<PAGE>
As filed with the Securities and Exchange Commission on July 31, 1996
1933 Act Registration No. 2-60655
1940 Act Registration No. 811-2802
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ________ [_____]
Post-Effective Amendment No. 35 [ X ]
REGISTRATION STATEMENT UNDER INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 31
PAINEWEBBER CASHFUND, INC.
(Exact name of registrant as specified in charter)
1285 Avenue of the Americas
New York, New York 10019
(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 713-2000
DIANNE E. O'DONNELL, Esq.
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
(Name and address of agent for service)
Copies to:
ROBERT A. WITTIE, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
Telephone: (202) 778-9000
It is proposed that this filing will become effective:
Immediately upon filing pursuant to Rule 485(b)
X On August 1, 1996 pursuant to Rule 485(b)
60 days after filing pursuant to Rule 485(a)(i)
On pursuant to Rule 485(a)(i)
75 days after filing pursuant to Rule 485(a)(ii)
On pursuant to Rule 485(a)(ii)
<PAGE>
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and filed the notice required by such
Rule for its most recent fiscal year on May 17, 1996.
<PAGE>
PaineWebber Cashfund, Inc.
Contents of Registration Statement
This registration statement consists of the following papers and
documents.
Cover Sheet
Contents of Registration Statement
Cross Reference Sheets
Part A - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
<PAGE>
PaineWebber Cashfund, Inc.
Form N-1A Cross Reference Sheet
Part A Item No.
and Caption Prospectus Caption
--------------- ------------------
1 Cover Page
2 Highlights
3 Financial Highlights; Performance Information
4 Highlights; Investment Objective and
Policies; General Information
5 Management; General Information
6 Cover Page; Dividends and Taxes; General
Information
7 Purchases; Management; Valuation of Shares;
General Information
8 Redemptions
9 Not Applicable
Part B Item No. Statement of Additional
and Caption Information Caption
--------------- ------------------------
10 Cover Page
11 Table of Contents
12 Not Applicable
13 Investment Policies and Restrictions
14 Directors and Officers
15 Directors and Officers
16 Investment Advisory Services
17 Portfolio Transactions
18 General Information
19 Valuation of Shares; Additional Information
Regarding Redemptions
20 Dividends and Taxes
21 Investment Advisory Services
22 Calculation of Yield
23 Financial Statements
Part C
Information required to be included in Part C is set forth
under the appropriate item, so numbered, in Part C of this
Registration Statement.
<PAGE>
- --------------------------------------------------------------------------------
PAINEWEBBER AUGUST 1, 1996
CASHFUND, INC.
1285 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10019
A PROFESSIONALLY MANAGED MONEY MARKET FUND, INVESTING IN HIGH QUALITY MONEY
MARKET INSTRUMENTS, DESIGNED TO PROVIDE:
/X/ Current Income
/X/ Stability of Principal
/X/ 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, 1996 (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
Highlights ................................................ 2
Financial Highlights ...................................... 4
Investment Objective and Policies ......................... 5
Purchases ................................................. 8
Redemptions ............................................... 9
Valuation of Shares ....................................... 12
Dividends and Taxes ....................................... 12
Management ................................................ 13
Performance Information ................................... 14
General Information ....................................... 14
<PAGE>
PAINEWEBBER CASHFUND, INC.
HIGHLIGHTS
See elsewhere in the Prospectus for more information on the topics
discussed in these highlights.
<TABLE>
<S> <C>
The Fund: PaineWebber Cashfund, Inc. ('Fund') is a professionally
managed, diversified no-load money market fund.
Investment Objective Current income, stability of principal and high
and Policies: liquidity; invests primarily in high quality money market
instruments.
Total Net Assets: Over $5.1 billion as of June 30, 1996.
Distributor and
Investment Adviser: PaineWebber Incorporated ('PaineWebber'). See
'Management.'
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: $1,000 for initial purchase.
Automatic Investment $500 daily investment, $1 or more on the next to last
Sweep: Business Day of each month.
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
Price: $1.00 per share.
</TABLE>
2
<PAGE>
WHO SHOULD INVEST. The Fund is designed for investors seeking safety,
liquidity 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
investment 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
assist 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
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C>
Management fees........................... 0.37%
12b-1 fees................................ None
Other expenses............................ 0.23%
-----
Total Operating Expenses.................. 0.60%
-----
-----
</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 $19 $33 $75
</TABLE>
This Example assumes that all dividends are reinvested and that the
percentage amounts listed under Annual Fund Operating Expenses remain the same
in the years shown. The above tables and the assumption in the Example of a 5%
annual return are required by regulations of the 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
EXPENSES, 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 variable expenses,
such as transfer agency costs.
3
<PAGE>
PaineWebber
<TABLE>
<S> <C>
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, 1996, 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, 1996, have
been audited by Ernst & Young LLP, independent auditors,
whose report thereon is included in the Annual Report to
Shareholders, which may be obtained without charge by
calling 1-800-647-1568. The information appearing below
for each of the five years in the period ended March 31,
1991 also has been audited by Ernst & Young LLP, whose
reports thereon were unqualified.
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year...................... $1.00 $1.00 $1.00 $1.00 $1.00
Net investment income................................... .0523 0.0433 0.0272 0.0317 0.0509
Dividends from net investment income.................... (.0523) (0.0433) (0.0272) (0.0317) (0.0509)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......................... $1.00 $1.00 $1.00 $1.00 $1.00
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (1)............................. 5.36% 4.44% 2.75% 3.17% 5.09%
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of period (000's)....................... $5,308,558 $3,700,678 $3,436,278 $3,774,298 $4,234,968
Ratios of expenses to average net assets................ 0.60% 0.62% 0.61% 0.57% 0.56%
Ratios of net investment income to average net assets... 5.24% 4.35% 2.73% 3.17% 5.09%
<CAPTION>
1991 1990 1989 1988 1987
---------- ---------- ---------- ---------- ----------
<S> <<C> <C> <C> <C> <C>
Net asset value, beginning of year...................... $1.00 $1.00 $1.00 $1.00 $1.00
Net investment income................................... 0.0743 0.0846 0.0761 0.0638 0.0581
Dividends from net investment income.................... (0.0743) (0.0846) (0.0761) (0.0638) (0.0581)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......................... $1.00 $1.00 $1.00 $1.00 $1.00
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total return (1)........................................ 7.43% 8.46% 7.61% 6.38% 5.81%
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of period (000's)....................... $5,122,338 $5,236,560 $4,416,667 $4,071,212 $4,251,408
Ratio of expenses to average net assets................. 0.53% 0.54% 0.57% 0.58% 0.56%
Ratio of net investment income to average net assets.... 7.43% 8.46% 7.61% 6.38% 5.81%
</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.
4
<PAGE>
Cashfund
<TABLE>
<S> <C>
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 quality money market
instruments having or deemed to have remaining maturities
of 13 months or less. These instruments include U.S.
government securities, obligations of U.S. banks,
commercial paper and other short-term corporate
obligations, variable and floating rate securities and
participation interests or repurchase agreements
involving any of the foregoing. The Fund maintains a
dollar-weighted average portfolio maturity of 90 days or
less.
The Fund invests The Fund may invest in obligations (including
exclusively in high certificates of deposit, bankers' acceptances and similar
quality money market obligations) of U.S. banks having total assets in excess
instruments having of $1.5 billion at the time of purchase. The Fund may
or deemed to have invest in non-negotiable time deposits of U.S. banks,
remaining maturities savings associations and similar depository institutions
of 13 months or having total assets in excess of $1.5 billion at the time
less. of purchase only if the time deposits have maturities of
seven days or less. The Fund also may invest in
interest-bearing savings deposits in U.S. banks and
savings associations having total assets of $1.5 billion
or less provided that the principal amount of each
deposit is fully insured by the Federal Deposit Insurance
Corporation and provided that the aggregate principal
amount of such deposits (plus interest earned) does not
exceed 5% 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 category 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 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
</TABLE>
5
<PAGE>
PaineWebber
<TABLE>
<S> <C>
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
In periods of rates the Fund's yield will tend to be somewhat higher
declining interest than prevailing market rates, and in periods of rising
rates, the Fund's interest rates the opposite will be true. Also, when
yield will tend to interest rates are falling, net cash inflows from the
be somewhat higher continuous sale of Fund shares are likely to be invested
than prevailing in portfolio instruments producing lower yields than the
market rates, and in balance of the Fund's portfolio, thereby reducing the
periods of rising Fund's yield. In periods of rising interest rates, the
rates, lower. 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 Government National Mortgage
Association certificates), securities supported primarily
or solely by the creditworthiness of the issuer (such as
securities of the Resolution Funding Corporation and the
Tennessee Valley Authority) and securities that are
supported primarily or solely by specific pools of assets
and the creditworthiness of a U.S. government-related
issuer (such as mortgage-backed securities issued by the
Federal Home Loan Mortgage Corporation).
The Fund may also acquire custodial receipts that
evidence ownership of future interest payments, principal
payments or both that have been 'stripped' from certain
U.S. Treasury 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
</TABLE>
6
<PAGE>
Cashfund
<TABLE>
<S> <C>
individually numbered and separately issued by the U.S.
Treasury. The staff of the SEC currently takes the
position that interests in 'stripped' U.S. government
securities that are not part of the STRIPS program are
not U.S. government securities.
VARIABLE AND FLOATING RATE SECURITIES. The Fund may
purchase variable and floating rate securities with
remaining maturities in excess 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 be
backed by a letter of credit or other liquidity support
arrangement provided by a bank or other financial
institution whose credit standing 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 simultaneously
commits to resell the securities to that bank or dealer
at an agreed-upon date or upon demand and at a 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.
</TABLE>
7
<PAGE>
PaineWebber
<TABLE>
<S> <C>
LENDING OF PORTFOLIO SECURITIES. The Fund is authorized
to lend up to 33 1/3% of the total value of its portfolio
securities to broker-dealers or institutional investors
that Mitchell Hutchins deems qualified. Lending
securities enables the Fund to earn additional income but
could result in a loss or delay in recovering securities.
OTHER INFORMATION. The Fund may borrow money for
temporary purposes from banks or, with respect to up to
5% of its net assets, through reverse repurchase
agreements, but aggregate borrowings may not exceed 10%
of its total assets.
The Fund may 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
The minimum initial GENERAL. Shares of the Fund are available through
investment is PaineWebber and its correspondent firms. Investors may
$1,000. Free credit contact a local PaineWebber office to open an account.
cash balances of The minimum initial investment in the Fund is $1,000, and
$500 or more are the minimum for additional purchases is $500, except as
invested daily and described below. All free credit cash balances in an
those of $1 or more investor's PaineWebber account (including proceeds from
are invested at each securities sold) of $500 or more are automatically
month end. invested or 'swept' into shares of the Fund daily for
settlement on the next Business Day, and all remaining
free credit 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 each month.
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 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. A 'Business
Day' is any day on which the Boston offices of the Fund's
custodian, State Street Bank and Trust Company
</TABLE>
8
<PAGE>
Cashfund
<TABLE>
<S> <C>
('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.
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.
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.
Fund shares may be PURCHASES BY WIRE. Investors may also purchase Fund
purchased by wire, shares by placing an order through their PaineWebber
check or with funds Investment Executives or correspondent firms and
held at PaineWebber. instructing their banks to transfer federal funds by wire
to: The 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 investor'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.
Redemptions
Shareholders may Shareholders may redeem any number of shares from their
redeem any number of Fund accounts by wire, check, telephone or mail. In
shares from their addition, unless shareholders otherwise instruct their
Fund accounts by PaineWebber Investment Executives, any securities
wire, check, purchase or other debit in their PaineWebber brokerage
telephone or mail. accounts will be paid for automatically on settlement
date by redeeming Fund shares held in such accounts.
</TABLE>
9
<PAGE>
PaineWebber
<TABLE>
<S> <C>
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,
Shareholders who are checks returned 'nonsufficient funds' and checks returned
interested in the because they are written for less than $500; these
check redemption charges will be paid by redeeming automatically an
service should appropriate number of Fund shares. PaineWebber reserves
obtain the necessary the right to modify or terminate the checkwriting service
forms from their at any time or to impose a service charge in connection
PaineWebber with it.
