<PAGE>
PAINEWEBBER CASH FUND, INC.
SUPPLEMENT TO PROSPECTUS DATED AUGUST 1, 1994
The following paragraphs replace the first and second paragraphs appearing under
the caption "Purchases" on page 8 of the Prospectus:
GENERAL. Shares of the Fund are available through PaineWebber and its
correspondent firms. Investors may contact a local PaineWebber office to open an
account. The minimum initial investment is $1,000. Thereafter, free credit cash
balances (including proceeds from securities sold) of $500 or more will be
automatically invested or "swept" into shares of the Fund daily for settlement
on the next Business Day and cash balances of $1 or more are "swept" on the next
to last Business Day of the month for settlement on the last Business Day of the
month. A "Business Day" is any day on which the Philadelphia offices of the
Fund's custodian, PNC Bank, National Association ("Custodian"), and the New York
City offices of PaineWebber and PaineWebber's bank, The Bank of New York, are
all open for business. The Fund and PaineWebber reserve the right to reject any
purchase order and to suspend the offering of Fund shares for a period of time.
An order to purchase Fund shares will be executed on the Business Day on which
federal funds become available to the Fund, at the Fund's next-determined net
asset value per share. "Federal funds" are funds deposited by a commercial bank
in an account of another bank in one day and thus may be made immediately
available to the Fund through its Custodian.
Dated: June 5, 1995
<PAGE>
PaineWebber August 1, 1994
CASHFUND, INC.
1285 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10019
A PROFESSIONALLY MANAGED MONEY MARKET FUND, INVESTING IN HIGH-GRADE MONEY
MARKET INSTRUMENTS, DESIGNED TO PROVIDE:
[_] Current Income
[_] Stability of Principal
[_] High Liquidity
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 August
1, 1994 (which is incorporated by reference
herein) has been filed with the Securities and
Exchange Commission ("SEC"). 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 1-800-441-7756.
AN INVESTMENT IN THE FUND IS
NEITHER INSURED NOR GUARANTEED
BY THE U.S. GOVERNMENT. WHILE
THE FUND SEEKS TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00
PER SHARE, THERE CAN BE NO
ASSURANCE THAT IT WILL BE ABLE
TO DO SO.
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.
Table of Contents
<TABLE>
<S> <C>
Highlights...................... 2
Financial Highlights............ 4
Investment Objective and Poli-
cies........................... 4
Purchases....................... 8
Redemptions..................... 9
Valuation of Shares............. 12
Dividends and Taxes............. 12
Management...................... 13
Performance Information......... 14
General Information............. 15
</TABLE>
<PAGE>
PAINEWEBBER CASHFUND, INC.
HIGHLIGHTS
See the body of the Prospectus for more information on the topics discussed
in these highlights.
The Fund: PaineWebber Cashfund, Inc. ("Fund") is a professionally
managed, diversified no-load money market fund that started
operations on May 1, 1978.
Investment Current income, stability of principal and high liquidity;
Objective and invests primarily in high-grade money market instruments.
Policies:
Total Net Assets: Over $3.4 billion as of June 30, 1994.
Distributor and PaineWebber Incorporated ("PaineWebber"). See
Investment "Management."
Adviser:
Sub-adviser: Mitchell Hutchins Asset Management Inc. ("Mitchell
Hutchins").
Purchases: Shares of common stock are available exclusively through
PaineWebber and its correspondent firms. See "Purchases."
Redemptions: Shares may be redeemed through PaineWebber or its
correspondent firms. See "Redemptions."
Yield: Based on current money market rates; quoted in the financial
section of most newspapers.
Dividends: Declared daily and paid monthly. See "Dividends and Taxes."
Reinvestment: All dividends are automatically paid in Fund shares.
Minimum Purchase: $5,000 for first purchase; $500 for subsequent purchases.
Purchase Methods: Instruct investment executive to apply funds held in
account, send investment executive bank/personal check
payable to "PaineWebber Cashfund, Inc." or wire federal
funds to: Bank of New York, ABA 021-000018, PaineWebber
Cashfund, Inc., A/C 890-0114-061, OBI=FBO [Account
Name]/[PaineWebber Account Number].
