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<PAGE> PAGE 2
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<PAGE> PAGE 3
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SIGNATURE JULIAN SLUYTERS
TITLE TREASURER
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<CIK> 0000789576
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</TABLE>
<TABLE> <S> <C>
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<EXPENSES-NET> (518)
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000789576
<NAME> PAINEWEBBER FINANCIAL SERVICES GROWTH FUND INC.
<SERIES>
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<NAME> FINANCIAL SERVICES GROWTH - CLASS C
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<S> <C>
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</TABLE>
Board of Directors
PaineWebber Financial Services Growth Fund Inc.
In planning and performing our audit of the financial statements of
PaineWebber Financial Services Growth Fund Inc. for the year ended March 31,
1996, we considered its internal control structure, including procedures for
safeguarding securities, in order to determine our auditing procedures
for the purpose of expressing our opinion on the financial statements and
to comply with the requirements of Form N-SAR, not to provide assurance on
the internal control structure.
The management of PaineWebber Financial Services Growth Fund Inc. is
responsible for establishing and maintaining an internal control structure. In
fulfilling this responsibility, estimates and judgments by management are
required to assess the expected benefits and related costs of internal
control structure policies and procedures. Two of the objectives of an
internal control structure are to provide management with reasonable, but not
absolute,assurance that assets are safeguarded against loss from unauthorized
use or disposition and that transactions are executed in accordance with
management's authorization and recorded properly to permit preparation of
financial statements in conformity with generally accepted accounting
principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it
may become inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce
to a relatively low level the risk that errors or irregularities in amounts
that would be material in relation to the financial statements being audited
may occur and not be detected within a timely period by employees in the
normal course of performing their assigned functions. However, we noted no
matters involving the internal control structure, including procedures for
safeguarding securities, that we consider to be material weaknesses as defined
above as of March 31, 1996.
This report is intended solely for the information and use of management and
the Securities and Exchange Commission.
ERNST & YOUNG LLP
May 14, 1996
- --------------------------------------------------------------------------------
Page 6
- --------------------------------------------------------------------------------
For period ending March 31, 1996 Attachment 77C
--------------
File Number 811-4587
PaineWebber Financial Services Growth Fund Inc.
-----------------------------------------------
A special meeting of shareholders was held on December 14, 1995, at which the
following proposals were approved:
<TABLE>
<CAPTION>
Shares Voted Shares Voted
For Against
--- -------
<S> <C> <C>
To vote for or against a change in the Fund's concentration policy of investing, under 1,949,598 212,595
normal circumstances, at least 65% of its total assets in the equity securities of
regional commercial banks, thrifts and their holding companies to one under which it
would invest, under normal circumstances, at least 65% of its total assets in the
equity securities of financial services companies and a corresponding change in the
Fund's investment limitation governing its ability to concentrate 25% or more of its
total assets in any one industry.
To vote for or against the elimination of the Fund's fundamental investment policy of 1,849,130 317,494
investing only in banks and thrifts with deposits insured by the Federal Deposit
Insurance Corporation and the holding companies of such banks and thrifts.
</TABLE>
<PAGE>
FORM 10f-3 FUND: PaineWebber Financial Services Growth Fund Inc.
(formerly Regional Financial Growth Fund Inc.)
Record of Securities Purchased Under the Fund's Rule 10f-3 Procedures
1. Issuer: Prudential Re (RE)
2. Date of Purchase: 08-02-95 3. Date offering commenced: 08-02-95
4. Underwriters from whom purchased: Goldman Sachs
5. "Affiliated Underwriter" managing or participating in syndicate: PaineWebber
6. Aggregate principal amount of purchase: $306,525.00
7. Aggregate principal amount of offering: $737,000,000.00
8. Purchase price (net of fees and expenses): 16 3/4
9. Initial public offering price: 16 3/4
10. Commission, spread or profit: % $0.57
<TABLE>
<S> <C> <C>
11. Have the following conditions been satisfied? YES NO
a. The securities are part of an issue registered under the
Securities Act of 1933 which is being offered to the
public or are "municipal securities" as defined in
Section 3(a)(29) of the Securities Exchange Act of 1934. X _______
b. The securities were purchased prior to the end of the
first full business day of the offering at not more than
the initial offering price (or, if a rights offering, the
securities were purchased on or before the fourth day
preceding the day on which the offering terminated). X _______
c. The underwriting was a firm commitment underwriting. X _______
d. The commission, spread or profit was reasonable and fair
in relation to that being received by others for
underwriting similar securities during the same period. X _______
e. (1) If securities are registered under the Securities
Act of 1933, the issuer of the securities and its
predecessor have been in continuous operation for not
less than three years. X _______
(2) If securities are municipal securities, the issue of
securities has received an investment grade rating from a
nationally recognized statistical rating organization or,
if the issuer or entity supplying the revenues from which
the issue is to be paid shall have been in continuous
operation for less than three years (including any
predecessor), the issue has received one of the three
highest ratings from at least one such rating
organization. N/A _______
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Page 8
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
f. The amount of such securities purchased by all of the
investment companies advised by Mitchell Hutchins did not
exceed 4% of the principal amount of the offering or
$500,000 in principal amount, whichever is greater,
provided that in no event did such amount exceed 10% of
the principal amount of the offering. X _______
g. The purchase price was less than 3% of the Fund's total
assets. X _______
h. No Affiliated Underwriter was a direct or indirect
participant in or beneficiary of the sale or, with
respect to municipal securities, no purchases were
designated as group sales or otherwise allocated to the
account of any Affiliated Underwriter. X _______
</TABLE>
Approved: Karen Finkel Date: 11-06-95
10/26/95
<PAGE>
FORM 10f-3 FUND: PaineWebber Financial Services Growth Fund Inc.