Investment Shareholders who are interested in the check redemption
Executives or service should obtain the necessary forms from their
correspondent firms. PaineWebber Investment Executives or correspondent firms.
Checks may be Checkwriting generally is not available to persons who
written in amounts hold Fund shares through any sub-account or tax-deferred
of $500 or more. retirement plan account.
</TABLE>
10
<PAGE>
Cashfund
<TABLE>
<S> <C>
REDEMPTIONS BY TELEPHONE OR MAIL. Shareholders may
submit redemption requests in person or by telephone or
mail to their PaineWebber Investment Executives or
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 request 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 registered, (b) a guarantee
of the signature of each registered owner by an eligible
institution acceptable to the Transfer Agent and in
accordance with SEC rules, such as a commercial bank,
trust company or member of a recognized stock exchange
and (c) other supporting legal 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. Because the 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
Shareholders should of shares which were purchased recently, the Fund may
maintain minimum delay payment until it is assured that it has received
balances of at least good payment for the purchase of the shares. In the case
$500. of purchases by check, this can take up to 15 days.
</TABLE>
11
<PAGE>
PaineWebber
<TABLE>
<S> <C>
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
carried at their face value. Other assets are valued at
fair value as determined in good faith by or under the
direction of the Fund's board of directors.
Dividends and Taxes
Dividends accrue to DIVIDENDS. Each Business Day, the Fund declares as
shareholder accounts dividends all of its net investment income. Shares begin
daily and are earning dividends on the day of purchase; dividends are
automatically paid accrued to shareholder accounts daily and are
in additional Fund automatically paid in additional Fund shares monthly.
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 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 its
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.
</TABLE>
12
<PAGE>
Cashfund
<TABLE>
<S> <C>
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
also is required from dividends payable to 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.
Management
The Fund's directors The Fund's board of directors, as part of its overall
oversee various management responsibility, oversees various organizations
organizations responsible for the Fund's day-to-day management.
responsible for the PaineWebber, the Fund's investment adviser and
Fund's day-to day administrator, provides a continuous investment program
management. 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.
PaineWebber receives a monthly fee for these services
and, for the fiscal year ended March 31, 1996, the Fund's
effective advisory and administration fee paid to
PaineWebber was equal to 0.37% 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, 1996, the Fund's ratio of expenses as a
percentage of average net assets was 0.60%.
PaineWebber and Mitchell Hutchins are located at 1285
Avenue of the Americas, New York, New York 10019. Michell
Hutchins is a wholly
</TABLE>
13
<PAGE>
PaineWebber
<TABLE>
<S> <C>
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, 1996,
PaineWebber or Mitchell Hutchins was investment adviser
to 31 registered investment companies with 65 separate
portfolios and aggregate assets exceeding $30.0 billion.
Mitchell Hutchins investment personnel may engage in
securities transactions for their own accounts pursuant
to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
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 reinvested. 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).
The Fund may The performance of shareholder accounts with small
advertise its balances will differ from the quoted performance because
'yield' and daily income for each shareholder account is rounded to
'effective yield.' the nearest whole penny. Accordingly, very small
The 'effective shareholder accounts (approximately $33 or lower at
yield' assumes current interest
dividends are rates) which generate less than 1/2cents per day of
reinvested. income will earn no
dividends.
General Information
The Fund is registered with the SEC as a diversified,
open-end management investment company and was
incorporated in Maryland on January 20, 1978. The Fund
has an authorized capitalization of 20 billion shares of
$0.001 par value common stock. Each share has one
</TABLE>
14
<PAGE>
Cashfund
<TABLE>
<S> <C>
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.
To avoid additional CERTIFICATES. To avoid additional operating expense and
expense, share for investor convenience, share certificates are not
certificates are not issued. Ownership of Fund shares is recorded on a stock
issued. register by the Transfer Agent, and shareholders have the
same rights of ownership with respect to such shares as
if certificates had been issued.
CUSTODIAN AND TRANSFER AGENT. State Street Bank and
Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171, is custodian of the Fund's assets.
PFPC, Inc., a subsidiary of PNC Bank, National
Association, whose principal business address is 400
Bellevue Parkway, Wilmington, Delaware 19809, is the
Fund's transfer and dividend disbursing agent.
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 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.
</TABLE>
15
<PAGE>
- --------------------------------------------------------------------------------
PAINEWEBBER
CASHFUND, INC.
Prospectus
August 1, 1996
- --------------------------------------------------------------------------------
o Current Income
o Stability of Principal
o High Liquidity
o Professional Management
o Dividend Reinvestment
o Checkwriting Privileges
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.
(Copyright) 1996 PaineWebber Incorporated
<PAGE>
PAINEWEBBER CASHFUND, INC.
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
STATEMENT OF ADDITIONAL INFORMATION
PaineWebber Cashfund, Inc. ('Fund') is a professionally managed, no load
money market fund designed to provide investors with current income, stability
of principal and high liquidity. The Fund's investment adviser, administrator
and distributor is PaineWebber Incorporated ('PaineWebber'); its sub-adviser is
Mitchell Hutchins Asset Management Inc. ('Mitchell Hutchins'), a wholly owned
subsidiary of PaineWebber. Mitchell Hutchins also serves as the Fund's
sub-administrator. This Statement of Additional Information is not a prospectus
and should be read only in conjunction with the Fund's current Prospectus, dated
August 1, 1996. A copy of the Prospectus may be obtained by contacting any
PaineWebber Investment Executive or correspondent firm or by calling toll-free
1-800-441-7756. This Statement of Additional Information is dated August 1,
1996.
INVESTMENT POLICIES AND RESTRICTIONS
The following supplements the information contained in the Prospectus
concerning the Fund's investment policies and limitations.
YIELDS AND RATINGS OF MONEY MARKET INSTRUMENTS. The yields on the money
market instruments in which the Fund invests (such as commercial paper and bank
obligations) are dependent on a variety of factors, including general money
market conditions, conditions in the particular market for the obligation, the
financial condition of the issuer, the size of the offering, the maturity of the
obligation and the ratings of the issue. The ratings of nationally recognized
statistical rating organizations ('NRSROs') represent their opinions as to the
quality of the obligations they undertake to rate. Ratings, however, are general
and are not absolute standards of quality. Consequently, obligations with the
same rating, maturity and interest rate may have different market prices.
Subsequent to its purchase by the Fund, an issue may cease to be rated or its
rating may be reduced. In the event that a security in the Fund's portfolio
ceases to be a 'First Tier Security,' as defined in the Prospectus, or Mitchell
Hutchins becomes aware that a security has received a rating below the second
highest rating by any NRSRO, Mitchell Hutchins or the Fund's board of directors
will consider whether the Fund should continue to hold the obligation. A First
Tier Security rated in the highest short-term rating category by a single NRSRO
at the time of purchase that subsequently receives a rating below the highest
rating category from a different NRSRO will continue to be considered a First
Tier Security.
REPURCHASE AGREEMENTS. As stated in the Prospectus, the Fund may enter
into repurchase agreements with respect to any security in which it is
authorized to invest. Securities subject to repurchase agreements may have
maturities in excess of 13 months. The Fund maintains custody of the underlying
securities prior to their repurchase; thus, the obligation of the bank or
securities dealer to pay the repurchase price on the date agreed to is, in
effect, secured by such securities. If the value of these securities is less
than the repurchase price, plus any agreed-upon additional amount, the other
party to the agreement must provide additional collateral so that at all times
the collateral is at least equal to the repurchase price, plus any agreed-upon
additional amount. The difference between the total amount to be received upon
repurchase of the securities and the price that was paid by the Fund upon
acquisition is accrued as interest and included in the Fund's net investment
income.
<PAGE>
Repurchase agreements carry certain risks not associated with direct
investments in securities. 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. Mitchell Hutchins will review and monitor the
creditworthiness of those institutions under the board's general supervision.
REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse repurchase
agreements up to an aggregate value of not more than 5% of its net assets. Such
agreements involve the sale of securities held by the Fund subject to its
agreement to repurchase the securities at an agreed-upon date and price
reflecting a market rate of interest. Such agreements are considered to be
borrowings and may be entered into only for temporary or emergency purposes.
While a reverse repurchase agreement is outstanding, the Fund will maintain with
its custodian in a segregated account cash or liquid securities, marked to
market daily, in an amount at least equal to the Fund's obligation under the
reverse repurchase agreement.
ILLIQUID SECURITIES. The Fund will not invest more than 10% of its net
assets in illiquid securities. The term 'illiquid securities' for this purpose
means securities that cannot be disposed of within seven days in the ordinary
course of business at approximately the amount at which the Fund has valued the
securities and includes, among other things, repurchase agreements maturing in
more than seven days and restricted securities other than those Mitchell
Hutchins has determined to be liquid pursuant to guidelines established by the
Fund's board of directors.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933 ('1933 Act'), including private
placements, repurchase agreements, commercial paper, foreign securities and
corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a 'safe harbor' from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
have developed as a result of Rule 144A, providing both readily ascertainable
values for restricted securities and the ability to liquidate an investment to
satisfy share redemption orders. Such markets include automated systems for the
trading, clearance and settlement of unregistered securities, such as the PORTAL
System sponsored by the National Association of Securities Dealers, Inc.
('NASD'). An insufficient number of qualified institutional buyers interested in
purchasing Rule 144A-eligible restricted securities held by the Fund, however,
could affect adversely the marketability of such portfolio securities, and the
Fund might be unable to dispose of such securities promptly or at favorable
prices.
The Fund's board of directors has delegated the function of making
day-to-day determinations of liquidity to Mitchell Hutchins, pursuant to
guidelines approved by the board. Mitchell Hutchins takes into account a
number of factors in reaching liquidity decisions, including (1) the
frequency of trades for the security, (2) the number of dealers that
make quotes for the security, (3) the number of dealers that have
undertaken to make a
2
<PAGE>
market in the security, (4) the number of other potential purchasers and (5) the
nature of the security and how trading is effected (e.g., the time needed to
sell the security, how offers are solicited and the mechanics of transfer).
Mitchell Hutchins monitors the liquidity of restricted securities in the Fund's
portfolio and reports periodically on such decisions to the board of directors.
LENDING OF PORTFOLIO SECURITIES. As indicated in the Prospectus, the Fund
is authorized to lend up to 33 1/3% of its portfolio securities to
broker-dealers or institutional investors that Mitchell Hutchins deems
qualified, but only when the borrower maintains acceptable collateral with the
Fund's custodian, marked to market daily, in an amount at least equal to the
market value of the securities loaned, plus accrued interest and dividends.
Acceptable collateral is limited to cash, U.S. government securities and
irrevocable letters of credit that meet certain guidelines established by
Mitchell Hutchins. In determining whether to lend securities to a particular
broker-dealer or institutional investor, Mitchell Hutchins will consider, and
during the period of the loan will monitor, all relevant facts and
circumstances, including the creditworthiness of the borrower. The Fund will
retain authority to terminate any loan at any time. The Fund may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or money market
instruments held as collateral to the borrower or placing broker. The Fund will
receive reasonable interest on the loan or a flat fee from the borrower and
amounts equivalent to any dividends, interest or other distributions on the
securities loaned. The Fund will regain record ownership of loaned securities to
exercise beneficial rights, such as voting and subscription rights and rights to
dividends, interest or other distributions, when regaining such rights is
considered to be in the Fund's interest.
INVESTMENT LIMITATIONS. The Fund will not:
(1) purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of
that issuer or the Fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to
this limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities or to securities issued by other
investment companies.
The following interpretation applies to, but is not a part of,
this fundamental restriction: Mortgage- and asset-backed securites
will not be considered to have been issued by the same issuer by
reason of the securities having the same sponsor, and mortgage-
and asset-backed securities issued by a finance or other special
purpose subsidiary that are not guaranteed by the parent company
will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry, except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities or to certificates of
deposit and bankers' acceptances of domestic branches of U.S.
banks.
