PAINEWEBBER
CASHFUND, INC.
A MONEY MARKET FUND
DESIGNED TO PROVIDE
INVESTORS WITH CURRENT
INCOME, STABILITY OF PRINCIPAL
AND HIGH LIQUIDITY
ANNUAL REPORT
MARCH 31, 1995
A MEMBER OF THE PAINEWEBBER FAMILY OF FUNDS
<PAGE>
May 15, 1995
- --------------------------------------------------------------------------------
Dear Shareholder,
During the year ended March 31, 1995, the United States economy exhibited steady
growth. In a series of monetary tightenings that began early in 1994, the
Federal Reserve Board raised the benchmark Federal Funds rate, the rate banks
charge each other for overnight borrowing, six times in 1994 for a total
increase of 2.5%. These increases were implemented to moderate economic
expansion and forestall inflation, and were followed by another 0.5% increase on
February 1, 1995, bringing the Federal Funds rate to 6.0%.
Productivity gains in the workplace and the increased competitiveness of United
States corporations in the global marketplace contributed to the low inflation
and steady growth which characterized the economy during the year ended March
31, 1995. Unemployment continued to decline, personal income exhibited an upward
trend and measures of consumer confidence continued to register positive
readings. However, side effects of higher interest rates, including a decline in
single family housing starts, crept into economic data during the latter half of
1994. As we move into the second quarter of 1995, the economy remains
healthy--although it is not yet clear what the full impact of higher interest
rates will be on either economic or corporate profit growth.
PORTFOLIO REVIEW
PaineWebber Cashfund's current yield for the seven-day period ended March 31,
1995 was 5.48%, and net assets totalled approximately $3.7 billion. During the
year ended March 31, 1995, the Federal Reserve's credit tightening policy caused
interest rates on money market instruments to increase. For example, the
discounted 30-day commercial paper rate rose to approximately 6.00% on March 31,
1995, from approximately 3.55% on March 31, 1994. The Federal Funds rate for
short-term borrowing was approximately 3.50% on March 31, 1994, and 6.00% on
March 31, 1995.
During the year ended March 31, 1995, the Fund's performance was enhanced by the
Federal Funds rate increases. Rising interest rates translated into higher
yields for the portfolio. During the period, the Fund continuously reduced its
weighted average maturity, from 55 days on March 31, 1994, to 35 days on March
31, 1995. A shorter weighted average maturity benefits the Fund by enabling it
to have more cash available to invest as rates trend upward. Going forward, the
Fund will maintain a neutral weighted average maturity as short-term rates find
stability during uncertain economic times. Investment decisions in the portfolio
will be dominated by credit quality and liquidity. Although we are interested in
maintaining higher yields, we will not do so by sacrificing the Fund's very
strict emphasis on security, quality and liquidity.
Effective December 21, 1994, Dennis L. McCauley became a Managing Director and
Chief Investment Officer--Fixed Income of Mitchell Hutchins. Mr. McCauley is
responsible for overseeing all active fixed income investments, including
domestic and global taxable and tax exempt mutual funds. Susan P. Messina is
responsible for the day-to-day portfolio management of the Fund. Mrs. Messina is
a senior vice president of Mitchell Hutchins.
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1
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As of March 21, 1995, the Fund continued to be rated AAAm by Standard & Poor's
Ratings Group ("S&P"), the highest rating given to money market funds. The
rating of the Fund reflects S&P's view concerning the creditworthiness of the
Fund's portfolio and its investment and management policies. The rating
indicates that there is a superior capacity to maintain principal value and
limit exposure to loss. The rating also reflects S&P's view that the portfolio
credit quality is strong, with all assets rated either 'A-1+' or 'A-1', in
accordance with S&P's rating guidelines.
We value you as a shareholder and as a client, and thank you for your continued
support. We welcome any comments or questions you may have.
Sincerely,
/s/ FRANK P.L. MINARD /s/ DENNIS L. MCCAULEY
FRANK P.L. MINARD DENNIS L. MCCAULEY
Chairman, Managing Director and Chief Investment
Mitchell Hutchins Asset Officer--Fixed Income,
Management Inc. Mitchell Hutchins Asset Management Inc.