Checkwriting: Available to qualified shareholders upon request. Unlimited
number of checks. Minimum amount per check: $500.
Public Offering Net asset value, which the Fund seeks to maintain at $1.00
Price: per share.
2
<PAGE>
WHO SHOULD INVEST. The Fund is designed for investors seeking safety, liquid-
ity and current income. The Fund provides a convenient means for investors to
enjoy current income at money market rates with minimal risk of fluctuation of
principal.
RISK FACTORS. There can be no assurance that the Fund will achieve its in-
vestment objective. In periods of declining interest rates the Fund's yield
will tend to be somewhat higher than prevailing market rates, and in periods of
rising interest rates the Fund's yield generally will be somewhat lower. See
"Investment Objective and Policies."
EXPENSES OF INVESTING IN THE FUND. The following tables are intended to as-
sist investors in understanding the expenses associated with investing in the
Fund.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales charge on purchases of shares.................................... None
Sales charge on reinvested dividends................................... None
Redemption fee or deferred sales charge................................ None
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<S> <C>
Management fees........................................................ 0.39%
12b-1 fees............................................................. None
Other expenses......................................................... 0.22%
-----
Total Operating Expenses............................................... 0.61%
=====
</TABLE>
EXAMPLE OF EFFECT OF FUND EXPENSES
An investor would pay directly or indirectly the following expenses on a
$1,000 investment in the Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
<S> <C> <C> <C>
$6 $20 $34 $76
</TABLE>
The "Example" assumes that all dividends are reinvested and that the percent-
age 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 SEC applicable to all mutual funds;
the assumed 5% annual return is not a prediction of, and does not represent,
the Fund's projected or actual performance.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EX-
PENSES, AND THE FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN. The actual expenses of the Fund will depend upon, among other things,
the level of average net assets and the extent to which the Fund incurs vari-
able expenses, such as transfer agency costs.
3
<PAGE>
PaineWebber
- --------------------- -------------------------------------------------------
Financial Highlights
The table below provides selected per share data and
ratios for one share of the Fund for the periods shown.
This information is supplemented by the financial
statements and accompanying notes appearing in the
Fund's Annual Report to Shareholders for the fiscal year
ended March 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 table appearing below insofar as it
relates to each of the five years in the period ended
March 31, 1994, have been audited by Ernst & Young,
independent auditors, whose report thereon is included
in the Annual Report to Shareholders. The information
appearing below for the five years ended March 31, 1989
also have been audited by Ernst & Young, whose reports
thereon were unqualified.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
-----------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of pe-
riod............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
NET INCOME FROM
INVESTMENT OPER-
ATIONS:
Net investment
income......... 0.0272 0.0317 0.0509 0.0743 0.0846 0.0761 0.0638 0.0581 0.0743
LESS DISTRIBU-
TIONS:
Dividends from
net investment (0.0272) (0.0317) (0.0509) (0.0743) (0.0846) (0.0761) (0.0638) (0.0581) (0.0743)
income......... ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net asset value, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
end of period.. ========== ========== ========== ========== ========== ========== ========== ========== ==========
Total return 2.75% 3.17% 5.09% 7.43% 8.46% 7.61% 6.38% 5.81% 7.43%
(1)............ ========== ========== ========== ========== ========== ========== ========== ========== ==========
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end
of period
(000's)........ $3,436,278 $3,774,298 $4,235,968 $5,122,338 $5,236,560 $4,416,667 $4,071,212 $4,251,408 $4,187,938
Ratio of ex-
penses to aver-
age net assets. 0.61% 0.57% 0.56% 0.53% 0.54% 0.57% 0.58% 0.56% 0.57%
Ratio of net in-
vestment income
to average net
assets......... 2.73% 3.17% 5.09% 7.43% 8.46% 7.61% 6.38% 5.81% 7.43%
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
------------------------------
1985
----------
<S> <C>
Net asset value,
beginning of pe-
riod............ $ 1.00
----------
NET INCOME FROM
INVESTMENT OPER-
ATIONS:
Net investment
income......... 0.0961
LESS DISTRIBU-
TIONS: (0.0961)
Dividends from ----------
net investment $ 1.00
income......... ==========
Net asset value, 9.61%
end of period.. ==========
Total return
(1)............
