer Agent from
the shareholder's bank for investment in the Fund. In addition to providing a
convenient and disciplined manner of investing, participation in the automatic
investment plan enables the investor to use the technique of "dollar cost
averaging." When under the plan a shareholder invests the same dollar amount
each month, the shareholder will purchase more shares when the Fund's net asset
value per share is low and fewer shares when the net asset value per share is
high. Using this technique, a shareholder's average purchase price per share
over any given period will be lower than if the shareholder purchased a fixed
number of shares on a monthly basis during the period.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders who own Class A or Class D shares
of the Fund with a value of $5,000 or more or Class B shares of the Fund with a
value of $20,000 or more may have PaineWebber redeem a portion of their shares
monthly, quarterly or semi-annually under the systematic withdrawal plan. No
contingent deferred sales charge will be imposed on such withdrawals for Class B
shares. The minimum amount for all withdrawals of Class A or Class D shares is
$100, and minimum monthly, quarterly and semi-annual withdrawal amounts for
Class B shares are $200, $400 and $600, respectively. Quarterly withdrawals are
made in March, June, September and December, and semi-annual withdrawals are
made in June and December. A Class B shareholder of the Fund may not withdraw an
amount exceeding 12% annually of his or her "Initial Account Balance," a term
that means the value of the Fund account at the time the shareholder elects to
participate in the systematic withdrawal plan. A Class B shareholder's
participation in the systematic withdrawal plan will terminate automatically if
the Initial Account Balance (plus the net asset value on the date of purchase of
Fund shares acquired after the election to participate in the systematic
withdrawal plan), less aggregate redemptions made other than pursuant to the
systematic withdrawal plan, is less than $20,000. Shareholders who receive
dividends or other distributions in cash may not participate in the systematic
withdrawal plan. Purchases of additional shares of the Fund concurrent with
withdrawals are ordinarily disadvantageous to shareholders because of tax
liabilities and, for Class A shares, sales charges.
INDIVIDUAL RETIREMENT ACCOUNTS. Shares of the Fund may be purchased
through IRAs available through the Fund. In addition, a Self-Directed IRA is
available through PaineWebber under which investments may be made in the Fund as
well as in other investments available through PaineWebber. Investors
considering establishing an IRA should review applicable tax laws and should
consult their tax advisers.
TRANSFER OF ACCOUNTS. If a shareholder holding shares of the Fund in a
PaineWebber brokerage account transfers his or her brokerage account to another
firm, the Fund shares normally will be transferred to an account with the
Transfer Agent. However, if the other firm has entered into a selected dealer
agreement with Mitchell Hutchins relating to the Fund, the shareholder may be
able to hold Fund shares in an account with the other firm.
DIVIDENDS AND TAXES
DIVIDENDS. The Fund pays an annual dividend from its net investment income
and net short-term capital gain, if any. The Fund also distributes substantially
all of its net capital gain (the excess of net long-term capital gain over net
short-term capital loss) with the regular annual dividend. The Fund may make
additional distributions if necessary to avoid a 4% excise tax
19
<PAGE> 21
on certain undistributed income and capital gains. Dividends and capital gain
distributions paid on all Classes of Fund shares are calculated at the same time
and in the same manner. Dividends on Class B and Class D shares of the Fund are
expected to be lower than those for its Class A shares because of the higher
expenses resulting from distribution fees borne by the Class B and Class D
shares. Dividends on each Class also might be affected differently by the
allocation of other Class-specific expenses. See "Valuation of Shares."
Dividends and capital gain distributions are paid in additional Fund shares
of the same Class at net asset value unless the shareholder has requested cash
payments. Shareholders who wish to receive dividends and/or capital gain
distributions in cash, either mailed to the shareholder by check or credited to
the shareholder's PaineWebber account, should contact their PaineWebber
investment executives or correspondent firms or complete the appropriate section
of the application form.
TAXES. The Fund intends to continue to qualify for treatment as a
regulated investment company under the Internal Revenue Code so that it will be
relieved of federal income tax on that part of its investment company taxable
income (consisting generally of net investment income and net short-term capital
gain) and net capital gain that is distributed to its shareholders.