The following interpretation applies to, but is not a part of,
this fundamental restriction: With respect to this limitation,
domestic and foreign banking will be considered to be different
industries.
3
<PAGE>
(3) issue senior securities or borrow money, except as permitted under
the Investment Company Act of 1940, as amended ('1940 Act'), and
then not in excess of 33 1/3% of the Fund's total assets
(including the amount of the senior securities issued but reduced
by any liabilities not constituting senior securities) at the time
of the issuance or borrowing, except that the Fund may borrow up
to an additional 5% of its total assets (not including the amount
borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interests
therein and investments in government obligations, commercial
paper, certificates of deposit, bankers' acceptances or similar
instruments will not be considered the making of a loan.
(5) engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with
its disposition of portfolio securities.
(6) purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments
in mortgage-backed securities, mortgage participations or other
instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights
under agreements relating to such securities, including the right
to enforce security interests and to hold real estate acquired by
reason of such enforcement until that real estate can be
liquidated in an orderly manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the Fund may
purchase, sell or enter into financial options and futures,
forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
The foregoing fundamental investment limitations cannot be changed without
the affirmative vote of the lesser of (a) more than 50% of the outstanding
shares of the Fund or (b) 67% or more of the shares present at a shareholders'
meeting if more than 50% of the outstanding shares are represented at the
meeting in person or by proxy. If a percentage restriction is adhered to at the
time of an investment or transaction, a later increase or decrease in percentage
resulting from changing values of portfolio securities or amount of total assets
will not be considered a violation of any of the foregoing limitations.
4
<PAGE>
The following non-fundamental investment restrictions may be changed by
vote of the Fund's board of directors without shareholder approval:
The Fund may not:
(1) purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that
the Fund may make margin deposits in connection with its use of
financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or
derivative instruments;
(2) engage in short sales of securities or maintain a short position,
except that the Fund may (a) sell short 'against the box' and (b)
maintain short positions in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative
instruments;
(3) invest in oil, gas or mineral exploration or development programs
or leases, except that investments in securities of issuers that
invest in such programs or leases and investments in asset-backed
securities supported by receivables generated from such programs
or leases are not subject to this prohibition;
(4) purchase securities of other investment companies, except to the
extent permitted by the 1940 Act and except that this limitation
does not apply to securities received or acquired as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger;
(5) invest in real estate limited partnerships; or
(6) purchase portfolio securities while borrowings, including reverse
repurchase agreements, exceed 5% of the Fund's assets.
DIRECTORS AND OFFICERS
The directors and executive officers of the Fund, their ages, business
addresses and principal occupations during the past five years are:
<TABLE>
<CAPTION>
POSITION BUSINESS EXPERIENCE;
NAME AND ADDRESS*; AGE WITH THE FUND OTHER DIRECTORSHIPS
- ----------------------------- ------------------ --------------------------------------------------------------------------------
<S> <C> <C>
Margo N. Alexander**; 49 Director and Mrs. Alexander is president, chief executive officer and a director of Mitchell
President Hutchins (since January 1995) and also an executive vice president and
director of PaineWebber. Mrs. Alexander is a president and a director or
trustee of 30 investment companies for which Mitchell Hutchins or PaineWebber
serves as investment adviser.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
POSITION BUSINESS EXPERIENCE;
NAME AND ADDRESS*; AGE WITH THE FUND OTHER DIRECTORSHIPS
- ----------------------------- ------------------ --------------------------------------------------------------------------------
<S> <C> <C>
Richard Q. Armstrong; 61 Director Mr. Armstrong is chairman and principal of RQA Enterprises (management
78 West Brother Drive consulting firm) (since April 1991 and principal occupation since March 1995).
Greenwich, CT 06830 Mr. Armstrong is also a director of Hi Lo Automotive, Inc. He was chairman of
the board, chief executive officer and co-owner of Adirondack Beverages
(producer and distributor of soft drinks and sparkling/still waters) (October
1993-March 1995). Mr. Armstrong was a partner of the New England Consulting
Group (management consulting firm) (December 1992-September 1993). He was
managing director of LVMH U.S. Corporation (U.S. subsidiary of the French
luxury goods conglomerate, Louis Vuitton Moet Hennessey Corporation)
(1987-1991) and chairman of its wine and spirits subsidiary, Schieffelin &
Somerset Company (1987-1991). Mr. Armstrong is a director or trustee of 29
investment companies for which Mitchell Hutchins or PaineWebber serves as
investment adviser.
E. Garrett Bewkes, Jr.**; 69 Director and Mr. Bewkes is a director of Paine Webber Group Inc. ('PW Group') (holding
Chairman of the company of PaineWebber and Mitchell Hutchins). Prior to December 1995, he was
Board of Directors a consultant to PW Group. Prior to 1988, he was chairman of the board,
president and chief executive officer of American Bakeries Company. Mr. Bewkes
is also a director of Interstate Bakeries Corporation and NaPro
Bio-Therapeutics, Inc. Mr. Bewkes is a director or trustee of 30 investment
companies for which Mitchell Hutchins or PaineWebber serves as investment
adviser.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
POSITION BUSINESS EXPERIENCE;
NAME AND ADDRESS*; AGE WITH THE FUND OTHER DIRECTORSHIPS
- ----------------------------- ------------------ --------------------------------------------------------------------------------
<S> <C> <C>
Richard Burt; 49 Director Mr. Burt is chairman of International Equity Partners (international investments
1101 Connecticut Avenue, N.W. and consulting firm) (since March 1994) and a partner of McKinsey & Company
Washington, D.C. 20036 (management consulting firm) (since 1991). He is also a director of American
Publishing Company. He was the chief negotiator in the Strategic Arms
Reduction Talks with the former Soviet Union (1989-1991) and the U.S.
Ambassador to the Federal Republic of Germany (1985-1989). Mr. Burt is a
director or trustee of 29 investment companies for which Mitchell Hutchins or
PaineWebber serves as investment adviser.
Mary C. Farrell**; 46 Director Ms. Farrell is a managing director, senior investment strategist, and member of
the Investment Policy Committee of PaineWebber. Ms. Farrell joined PaineWebber
in 1982. She is a member of the Financial Women's Association and Women's
Economic Roundtable, and is employed as a regular panelist on Wall $treet Week
with Louis Rukeyser. She also serves on the Board of Overseers of New York
University's Stern School of Business. Ms. Farrell is a director or trustee of
29 investment companies for which Mitchell Hutchins or PaineWebber serves as
investment adviser.
Meyer Feldberg; 54 Director Mr. Feldberg is Dean and Professor of Management of the Graduate School of
Columbia University Business, Columbia University. Prior to 1989, he was president of the Illinois
101 Uris Hall Institute of Technology. Dean Feldberg is also a director of AMSCO
New York, New York 10027 International Inc. (medical instruments and supplies), Federated Department
Stores, Inc. and New World Communications Group Incorporated. Dean Feldberg is
a director or trustee of 29 other investment companies for which Mitchell
Hutchins or PaineWebber serves as investment adviser.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
POSITION BUSINESS EXPERIENCE;
NAME AND ADDRESS*; AGE WITH THE FUND OTHER DIRECTORSHIPS
- ----------------------------- ------------------ --------------------------------------------------------------------------------
<S> <C> <C>
George W. Gowen; 66 Director Mr. Gowen is a partner in the law firm of Dunnington, Bartholow & Miller. Prior
666 Third Avenue to May 1994, he was a partner in the law firm of Fryer, Ross & Gowen. Mr.
New York, New York 10017 Gowen is also a director of Columbia Real Estate Investments, Inc. Mr. Gowen
is a director or trustee of 29 investment companies for which Mitchell
Hutchins or PaineWebber serves as investment adviser.
Frederic V. Malek; 59 Director Mr. Malek is chairman of Thayer Capital Partners (investment bank) and a
901 15th Street, N.W. co-chairman and director of CB Commercial Group Inc. (real estate). From Janu-
Suite 300 ary 1992 to November 1992, he was campaign manager of Bush-Quayle '92. From
Washington, D.C. 20005 1990 to 1992, he was vice chairman and, from 1989 to 1990, he was president of
Northwest Airlines Inc., NWA Inc. (holding company of Northwest Airlines Inc.)
and Wings Holdings Inc. (holding company of NWA Inc.). Prior to 1989, he was
employed by the Marriott Corporation (hotels, restaurants, airline catering
and contract feeding), where he most recently was an executive vice president
and president of Marriott Hotels and Resorts. Mr. Malek is also a director of
American Management Systems, Inc., (management consulting and computer related
services), Automatic Data Processing, Inc., Avis, Inc., (passenger car
rental), FPL Group, Inc., (electric services), National Education Corporation
and Northwest Airlines Inc. Mr. Malek is a director or trustee of 29
investment companies for which Mitchell Hutchins or PaineWebber serves as in-
vestment adviser.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
POSITION BUSINESS EXPERIENCE;
NAME AND ADDRESS*; AGE WITH THE FUND OTHER DIRECTORSHIPS
- ----------------------------- ------------------ --------------------------------------------------------------------------------
<S> <C> <C>
Carl W. Schafer; 60 Director Mr. Schafer is president of the Atlantic Foundation (charitable foundation
P.O. Box 1164 supporting mainly oceanographic exploration and research). He also is a direc-
Princeton, NJ 08542 tor of Roadway Express, Inc. (trucking), The Guardian Group of Mutual Funds,
Evans Systems, Inc. (a motor fuels, convenience store and diversified com-
pany), Hidden Lake Gold Mines Ltd. (gold mining), Electronic Clearing House,
Inc. (financial transactions processing), Wainoco Oil Corporation and Nu-
traceutix, Inc. (biotechnology). Prior to January 1993, Mr. Schafer was
chairman of the Investment Advisory Committee of the Howard Hughes Medical
Institute. Mr. Schafer is a director or trustee of 29 investment companies for
which Mitchell Hutchins or PaineWebber serves as investment adviser.
John R. Torell III; 57 Director Mr. Torell is chairman of Torell Management, Inc. (financial advisory firm),
767 Fifth Avenue chairman of Telesphere Corporation (electronic provider of financial informa-
Suite 4605 tion) and a partner of Zilkha & Company (merchant banking and private
New York, NY 10153 investment company). He is the former chairman and chief executive officer of
Fortune Bancorp (1990-1991 and 1990-1994, respectively), the former chairman,
president and chief executive officer of CalFed, Inc. (savings association)
(1988 to 1989) and the former president of Manufacturers Hanover Corp. (bank)
(prior to 1988). Mr. Torell is also a director of American Home Products
Corp., New Colt Inc. (armament manufacturer) and Volt Information Sciences
Inc. Mr. Torell is a director or trustee of 29 investment companies for which
Mitchell Hutchins or PaineWebber serves as investment adviser.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
POSITION BUSINESS EXPERIENCE;
NAME AND ADDRESS*; AGE WITH THE FUND OTHER DIRECTORSHIPS
- ----------------------------- ------------------ --------------------------------------------------------------------------------
<S> <C> <C>
Teresa M. Boyle; 37 Vice President Ms. Boyle is a first vice president and manager--advisory administration of
Mitchell Hutchins. Prior to November 1993, she was compliance manager of
Hyperion Capital Management, Inc., an investment advisory firm. Prior to April
1993, Ms. Boyle was a vice president and manager-legal administration of
Mitchell Hutchins. Ms. Boyle is a vice president of 30 investment companies
for which Mitchell Hutchins or PaineWebber serves as investment adviser.
C. William Maher; 35 Vice President and Mr. Maher is a first vice president and a senior manager of the mutual fund
Assistant finance division of Mitchell Hutchins. Mr. Maher is a vice president and
Treasurer assistant treasurer of 30 investment companies for which Mitchell Hutchins or
PaineWebber serves as investment adviser.
Dennis McCauley; 49 Vice President Mr. McCauley is a managing director and chief investment officer--fixed income
of Mitchell Hutchins. Prior to December 1994, he was director of fixed
income investments of IBM Corporation. Mr. McCauley is a vice president of 19
investment companies for which Mitchell Hutchins or PaineWebber serves as
investment adviser.