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end $4,261,840
of period
(000's)........
Ratio of ex- 0.57%
penses to aver-
age net assets.
Ratio of net in-
vestment income 9.61%
to average net
assets.........
</TABLE>
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends at net
asset value on the payable dates and a sale at net asset value on the last
day of each period reported.
Investment Objective and Policies
The Fund's investment objective is to provide current
income, stability of principal and high liquidity. The
Fund invests exclusively in high-grade money market
instruments with remaining maturities of 13 months or
less. These in-struments include U.S. government
securities, obligations of U.S. banks, commercial paper
and other short-term corporate obligations, variable and
float-ing rate securities and participation interests or
repurchase agreements in-volving any of the foregoing.
The Fund maintains a dollar-weighted average portfolio
maturity of 90 days or less.
- --------------------- -------------------------------------------------------
4
<PAGE>
Cashfund
- --------------------- -------------------------------------------------------
The Fund invests The Fund may invest in obligations (including
exclusively in high- certificates of deposit, bankers' acceptances and
grade money market similar obligations) of U.S. banks having total assets
instruments with in excess of $1.5 billion at the time of purchase. The
remaining maturities of Fund may also invest in interest-bearing savings
13 months or less. deposits in U.S. commercial and savings banks, provided
that the principal amounts at each such bank are fully
insured by the Federal Deposit Insurance Corporation and
the aggregate amount of such deposits does not exceed 5%
of the value of the Fund's assets.
The commercial paper and other short-term corporate
obligations purchased by the Fund consist only of
obligations that Mitchell Hutchins determines, pursuant
to procedures adopted by the Fund's board of directors,
present minimal credit risks and are either (1) rated in
the highest short-term rating cate gory by at least two
nationally recognized statistical rating organizations
("NRSROs"), (2) rated in the highest short-term rating
category by a single NRSRO if only that NRSRO has
assigned the obligations a short-term rating or (3)
unrated, but determined by Mitchell Hutchins to be of
comparable quality ("First Tier Securities"). The Fund
may also purchase bonds and notes with remaining
maturities of 13 months or less, and participation
interests in any of the securities in which it is
permitted to invest. Participation interests are pro
rata interests in securities held by others. The Fund
generally may invest no more than 5% of its total assets
in the securities of a single issuer (other than
securities issued by the U.S. government, its agencies
or instrumentalities).
In managing the Fund's portfolio, Mitchell Hutchins may
employ a number of professional money management
techniques, including varying the composition and the
average weighted maturity of the Fund's portfolio based
upon its assessment of the relative values of various
money market instruments and future interest rate
patterns in order to respond to changing economic and
money market conditions and to shifts in fiscal and
monetary policy. Mitchell Hutchins may also seek to
improve the Fund's yield by purchasing or selling
securities to take advantage of yield disparities among
similar or dissimilar money market instruments that
regularly occur in the money market.
There can be no assurance that the Fund will achieve its
investment objective. In periods of declining interest
rates the Fund's yield will tend to be somewhat higher
than prevailing market rates, and in
- --------------------- -------------------------------------------------------
5
<PAGE>
PaineWebber
- --------------------- -------------------------------------------------------
periods of rising interest rates the opposite will be
true. Also, when interest rates are falling, net cash
inflows from the continuous sale of Fund shares are
likely to be invested in portfolio instruments producing
lower yields than the balance of the Fund's portfolio,
thereby reducing the Fund's yield. In periods of rising
interest rates, the opposite can be true.