/s/ SUSAN P. MESSINA
SUSAN P. MESSINA
Senior Vice President,
Taxable Money Funds
Mitchell Hutchins Asset Management Inc.
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2
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<TABLE>
<CAPTION>
PaineWebber Cashfund, Inc.
- ----------------------------------------------------------------------------------------------------------
Statement of Net Assets
March 31, 1995
- ----------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Dates Rates Value
- --------- --------------------- -------------- --------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--5.62%
$ 40,000 U.S. Treasury Bills................ 08/24/95 to 11/16/95 5.330 to 6.125% $ 38,791,403
15,000 Federal Home Loan Bank............. 05/22/95 5.980 14,872,925
75,000 Federal National Mortgage
Association...................... 04/05/95 to 08/14/95 5.170 to 6.210 74,317,063
40,000 Federal National Mortgage
Association*..................... 04/04/95 to 06/15/95 5.188 to 6.000 40,000,000
40,000 Student Loan Marketing
Association*..................... 04/04/95 to 06/30/95 5.480 to 6.010 39,993,299
--------------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(cost--$207,974,690).......................... 207,974,690
--------------
DOMESTIC BANK NOTES--4.16%
20,000 Bank One (Milwaukee)............... 02/09/96 7.250 20,000,000
25,000 Comerica Bank (Detroit)*........... 04/04/95 5.930 24,980,656
29,000 Fifth Third Bank................... 04/10/95 6.030 29,000,173
20,000 Lasalle National Bank, N.A......... 01/11/96 7.560 20,000,000
20,000 NationsBank (Carolina)............. 05/19/95 5.400 19,999,836
20,000 NBD Bank N.A....................... 05/08/95 5.950 19,998,923
20,000 PNC Bank (Delaware)*............... 04/04/95 5.920 19,998,580
--------------
TOTAL DOMESTIC BANK NOTES (cost--$153,978,168). 153,978,168
--------------
COMMERCIAL PAPER--85.21%
Aerospace--1.74%
45,000 Raytheon Co........................ 04/03/95 5.930 44,985,175
20,000 Rockwell International Corp. ...... 09/06/95 6.200 19,455,778
--------------
64,440,953
--------------
Agriculture--0.54%
20,000 Cargill Inc........................ 04/10/95 5.950 19,970,250
--------------
Asset-Backed--8.74%
70,000 Asset Securitization Cooperative
Corp. ........................... 04/03/95 to 04/10/95 5.950 to 6.030 69,939,374
75,790 Delaware Funding Corp. ............ 04/21/95 to 05/26/95 5.980 to 6.000 75,395,373
159,000 New Center Asset Trust............. 04/07/95 to 06/29/95 5.980 to 6.380 158,414,125
20,000 Preferred Receivables Funding
Corp. ........................... 05/17/95 6.070 19,844,878
--------------
323,593,750
--------------
</TABLE>
3
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<TABLE>
<CAPTION>
PaineWebber Cashfund, Inc.