(formerly Regional Financial Growth Fund Inc.)
Record of Securities Purchased Under the Fund's Rule 10f-3 Procedures
1. Issuer: Harbinger (HRBC)
2. Date of Purchase: 08-22-95 3. Date offering commenced: 08-22-95
4. Underwriters from whom purchased: Alex Brown
5. "Affiliated Underwriter" managing or participating in syndicate: PaineWebber
6. Aggregate principal amount of purchase: $9,600.00
7. Aggregate principal amount of offering: $36,000,000.00
8. Purchase price (net of fees and expenses): 12
9. Initial public offering price: 12
10. Commission, spread or profit: % $0.48
<TABLE>
<S> <C> <C>
11. Have the following conditions been satisfied? YES NO
a. The securities are part of an issue registered under the
Securities Act of 1933 which is being offered to the
public or are "municipal securities" as defined in
Section 3(a)(29) of the Securities Exchange Act of 1934. X _______
b. The securities were purchased prior to the end of the
first full business day of the offering at not more than
the initial offering price (or, if a rights offering, the
securities were purchased on or before the fourth day
preceding the day on which the offering terminated). X _______
c. The underwriting was a firm commitment underwriting. X _______
d. The commission, spread or profit was reasonable and fair
in relation to that being received by others for
underwriting similar securities during the same period. X _______
e. (1) If securities are registered under the Securities
Act of 1933, the issuer of the securities and its
predecessor have been in continuous operation for not
less than three years. X _______
(2) If securities are municipal securities, the issue of
securities has received an investment grade rating from a
nationally recognized statistical rating organization or,
if the issuer or entity supplying the revenues from which
the issue is to be paid shall have been in continuous
operation for less than three years (including any
predecessor), the issue has received one of the three
highest ratings from at least one such rating
organization. N/A _______
</TABLE>
<PAGE>
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<TABLE>
<S> <C> <C>
f. The amount of such securities purchased by all of the
investment companies advised by Mitchell Hutchins did not
exceed 4% of the principal amount of the offering or
$500,000 in principal amount, whichever is greater,
provided that in no event did such amount exceed 10% of
the principal amount of the offering. X _______
g. The purchase price was less than 3% of the Fund's total
assets. X _______
h. No Affiliated Underwriter was a direct or indirect
participant in or beneficiary of the sale or, with
respect to municipal securities, no purchases were
designated as group sales or otherwise allocated to the
account of any Affiliated Underwriter. X _______
</TABLE>
Approved: Karen Finkel Date: 11-06-95
10/26/95
<PAGE>
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FORM 10f-3 FUND: PaineWebber Financial Services Growth Fund Inc.
(formerly Regional Financial Growth Fund Inc.)