Dividends from the Fund's investment company taxable income (whether paid
in cash or in additional shares) generally are taxable to shareholders as
ordinary income. Distributions of the Fund's net capital gain (whether paid in
cash or in additional shares) are taxable to its shareholders as long-term
capital gain, regardless of how long they have held their Fund shares.
Shareholders not subject to tax on their income will not be required to pay
taxes on amounts distributed to them.
The Fund notifies its shareholders following the end of each calendar year
of the amounts of dividends and capital gain distributions paid (or deemed paid)
that year and of any portion of those dividends that qualifies for the corporate
dividends-received deduction.
The Fund is required to withhold 31% of all dividends, capital gain
distributions and redemption proceeds payable to any individuals and certain
other noncorporate shareholders who do not provide the Fund with a correct
taxpayer identification number. Withholding at that rate from dividends and
capital gain distributions is also required for those shareholders who otherwise
are subject to backup withholding.
A redemption of Fund shares may result in taxable gain or loss to the
redeeming shareholder, depending upon whether the redemption proceeds payable to
the shareholder are more or less than the shareholder's adjusted basis for the
redeemed shares (which normally includes any initial sales charge paid on Class
A shares). An exchange of Fund shares for shares of another PaineWebber fund
generally will have similar tax consequences. However, special tax rules apply
when a shareholder (1) disposes of Class A shares through a redemption or
exchange within 90 days of purchase and (2) subsequently acquires Class A shares
of a PaineWebber fund without paying a sales charge due to the 365-day
reinstatement privilege or the exchange privilege. In these cases, any gain on
the disposition of the original Class A shares would be increased, or loss
decreased, by the amount of the sales charge paid when those shares were
acquired, and that amount will increase the basis of the PaineWebber fund shares
subsequently acquired. In addition, if shares of the Fund are purchased within
30 days before or after redeeming other Fund shares (regardless of Class) at a
loss, all or a portion of that loss will not be deductible and will increase the
basis of the newly purchased shares.
20
<PAGE> 22
No gain or loss will be recognized to a shareholder as a result of a
conversion of Class B shares into Class A shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Fund and its shareholders; see the
Statement of Additional Information for a further discussion. There may be other
federal, state or local tax considerations applicable to a particular investor.
Prospective shareholders are therefore urged to consult their tax advisers.
VALUATION OF SHARES
The net asset value of the Fund's shares fluctuates and is determined
separately for each Class as of the close of regular trading on the NYSE
(currently 4:00 p.m., eastern time) each Business Day. The Fund's net asset
value per share is determined by dividing the value of the securities held by
the Fund plus any cash or other assets minus all liabilities by the total number
of Fund shares outstanding.
The Fund values its assets based on their current market value when market
quotations are readily available. If such value cannot be established, assets
are valued at fair value as determined in good faith by or under the direction
of the Trust's board of trustees. The amortized cost method of valuation
generally is used to value debt obligations with 60 days or less remaining to
maturity, unless the board of trustees determines that this does not represent
fair value. It should be recognized that judgment plays a greater role in
valuing lower rated debt securities in which the Fund may invest, because there
is less reliable, objective data available.
MANAGEMENT
The Trust's board of trustees, as part of its overall management
responsibility, oversees various organizations responsible for the Fund's
day-to-day management. Mitchell Hutchins, investment adviser and administrator
of the Fund, makes and implements all investment decisions and supervises all
aspects of the Fund's operations. Brokerage transactions for the Fund may be
conducted through PaineWebber or its affiliates, in accordance with procedures
adopted by the Trust's board of trustees.
Mitchell Hutchins receives a monthly fee for these services at the annual
rate of 0.75% of average daily net assets of the Fund. The advisory fees for the
Fund are higher than those paid by most investment companies to their advisers,
but Mitchell Hutchins believes the fees are comparable to the advisory fees paid
to their advisers by other funds with similar investment objectives and
policies.