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- ----------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Dates Rates Value
- --------- --------------------- -------------- --------------
COMMERCIAL PAPER--(continued)
<C> <S> <C> <C> <C>
Auto-Truck--4.01%
$ 20,000 Daimler-Benz North America
Corp. ........................... 04/03/95 5.940 % $ 19,993,400
65,000 Ford Motor Credit Corp. ........... 04/04/95 to 04/12/95 6.040 to 6.100 64,913,470
5,000 Paccar Financial Corp. ............ 04/21/95 6.000 4,983,333
59,000 Toyota Motor Credit Corp. ......... 04/03/95 to 12/08/95 6.170 to 6.200 58,333,373
--------------
148,223,576
--------------
Banking--9.13%
30,000 ABN Amro North America Finance
Inc. ............................ 04/21/95 6.000 29,900,000
40,000 B.B.V. Finance (Delaware) Inc. .... 04/06/95 6.000 39,966,667
15,000 Bankers Trust N.Y. Corp. .......... 05/01/95 5.200 14,935,000
70,000 Canadian Imperial Holdings Inc. ... 05/02/95 to 05/03/95 6.000 to 6.020 69,630,956
103,000 Cregem North America Inc. ......... 04/07/95 to 06/22/95 6.050 to 6.100 101,899,482
18,000 MPS U.S. Commercial Paper Corp. ... 04/17/95 6.050 17,951,600
40,000 Nomura Holding America Inc. ....... 04/03/95 6.400 39,985,778
23,700 Nordbanken North America, Inc. .... 04/06/95 6.020 23,680,184
--------------
337,949,667
--------------
Broker/Dealer--7.89%
25,000 CS First Boston Corp. ............. 04/17/95 6.010 24,933,222
112,750 Merrill Lynch & Co, Inc. .......... 04/05/95 to 05/01/95 6.000 to 6.100 112,461,873
155,000 Morgan Stanley Group, Inc. ........ 04/04/95 to 06/20/95 6.000 to 6.060 154,693,834
--------------
292,088,929
--------------
Conglomerate--1.23%
45,951 BTR Dunlop Finance Inc. ........... 04/24/95 to 06/21/95 5.980 to 6.050 45,423,411
--------------
Drugs and Health Care--7.03%
61,000 Lilly (Eli) & Co. ................. 04/18/95 to 06/08/95 6.000 to 6.450 60,573,402
45,000 Miles Inc. ........................ 04/07/95 5.950 44,955,375
140,000 Pfizer Inc. ....................... 04/10/95 to 05/02/95 5.950 to 6.000 139,603,327
15,000 Warner Lambert Co.................. 04/25/95 5.970 14,940,300
--------------
260,072,404
--------------
Electronics--5.27%
76,250 Emerson Electric Co. .............. 04/13/95 to 04/20/95 5.950 76,068,401
25,000 Hewlett-Packard Co. ............... 04/27/95 5.970 24,892,208
38,800 Motorola Credit Corp. ............. 04/10/95 to 04/18/95 5.970 38,726,171
55,725 Motorola Inc. ..................... 04/18/95 to 04/27/95 5.950 to 6.000 55,493,791
--------------
195,180,571
--------------
Energy--5.12%
120,000 Chevron Oil Finance Co. ........... 04/10/95 to 04/25/95 5.950 to 6.000 119,708,078
30,000 Exxon Asset Management............. 04/17/95 5.950 29,920,667
40,000 Exxon Imperial U.S. Inc. .......... 04/05/95 5.950 39,973,556
--------------
189,602,301
--------------
</TABLE>
4
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<TABLE>
<CAPTION>
PaineWebber Cashfund, Inc.
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Dates Rates Value
- --------- --------------------- -------------- --------------
COMMERCIAL PAPER--(continued)
<C> <S> <C> <C> <C>
Finance-Conduit--5.86%
$ 78,250 CommerzBank U.S. Finance........... 04/03/95 to 09/29/95 5.970 to 6.150% $ 77,643,416
20,000 MetLife Funding Corp. ............. 04/19/95 5.950 19,940,500
60,000 SBNSW (Delaware) Inc............... 04/10/95 to 04/20/95 5.990 to 6.040 59,867,869
19,845 Toronto-Dominion Holdings USA
Inc.............................. 09/18/95 6.130 19,270,542
40,000 UBS Finance (Delaware) Inc......... 04/03/95 6.400 39,985,778
--------------
216,708,105
--------------
Finance-Credit Union--1.16%
25,000 Southwest Corporate Federal Credit
Union............................ 04/24/95 6.200 24,900,972
18,000 U.S. Central Credit Union.......... 04/10/95 5.980 17,973,090
--------------
42,874,062
--------------
Finance-Diversified--3.10%
65,000 Associates Corp. of North
America.......................... 04/11/95 to 04/12/95 6.020 64,886,289
50,000 Barclays U.S. Funding Corp. ....... 04/13/95 to 04/19/95 5.980 to 5.990 49,885,308
--------------
114,771,597
--------------
Finance-Independent--2.12%
78,750 National Rural Utility Coop.