Record of Securities Purchased Under the Fund's Rule 10f-3 Procedures
1. Issuer: DST Systems (DST)
2. Date of Purchase: 10-31-95 3. Date offering commenced: 10-31-95
4. Underwriters from whom purchased: Merrill Lynch
5. "Affiliated Underwriter" managing or participating in syndicate: PaineWebber
6. Aggregate principal amount of purchase: $157,500.00
7. Aggregate principal amount of offering: $462,000,000.00
8. Purchase price (net of fees and expenses): 21
9. Initial public offering price: 21
10. Commission, spread or profit: % $0.73
<TABLE>
<S> <C> <C>
11. Have the following conditions been satisfied? YES NO
a. The securities are part of an issue registered under the
Securities Act of 1933 which is being offered to the
public or are "municipal securities" as defined in
Section 3(a)(29) of the Securities Exchange Act of 1934. X _______
b. The securities were purchased prior to the end of the
first full business day of the offering at not more than
the initial offering price (or, if a rights offering, the
securities were purchased on or before the fourth day
preceding the day on which the offering terminated). X _______
c. The underwriting was a firm commitment underwriting. X _______
d. The commission, spread or profit was reasonable and fair
in relation to that being received by others for
underwriting similar securities during the same period. X _______
e. (1) If securities are registered under the Securities
Act of 1933, the issuer of the securities and its
predecessor have been in continuous operation for not
less than three years. X _______
(2) If securities are municipal securities, the issue of
securities has received an investment grade rating from a
nationally recognized statistical rating organization or,
if the issuer or entity supplying the revenues from which
the issue is to be paid shall have been in continuous
operation for less than three years (including any
predecessor), the issue has received one of the three
highest ratings from at least one such rating
organization. N/A _______
</TABLE>
<PAGE>
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<TABLE>
<S> <C> <C>
f. The amount of such securities purchased by all of the
investment companies advised by Mitchell Hutchins did not
exceed 4% of the principal amount of the offering or
$500,000 in principal amount, whichever is greater,
provided that in no event did such amount exceed 10% of
the principal amount of the offering. X _______
g. The purchase price was less than 3% of the Fund's total
assets. X _______
h. No Affiliated Underwriter was a direct or indirect
participant in or beneficiary of the sale or, with
respect to municipal securities, no purchases were
designated as group sales or otherwise allocated to the
account of any Affiliated Underwriter. X _______
</TABLE>
Approved: Karen Finkel Date: 11-06-95
10/26/95
<PAGE>
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FORM 10f-3 FUND: PaineWebber Financial Services Growth Fund Inc.
(formerly Regional Financial Growth Fund Inc.)
Record of Securities Purchased Under the Fund's Rule 10f-3 Procedures
1. Issuer: Capmac Holdings (KAP)
2. Date of Purchase: 12-14-95 3. Date offering commenced: 12-14-95
4. Underwriters from whom purchased: Dillon Reed & Co.
5. "Affiliated Underwriter" managing or participating in syndicate: PaineWebber
6. Aggregate principal amount of purchase: $100,000.00
7. Aggregate principal amount of offering: $68,000,000.00
8. Purchase price (net of fees and expenses): 20
9. Initial public offering price: 20
10. Commission, spread or profit: % $0.84
<TABLE>
<S> <C> <C>
11. Have the following conditions been satisfied? YES NO
a. The securities are part of an issue registered under the
Securities Act of 1933 which is being offered to the
public or are "municipal securities" as defined in
Section 3(a)(29) of the Securities Exchange Act of 1934. X _______
b. The securities were purchased prior to the end of the
first full business day of the offering at not more than
the initial offering price (or, if a rights offering, the
securities were purchased on or before the fourth day
preceding the day on which the offering terminated). X _______
c. The underwriting was a firm commitment underwriting. X _______
d. The commission, spread or profit was reasonable and fair
in relation to that being received by others for
underwriting similar securities during the same period. X _______
e. (1) If securities are registered under the Securities
Act of 1933, the issuer of the securities and its
predecessor have been in continuous operation for not
less than three years. X _______
(2) If securities are municipal securities, the issue of
securities has received an investment grade rating from a
nationally recognized statistical rating organization or,
if the issuer or entity supplying the revenues from which
the issue is to be paid shall have been in continuous
operation for less than three years (including any
predecessor), the issue has received one of the three
highest ratings from at least one such rating
organization. N/A _______
</TABLE>
<PAGE>
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Page 14
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<TABLE>
<S> <C> <C>
f. The amount of such securities purchased by all of the
investment companies advised by Mitchell Hutchins did not
exceed 4% of the principal amount of the offering or
$500,000 in principal amount, whichever is greater,
provided that in no event did such amount exceed 10% of
the principal amount of the offering. X _______
g. The purchase price was less than 3% of the Fund's total
assets. X _______
h. No Affiliated Underwriter was a direct or indirect
participant in or beneficiary of the sale or, with
respect to municipal securities, no purchases were
designated as group sales or otherwise allocated to the
account of any Affiliated Underwriter. X _______
</TABLE>
Approved: Karen Finkel Date: 12-18-95
10/26/95