The Fund also pays PaineWebber an annual fee of $4.00 per active
shareholder account held at PaineWebber for certain services not provided by the
Transfer Agent. The Fund also incurs other expenses in its operations, such as
custody and transfer agency fees, brokerage commissions, professional fees,
expenses of board and shareholder meetings, fees and expenses relating to
registration of its shares, taxes and governmental fees, fees and expenses of
the trustees, costs of obtaining insurance, expenses of printing and
distributing shareholder materials, organizational expenses and extraordinary
expenses, including costs or losses in any litigation. For the period November
2, 1993 (commencement of operations) to August 31, 1994, the Fund's total
expenses for its Class A, Class B and Class D shares, stated as a percentage of
net assets and annualized, were 1.54%, 2.28% and 2.29%, respectively.
Mitchell Hutchins is located at 1285 Avenue of the Americas, New York, New
York 10019. It is a wholly owned subsidiary of PaineWebber, which is in turn
wholly owned by Paine Webber Group Inc., a publicly owned financial services
holding company. As of November 30, 1994, Mitchell Hutchins was adviser or
subadviser of 29 investment companies with 55 separate port-
21
<PAGE> 23
folios and aggregate assets of approximately $23 billion.
Ellen R. Harris has been primarily responsible for the day-to-day portfolio
management of the Fund since its inception. Ms. Harris is a vice president of
the Trust and chief domestic equity strategist, a managing director and chief
investment officer--domestic of Mitchell Hutchins. Prior to joining Mitchell
Hutchins in 1983 as a portfolio manager, Ms. Harris served as a vice president
and portfolio manager at American General Capital Management (now American
Capital Management).
Other members of Mitchell Hutchins equities and fixed income groups provide
input on market outlook, interest rate forecasts and other considerations
pertaining to equity and fixed income investments.
DISTRIBUTION ARRANGEMENTS. Mitchell Hutchins is the distributor of the
Fund's shares and has appointed PaineWebber as the exclusive dealer for the sale
of those shares. Under separate plans of distribution pertaining to the Class A
shares, the Class B shares and Class D shares ("Class A Plan," "Class B Plan"
and "Class D Plan," collectively, "Plans"), the Fund pays Mitchell Hutchins
monthly service fees at the annual rate of 0.25% of the average daily net assets
of each Class of shares and monthly distribution fees at the annual rate of
0.75% of the average daily net assets of the Class B and Class D shares.
Under all three Plans, Mitchell Hutchins uses the service fees primarily to
pay PaineWebber for shareholder servicing, currently at the annual rate of 0.25%
of the aggregate investment amounts maintained in the Fund by PaineWebber
clients. PaineWebber passes on a portion of these fees to its investment
executives to compensate them for shareholder servicing that they perform and
retains the remainder to offset its own expenses in servicing and maintaining
shareholder accounts. These expenses may include costs of the PaineWebber branch
office in which the investment executive is based, such as rent, communications
equipment, employee salaries and other overhead costs.
Mitchell Hutchins uses the distribution fees under the Class B and Class D
Plans to offset the commissions it pays to PaineWebber for selling the Fund's
Class B and Class D shares. PaineWebber passes on to its investment executives a
portion of these commissions and retains the remainder to offset its expenses in
selling Class B and Class D shares. These expenses may include the branch office
costs noted above. In addition, Mitchell Hutchins uses the distribution fees
under the Class B and Class D Plans to offset the Fund's marketing costs
attributable to such Classes, such as preparation of sales literature,
advertising and printing and distributing prospectuses and other shareholder
materials to prospective investors. Mitchell Hutchins also may use the
distribution fees to pay additional compensation to PaineWebber and other costs
allocated to Mitchell Hutchins' and PaineWebber's distribution activities,
including employee salaries, bonuses and other overhead expenses.
Mitchell Hutchins expects that, from time to time, PaineWebber will pay
shareholder servicing fees and sales commissions to its investment executives at
the time of sale of Class D shares of the Fund. If PaineWebber makes such
payments, it will retain the service and distribution fees on Class D shares
until it has been reimbursed and thereafter will pass a portion of the service
and distribution fees on Class D shares on to its investment executives.