Finance.......................... 04/07/95 to 05/04/95 5.970 to 6.000 78,491,375
--------------
Finance-Retail--0.81%
30,000 American Express Credit Corp. ..... 04/12/95 5.970 29,945,275
--------------
Finance-Subsidiary--3.93%
25,000 Deutsche Bank Financial Inc. ...... 04/21/95 5.955 24,917,292
20,000 Dresdner U.S. Finance, Inc. ....... 06/09/95 6.150 19,764,250
32,000 MCA Funding Corp. ................. 08/15/95 to 09/28/95 6.140 to 6.230 31,153,724
50,000 National Australia Funding......... 04/28/95 to 05/23/95 6.000 49,670,833
20,000 Pitney Bowes Credit Corp. ......... 04/18/95 6.000 19,943,333
--------------
145,449,432
--------------
Food and Beverage--3.72%
32,500 Campbell Soup Co................... 04/27/95 to 08/28/95 5.970 to 6.130 32,138,743
30,000 Heinz H. J. Co. ................... 04/21/95 5.970 29,900,500
11,000 Hershey Foods Corp. ............... 04/06/95 5.950 10,990,910
23,300 Nestle Capital Corp. .............. 04/24/95 5.950 23,211,428
42,000 Sara Lee Corp. .................... 04/27/95 to 08/15/95 6.150 to 6.225 41,336,575
--------------
137,578,156
--------------
General Trade--3.58%
133,000 Mitsubishi International........... 04/04/95 to 04/28/95 5.980 to 6.220 132,607,418
--------------
Insurance--0.94%
25,000 American General Corp. ............ 04/26/95 6.000 24,895,833
10,000 St. Paul Companies Inc. ........... 04/24/95 5.970 9,961,858
--------------
34,857,691
--------------
</TABLE>
5
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<TABLE>
<CAPTION>
PaineWebber Cashfund, Inc.
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- ----------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Dates Rates Value
- --------- --------------------- -------------- --------------
COMMERCIAL PAPER--(concluded)
<C> <S> <C> <C> <C>
Insurance-Life--1.24%
$ 46,000 USAA Capital Corp. ................ 04/04/95 to 04/25/95 5.970 to 6.250% $ 45,898,230
--------------
Insurance-Property/Casualty--4.01%
18,894 A.I. Credit Corp. ................. 04/17/95 to 07/06/95 5.950 to 6.600 18,694,480
130,000 A.I.G. Funding Corp. .............. 04/04/95 to 05/04/95 5.930 to 5.980 129,630,384
--------------
148,324,864
--------------
Oil Equipment and Services--1.61%
59,850 Colonial Pipeline.................. 04/10/95 to 05/05/95 5.970 to 6.000 59,610,243
--------------
Pollution Control--0.42%
15,500 WMX Technologies Inc............... 04/20/95 6.000 15,450,917
--------------
Retail Merchandising--0.29%
11,200 Melville Corporation............... 12/07/95 6.200 10,717,778
--------------
Telecommunications--0.68%
15,451 Ameritech Corp. ................... 05/02/95 6.160 15,369,041
10,000 BellSouth Capital Funding Corp. ... 05/03/95 6.050 9,946,222
--------------
25,315,263
--------------
Utilities-Gas--0.64%
23,600 Consolidated Natural Gas Co........ 04/10/95 to 04/13/95 5.950 23,558,399
--------------
Utilities-Telephone--0.40%
15,000 American Telephone & Telegraph..... 04/20/95 5.950 14,952,896
--------------
TOTAL COMMERCIAL PAPER (cost--$3,153,657,513).. 3,153,657,513
--------------
SHORT-TERM CORPORATE OBLIGATIONS--2.57%
Broker/Dealer--1.08%
20,000 Goldman Sachs Group L.P............ 04/20/95 5.000 20,000,000
20,000 Merrill Lynch & Co, Inc............ 10/03/95 6.000 20,000,000
--------------
40,000,000
--------------
Miscellaneous--1.49%
55,000 Beta Finance, Inc. ................ 04/17/95 to 06/22/95 5.375 to 6.360 54,998,986
--------------
TOTAL SHORT-TERM CORPORATE OBLIGATIONS
(cost--$94,998,986)........................... 94,998,986
--------------
FLOATING RATE NOTES*--1.08%
Food and Beverage--0.41%
15,000 Pepsico, Inc....................... 04/04/95 5.945 14,999,876
--------------
Miscellaneous--0.67%
25,000 Beta Finance, Inc.................. 04/04/95 6.020 to 6.170 25,000,000
--------------
TOTAL FLOATING RATE NOTES (cost--$39,999,876).. 39,999,876
--------------
</TABLE>
6
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<TABLE>
<CAPTION>
PaineWebber Cashfund, Inc.