Susan Messina; 36 Vice President Ms. Messina is a senior vice president of Mitchell Hutchins and has been with
Mitchell Hutchins since 1982. Ms. Messina is a vice president of five invest-
ment companies for which Mitchell Hutchins or PaineWebber serves as investment
adviser.
Ann E. Moran; 39 Vice President and Ms. Moran is a vice president of Mitchell Hutchins. Ms. Moran is a vice
Assistant president and assistant treasurer of 30 investment companies for which
Treasurer Mitchell Hutchins or PaineWebber serves as investment adviser.
Dianne E. O'Donnell; 44 Vice President and Ms. O'Donnell is a senior vice president and deputy general counsel of Mitchell
Secretary Hutchins. Ms. O'Donnell is a vice president and secretary of 29 investment
companies for which Mitchell Hutchins or PaineWebber serves as investment
adviser.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
POSITION BUSINESS EXPERIENCE;
NAME AND ADDRESS*; AGE WITH THE FUND OTHER DIRECTORSHIPS
- ----------------------------- ------------------ --------------------------------------------------------------------------------
<S> <C> <C>
Victoria E. Schonfeld; 45 Vice President Ms. Schonfeld is a managing director and general counsel of Mitchell Hutchins.
Prior to May 1994, she was a partner in the law firm of Arnold & Porter. Ms.
Schonfeld is a vice president of 30 investment companies for which Mitchell
Hutchins or PaineWebber serves as investment adviser.
Paul H. Schubert; 33 Vice President and Mr. Schubert is a first vice president and a senior manager of the mutual fund
Assistant finance division of Mitchell Hutchins. From August 1992 to August 1994, he was
Treasurer a vice president of BlackRock Financial Management, L.P. Prior to August 1992,
he was an audit manager with Ernst & Young LLP. Mr. Schubert is a vice
president and assistant treasurer of 30 investment companies for which
Mitchell Hutchins or PaineWebber serves as investment adviser.
Julian F. Sluyters; 36 Vice President and Mr. Sluyters is a senior vice president and the director of the mutual fund
Treasurer finance division of Mitchell Hutchins. Prior to 1991, he was an audit senior
manager with Ernst & Young LLP. Mr. Sluyters is a vice president and treasurer
of 30 investment companies for which Mitchell Hutchins or PaineWebber serves
as investment adviser.
Keith A. Weller; 34 Vice President and Mr. Weller is a first vice president and associate general counsel of Mitchell
Assistant Hutchins. Prior to May 1995, he was an attorney in private practice. Mr.
Secretary Weller is a vice president and assistant secretary of 29 investment companies
for which Mitchell Hutchins or PaineWebber serves as investment adviser.
</TABLE>
- ------------------
* Unless otherwise indicated, the business address of each listed person is
1285 Avenue of the Americas, New York, New York 10019.
** Mrs. Alexander, Mr. Bewkes and Ms. Farrell are 'interested persons' of the
Fund as defined in the 1940 Act by virtue of their positions with Mitchell
Hutchins, PaineWebber and/or PW Group.
The Fund pays directors who are not 'interested persons' of the Fund $1,000
annually and $150 for each board meeting and each meeting of a board committee
(other than committee meetings held on the same day as a board meeting). Messrs.
Feldberg and Torell each receive additional annual compensation aggregating
$15,000 from all of the funds within the PaineWebber fund complex (including the
Fund) for serving as chairmen of the audit and contract review committees of
those funds. All directors are reimbursed for any expenses incurred in attending
meetings. Directors and officers of the Fund own in the aggregate less than 1%
of the
11
<PAGE>
Fund's shares. Because PaineWebber and Mitchell Hutchins perform substantially
all of the services necessary for the operation of the Fund, the Fund requires
no employees. No officer, director or employee of PaineWebber or Mitchell
Hutchins presently receives any compensation from the Fund for acting as a
director or officer.
The table below includes certain information relating to the compensation
of the current directors of the Fund who held office with the Fund or with other
PaineWebber funds during the Fund's last fiscal year.
<TABLE>
<CAPTION>
TOTAL
AGGREGATE COMPENSATION
COMPENSATION FROM THE
FROM FUND AND THE
NAME OF PERSONS, POSITION THE FUND* FUND COMPLEX**
- ------------------------- ------------ --------------
<S> <C> <C>
Richard Q. Armstrong
Director............... -- $ 9,000
Richard R. Burt,
Director............... -- $ 7,750
Meyer Feldberg,
Director............... $ 12,000 $106,375
George W. Gowen,
Director............... $ 11,500 $ 99,750
Frederic V. Malek,
Director............... $ 12,000 $ 99,750
Carl W. Schafer,
Director............... -- $118,175
John R. Torell III,
Director............... -- $ 28,125
</TABLE>
- ------------------
Only independent members of the board of directors are compensated by the Fund
and identified above; directors who are 'interested persons,' as defined by the
1940 Act, do not receive compensation.
* Represents fees paid to each director during the fiscal year ended March 31,
1996.
** Represents total compensation paid to each director during the calendar year
ended December 31, 1995; no fund within the fund complex has a bonus,
pension, profit sharing or retirement plan.
12
<PAGE>
INVESTMENT ADVISORY SERVICES
PaineWebber acts as the Fund's investment adviser and administrator
pursuant to a contract with the Fund dated July 23, 1987 ('PaineWebber
Contract'). Under the PaineWebber Contract, the Fund pays PaineWebber an annual
fee, computed daily and paid monthly, according to the following schedule:
<TABLE>
<CAPTION>
ANNUAL
AVERAGE DAILY NET ASSETS RATE
- ----------------------------------------------- ------
<S> <C>
Up to $500 million............................. 0.500%
In excess of $500 million up to $1.0 billion... 0.425
In excess of $1.0 billion up to $1.5 billion... 0.390
In excess of $1.5 billion up to $2.0 billion... 0.380
In excess of $2.0 billion up to $2.5 billion... 0.350
In excess of $2.5 billion up to $3.5 billion... 0.345
In excess of $3.5 billion up to $4.0 billion... 0.325
In excess of $4.0 billion up to $4.5 billion... 0.315
In excess of $4.5 billion up to $5.0 billion... 0.300
In excess of $5.0 billion up to $5.5 billion... 0.290
In excess of $5.5 billion...................... 0.280
</TABLE>
Services provided by PaineWebber under the PaineWebber Contract, some of which
may be delegated to Mitchell Hutchins, as discussed below, include the provision
of a continuous investment program for the Fund and supervision of all matters
relating to the operation of the Fund. Under the PaineWebber Contract,
PaineWebber is also obligated to distribute the Fund's shares on an agency, or
'best efforts,' basis under which the Fund only issues such shares as are
actually sold. Shares of the Fund are offered continuously. Under the
PaineWebber Contract, during the fiscal years ended March 31, 1996, March 31,
1995 and March 31, 1994, the Fund paid (or accrued) to PaineWebber investment
advisory and administrative fees in the amount of $16,998,964, $13,839,569, and
$13,665,261, respectively.
Under a service agreement that is reviewed annually by the Fund's board of
directors, PaineWebber provides certain services to the Fund not otherwise
provided by the Fund's transfer agent. Pursuant to the service agreement, during
the fiscal years ended March 31, 1996, March 31, 1995 and March 31, 1994, the
Fund paid (or accrued) to PaineWebber $2,762,836, $2,551,016 and $2,379,604,
respectively.
Under a contract with PaineWebber dated July 23, 1987 ('Sub-Advisory
Contract'), Mitchell Hutchins is responsible for the actual investment
management of the Fund's assets, including the responsibility for making
decisions and placing orders to buy, sell or hold particular securities. Under
the Sub-Advisory Contract, PaineWebber (not the Fund) pays Mitchell Hutchins an
annual fee, computed daily and paid monthly, according to the following
schedule:
<TABLE>
<CAPTION>
ANNUAL
AVERAGE DAILY NET ASSETS RATE
- ----------------------------------------------- ------
<S> <C>
Up to $500 million............................. 0.0900%
In excess of $500 million up to $1.0 billion... 0.0500
In excess of $1.0 billion up to $1.5 billion... 0.0400
In excess of $1.5 billion up to $2.0 billion... 0.0300
In excess of $2.0 billion up to $2.5 billion... 0.0250
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
ANNUAL
AVERAGE DAILY NET ASSETS RATE
- ----------------------------------------------- ------
<S> <C>
In excess of $2.5 billion up to $3.5 billion... 0.0250
In excess of $3.5 billion up to $4.5 billion... 0.0200
In excess of $4.5 billion up to $5.5 billion... 0.0125
In excess of $5.5 billion...................... 0.0100
</TABLE>
Under the Sub-Advisory Contract, during the fiscal years ended March 31,
1996, March 31, 1995 and March 31, 1994, PaineWebber paid (or accrued) to
Mitchell Hutchins fees in the amount of $1,593,013, $1,435,247 and $1,424,776,
respectively.
Under a contract with PaineWebber dated May 24, 1988 ('Sub-Administration
Contract'), Mitchell Hutchins also serves as the Fund's sub-administrator. Under
the Sub-Administration Contract, PaineWebber (not the Fund) pays Mitchell
Hutchins 20% of the fees received by PaineWebber under the PaineWebber Contract,
such amount to be paid monthly and reduced by any amount paid by PaineWebber in
each such month under the Sub-Advisory Contract. During the fiscal years ended
March 31, 1996, March 31, 1995 and March 31, 1994, PaineWebber paid (or accrued)
to Mitchell Hutchins sub-administration fees of $1,806,780, $1,332,667 and
$1,308,276, respectively.
Each of the advisory, sub-advisory and sub-administration contracts noted
above provides that PaineWebber or Mitchell Hutchins, as the case may be, shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the performance of the contract, except
a loss resulting from willful misfeasance, bad faith or gross negligence on the
part of PaineWebber or Mitchell Hutchins, in the performance of its duties or
from reckless disregard of its duties and obligations thereunder. The
PaineWebber Contract also provides that PaineWebber shall not be liable for
losses arising out of the receipt by PaineWebber of inadequate consideration in
connection with an order to purchase Fund shares whether in the form of a
fraudulent check, draft or wire; a check returned for insufficient funds; or any
other such inadequate consideration (hereinafter 'check losses'), except under
the circumstances noted above, but the Fund shall not be liable for check losses
resulting from negligence on the part of PaineWebber. Each of the advisory,
sub-advisory and sub-administration contracts is terminable by vote of the
Fund's board of directors or by the holders of a majority of the outstanding
voting securities of the Fund at any time without penalty, on 60 days' written
notice to PaineWebber or Mitchell Hutchins, as the case may be. Each of the
advisory and sub-advisory contracts may also be terminated by PaineWebber or
Mitchell Hutchins, as the case may be, on 90 days' written notice to the Fund.
The sub-administration contract may also be terminated by Mitchell Hutchins on
60 days' written notice to the Fund. Each of the advisory, sub-advisory and
sub-administration contracts terminates automatically upon its assignment.
Under the terms of the PaineWebber Contract, the Fund bears all expenses
incurred in its operation that are not specifically assumed by PaineWebber.
Expenses borne by the Fund include the following: (a) the cost (including
brokerage commissions, if any) of securities purchased or sold by the Fund or
any losses incurred in connection therewith; (b) fees payable to and expenses
incurred on behalf of the Fund by PaineWebber; (c) filing fees and expenses
relating to the registration and qualification of the Fund's shares under
federal or state securities laws and maintaining such registrations and
qualifications; (d) fees and salaries payable to the Fund's directors and
officers who are not officers or employees of PaineWebber or interested persons
(as defined in the 1940 Act) of any investment adviser or underwriter of the
Fund ('Independent Directors');
14
<PAGE>
(e) taxes (including any income or franchise taxes) and governmental fees; (f)
costs of any liability, uncollectible items of deposit and other insurance or
fidelity bonds; (g) any costs, expenses or losses arising out of any liability
of or claim for damage or other relief asserted against the Fund for violation
of any law; (h) legal, accounting and auditing expenses, including legal fees of
special counsel for the Independent Directors; (i) charges of custodians,
transfer agents and other agents; (j) costs of preparing share certificates; (k)
expenses of setting in type and printing prospectuses, statements of additional
information and supplements thereto for existing shareholders, reports and
statements to shareholders and proxy materials; (l) any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Fund; and (m) fees
and other expenses incurred in connection with membership in investment company
organizations.