U.S. GOVERNMENT SECURITIES. The U.S. government
securities in which the Fund may invest include direct
obligations of the U.S. Treasury (such as Treasury
bills, notes and bonds) and obligations issued or
guaranteed by U.S. government agencies and
instrumentalities. The Fund may invest in U.S.
government securities that are supported by the full
faith and credit of the U.S. government (such as
In periods of declining Government National Mortgage Association certificates),
interest rates, the securities supported primarily or solely by the
Fund's yield will tend creditworthiness of the issuer (such as securities of
to be somewhat higher the Resolution Funding Corporation and the Tennessee
than prevailing market Valley Authority) and securities that are supported
rates, and in periods primarily or solely by specific pools of assets and the
of rising rates, creditworthiness of a U.S. government-related issuer
lower. (such as mortgage-backed securities issued by the
Federal Home Loan Mortgage Corporation).
The Fund may also acquire securities issued or
guaranteed as to principal and interest by the U.S.
government in the form of custodial receipts that evi-
dence ownership of future interest payments, principal
payments or both on certain U.S. Treasury notes or
bonds. Such notes and bonds are held in custody by a
bank on behalf of the owners of such notes or bonds.
These custodial receipts are known by various names,
including "Treasury Investment Growth Receipts"
("TIGRs") and "Certificates of Accrual on Treasury
Securities" ("CATS"). The Fund also may invest in
separately traded principal and interest components of
securities issued or guaranteed by the U.S. Treasury.
The principal and interest components of selected
securities are traded independently under the Separate
Trading of Registered Interest and Principal of
Securities ("STRIPS") program. Under the STRIPS program,
the principal and interest components are individually
numbered and separately issued by the U.S. Treasury at
the request of depository financial institutions, which
then trade the component parts independently.
VARIABLE AND FLOATING RATE SECURITIES. The Fund may
purchase variable and floating rate securities with
remaining maturities in excess
- --------------------- -------------------------------------------------------
6
<PAGE>
Cashfund
- --------------------- -------------------------------------------------------
of 13 months issued by U.S. government agencies or
instrumentalities or guaranteed by the U.S. government,
or (if subject to a demand feature exercisable within 13
months or less) issued by U.S. companies. The yield on
these securities is adjusted in relation to changes in
specific rates such as the prime rate, and different
securities may have different adjustment rates. The
Fund's investment in these securities must comply with
conditions established by the SEC under which they may
be considered to have remaining maturities of 13 months
or less. Certain of these obligations carry a demand
feature that gives the Fund the right to tender them
back to the issuer or a remarketing agent and receive
the principal amount of the security prior to maturity.
The demand feature may or may not be backed by a letter
of credit or other credit support arrangement provided
by a bank or other financial institution, the credit
quality of which affects the credit quality of the
obligation.
Securities purchased by the Fund may include variable
amount master demand notes, which are unsecured
redeemable obligations that permit investment of varying
amounts at fluctuating interest rates under a direct
agreement between the issuer and the Fund. The principal
amount of these notes may be increased from time to time
by the parties (subject to specified maximums) or
decreased by the Fund or the issuer. These notes are
payable on demand and are typically unrated.
REPURCHASE AGREEMENTS. Repurchase agreements are
transactions in which the Fund purchases securities from
a bank or recognized securities dealer and si-
multaneously commits to resell the securities to that
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
Fund's board of directors.
OTHER INFORMATION. The Fund may borrow money for
temporary purposes, but not in excess of 10% of its
total assets. The Fund may
- --------------------- -------------------------------------------------------
7
<PAGE>
PaineWebber
- --------------------- -------------------------------------------------------
not invest more than 10% of its net assets in illiquid
securities, including repurchase agreements with
maturities in excess of seven days.
The Fund's investment objective may not be changed
without the approval of the Fund's shareholders. Certain
other investment limitations, as described in the
Statement of Additional Information, also may not be
changed without shareholder approval. All other
investment policies may be changed by the Fund's board
of directors without shareholder approval.
Purchases
GENERAL. Shares of the Fund are available through
PaineWebber and its correspondent firms. Investors may
contact a local PaineWebber office to open an account.