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- ----------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Dates Rates Value
- --------- --------------------- -------------- --------------
REPURCHASE AGREEMENT--1.61%
<C> <S> <C> <C> <C>
$ 59,500 Repurchase Agreement dated 03/31/95
with Lehman Government Securities
Inc., collateralized by
$59,070,000 U.S. Treasury Bonds,
7.625% due 02/15/25; proceeds:
$59,530,246 (cost--$59,500,000).... 04/03/95 6.100 % $ 59,500,000
--------------
TOTAL INVESTMENTS (cost $3,710,109,233 which
approximates cost for federal tax
purposes)--100.25%............................ 3,710,109,233
Liabilities in excess of other
assets--(0.25%).............................. (9,430,914)
--------------
NET ASSETS (applicable to 3,702,595,650 shares
outstanding at $1.00 per share)--100.00%..... $3,700,678,319
--------------
--------------
</TABLE>
- ------------
* Variable rate securities--maturity date reflects earlier of reset date or
maturity date.
Weighted Average Maturity--35 days
See accompanying notes to financial statements.
7
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<TABLE>
PaineWebber Cashfund, Inc.
- -----------------------------------------------------------------------------------------------------------------------
Statement of Operations
For the Year Ended March 31, 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
INTEREST INCOME............................................................. $176,416,085
------------
EXPENSES:
Investment advisory and administration fees............................... 13,839,569
Transfer agency and service fees.......................................... 6,748,353
State registration........................................................ 422,112
Reports and notices to shareholders....................................... 355,129
Custody and accounting.................................................... 285,017
Insurance................................................................. 204,307
Legal and audit........................................................... 148,826
Directors' fees........................................................... 52,500
Other expenses............................................................ 34,354
------------
22,090,167
------------
NET INVESTMENT INCOME....................................................... 154,325,918
------------
NET REALIZED LOSSES FROM INVESTMENT TRANSACTIONS............................ (1,511,404)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................ $152,814,514
------------
------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Statement of Changes in Net Assets
- -----------------------------------------------------------------------------------------------------------------------
FOR THE YEARS ENDED MARCH 31,
--------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income.......................................... $ 154,325,918 $ 95,447,190
Net realized losses from investment transactions............... (1,511,404) (28,064)
-------------- --------------
Net increase in net assets resulting from operations........... 152,814,514 95,419,126
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.......................................... (154,325,918) (95,557,849)
-------------- --------------
NET INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS.......... 265,911,471 (337,880,563)
-------------- --------------
Net increase (decrease) in net assets.......................... 264,400,067 (338,019,286)
NET ASSETS:
Beginning of period............................................ 3,436,278,252 3,774,297,538
-------------- --------------
End of period.................................................. $3,700,678,319 $3,436,278,252
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
PaineWebber Cashfund, Inc.
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Notes to Financial Statements
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ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Cashfund, Inc. (the "Fund"), was organized under the laws of
Maryland on January 20, 1978 and is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended ("1940 Act"), as
an open-end diversified management investment company.