As required by various state regulations, PaineWebber will reimburse the
Fund if and to the extent that the aggregate operating expenses of the Fund
exceed applicable limits for the fiscal year. Currently, the most restrictive
such limit applicable to the Fund is 2.5% of the first $30 million of the Fund's
average daily net assets, 2.0% of the next $70 million of its average daily net
assets and 1.5% of its average daily net assets in excess of $100 million.
Certain expenses, such as brokerage commissions, taxes, interest and
extraordinary items are excluded from this limitation. No reimbursement pursuant
to such limitation was required for the fiscal years ended March 31, 1996, March
31, 1995 and March 31, 1994.
The following table shows the approximate net assets as of June 30, 1996,
sorted by category of investment objective, of the investment companies as to
which Mitchell Hutchins serves as adviser or sub-adviser. An investment company
may fall into more than one of the categories below.
<TABLE>
<CAPTION>
NET ASSETS
INVESTMENT CATEGORY ($ MIL)
- ---------------------------------------- ----------
<S> <C>
Domestic (excluding Money Market)....... $ 5,585.3
Global.................................. 2,826.1
Equity/Balanced......................... 3,118.7
Fixed Income (excluding Money Market)... 5,292.7
Taxable Fixed Income............... 3,653.2
Tax-Free Fixed Income.............. 1,639.5
Money Market Funds...................... 21,656.6
</TABLE>
Mitchell Hutchins personnel may invest in securities for their own accounts
pursuant to a code of ethics that describes the fiduciary duty owed to
shareholders of the PaineWebber mutual funds and other Mitchell Hutchins'
advisory accounts by all Mitchell Hutchins' directors, officers and employees,
establishes procedures for personal investing and restricts certain
transactions. For example, employee accounts generally must be maintained at
PaineWebber, personal trades in most securities require pre-clearance and
short-term trading and participation in initial public offerings generally are
prohibited. In addition, the code of ethics puts restrictions on the timing of
personal investing in relation to trades by PaineWebber funds and other Mitchell
Hutchins advisory clients.
15
<PAGE>
PORTFOLIO TRANSACTIONS
The Fund purchases only securities that have remaining maturities of 13
months or less, except for securities subject to repurchase agreements and
except for variable rate and floating rate securities with remaining maturities
of more than 13 months that comply with conditions established by the Securities
and Exchange Commission ('SEC') under which they may be considered to have
remaining maturities of 13 months or less.
The Fund purchases portfolio securities from dealers and underwriters as
well as from issuers. Securities are usually traded on a net basis with dealers
acting as principal for their own accounts without a stated commission. Prices
paid to dealers in principal transactions generally include a 'spread,' which is
the difference between the prices at which the dealer is willing to purchase and
sell a specific security at the time. When securities are purchased directly
from an issuer, no commissions or discounts are paid. When securities are
purchased in underwritten offerings, they include a fixed amount of compensation
to the underwriter.
The Sub-Advisory Contract authorizes Mitchell Hutchins (with the approval
of the Fund's board) to select brokers and dealers to execute purchases and
sales of the Fund's portfolio securities. It directs Mitchell Hutchins to use
its best efforts to obtain the best available price and the most favorable
execution with respect to all transactions for the Fund. To the extent that the
execution and price offered by more than one dealer are comparable, Mitchell
Hutchins may, in its discretion, effect transactions in portfolio securities
with dealers who provide the Fund with research, analysis, advice and similar
services. Although Mitchell Hutchins may receive certain research or execution
services in connection with these transactions, Mitchell Hutchins will not
purchase securities at a higher price or sell securities at a lower price than
would otherwise be paid if no weight was attributed to the services provided by
the executing dealer. Moreover, Mitchell Hutchins will not enter into any
explicit soft dollar arrangements relating to principal transactions and will
not receive in principal transactions the types of services which could be
purchased for hard dollars. Research services furnished by the dealers through
which or with which the Fund effects securities transactions may be used by
Mitchell Hutchins in advising other funds or accounts and, conversely, research
services furnished to Mitchell Hutchins in connection with other funds or
accounts that Mitchell Hutchins advises may be used in advising the Fund. During
its past three fiscal years, the Fund has not paid any brokerage commissions,
nor has it allocated any transactions to dealers for research, analysis, advice
and similar services.
Mitchell Hutchins may engage in agency transactions in over-the-counter
equity and debt securities in return for research and execution services. These
transactions are entered into only in compliance with procedures ensuring that
the transaction (including commissions) is at least as favorable as it would
have been if effected directly with a market-maker that did not provide research
or execution services. These procedures include Mitchell Hutchins receiving
multiple quotes from dealers before executing the transactions on an agency
basis.
Investment decisions for the Fund and for other investment accounts managed
by Mitchell Hutchins are made independently of each other in light of differing
considerations for the various accounts. However, the same investment decision
may occasionally be made for the Fund and one or more of such accounts. In such
cases, simultaneous transactions are inevitable. Purchases or sales are then
averaged as to price and allocated between the Fund and such other account(s) as
to amount according to a formula deemed equitable to the Fund and such
account(s). While in some cases this practice could have a detrimental effect
upon the price or value of
16
<PAGE>
the security as far as the Fund is concerned or upon its ability to complete its
entire order, in other cases it is believed that coordination and the ability to
participate in volume transactions will be beneficial to the Fund.
As of March 31, 1996, the Fund owned commercial paper and short-term
corporate obligations issued by the following persons who are regular
broker-dealers for the Fund: Goldman Sachs Group LP ($109,704,598); Merrill
Lynch & Co, Inc. ($142,602,057); Morgan (J.P.) & Co. Inc. ($28,011,422); Morgan
Stanley Group, Inc. ($177,012,312); and Nomura Holding America Inc.
($25,000,000).
ADDITIONAL INFORMATION REGARDING REDEMPTIONS
The Fund may suspend redemption privileges or postpone the date of payment
during any period (1) when the New York Stock Exchange, Inc. ('NYSE') is closed
or trading on the NYSE is restricted as determined by the SEC, (2) when an
emergency exists, as defined by the SEC, which makes it not reasonably
practicable for the Fund to dispose of securities owned by it or to determine
fairly the market value of its assets or (3) as the SEC may otherwise permit.
The redemption price may be more or less than the shareholder's cost, depending
on the market value of the Fund's portfolio at the time, although the Fund
attempts to maintain a constant net asset value of $1.00 per share.
Under normal circumstances, the Fund will redeem shares when so requested
by a shareholder's broker-dealer other than PaineWebber by telegram or telephone
to PaineWebber. Such a redemption order will be executed at the net asset value
next determined after the order is received by PaineWebber. Redemptions of Fund
shares effected through a broker-dealer other than PaineWebber may be subject to
a service charge by that broker-dealer.
VALUATION OF SHARES
The Fund uses its best efforts to maintain its net asset value at $1.00 per
share. The Fund's net asset value per share is determined by State Street Bank
and Trust Company ('State Street') as of 2:00 p.m., Eastern time, on each
Business Day. As defined in the Prospectus, 'Business Day' means any day on
which State Street's Boston offices, and the New York City offices of
PaineWebber and PaineWebber's bank, The Bank of New York, are all open for
business. One or more of these institutions will be closed on the observance of
the following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans' Day, Thanksgiving Day and Christmas Day.
The Fund values its portfolio securities in accordance with the amortized
cost method of valuation under Rule 2a-7 under the 1940 Act. To use amortized
cost to value its portfolio securities, the Fund must adhere to certain
conditions under that Rule relating to the Fund's investments, some of which are
discussed in the Prospectus. Amortized cost is an approximation of market value,
whereby the difference between acquisition cost and value at maturity of the
instrument is amortized on a straight-line basis over the remaining life of the
instrument. The effect of changes in the market value of a security as a result
of fluctuating interest rates is not taken into account, and thus the amortized
cost method of valuation may result in the value of a security being higher or
lower than its actual market value. In the event that a large number of
redemptions take place at a time when interest rates have increased, the Fund
might have to sell portfolio securities prior to maturity and at a price that
might not be as desirable.
17
<PAGE>
The Fund's board of directors has established procedures for the purpose of
maintaining a constant net asset value of $1.00 per share, which include a
review of the extent of any deviation of net asset value per share, based on
available market quotations, from the $1.00 amortized cost per share. Should
that deviation exceed 1/2 of 1%, the board of directors will promptly consider
whether any action should be initiated to eliminate or reduce material dilution
or other unfair results to shareholders. Such action may include redeeming
shares in kind, selling portfolio securities prior to maturity, reducing or
withholding dividends and utilizing a net asset value per share as determined by
using available market quotations. The Fund will maintain a dollar-weighted
average portfolio maturity of 90 days or less and except as otherwise indicated
herein will not purchase any instrument with a remaining maturity greater than
13 months, will limit portfolio investments, including repurchase agreements, to
those U.S. dollar-denominated instruments that are of high quality and that the
directors determine present minimal credit risks as advised by Mitchell
Hutchins, and will comply with certain reporting and recordkeeping procedures.
There is no assurance that constant net asset value per share will be
maintained. In the event amortized cost ceases to represent fair value, the
board will take appropriate action.
In determining the approximate market value of portfolio investments, the
Fund may employ outside organizations, which may use a matrix or formula method
that takes into consideration market indices, matrices, yield curves and other
specific adjustments. This may result in the securities being valued at a price
different from the price that would have been determined had the matrix or
formula method not been used.
TAXES
In order to continue to qualify for treatment as a regulated investment
company under the Internal Revenue Code, the Fund must distribute to its
shareholders for each taxable year at least 90% of its investment company
taxable income (consisting generally of net investment income and net short-term
capital gain, if any) and must meet several additional requirements. Among these
requirements are the following: (1) the Fund must derive at least 90% of its
gross income each taxable year from dividends, interest, payments with respect
to securities loans, gains from the sale or other disposition of securities and
certain other income; (2) the Fund must derive less than 30% of its gross income
each taxable year from the sale or other disposition of securities held for less
than three months; (3) at the close of each quarter of the Fund's taxable year,
at least 50% of the value of its total assets must be represented by cash and
cash items, U.S. government securities and other securities, with these other
securities limited, in respect of any one issuer, to an amount that does not
exceed 5% of the value of the Fund's total assets; and (4) at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its total
assets may be invested in securities (other than U.S. government securities) of
any one issuer.
CALCULATION OF YIELD
The Fund computes its yield and effective yield quotations using
standardized methods required by the SEC. The Fund from time to time advertises
(1) its current yield based on a recently ended seven-day period, computed by
determining the net change, exclusive of capital changes, in the value of a
hypothetical pre-existing account having a balance of one share at the beginning
of the period, subtracting a hypothetical charge reflecting deductions from that
shareholder account, dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return and then
multiplying the base period return by (365/7), with the resulting yield figure
carried to at least the nearest hundredth of one percent; and (2) its
18
<PAGE>
effective yield based on the same seven-day period by compounding the base
period return by adding 1, raising the sum to a power equal to (365/7) and
subtracting 1 from the result, according to the following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)365/7] - 1
Yield may fluctuate daily and does not provide a basis for determining
future yields. Because the yield of the Fund fluctuates, it cannot be compared
with yields on savings accounts or other investment alternatives that provide an
agreed-to or guaranteed fixed yield for a stated period of time. However, yield
information may be useful to an investor considering temporary investments in
money market instruments. In comparing the yield of one money market fund to
another, consideration should be given to each fund's investment policies,
including the types of investments made, the average maturity of the portfolio
securities and whether there are any special account charges that may reduce the
yield.
The Fund's yield and effective yield for the seven-day period ended March
31, 1996 were 4.73% and 4.84%, respectively.