The minimum initial The minimum initial investment is $5,000, and the
investment is $5,000, minimum for additional purchases is $500. These
and the minimum for minimums may be waived or reduced for investments by
additional purchases employees of PaineWebber or its affiliates. The Fund and
is $500. PaineWebber reserve the right to reject any purchase
order and to suspend the offering of Fund shares for a
period of time.
An order to purchase Fund shares will be executed on the
Business Day on which federal funds become available to
the Fund, at the Fund's next-determined net asset value
per share. A "Business Day" is any day on which the
Philadelphia offices of the Fund's custodian, PNC Bank,
National Association ("Custodian"), and the New York
City offices of PaineWebber and PaineWebber's bank, Bank
of New York, are all open for business. "Federal funds"
are funds deposited by a commercial bank in an account
at a Federal Reserve Bank that can be transferred to a
similar account of another bank in one day and thus may
be made immediately available to the Fund through its
Custodian.
On any Business Day, the Fund will accept purchase
orders and credit shares to investors' accounts as
follows:
PURCHASES BY CHECK. Investors may purchase Fund shares
by placing an order with their PaineWebber investment
executives or correspondent firms and forwarding checks
drawn on a U.S. bank. Checks should be made payable to
PaineWebber Cashfund, Inc. and should include the
investor's PaineWebber account number on the check.
- --------------------- -------------------------------------------------------
8
<PAGE>
Cashfund
- --------------------- -------------------------------------------------------
As noted above, Fund shares will be purchased when
federal funds are available. Federal funds are deemed
available to the Fund two Business Days after deposit of
a personal check and one Business Day after deposit of a
cashier's or certified check. PaineWebber may benefit
from the temporary use of the proceeds of personal
checks to the extent those checks are converted to
federal funds in fewer than two Business Days.
PURCHASES BY WIRE. Investors may also purchase Fund
Fund shares may be shares by placing an order through their PaineWebber
purchased by wire, investment executives or correspondent firms and in-
check or with funds structing their banks to transfer federal funds by wire
held at PaineWebber. to: Bank of New York, ABA 021-000018, PaineWebber
Cashfund, Inc., A/C 890-0114-061, OBI=FBO [Account
Name]/[PaineWebber Account Number]. The wire must
include the investor's name and PaineWebber account
number. If PaineWebber receives a notice from an in-
vestor's bank of a wire transfer of federal funds for a
purchase of Fund shares by 2:00 p.m., eastern time, on a
Business Day, the purchase will be executed on that
Business Day; otherwise the order will be executed at
2:00 p.m., eastern time, on the next Business Day.
PaineWebber and/or an investor's bank may impose a
service charge for wire purchases.
PURCHASES WITH FUNDS HELD AT PAINEWEBBER. Investors may
purchase Fund shares with funds held in a PaineWebber
brokerage account. Such orders will be executed when
the Fund's net asset value per share is next determined
after the order is received by PaineWebber's New York
City offices.
Shareholders may
redeem any number Investors may also purchase Fund shares with the
of shares from their proceeds from a sale of securities from a PaineWebber
Fund accounts by wire, account. These transactions will be executed no later
check, telephone or than the Business Day after PaineWebber has funds from
mail. the sale immediately available to it, which normally
occurs on the Business Day following the settlement, but
in some cases can take longer.
Redemptions
Shareholders may redeem any number of shares from their
Fund accounts by wire, check, telephone or mail. In
addition, unless shareholders otherwise instruct their
PaineWebber investment executives, any securities
purchase or other debit in their PaineWebber brokerage
- --------------------- -------------------------------------------------------
9
<PAGE>
PaineWebber
- --------------------- -------------------------------------------------------
accounts will be paid for automatically on settlement
date by redeeming Fund shares held in such accounts.