Mitchell Hutchins receives the proceeds of the initial sales charge paid
upon the purchase of Class A shares and the contingent deferred sales charge
paid upon certain redemptions of Class B shares, and may use these proceeds for
any of the distribution expenses described above. See "Purchases."
22
<PAGE> 24
During the period they are in effect, the Plans and related distribution
contracts pertaining to each Class of shares ("Distribution Contracts") obligate
the Fund to pay service and distribution fees to Mitchell Hutchins as
compensation for its service and distribution activities, not as reimbursement
for specific expenses incurred. Thus, even if Mitchell Hutchins' expenses exceed
its service or distribution fees for the Fund, it will not be obligated to pay
more than those fees, and, if Mitchell Hutchins' expenses are less than such
fees, it will retain its full fees and realize a profit. The Fund will pay the
service and distribution fees to Mitchell Hutchins until either the applicable
Plan or Distribution Contract is terminated or not renewed. In that event,
Mitchell Hutchins' expenses in excess of service and distribution fees received
or accrued through the termination date will be Mitchell Hutchins' sole
responsibility and not obligations of the Fund. In their annual consideration of
the continuation of the Plans, the trustees will review the Plan and Mitchell
Hutchins' corresponding expenses for each Class separately from the Plans and
corresponding expenses for the other two Classes.
PERFORMANCE INFORMATION
The Fund performs a standardized computation of annualized total return and
may show this return in advertisements or promotional materials. Standardized
return shows the change in value of an investment in the Fund as a steady
compound annual rate of return. Actual year-by-year returns fluctuate and may be
higher or lower than standardized return. Standardized return for the Class A
shares of the Fund reflects deduction of the Fund's maximum initial sales charge
at the time of purchase, and standardized return for the Class B shares of the
Fund reflects deduction of the applicable contingent deferred sales charge
imposed on a redemption of shares held for the period. One-, five- and ten-year
periods will be shown, unless the Class has been in existence for a shorter
period. Total return calculations assume reinvestment of dividends and other
distributions.
The Fund may use other total return presentations in conjunction with
standardized return. These may cover the same or different periods as those used
for standardized return and may include cumulative returns, average annual
rates, actual year-by-year rates or any combination thereof. Non-standardized
return does not reflect initial or contingent deferred sales charges and would
be lower if such charges were included.
The Fund will include performance data for all three Classes of Fund shares
in any advertisements or promotional materials, including Fund performance data.
Total return information reflects past performance and does not necessarily
indicate future results. Investment return and principal values will fluctuate,
and proceeds upon redemption may be more or less than a shareholder's cost.
GENERAL INFORMATION
ORGANIZATION. PaineWebber Olympus Fund is registered with the SEC as an
open-end management investment company and was organized as a business trust
under the laws of the Commonwealth of Massachusetts by Declaration of Trust
dated October 31, 1986. The trustees have authority to issue an unlimited number
of shares of beneficial interest of separate series, par value $.001 per share,
of the Trust. In addition to the Fund, shares of one other series have been
authorized.
The shares of beneficial interest of the Fund are divided into three
Classes, designated Class A shares, Class B shares and Class D shares. Each
Class represents interests in the same assets of the Fund. The Classes differ as
follows: (1) each Class of shares has exclusive voting rights on matters
pertaining to its plan of distribution, (2) Class A shares are subject to an
initial sales charge, (3) Class B shares bear ongo-
23
<PAGE> 25
ing distribution fees, are subject to a contingent deferred sales charge upon
certain redemptions and will automatically convert to Class A shares
approximately six years after issuance, (4) Class D shares are subject to
neither an initial nor a contingent deferred sales charge, bear ongoing
distribution fees and do not convert into another Class and (5) each Class may
bear differing amounts of certain Class-specific expenses. The board of trustees
of the Trust does not anticipate that there will be any conflicts among the
interests of the holders of each Class of Fund shares. On an ongoing basis, the
board of trustees will consider whether any such conflict exists and, if so,
take appropriate action.
The Trust does not hold annual shareholder meetings. There normally will be
no meetings of shareholders to elect trustees unless fewer than a majority of
the trustees of the Trust holding office have been elected by shareholders.