OTHER INFORMATION. The Fund's performance data quoted in advertising and
other promotional materials ('Performance Advertisements') represent past
performance and are not intended to predict or indicate future results. The
return on an investment in the Fund will fluctuate. In Performance
Advertisements, the Fund may compare its yield with data published by Lipper
Analytical Services, Inc. for money funds ('Lipper'), CDA Investment
Technologies, Inc. ('CDA'), IBC/Donoghue's Money Market Fund Report
('Donoghue'), Wiesenberger Investment Companies Service ('Wiesenberger'),
Investment Company Data Inc. ('ICD') or Morningstar Mutual Funds
('Morningstar'), or with the performance of recognized stock and other indexes,
including (but not limited to) the Standard & Poor's 500 Composite Stock Price
Index, the Dow Jones Industrial Average, the Morgan Stanley Capital World Index,
the Lehman Brothers Treasury Bond Index, the Lehman Brothers
Government-Corporate Bond Index, the Salomon Brothers Non-U.S. World Government
Bond Index and the Consumer Price Index as published by the U.S. Department of
Commerce. The Fund also may refer in such materials to mutual fund performance
rankings and other data, such as comparative asset, expense and fee levels,
published by Lipper, CDA, Donoghue, Wiesenberger, ICD or Morningstar.
Performance Advertisements also may refer to discussions of the Fund and
comparative mutual fund data and ratings reported in independent periodicals,
including (but not limited to) THE WALL STREET JOURNAL, MONEY Magazine, FORBES,
BUSINESS WEEK, FINANCIAL WORLD, BARRON'S, FORTUNE, THE NEW YORK TIMES, THE
CHICAGO TRIBUNE, THE WASHINGTON POST and THE KIPLINGER LETTERS.
The Fund may include discussions or illustrations of the effects of
compounding in Performance Advertisements. 'Compounding' refers to the fact
that, if dividends on a Fund investment are reinvested by being paid in
additional Fund shares, any future income of the Fund would increase the value,
not only of the original Fund investment, but also of the additional Fund shares
received through reinvestment. As a result, the value of the Fund investment
would increase more quickly than if dividends had been paid in cash.
The Fund may also compare its performance with the performance of bank
certificates of deposit (CDs) as measured by the CDA Certificate of Deposit
Index and the Bank Rate Monitor National Index and the averages of yields of CDs
of major banks published by Banxquotes(Registered) Money Markets. In comparing
the Fund's performance to CD performance, investors should keep in mind that
bank CDs are insured in whole or in part by an agency of the U.S. government and
offer fixed principal and fixed or variable rates of interest, and that bank CD
yields may vary depending on the financial institution offering the CD and
prevailing interest
19
<PAGE>
rates. Fund shares are not insured or guaranteed by the U.S. government, and
returns will fluctuate. 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.
OTHER INFORMATION
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800, counsel to the Fund, has passed upon
the legality of the shares offered by the Prospectus. Kirkpatrick & Lockhart LLP
also acts as counsel to PaineWebber and Mitchell Hutchins in connection with
other matters.
AUDITORS. Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
serves as the Fund's independent auditors.
FINANCIAL STATEMENTS
The Fund's Annual Report to Shareholders for the fiscal year ended March
31, 1996 is a separate document supplied with this Statement of Additional
Information, and the financial statements, accompanying notes and report of
independent auditors appearing therein are incorporated herein by this
reference.
20
<PAGE>
No person has been authorized to give any information or to make any
representations not contained in the Prospectus or in this Statement of
Additional Information in connection with the offering made by the 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. The Prospectus
and this Statement of Additional Information do not constitute an offering by
the Fund or by the distributor in any jurisdiction in which such offering may
not lawfully be made.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Investment Policies and Restrictions............ 1
Directors and Officers.......................... 5
Investment Advisory Services.................... 13
Portfolio Transactions.......................... 16
Additional Information Regarding Redemptions.... 17
Valuation of Shares............................. 17
Taxes........................................... 18
Calculation of Yield............................ 18
Other Information............................... 20
Financial Statements............................ 20
</TABLE>
(Copyright) 1996 PaineWebber Incorporated
- --------------------------------------------------------------------------------
PaineWebber
Cashfund, Inc.
Statement of Additional Information
August 1, 1996
- --------------------------------------------------------------------------------
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements: (filed herewith)
Included in Part A of this Registration Statement:
Financial Highlights for each of the ten years in the
period ended March 31, 1996.
Included in Part B of this Registration Statement through
incorporation by reference from the Annual Report to
Shareholders (previously filed with the Securities and
Exchange Commission through EDGAR on May 31, 1996, Accession
No. 0000950112-96-001798:
Statement of Net Assets as of March 31, 1996.
Statement of Operations for the year ended March 31,
1996.
Statement of Changes in Net Assets for each of the two
years in the period ended March 31, 1996.
Notes to Financial Statements
Financial Highlights for each of the five years in the
period ended March 31, 1996.
Report of Ernst & Young LLP, Independent Auditors,
dated May 14, 1996.
(b) Exhibits:
(1) Restated Articles of Incorporation (filed herewith)
(2) (a) Amended By-Laws dated July 18, 19901/
(b) Certificate of Amendment dated September 28, 1994
to By-laws2/
(c) Certificate of Amendment dated May 1, 1996 to By-
Laws (filed herewith)
(3) Voting Trust Agreement - none
(4) Instruments defining the rights of holders of
Registrant's common stock3/
(5) (a) Investment Advisory, Administration and
Distribution Contract between Registrant and
PaineWebber4/
(b) Sub-Advisory Contract between PaineWebber and
Mitchell Hutchins4/
(c) Sub-Administration Contract between PaineWebber
and Mitchell Hutchins5/
(6) Underwriting Contract - See Exhibit 5(a)
C-1
<PAGE>
(7) Bonus, profit sharing or pension plans - none
(8) (a) Custodian Contract1/
(b) Amendment to Custodian and Ancillary Services
Agreement2/
(c) Second Amendment to Custodian and Ancillary
Services Agreement2/
(d) Amendment No. 4 to Custodian Agreement2/
(9) (a) Transfer Agency Services and Shareholder Services
Agreement6/
(b) Service Contract1/
(10) Opinion and consent of counsel7/
(11) Other opinions, appraisals, rulings and consents:
Consent of Independent Auditors (filed herewith)
(12) Financial statements omitted from Part B - none
(13) Letter of investment intent7/
(14) Prototype Retirement Plan - none
(15) Plan pursuant to Rule 12b-1 - none
(16) Schedule of Calculation of Performance Quotations6/
(17) and
(27) Financial Data Schedule (filed herewith)
(18) Plan pursuant to Rule 18f-3 (none)
______________
1/ Incorporated herein by reference from Post-Effective
Amendment No. 24 to registration statement (SEC File No. 2-
60655), filed July 27, 1990.
2/ Incorporated herein by reference from Post-Effective
Amendment No. 33 to registration statement (SEC File No. 2-
60655), filed July 28, 1995.
3/ Incorporated by reference from Articles Sixth, Eighth, Ninth
and Twelfth of the Registrant's Articles of Incorporation
and Articles II, III, VIII, X, and XI of the Registrant's
By-Laws.
4/ Incorporated herein by reference from Post-Effective
Amendment No. 21 to registration statement (SEC File No. 2-
60655), filed August 1, 1988.
5/ Incorporated herein by reference from Post-Effective
Amendment No. 23 to registration statement (SEC File No. 2-
60655), filed July 31, 1989.
6/ Incorporated herein by reference from Post-Effective
Amendment No. 25 to registration statement (SEC File No. 2-
60655), filed July 30, 1991.
7/ Incorporated herein by reference from initial registration
statement (SEC File No. 2-60655), filed January 20, 1978.
C-2
<PAGE>
Item 25. Persons Controlled by or under Common Control with
Registrant
None.
Item 26. Number of Holders of Securities
Number of Record
Shareholders as
Title of Class of May 17 1996
-------------- ----------------
Shares of common stock, 512,875
par value $.001 per share
Item 27. Indemnification
Article Eleventh of the Articles of Incorporation provides
that the directors and officers of the Registrant shall not be
liable to the Registrant or to any of its stockholders for money
damages to the maximum extent permitted by applicable law.
Article Eleventh also provides that any repeal or modification of
Article Eleventh or adoption, or modification of any other
provision of the Articles or By-Laws inconsistent with Article
Eleventh shall be prospective only, to the extent that any such
repeal or modification would, if applied retroactively, adversely
affect any limitation on the liability of any director or officer
of the Registrant or indemnification available to any person
covered by these provisions with respect to any act or omission
which occurred prior to such repeal, modification or adoption.
Section 10.01 of Article 10 of the By-Laws provides that the
Registrant shall indemnify its present and past directors,
officers, employees and agents, and any persons who are serving
or have served at the request of the Registrant as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust, or enterprise, to the fullest extent
permitted by law.
Section 10.02 of Article 10 of the By-Laws further provides
that the Registrant may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or
agent of the Registrant, or is or was serving at the request of
the Registrant as a director, officer or employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and
incurred by him in any such capacity or arising out of his status
as such, whether or not the Registrant would have the power to
indemnify him against such liability.
C-3
<PAGE>
Section 9 of the Investment Advisory, Administration and
Distribution Contract between Registrant and PaineWebber
Incorporated ("PaineWebber") provides that PaineWebber shall not
be liable for any error of judgment or mistake of law or for any
loss suffered by the Registrant in connection with the matters to
which the Contract relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its
obligations and duties under the Contract.
Section 7 of the Sub-Advisory Contract between PaineWebber
and Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins")
provides that Mitchell Hutchins will not be liable for any error
of judgment or mistake of law or for any loss suffered by
PaineWebber or by the Registrant or its shareholders in
connection with the performance of the Contract, except a loss
resulting from willful misfeasance, bad faith or gross negligence
on its part in the performance of its duties or from reckless
disregard by it of its obligations or duties under the Contract.
Section 8 of the Sub-Administration Contract between
PaineWebber and Mitchell Hutchins contains provisions similar to
Section 9 of the Investment Advisory, Administration and
Distribution Contract between the Registrant and PaineWebber.
Section 7 of the Service Contract between Registrant and
PaineWebber provides that PaineWebber shall be indemnified and
held harmless by the Registrant against all liabilities, except
those arising out of bad faith, gross negligence, willful
misfeasance or reckless disregard of its duties under the Service
Contract.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be provided to directors,
officers and controlling persons of the Registrant, pursuant to
the foregoing provisions or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling persons of the
Registrant in connection with the successful defense of any
action, suit or proceeding or payment pursuant to any insurance
policy) is asserted against the Registrant by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
C-4
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
I. PaineWebber, a Delaware corporation, is a registered
investment adviser and is wholly owned by Paine Webber Group Inc.
PaineWebber is primarily engaged in the financial services
business. Information as to the officers and directors of
PaineWebber is included in its Form ADV, as filed with the
Securities and Exchange Commission (registration number 801-7163)
and is incorporated herein by reference.
II. Mitchell Hutchins, a Delaware corporation, is a
registered investment adviser and is a wholly owned subsidiary of
PaineWebber. Mitchell Hutchins is primarily engaged in the
investment advisory business. Information as to the officers and
directors of Mitchell Hutchins is included in its Form ADV, as
filed with the Securities and Exchange Commission (registration
number 801-13219) and is incorporated herein by reference.
Item 29. Principal Underwriters
(a) PaineWebber serves as principal underwriter and/or
investment adviser for the following other investment companies:
LIQUID INSTITUTIONAL RESERVES
PAINEWEBBER RMA MONEY FUND, INC.
PAINEWEBBER RMA TAX-FREE FUND, INC.