Valuation and Accounting for Investments--Investment securities are valued
at amortized cost which approximates market value. Investment transactions are
recorded on trade date. Interest income is recorded on an accrual basis.
Premiums paid on purchases of portfolio securities are amortized and discounts
are accreted as adjustments to interest income and the identified cost of
securities. Realized gains and losses from security transactions are calculated
using the identified cost method.
The ability of the issuers of the debt securities held by the Fund to meet
their obligations may be affected by economic developments, including those
particular to a specific industry or region.
Repurchase Agreements--The Fund's custodian takes possession of the
collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to ensure that the value,
including accrued interest, is at least equal to the repurchase price. In the
event of default of the obligation to repurchase, the Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings.
Federal Tax Status--The Fund intends to distribute all of its taxable income
and to comply with the other requirements of the Internal Revenue Code
applicable to regulated investment companies. Accordingly, no provision for
federal income taxes is required. In addition, by distributing during each
calendar year substantially all of its net investment income, capital gains and
certain other amounts, if any, the Fund intends not to be subject to federal
excise tax. At March 31, 1995, the Fund had net capital loss carryforwards of
$1,746,060. These loss carryforwards are available as a reduction, to the extent
provided in the regulations, of any future net capital gains and will expire
between March 31, 2000 and March 31, 2003.
Dividends--The Fund declares dividends on a daily basis from net investment
income. Net capital gains, if any, will be distributed at least annually, but
the Fund may make more frequent distributions of such gains if necessary to
maintain its net asset value per share at $1.00 or to avoid income or excise
taxes.
9
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PaineWebber Cashfund, Inc.
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Notes to Financial Statements--(continued)
- --------------------------------------------------------------------------------
INVESTMENT ADVISER AND ADMINISTRATOR
The Fund's board of directors has approved an investment advisory and
administration contract ("Advisory Contract") with PaineWebber Incorporated
("PaineWebber"), under which PaineWebber serves as investment adviser and
administrator of the Fund. In accordance with the Advisory Contract, PaineWebber
receives compensation from the Fund, computed daily and paid on a monthly basis
equivalent to 0.500% per annum of the Fund's first $500 million of average daily
net assets; 0.425% of the next $500 million; 0.390% of the next $500 million;
0.380% of the next $500 million; 0.350% of the next $500 million; 0.345% of the
next $1.0 billion; 0.325% of the next $500 million; 0.315% of the next $500
million; 0.300% of the next $500 million; 0.290% of the next $500 million; and
0.280% of assets in excess of $5.5 billion. At March 31, 1995, the Fund owed
PaineWebber $1,217,496 in investment advisory and administration fees.
In compliance with applicable state securities laws, PaineWebber will
reimburse the Fund for those operating expenses, exclusive of taxes, interest,
brokerage fees, distribution fees and extraordinary expenses, which exceed
applicable limitations in any fiscal year. Currently, the most restrictive
limitation is 2.5% on the first $30 million of average daily net assets, 2.0% of
the next $70 million and 1.5% of any excess over $100 million. For the year
ended March 31, 1995, no reimbursements were required pursuant to the above
limitation.
SUB-ADVISERS
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins") serves as
sub-adviser to the Fund pursuant to Sub-Advisory Contract between PaineWebber
and Mitchell Hutchins. Mitchell Hutchins is an affiliate of PaineWebber. In
accordance with the sub-advisory contract, PaineWebber (not the Fund) pays
Mitchell Hutchins for sub-advisory services provided.
CUSTODY, TRANSFER AGENCY AND SERVICE FEES
PNC Bank, N.A. ("PNC") is custodian of the Fund's assets. PFPC Inc.
("PFPC"), a corporation wholly owned by PNC, is the Fund's transfer agent and
dividend disbursing agent. For custodial and related services PNC receives
compensation based on the Fund's average net assets. For its services as
custodian for the year ended March 31, 1995, PNC earned $285,017 in fees, of
which $121,733 was payable at March 31, 1995. PFPC's transfer agency fees are
based on the number of active shareholder accounts plus out-of-pocket expenses.