Shareholders of record holding at least two-thirds of the outstanding shares of
the Trust may remove a trustee by votes cast in person or by proxy at a meeting
called for that purpose. The trustees are required to call a meeting of
shareholders for the purpose of voting upon the question of removal of any
trustee when so requested in writing by the shareholders of record holding at
least 10% of the Trust's outstanding shares. Each share of the Fund has equal
voting rights, except as noted above. Each share of the Fund is entitled to
participate equally in dividends and other distributions and the proceeds of any
liquidation, except that, due to the differing expenses borne by the three
Classes, dividends and liquidation proceeds of Class B and Class D shares are
likely to be lower than for the Class A shares. The shares of each series of the
Trust will be voted separately except when an aggregate vote of all series is
required by the Investment Company Act of 1940.
To avoid additional operating costs and for investor convenience, the Fund
does not issue share certificates. Ownership of shares of the Fund is recorded
on a stock register by the Transfer Agent and shareholders have the same rights
of ownership with respect to such shares as if certificates had been issued.
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, One
Heritage Drive, North Quincy, Massachusetts 02171, is custodian for the Fund.
PFPC Inc., a subsidiary of PNC Bank, National Association, whose business
address is 400 Bellevue Parkway, Wilmington, Delaware 19809, is the Fund's
transfer and dividend disbursing agent.
CONFIRMATIONS AND STATEMENTS. Shareholders receive confirmations of
purchases and redemptions of shares of the Fund. PaineWebber clients receive
statements at least quarterly that report their Fund activity and consolidated
year-end statements that show all Fund transactions for that year. Shareholders
who are not PaineWebber clients receive quarterly statements from the Transfer
Agent. Shareholders also receive audited annual and unaudited semi-annual
financial statements of the Fund.
24
<PAGE> 26
APPENDIX
The Fund may use the hedging instruments described below:
OPTIONS ON EQUITY AND DEBT SECURITIES--A call option is a short-term
contract pursuant to which the purchaser of the option, in return for a premium,
has the right to buy the security underlying the option at a specified price at
any time during the term of the option. The writer of the call option, who
receives the premium, has the obligation, upon exercise of the option during the
option term, to deliver the underlying security against payment of the exercise
price. A put option is a similar contract that gives its purchaser, in return
for a premium, the right to sell the underlying security at a specified price
during the option term. The writer of the put option, who receives the premium,
has the obligation, upon the exercise of the option during the option term, to
buy the underlying security at the exercise price.
OPTIONS ON STOCK INDEXES--A stock index assigns relative values to the
stocks included in the index and fluctuates with changes in the market values of
those stocks. A stock index option operates in the same way as a more
traditional stock option, except that exercise of a stock index option is
effected with cash payment and does not involve delivery of securities. Thus,
upon exercise of a stock index option, the purchaser will realize, and the
writer will pay, an amount based on the difference between the exercise price
and the closing price of the stock index.
STOCK INDEX FUTURES CONTRACTS--A stock index futures contract is a
bilateral agreement pursuant to which one party agrees to accept, and the other
party agrees to make, delivery of an amount of cash equal to a specified dollar
amount times the difference between the stock index value at the close of
trading of the contract and the price at which the futures contract is
originally struck. No physical delivery of the stocks comprising the index is
made. Generally, contracts are closed out prior to the expiration date of the
contract.
INTEREST RATE FUTURES CONTRACTS--Interest rate futures contracts are
bilateral agreements pursuant to which one party agrees to make, and the other
party agrees to accept, delivery of a specified type of debt security or
currency at a specified future time and at a specified price. Although such
futures contracts by their terms call for actual delivery or acceptance of debt
securities, in most cases the contracts are closed out before the settlement
date without the making or taking of delivery.
OPTIONS ON FUTURES CONTRACTS--Options on futures contracts are similar to
options on securities, except that an option on a futures contract gives the
purchaser the right, in return for the premium, to assume a position in a
futures contract (a long position if the option is a call and a short position
if the option is a put), rather than to purchase or sell a security, at a
specified price at any time during the option term. Upon exercise of the option,
the delivery of the futures position to the holder of the option will be
accompanied by delivery of the accumulated balance that represents the amount by
which the market price of the futures contract exceeds, in the case of a call,
or is less than, in the case of a put, the exercise price of the option on the
future. The writer of an option, upon exercise, will assume a short position in
the case of a call and a long position in the case of a put.