PAINEWEBBER MUNICIPAL MONEY MARKET SERIES
PAINEWEBBER MANAGED MUNICIPAL TRUST
(b) PaineWebber is the principal underwriter of the Fund. The
directors and officers of PaineWebber, their principal business
addresses and their positions and offices with PaineWebber are
identified in its Form ADV, as filed with the Securities and
Exchange Commission (registration number 801-7163) and such
information is hereby incorporated herein by reference. The
information set forth below is furnished for those directors and
officers of PaineWebber who also serve as directors or officers
of the Fund:
C-5
<PAGE>
Position and
Name and Principal Position With Offices With
Business Address Registrant Underwriter
------------------ ------------- ------------
Margo N. Alexander Director and Executive vice
1285 Avenue of President president and
the Americas (Chief director
New York, NY 10019 Executive
Officer)
Mary C. Farrell Director Managing director,
1285 Avenue of senior investment
the Americas strategist and
New York, NY 10019 member of the
Investment Policy
Committee
(c) None.
Item 30. Location of Accounts and Records
The books and other documents required by paragraphs (b)(4), (c)
and (d) of Rule 31a-1 under the Investment Company Act of 1940
are maintained in the physical possession of Registrant's
Portfolio Manager, Mitchell Hutchins Asset Management Inc., 1285
Avenue of the Americas, New York, New York 10019. All other
accounts, books and documents required by Rule 31a-1 are
maintained in the physical possession of Registrant's transfer
agent and custodian.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders upon request and without charge.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933 and the Investment Company Act of 1940, the
Registrant hereby certifies that it meets all the
requirements for effectiveness of this Post-Effective
Amendment to its Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has
duly caused this Post-Effective Amendment to be signed
on its behalf by the undersigned, thereunto duly
authorized, in the City of New York and State of New
York, on the 30th day of July, 1996.
PAINEWEBBER CASHFUND, INC.
By: /s/ Dianne E. O'Donnell
-------------------------------
Dianne E. O'Donnell
Vice President and
Secretary
Pursuant to the requirements of the Securities Act
of 1933, this Post-Effective Amendment has been signed
below by the following persons in the capacities and on
the dates indicated:
Signature Title Date
/s/ Margo N. Alexander President and Director July 30, 1996
--------------------------- (Chief Executive
Margo N. Alexander * Officer)
/s/ E. Garrett Bewkes, Jr. Director and Chairman July 30, 1996
--------------------------- of the Board of
E. Garrett Bewkes, Jr. * Directors
/s/ Richard Q. Armstrong Director July 30, 1996
---------------------------
Richard Q. Armstrong *
/s/ Richard R. Burt Director July 30, 1996
---------------------------
Richard R. Burt *
/s/ Mary C. Farrell Director July 30, 1996
---------------------------
Mary C. Farrell *
/s/ Meyer Feldberg Director July 30, 1996
---------------------------
Meyer Feldberg *
/s/ George W. Gowen Director July 30, 1996
---------------------------
George W. Gowen *
/s/ Frederic V. Malek Director July 30, 1996
---------------------------
Frederic V. Malek *
/s/ Carl W. Schafer Director July 30, 1996
---------------------------
Carl W. Schafer *
/s/ John R. Torell III Director July 30, 1996
---------------------------
John R. Torell III *
/s/ Julian F. Sluyters Vice President and July 30, 1996
--------------------------- Treasurer (Chief
Julian F. Sluyters Financial and Accounting
Officer)
<PAGE>
SIGNATURES (Continued)
* Signature affixed by Elinor W. Gammon pursuant to power of
attorney dated May 21, 1996 and incorporated by reference
from Post-Effective Amendment No. 25 of PaineWebber RMA Tax-
Free Fund, Inc., SEC File No. 2-78319, filed June 27, 1996.
<PAGE>
PAINEWEBBER CASHFUND, INC.
EXHIBIT INDEX
(1) Restated Articles of Incorporation (filed herewith)
(2) (a) Amended By-Laws dated July 18, 1990(1)
(b) Certificate of Amendment dated September 28, 1994
to By-laws(2)
(c) Certificate of Amendment dated May 1, 1996 to By-
Laws (filed herewith)
(3) Voting Trust Agreement - none
(4) Instruments defining the rights of holders of
Registrant's common stock(3)
(5) (a) Investment Advisory, Administration and
Distribution Contract between Registrant and
PaineWebber(4)
(b) Sub-Advisory Contract between PaineWebber and
Mitchell Hutchins(4)
(c) Sub-Administration Contract between PaineWebber
and Mitchell Hutchins(5)
(6) Underwriting Contract - See Exhibit 5(a)
(7) Bonus, profit sharing or pension plans - none
(8) (a) Custodian Contract(1)
(b) Amendment to Custodian and Ancillary Services
Agreement(2)
(c) Second Amendment to Custodian and Ancillary
Services Agreement(2)
(d) Amendment No. 4 to Custodian Agreement(2)
(9) (a) Transfer Agency Services and Shareholder Services
Agreement(6)
(b) Service Contract(1)
(10) Opinion and consent of counsel(7)
(11) Other opinions, appraisals, rulings and consents:
Consent of Independent Auditors (filed herewith)
(12) Financial statements omitted from Part B - none
(13) Letter of investment intent(7)
(14) Prototype Retirement Plan - none
(15) Plan pursuant to Rule 12b-1 - none
(16) Schedule of Calculation of Performance Quotations(6)
(17) and
(27) Financial Data Schedule (filed herewith)
(18) Plan pursuant to Rule 18f-3 (none)
______________
(1) Incorporated herein by reference from Post-Effective
Amendment No. 24 to registration statement (SEC File No. 2-
60655), filed July 27, 1990.
(2) Incorporated herein by reference from Post-Effective
Amendment No. 33 to registration statement (SEC File No. 2-
60655), filed July 28, 1995.
<PAGE>
(3) Incorporated by reference from Articles Sixth, Eighth, Ninth
and Twelfth of the Registrant's Articles of Incorporation
and Articles II, III, VIII, X, and XI of the Registrant's
By-Laws.
(4) Incorporated herein by reference from Post-Effective
Amendment No. 21 to registration statement (SEC File No. 2-
60655), filed August 1, 1988.
(5) Incorporated herein by reference from Post-Effective
Amendment No. 23 to registration statement (SEC File No. 2-
60655), filed July 31, 1989.
(6) Incorporated herein by reference from Post-Effective
Amendment No. 25 to registration statement (SEC File No. 2-
60655), filed July 30, 1991.
(7) Incorporated herein by reference from initial registration
statement (SEC File No. 2-60655), filed January 20, 1978.
EXHIBIT 1
RESTATEMENT OF ARTICLES OF INCORPORATION
PAINEWEBBER CASHFUND, INC.
PaineWebber Cashfund, Inc. desires to restate its existing
Articles of Incorporation by adopting the following Restatement of
Articles of Incorporation, as approved by a majority of the Board
of Directors as of July 24, 1996. The provisions set forth in
this Restatement of Articles of Incorporation, which do not amend
the existing Articles of Incorporation, restate all of the
provisions of the charter currently in effect and otherwise
permitted by Maryland General Corporate Law:
FIRST:
I, Clifford J. Alexander, whose post office address is 1900
M Street, N.W., Washington, D.C. 20036, being at least twenty-one
years of age, do, under and by virtue of the General Laws of the
State of Maryland authorizing the formation of corporations,
associate myself as incorporator with intention of forming a
corporation (hereinafter called the "Corporation").
SECOND: Name.
The name of the Corporation is PaineWebber Cashfund, Inc.
THIRD: Corporate Purposes.
(a) The purposes for which the Corporation is formed are to
act as an open-end, diversified management investment company
under the Investment Company Act of 1940, as amended, and to
exercise and enjoy all of the powers, rights and privileges
granted to, or conferred upon, corporations of a similar character
by the General Laws of the State of Maryland now or hereafter in
force.
(1) To invest, hold for investment, or reinvest in
securities, including bonds, debentures, bills, time notes
and all other evidence of indebtedness; negotiable or
non-negotiable instruments; government securities; and money
market instruments including bank certificates of deposit,
finance paper, commercial paper, bankers' acceptances and
all kinds of repurchase and reverse repurchase agreements,
of any corporation, company, trust, association, firm or
other business organization however established, and of any
country, state, municipality or other political subdivision,
or any other governmental or quasi-governmental agency or
instrumentality.
(2) To acquire (by purchase, subscription or
otherwise), to trade in and deal in, to sell or otherwise
dispose of, to lend and to pledge any such securities.
(3) To exercise all rights, powers and privileges of
ownership or interest in all securities held by the
Corporation, including the right to vote thereon and
otherwise act with respect thereto and to do all acts for
the preservation, protection, improvement and enhancement in
value of all such securities.
(4) To acquire (by purchase, lease or otherwise) and
to hold, use, maintain, develop and dispose of (by sale or
otherwise) any property, real or personal and any interest
therein.
<PAGE>
(5) To borrow money and, in this connection, issue
notes or other evidence of indebtedness.
(6) To aid by further investment any issuer, any
obligation of or interest in which is held by the
Corporation or in the affairs of which the Corporation has
any direct or indirect interest; to do all acts and things
designed to protect, preserve, improve or enhance the value
of such obligation or interest; to guarantee or become
surety on any or all of the contracts, stocks, bonds, notes,
debentures and other obligations of any such issuer.
(7) In general to carry on any other business in
connection with or incidental to any of the foregoing
objects and purposes; to have and exercise all the powers
conferred upon corporations by the laws of the State of
Maryland as in force from time to time; to do everything
necessary, suitable or proper for the accomplishment of any
purpose or the attainment of any object or the furtherance
of any power hereinbefore set forth, either alone or in
association with others; and to do every other act or thing
incidental or appurtenant to or growing out of or connected
with the aforesaid business or purposes, objects or powers.
(b) The Corporation shall have the power to conduct and
carry on its business, or any part thereof, and to have one or
more offices, and to exercise any or all of its corporate powers
and rights, in the State of Maryland, in any other states,
territories, districts, colonies and dependencies of the United
States, and in any or all foreign countries.
(c) The foregoing clauses shall be construed both as
objects and powers, and the foregoing enumeration of specific
powers shall not be held to limit or restrict in any manner the
general powers of the Corporation.
FOURTH: Address and Resident Agent.
The post office address of the principal office of the
Corporation in this State is c/o The Corporation Trust
Incorporated, 32 South Street, Baltimore, Maryland 21202. The
name of the resident agent of the Corporation in this State is The
Corporation Trust Incorporated, a corporation of this State, and
the post office address of the resident agent is 32 South Street,
Baltimore, Maryland 21202.
FIFTH: Capital Stock.
The total number of shares of stock which the Corporation
shall have authority to issue is 20,000,000,000 shares of Common
Stock, of the par value of 1/10 of one cent ($.001) per share and
of the aggregate par value of $20,000,000. The Board of Directors
of the Corporation is authorized, from time to time, to classify
or to reclassify, as the case may be, any unissued shares of stock
of the Corporation.
SIXTH: Preemptive Rights.
No holder of any of the shares of the Corporation shall be
entitled as of right to subscribe for, purchase, or otherwise
acquire any shares of the Corporation which the Corporation
proposes to issue; and any or all of such shares of the
Corporation, whether now or hereafter authorized or created, may
be issued, or may be reissued or transferred if the same have been
reacquired and have treasury status to such persons, and to such
corporations, companies, trusts, associations, firms, and other
business organizations, and for such lawful consideration, and on
such terms as the Board of Directors in its discretion may
determine, without first offering the same, or any thereof, to any
said holder.
- 2 -
<PAGE>
SEVENTH: Issue, Redemption and Repurchase of Capital Stock.
SECTION I
ISSUE OF THE CORPORATION'S SHARES
1.01 General. The Board of Directors may from time to time
issue, reissue, sell or cause to be issued and sold any of the
Corporation's authorized shares of Capital Stock, including any
additional shares hereafter authorized and any shares redeemed or
repurchased by the Corporation, except that only shares previously
contracted to be sold may be issued during any period when the
determination of net asset value is suspended pursuant to the
provisions of Section III hereof. All shares of such authorized
Capital Stock, when issued in accordance with the terms of this
Section I, shall be fully paid and nonassessable.