WIRE REDEMPTIONS. Shareholders who wish to redeem $5,000
or more may request that redemption proceeds be paid in
federal funds and wired directly to a pre-designated
bank account. To take advantage of this service,
shareholders should obtain an authorization form from
their PaineWebber investment executives or
correspondent firms. If a wire redemption order is
received by PaineWebber's New York City offices prior to
12:00 noon, eastern time, on any Business Day, the
redemption proceeds will be wired to the shareholder's
bank on the same Business Day. Proceeds of all other
wire redemption orders will be wired to the
shareholder's bank on the next Business Day. PaineWebber
reserves the right to charge a fee for wiring funds and
to redeem automatically an appropriate number of Fund
shares to pay that fee.
CHECK REDEMPTIONS. Shareholders may redeem Fund shares
by drawing a check, a supply of which may be obtained
through PaineWebber, for $500 or more against their Fund
accounts. When the check is presented to the Fund's
transfer agent ("Transfer Agent") for payment, the
Transfer Agent will cause the Fund to redeem sufficient
shares to cover the amount of the check. The shareholder
will continue to receive dividends on those shares until
the check is presented to the Transfer Agent for
payment. Cancelled checks are not returned; however,
shareholders may obtain photocopies of their cancelled
checks upon request. If a shareholder has insufficient
shares to cover a check, the check will be returned to
the payee marked "nonsufficient funds." Checks written
in amounts less than $500 will also be returned. Because
the amount of Fund shares owned by a shareholder is
likely to change each day, shareholders should not
attempt to redeem all shares held in their accounts by
writing a check. Charges may be imposed for specially
imprinted checks, business checks, copies of cancelled
checks, stop payment orders, checks returned
"nonsufficient funds" and checks returned because they
are written for less than $500; these charges will be
paid by redeeming automatically an appropriate number of
Fund shares. PaineWebber reserves the right to modify or
terminate the checkwriting service at any time or to
impose a service charge in connection with it.
- --------------------- -------------------------------------------------------
10
<PAGE>
Cashfund
- --------------------- -------------------------------------------------------
Shareholders who are Shareholders who are interested in the check redemption
interested in the check service should obtain the necessary forms from their
redemption service PaineWebber investment executives or correspondent
should obtain the firms. Checkwriting generally is not available to
necessary forms from persons who hold Fund shares through any sub-account or
their PaineWebber tax-deferred retirement plan accounts.
investment executives
or correspondent firms. REDEMPTIONS BY TELEPHONE OR MAIL. Shareholders may
Checks may be written submit redemption requests in person or by telephone or
in amounts of $500 or mail to their PaineWebber investment executives or
more. correspondent firms; PaineWebber investment executives
in local branches throughout the country and
correspondent firms are responsible for promptly
forwarding orders to PaineWebber's New York City
offices. Such redemption orders will be executed at the
net asset value per share next determined after receipt
by PaineWebber's New York City offices, and redemption
proceeds will be paid promptly by check. Under certain
circumstances, PaineWebber may impose an administrative
service fee of up to $5.00 for processing redemptions
paid by check.
Shareholders who send redemption orders to their
PaineWebber investment executives or correspondent
firms by mail are responsible for ensuring that the re-
quest for redemption is received in good order. "Good
order" means that the request must be accompanied by (a)
a letter of instruction or a stock assignment
specifying the number of shares or amount of investment
to be redeemed (or that all shares credited to a Fund
account be redeemed), signed by all registered owners of
the shares in the exact names in which they are regis-
tered, (b) a guarantee of the signature of each
registered owner by an eligible institution acceptable
Shareholders should to the Transfer Agent and in accordance with SEC rules,
maintain minimum such as a commercial bank, trust company or member of a
balances of at least recognized stock exchange and (c) other supporting legal
$500. documents for estates, trusts, guardianships,
custodianships, partnerships and corporations.
ADDITIONAL INFORMATION ON REDEMPTIONS. Shareholders with
questions about redemption requirements should consult
their PaineWebber investment executives or correspondent
firms. Shareholders who redeem all their shares will
receive cash credits to their PaineWebber accounts for
dividends earned on those shares through the day before
redemption. The redemption price may be more or less
than the purchase price, although the Fund anticipates
that its net asset value per share will normally be
$1.00 per share. Because the
- --------------------- -------------------------------------------------------
11
<PAGE>
PaineWebber
- --------------------- -------------------------------------------------------
Fund incurs certain fixed costs in maintaining
shareholder accounts, the Fund 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 with an opportunity to increase the amount
invested to $500 or more within 60 days of the notice.