25
<PAGE> 27
[This Page Intentionally Left Blank]
<PAGE> 28
<TABLE>
Application Form
_ _ _ _ _ _ _ _ _
THE PAINEWEBBER /_/ /_/ - /_/ /_/ /_/ /_/ /_/ - /_/ /_/
MUTUAL FUNDS PaineWebber Account No.
- -------------------------------------------------------------------------------
<S> <C>
INSTRUCTIONS DO NOT USE THIS FORM IF YOU WOULD LIKE YOUR ACCOUNT
SERVICED THROUGH PAINEWEBBER. INSTEAD, CALL YOUR
PAINEWEBBER INVESTMENT EXECUTIVE (OR YOUR LOCAL
PAINEWEBBER OFFICE TO OPEN AN ACCOUNT).
ALSO, DO NOT USE THIS FORM TO OPEN A RETIREMENT PLAN ACCOUNT,
FOR RETIREMENT PLAN FORMS OR FOR ASSISTANCE IN COMPLETING
THIS FORM CONTACT PFPC INC. AT 1-800-647-1568.
Return this completed form to:
PFPC Inc.
P.O. Box 8950
Wilmington, Delaware 19899
ATTN: PaineWebber Mutual Funds
PLEASE PRINT
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
/1/ INITIAL INVESTMENT ($1,000 MINIMUM)
ENCLOSED IS A CHECK FOR $_______ (payable to
"PaineWebber Communications & Technology Growth Fund")
to purchase
Class A / / Class B / / or Class D / / shares
(Check one Class; if no Class is specified Class A
shares wil be purchased)
/2/ ACCOUNT REGISTRATION
Not valid without 1. Individual / /
signature and Soc. Sec. ------------------------------- ----------------------------- --------------------
or Tax ID # First Name Last Name MI Soc. Sec. No.
- --As joint tenants, use
Lines 1 and 2 2. Joint Tenancy / /
- --As custodian for a ---------------------------- ----------------------------- --------------------
minor, use Lines 1 and 3 First Name Last Name MI Soc. Sec. No.
- --In the name of a ("Joint Tenants with Right of Survivorship" unless otherwise specified)
or other organization
or any fuduciary 3. Gifts to Minors / /
capacity, use Line 4 ---------------------------------------------------------- --------------------
Minor's Name Soc. Sec. No.
Under the Uniform Gifts / Uniform Transfers
----------------------------------------------------- to Minors Act / to Minors Act
State of Residence of Minor
4. Other Registrations
------------------------------------------ ------------------------------
Name Tax Ident. No.
5. If Trust, Date of Trust Instrument
------------------------------------------------------------
/3/ ADDRESS
----------------------------------------------- U.S. Citizen / / Yes / / No*
Street
----------------------------------------------- --------------------------------
City State Zip Code *Country of Citizenship
/4/ DISTRIBUTION OPTIONS (See Prospectus)
Please select one of the following:
/ / Reinvest both dividends and capital gain distributions in additonal shares
/ / Pay dividends to my address above; reinvest capital gain distributions
/ / Pay both dividends and capital gain distributions in cash to my address above
/ / Reinvest dividends and pay capital gain distributions in cash to my address above
NOTE: If a selection is not made, both dividends and capital gain distributions will be paid in
additional Fund shares of the same Class.
</TABLE>
<PAGE> 29
<TABLE>
<S> <C>
/5/ SPECIAL OPTIONS (For More Information--Check Appropriate Box)
/ / Automatic Investment Plan / / Prototype IRA Application / / Systematic Withdrawal Plan
/6/ RIGHTS OF ACCUMULATION--CLASS A SHARES (See Prospectus)
Indicate here any other account(s) in the group of funds that would qualify for the
cumulative quantity discount as outlined in the Prospectus.