For its services as transfer agent for the year ended March 31, 1995, PFPC
earned $4,347,337 in fees and reimbursement of out-of-pocket expenses. As of
March 31, 1995, $1,917,000 of this amount was payable to PFPC.
PaineWebber assists PFPC in performing certain transfer agency services for
the Fund, for which PaineWebber receives monthly compensation at an annual rate
of $4.00 per active PaineWebber shareholder account plus certain out-of-pocket
expenses. For the year ended March 31, 1995,
10
<PAGE>
PaineWebber Cashfund, Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
- --------------------------------------------------------------------------------
PaineWebber earned $2,401,016 in fees and reimbursements of expenses. At March
31, 1995, $206,449 of this amount was payable to PaineWebber.
OTHER LIABILITIES
At March 31, 1995, the amounts payable for investments purchased and
dividends payable aggregated $10,000,000 and $2,218,274 respectively.
CAPITAL SHARE TRANSACTIONS
There are 20 billion shares of $0.001 par value common stock. Transactions
in capital shares, at $1.00 per share, were as follows:
For the Years Ended
March 31,
----------------------------------
1995 1994
--------------- ---------------
Shares sold............................... 11,629,927,695 11,817,682,591
Shares repurchased........................ (11,514,158,936) (12,247,848,435)
Dividends reinvested in additional
Fund shares............................. 150,142,712 92,285,281
--------------- ---------------
Net increase (decrease) in shares
outstanding............................. 265,911,471 (337,880,563)
--------------- ---------------
--------------- ---------------
11
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<TABLE>
<CAPTION>
PaineWebber Cashfund, Inc.
- ----------------------------------------------------------------------------------------------------------
Financial Highlights
- ----------------------------------------------------------------------------------------------------------
Selected data for a share of common stock outstanding throughout each period is presented below:
For the Years Ended March 31,
------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Net investment income........ 0.0433 0.0272 0.0317 0.0509 0.0743
Dividends from net investment
income..................... (0.0433) (0.0272) (0.0317) (0.0509) (0.0743)
---------- ---------- ---------- ---------- ----------
Net asset value:
End of period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total return(1)................ 4.44% 2.75% 3.17% 5.09% 7.43%
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Ratios/Supplemental Data:
Net assets, end of period
(000's).................... $3,700,678 $3,436,278 $3,774,298 $4,234,968 $5,122,338
Ratio of expenses to average
net assets................. 0.62% 0.61% 0.57% 0.56% 0.53%
Ratio of net investment
income to average net
assets................... 4.35% 2.73% 3.17% 5.09% 7.43%
</TABLE>
- -------------------
(1) Total 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 date and a sale at net asset value on the last day of each
period reported.
12
<PAGE>
PaineWebber Cashfund, Inc.
- --------------------------------------------------------------------------------
Report of Ernst & Young LLP, Independent Auditors
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders
PaineWebber Cashfund, Inc.
We have audited the accompanying statement of net assets of PaineWebber
Cashfund, Inc. as of March 31, 1995, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We have conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at March
31, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
PaineWebber Cashfund, Inc. at March 31, 1995, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the five years
in the period then ended in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
New York, New York
May 19, 1995
13
<PAGE>
PaineWebber Cashfund, Inc.
- --------------------------------------------------------------------------------
Tax Information
- --------------------------------------------------------------------------------
We are required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within 60 days of the Fund's fiscal year end (March 31,
1995) as to the federal tax status of distributions received by shareholders
during such fiscal year. Accordingly, we are advising you that all distributions
paid during the fiscal year were derived from net investment income and are
taxable as ordinary income. No portion of these distributions qualifies for the
dividends received deduction available to corporate shareholders.
Dividends received by tax-exempt recipients (e.g., IRAs and Keoghs) need not
be reported as taxable income. Some retirement trusts (e.g., corporate, Keogh
and 403(b)(7) plans) may need this information for their annual information
reporting.