This notice may appear on the shareholder's account
statement. If a shareholder requests redemption of
shares which were purchased recently, the Fund may delay
payment until it is assured that it has received good
payment for the purchase of the shares. In the case of
purchases by check, this can take up to 15 days.
Valuation of Shares
The Fund uses its best efforts to maintain its net asset
value at $1.00 per share. 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 number of Fund shares outstanding.
The Fund's net asset value is computed once each
Business Day at 2:00 p.m., eastern time.
The Fund values its portfolio securities using the
amortized cost method of valuation, under which market
value is approximated by amortizing the difference
between the acquisition cost and value at maturity of an
instrument on a straight-line basis over its remaining
life. All cash, receivables and current payables are
Fund dividends accrue carried at their face value. Other assets are valued at
to the shareholder fair value as determined in good faith by or under the
accounts daily and are direction of the Fund's board of directors.
automatically paid in
additional Fund shares Dividends and Taxes
monthly.
DIVIDENDS. Each Business Day, the Fund declares as
dividends all of its net investment income. Shares begin
earning dividends on the day of purchase; dividends are
accrued to shareholder accounts daily and are
automatically paid in additional Fund shares monthly.
Shares do not earn dividends on the day of redemption.
Net investment income includes accrued interest and
earned discount (including both original issue and
market discounts), less amortization of premium and
accrued expenses. The Fund distributes any net short-
term capital gain annually, but may make more frequent
distributions of such gain if necessary to maintain its
net asset value per share at $1.00 or to
- --------------------- -------------------------------------------------------
12
<PAGE>
Cashfund
- --------------------- -------------------------------------------------------
avoid income or excise taxes. The Fund does not expect
to realize net long-term capital gain and thus does not
anticipate payment of any long-term capital gain
distributions.
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, if
any) that is distributed to its shareholders.
Dividends paid by the Fund generally are taxable to
shareholders as ordinary income, notwithstanding that
such dividends are paid in additional Fund shares.
Shareholders not subject to tax on their income
generally will not be required to pay tax on amounts
distributed to them.
The Fund notifies its shareholders following the end of
each calendar year of the amount of all dividends paid
that year.
The Fund is required to withhold 31% of all dividends
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 also is required
for such shareholders who otherwise are subject to
backup withholding.
The foregoing is only a summary of some of the important
federal income 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 urged to consult their tax advisers.
The Fund's directors Management
oversee various
organizations The Fund's board of directors, as part of its overall
responsible for the management responsibility, oversees various
Fund's day-to day organizations responsible for the Fund's day-to-day man-
management. agement. PaineWebber, the Fund's investment adviser and
administrator, provides a continuous investment program
for the Fund and supervises all aspects of its
operations. As sub-adviser to the Fund, Mitchell
Hutchins makes and implements investment decisions and,
as sub-administrator, is responsible for the day-to-day
administration of the Fund.
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13
<PAGE>
PaineWebber
- --------------------- -------------------------------------------------------
PaineWebber receives a monthly fee for these services
and, for the fiscal year ended March 31, 1994, the
Fund's advisory and administration fee paid to
PaineWebber was equal to 0.39% of the Fund's average
daily net assets. PaineWebber (not the Fund) pays
Mitchell Hutchins fees for its sub-advisory and sub-
administrative services, in an aggregate annual amount
equal to 20% of the fee received by PaineWebber from the
Fund for advisory and administrative services.
The Fund pays PaineWebber an annual fee of $4.00 per
active Fund account, plus certain out-of-pocket
expenses, for certain services not performed by the
Transfer Agent. The Fund also incurs other expenses. For
the fiscal year ended March 31, 1994, the Fund's ratio
of expenses as a percentage of average net assets was
0.61%.
PaineWebber and Mitchell Hutchins are located at 1285
Avenue of the Americas, New York, New York 10019.