------------------------------ --------------------- ------------------------------
Fund Name Account No. Registered Owner
------------------------------ --------------------- ------------------------------
Fund Name Account No. Registered Owner
------------------------------ --------------------- ------------------------------
Fund Name Account No. Registered Owner
/7/ PLEASE INDICATE BELOW IF YOU ARE AFFILIATED WITH PAINEWEBBER
"Affiliated" persons are defined as officers, directors/trustees and employees of the PaineWebber
funds, PaineWebber or its affiliates, and their parents, spouses and children.
--------------------------------------------------------
Nature of Relationship
/8/ SIGNATURE(S) AND TAX CERTIFICATION(S)
I warrant that I have full authority and am of legal age to purchase shares of the Fund and
have received and read a current Prospectus of the Fund and agree to its terms. The Fund and
its Transfer Agent will not be liable for acting upon instructions or inquiries believed genuine.
Under penalties of perjury, I certify that (1) my taxpayer identification number provided in
this application is correct and (2) I am not subject to backup withholding because (i) I have
not been notified that I am subject to backup withholding as a result of failure to report
interest or dividends or (ii) the IRS has notified me that I am no longer subject to backup
withholding (strike out clause (2) if incorrect).
---------------------------------------- ------------------------------ ------------------
Individual (or Custodian) Joint Registrant (if any) Date
----------------------------------------- ------------------------------ ------------------
Corporate Officer, Partner, Trustee, etc. Title Date
/9/ INVESTMENT EXECUTIVE IDENTIFICATION (To Be Completed By Investment Executive Only)
----------------------------------------- -----------------------------------------
Broker No./Name Branch Wire Code
( )
----------------------------------------- -----------------------------------------
Branch Address Telephone
/10/ CORRESPONDENT FIRM IDENTIFICATION (To Be Completed By Correspondent Firm Only)
----------------------------------------- -----------------------------------------
Name Address
----------------------------------------- -----------------------------------------
MAIL COMPLETED FORM TO YOUR PAINEWEBBER INVESTMENT EXECUTIVE OR CORRESPONDENT
FIRM OR TO PFPC INC., P.O. BOX 8950, WILMINGTON, DELAWARE 19899.
</TABLE>
<PAGE> 30
<TABLE>
<S> <C>
Shares of the Fund can be exchanged for shares
of the following PaineWebber Mutual Funds:
PAINEWEBBER INCOME FUNDS
PAINEWEBBER
- - Global Income Fund COMMUNICATIONS
- - High Income Fund & TECHNOLOGY
- - Investment Grade Income Fund GROWTH FUND
- - Short-Term U.S. Government Income Fund
- - Short-Term U.S. Government Income Fund
for Credit Unions
- - Strategic Income Fund
- - U.S. Government Income Fund - Professional Management
- Portfolio Diversification
PAINEWEBBER TAX-FREE INCOME FUNDS - Dividend and Capital Gain Reinvestment
- Flexible Pricing (SM)
- - California Tax-Free Income Fund - Low Minimum Investment
- - Municipal High Income Fund - Automatic Investment Plan
- - National Tax-Free Income Fund - Systematic Withdrawal Plan
- - New York Tax-Free Income Fund - Exchange Privileges
- Suitable for Retirement Plans
PAINEWEBBER GROWTH FUNDS
- - Atlas Global Growth Fund PROSPECTUS
- - Blue Chip Growth Fund JANUARY 1, 1995
- - Capital Appreciation Fund
- - Europe Growth Fund
- - Growth Fund
- - Regional Financial Growth Fund
- - Small Cap Value Fund
PAINEWEBBER GROWTH AND INCOME FUNDS
- - Asset Allocation Fund
- - Dividend Growth Fund
- - Global Energy Fund
- - Global Growth and Income Fund
- - Utility Income Fund
PAINEWEBBER MONEY MARKET FUND
----------------------
A prospectus containing more complete information
for any of the above funds, including charges and
expenses, can be obtained from a PaineWebber
investment executive or correspondent firm. Read
it carefully before investing.
(c) 1995 PaineWebber Incorporated
Recycled
Paper
</TABLE>