Because the Fund's fiscal year is not the calendar year, another
notification will be sent in respect of calendar 1995. The second notification,
which will reflect the amount to be used by calendar year taxpayers on their
federal income tax returns, will be made in conjunction with Form 1099 DIV and
will be mailed January 1996. Shareholders are advised to consult their own tax
advisers with respect to the tax consequences of their investment in the Fund.
14
<PAGE>
<TABLE>
<S> <C>
----------------------------
PAINEWEBBER AND MITCHELL DIRECTORS
HUTCHINS/KIDDER, PEABODY E. Garrett Bewkes, Jr., Chairman
MUTUAL FUNDS Meyer Feldberg
George W. Gowen
PAINEWEBBER OFFERS A FAMILY OF 35 Joseph J. Grano, Jr.
MUTUAL FUNDS WHICH ENCOMPASS A DIVER- Frederic V. Malek
SIFIED RANGE OF INVESTMENT GOALS. INVES- Frank P.L. Minard
TORS MAY EXCHANGE THEIR FUND SHARES Judith Davidson Moyers
WITH OTHER FUNDS WITHIN THE FAMILY. Thomas F. Murray
INCOME FUNDS
. MH/KP ADJUSTABLE RATE GOVERNMENT FUND ----------------------------
. MH/KP GLOBAL INCOME FUND PRINCIPAL OFFICERS
. MH/KP GOVERNMENT INCOME FUND Margo N. Alexander
. MH/KP INTERMEDIATE FIXED INCOME FUND President
. PW GLOBAL INCOME FUND Victoria E. Schonfeld
. PW HIGH INCOME FUND Vice President
. PW INVESTMENT GRADE INCOME FUND Dianne E. O'Donnell
. PW SHORT-TERM U.S. GOVERNMENT INCOME FUND Vice President and Secretary
. PW SHORT-TERM U.S. GOVERNMENT INCOME FUND Julian F. Sluyters
FOR CREDIT UNIONS Vice President and Treasurer
. PW STRATEGIC INCOME FUND
. PW U.S. GOVERNMENT INCOME FUND
TAX-FREE INCOME FUNDS ----------------------------
. MH/KP MUNICIPAL BOND FUND ADMINISTRATOR AND
. PW CALIFORNIA TAX-FREE INCOME FUND DISTRIBUTOR
. PW MUNICIPAL HIGH INCOME FUND PaineWebber Incorporated
. PW NATIONAL TAX-FREE INCOME FUND 1285 Avenue of the Americas
. PW NEW YORK TAX-FREE INCOME FUND New York, New York 10019
GROWTH FUNDS
. MH/KP EMERGING MARKETS EQUITY FUND ----------------------------
. MH/KP GLOBAL EQUITY FUND INVESTMENT ADVISERS
. MH/KP SMALL CAP GROWTH FUND PaineWebber Incorporated
. PW ATLAS GLOBAL GROWTH FUND 1285 Avenue of the Americas
. PW BLUE CHIP GROWTH FUND New York, New York 10019
. PW CAPITAL APPRECIATION FUND
. PW COMMUNICATIONS & TECHNOLOGY GROWTH FUND Mitchell Hutchins Asset Management Inc.
. PW EUROPE GROWTH FUND 1285 Avenue of the Americas
. PW GROWTH FUND New York, New York 10019
. PW REGIONAL FINANCIAL GROWTH FUND
. PW SMALL CAP VALUE FUND
------------------------------------
GROWTH AND INCOME FUNDS This report is not to be
. MH/KP ASSET ALLOCATION FUND used in connection with the
. MH/KP EQUITY INCOME FUND offering of shares of the
. PW ASSET ALLOCATION FUND Fund unless accompanied or
. PW GROWTH AND INCOME FUND preceded by an effective prospectus.
. PW GLOBAL ENERGY FUND
. PW GLOBAL GROWTH AND INCOME FUND Recycled Paper
. PW UTILITY INCOME FUND
-------------
(C)1995 PaineWebber Incorporated
</TABLE>
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 THE PROSPECTUS CAREFULLY BEFORE INVESTING.