Michell Hutchins 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. At June 30, 1994, PaineWebber or
Mitchell Hutchins was investment adviser to 30
registered investment companies with 56 separate
portfolios and aggregate assets exceeding $23.9 billion.
Performance Information
From time to time the Fund may advertise its "yield" and
"effective yield." Both yield figures are based on
historical earnings and are not intended to indicate
future performance. The "yield" of the Fund is the
income on an investment in the Fund over a specified
seven-day period. This income is then "annualized" (that
is, assumed to be earned each week over a 52-week
period) and shown as a percentage of the investment. The
"effective yield" is calculated similarly but, when
annualized, the income earned is assumed to be rein-
vested. The "effective yield" will be higher than the
"yield" because of the compounding effect of this
assumed reinvestment.
The Fund may also advertise other performance data,
which may consist of the annual or cumulative return
(including realized net short-term capital gain, if any)
earned on a hypothetical investment in the Fund since it
began operations on May 1, 1978, or for shorter
periods. This return data may or may not assume
reinvestment of dividends (compounding).
- --------------------- -------------------------------------------------------
14
<PAGE>
Cashfund
- --------------------- -------------------------------------------------------
The performance of shareholder accounts with small
balances will differ from the quoted performance because
daily income for each shareholder account is rounded to
the nearest whole penny. Accordingly, very small
shareholder accounts (approximately $48 or lower at
current interest rates) which generate less than 1/2c
per day of income will earn no dividends.
The Fund may General Information
advertise its "yield"
and "effective yield." The Fund is registered with the SEC as a diversified,
The "effective yield" open-end management investment company and was
assumes dividends are incorporated in Maryland on January 20, 1978. The Fund
reinvested. has an authorized capitalization of 20 billion shares of
$0.001 par value common stock. Each share has one vote
with respect to matters upon which a shareholder vote is
required; voting rights are non-cumulative.
The Fund does not hold annual shareholder meetings.
There normally will be no meetings of shareholders to
elect directors unless fewer than a majority of the
directors holding office have been elected by
shareholders. The directors are required to call a
meeting of shareholders when requested in writing to do
so by the shareholders of record holding at least 25%
of the Fund's outstanding shares. Each share of the Fund
has equal voting, dividend and liquidation rights.
CERTIFICATES. To avoid additional operating expenses and
for investor convenience, share certificates are not
issued. Ownership of Fund shares 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. PNC Bank, National
Association ("PNC"), whose principal business address is
Broad & Chestnut Streets, Land Title Bldg.,
Philadelphia, Pennsylvania 19101, is custodian of the
Fund's assets. PFPC, Inc., a subsidiary of PNC whose
principal business address is 400 Bellevue Parkway,
To avoid additional Bellevue Corporate Center, Wilmington, Delaware 19809,
expense, share is the Fund's transfer and dividend disbursing agent.
certificates are not
issued. PRINCIPAL UNDERWRITER. PaineWebber serves as principal
underwriter of the Fund's shares.
CONFIRMATIONS AND STATEMENTS. Shareholders receive
confirmations of initial purchases of Fund shares, and
subsequent transactions are
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15
<PAGE>
PaineWebber
- ----------------- -----------------------------------------------------------
reported on account statements sent to PaineWebber clients.
These statements are sent monthly except that, if a
shareholder's only Fund activity in a quarter was
reinvestment of dividends, the activity may be reported on a
quarterly rather than monthly statement. Shareholders also
receive audited annual and unaudited semi-annual financial
statements.
- ----------------- -----------------------------------------------------------
16
<PAGE>
PAINEWEBBER
CASHFUND, INC.
.Current Income
.Stability of Principal
.High Liquidity
.Professional Management
.Dividend Reinvestment
.Checkwriting Privileges
PROSPECTUS
AUGUST 1, 1994
[ARTWORK]
NO PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO
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 BY THE
DISTRIBUTOR IN ANY JURISDICTION
IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
(C) 1994 PaineWebber Incorporated
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