1.02 Price. No shares of Capital Stock shall be issued or
sold by the Corporation, except as a stock dividend distributed to
shareholders, for less than an amount which would result in
proceeds to the Corporation, before taxes payable by the
Corporation in connection with such transaction, of at least the
net asset value per share determined as set forth in Section III
hereof as of such time as the Board of Directors shall have by
resolution prescribed. In the absence of a resolution of the
Board of Directors applicable to the transaction, such net asset
value shall be that next determined after receipt of an
unconditional order for shares has been received by the
Corporation (either directly or through one of its agents), the
sales price in currency has been determined and Federal funds have
been credited to an account of the Corporation or to an account of
its custodian established for the Corporation.
1.03 Merger or Consolidation. In connection with the ac-
quisition of all or substantially all the assets or stock of
another investment company or investment trust, the Board of
Directors may issue or cause to be issued shares of Capital Stock
of the Corporation and accept in payment therefore, in lieu of
cash, such assets at their market value, or such stock at the
market value of the assets held by such investment company or
investment trust, either with or without adjustment for contingent
costs or liabilities, provided such assets are of the character in
which the Board of Directors is permitted to invest the funds of
the Corporation.
1.04 Fractional Shares. The Corporation may issue and sell
or cause to be issued and sold fractions of shares having pro rata
all the rights of full shares, including, without limitation, the
right to vote and to receive dividends.
SECTION II
REDEMPTION AND REPURCHASE OF
THE CORPORATION'S SHARES
2.01 Redemption of Shares. All shares of the Capital Stock
of the Corporation now or hereafter authorized shall be "subject
to redemption" and "redeemable" in the sense used in the General
Laws of the State of Maryland authorizing the formation of
corporations, at the redemption or purchase price for any such
shares, determined in the manner set out in these Articles of
Incorporation or in any amendment thereto; provided, however, that
the Corporation shall have the right, at its option, to refuse to
redeem the shares of stock at less than the par value thereof.
Redeemed shares may be resold by the Corporation.
The Corporation shall redeem shares of its Capital Stock,
subject to the conditions, and at the price determined as
hereinafter set forth, upon the appropriately verified written
application of the record holder thereof (or upon such other form
of request as the Board of Directors may determine) at such office
or agency as may be designated from time to time for that purpose
by the Board of Directors. Any such application must be
accompanied by any certificate or certificates which may have been
issued for such shares, duly endorsed or accompanied by a proper
instrument of transfer.
- 3 -
<PAGE>
2.02 Price. Such shares shall be redeemed at their net
asset value determined as set forth in Section III hereof as of
such time as the Board of Directors shall have prescribed by
resolution. In the absence of such resolution, the redemption
price of shares shall be the net asset value of such shares next
determined as set forth in Section III hereof after receipt of
such application (including any certificate or certificates which
may have been issued therefore, if any, duly endorsed or
accompanied by a proper instrument of transfer).
2.03 Payment. Payment for such shares shall be made in
cash to the shareholder of record within 7 days after the date
upon which the application (including any certificate or certi-
ficates which may have been issued therefore, duly endorsed or
accompanied by a proper instrument of transfer) is received,
subject to the provision of Section 2.04 hereof.
2.04 Effect of Suspension of Determination of Net Asset
Value. If, pursuant to Section 3.03 hereof, the Board of Di-
rectors shall declare a suspension of the determination of net
asset value, the rights of stockholders (including those who shall
have applied for redemption pursuant to Section 2.01 hereof but
who shall not yet have received payment) to have shares redeemed
and paid for by the Corporation shall be suspended until the
termination of such suspension is declared. Any stockholder who
shall have his redemption right so suspended may during the period
of such suspension, by appropriate written notice of revocation at
the office or agency where application was made, revoke any
application for redemption not honored and withdraw any
certificates on deposit. The redemption price of shares for which
redemption applications have not been revoked shall be the net
asset value of such shares next determined as set forth in Section
III after the termination of such suspension, and payment shall be
made within 7 days after the date upon which the application was
made plus the period after such application during which the
determination of net asset value was suspended.
2.05 Repurchase by Agreement. The Corporation may repur-
chase shares of the Corporation directly, or through its dis-
tributor or another agent designated for the purpose, by agreement
with the owner thereof at a price not exceeding the net asset
value per share determined pursuant to Section III hereof.
2.06 Redemption of Stockholders' Interest. The Corporation
shall have the right to redeem shares of any stockholder for their
then current net asset value per share if at such time the
stockholder owns shares having an aggregate net asset value of
less than $500 subject to such terms and conditions as the Board
of Directors may approve. In addition, if, in the opinion of the
Board of Directors, concentration in the ownership of the
Corporation's shares might cause the Corporation to be deemed a
personal holding company within the meaning of the Internal
Revenue Code, the Corporation may compel the redemption of, reject
any order for or refuse to give effect on the Corporation's books
to transfer of, its shares in an effort to prevent personal
holding company status. The Corporation shall be required only to
give general notice to all shareholders of its intention to avail
itself of either such right, either by publication in the
Corporation's prospectus, if any, or by such other means as the
Board of Directors may determine.
SECTION III
NET ASSET VALUE OF SHARES
3.01 By Whom Determined. The Board of Directors shall have
the power and duty to determine from time to time the net asset
value per share of the outstanding shares of each series of
Capital Stock of the Corporation. It may delegate such power and
duty to any one or more of the directors and officers of the
Corporation, to the investment adviser, custodian or depositary of
the Corporation's assets, or to another agent of the Corporation
appointed for such purpose. Any determination made pursuant to
this Section by the Board of Directors or its delegate shall be
binding on all parties concerned.
3.02 When Determined. The net asset value shall be deter-
mined at such times as the Board of Directors shall prescribe by
resolution, provided that such net asset value shall be determined
at least once each week. In the absence of a resolution of the
Board of Directors, the net asset value shall be determined on
each business day as of 12:00 noon New York City time and as of
the close of trading on the New York Stock Exchange.
- 4 -
<PAGE>
3.03 Suspension of Determination of Net Asset Value. The
Board of Directors may declare a suspension of the determination
of net asset value for the whole or any part of any period (a)
during which the New York Stock Exchange is closed other than
customary week-end and holiday closings, (b) during which trading
on the New York Stock Exchange is restricted, (c) during which an
emergency exists as a result of which disposal by the Corporation
of securities owned by it is not reasonably practicable or it is
not reasonably practicable for the Corporation fairly to determine
the value of its net assets or (d) during which a governmental
body having jurisdiction over the Corporation may by order permit
for the protection of the security holders of the Corporation.
Such suspension shall take effect at such time as the Board of
Directors shall specify and thereafter there shall be no
determination of net asset value until the Board of Directors
shall declare the suspension at an end, except that the suspension
shall terminate in any event on the first day on which (1) the
condition giving rise to the suspension shall have ceased to exist
and (2) no other condition exists under which suspension is
authorized under this Section 3.03. Each declaration by the Board
of Directors pursuant to this Section 3.03 shall be consistent
with such official rules and regulations, if any, relating to the
subject matter thereof as shall have been promulgated by the
Securities and Exchange Commission or any other governmental body
having jurisdiction over the Corporation and as shall be in effect
at the time. To the extent not inconsistent with such official
rules and regulations, the determination of the Board of Directors
shall be conclusive.
3.04 Computation of Per Share Net Asset Value.
(a) Net Asset Value Per Share. The net asset value of each
share as of any particular time shall be the quotient obtained by
dividing the value of the net assets of the Corporation by the
total number of shares outstanding.
(b) Value of Corporation's Net Assets. The value of the
Corporation's net assets as of any particular time shall be the
value of the Corporation's assets less its liabilities, determined
and computed as follows:
(1) Corporation's Assets. The Corporation's assets
shall be deemed to include: (A) all cash on hand or on
deposit, including any interest accrued thereon, (B) all
bills and demand notes and accounts receivable, (C) all
securities owned or contracted for by the Corporation, (D)
all stock and cash dividends and cash distributions payable
to but not yet received by the Corporation (when the
valuation of the underlying security is being determined ex-
dividend), (E) all interest accrued on all interest-bearing
securities owned by the Corporation (except accrued interest
included in the valuation of the underlying security), (F)
all repurchase and reverse repurchase agreements and (G) all
other property of every kind and nature, including prepaid
expenses.
(2) Valuation of Assets. The value of such assets is
to be determined as follows:
(i) Cash and Prepaid Expenses. The value of
any cash on hand and of any prepaid expenses shall be
deemed to be their face amount.
(ii) Other Current Assets. The value of any
cash on deposit, bills, demand notes, accounts
receivable, and cash dividends and interest declared
or accrued as aforesaid and not yet received shall be
deemed to be the face amount thereof, unless the Board
of Directors or its delegate shall be determine that
any such item is not worth its face amount. In such
case the value of the item shall be deemed to be its
reasonable value, as determined by the Board of
Directors or its delegate.
(iii) Securities Listed or Dealt in on New York
Stock Exchange. The value of any security listed or
dealt in upon the New York Stock Exchange and not
subject to restrictions against sale by the
Corporation on such Exchange shall be determined by
taking the latest sale price at the time as of which
net asset value is being determined, all as reported
by any means in common use. Lacking any sales, the
value shall be deemed
- 5 -
<PAGE>
to be such value, not higher than the closing asked
price and not lower than the closing bid price therefor
at such time, as the Board of Directors or its delegate
may from time to time determine. When an appraisal is
made as part of a determination other than as of the
close of trading, the latest available quotations (i.e.,
last sale on that day or latest bid asked if no sale on
that day) shall be used. The Board of Directors may by
resolution permit quotations on an exchange other than
the New York Stock Exchange or over-the-counter rather
than stock exchange quotations to be used when they
appear to the Board of Directors or its delegate to
reflect more closely the fair value of any particular
security in the portfolio.
(iv) Securities Listed on Other Exchanges. The
value of any security listed or dealt in on one or
more securities exchanges, but not on the New York
Stock Exchange and not subject to restrictions against
sale by the Corporation on such exchanges, shall be
determined as nearly as possible in the manner
described in the preceding subparagraph, with
reference to the quotations on the exchange that, in
the option of the Board of Directors or its delegate,
best reflects the fair value of the security.
(v) Unlisted Securities and Other Property.
The value of any other property, the valuation of
which is not provided for above, shall be its fair
market value as determined in such manner as the Board
of Directors shall from time to time prescribe by
resolution.
(3) The Corporation's Liabilities. The Corporation's
liabilities shall not be deemed to include outstanding
shares and surplus. They shall be deemed to include: (A)
all bills and accounts payable, (B) all expenses accrued,
(C) all contractual obligations for the payment of money or
property, including the amount of any unpaid dividends upon
the Corporation's shares declared to shareholders of record
at or before the time as of which the net asset value is
being determined, (D) all reserves authorized approved by
the Board of Directors for taxes or contingencies and (E)
all other liabilities of whatsoever kind and nature.
3.05 Interim Determinations. Any determination of net
asset value other than as of 12:00 noon New York City time and as
of the close of trading on the New York Stock Exchange may be made
either by appraisal or by calculation or estimate. Any such
calculation or estimate shall be based on changes in the market
value of representative or selected securities or on changes in
recognized market averages since the last closing appraisal and
made in a manner which, in the opinion of the Board of Directors
or its delegate, will fairly reflect the changes in the net asset
value.
3.06 Miscellaneous. For the purposes of this Section III:
(a) Shares of the Corporation sold shall be deemed to be
outstanding as of the time at or after which an unconditional
order therefor has been received by the Corporation (directly or
through one of its agents), the sale price in currency has been
determined and federal funds are credited to an account of a
series of stock of the Corporation or to an account of its
custodian established for said series of stock of the Corporation.
The net sale price of shares sold to the Corporation (less
commission, if any, and less any stamp or other tax payable by the
Corporation in connection with the issue and sale thereof) shall
be thereupon deemed to be an asset belonging to that series of the
Corporation.
(b) Shares of a series of stock of the Corporation for
which an application for redemption has been made or which are
subject to repurchase by the Corporation shall be deemed to be
outstanding up to and including the time as of which the re-
demption or repurchase price is determined. After such time, they
shall be deemed to be no longer outstanding and the price until
paid shall be deemed to be a liability belonging to said series of
the Corporation.
- 6 -
<PAGE>
(c) Funds on deposit and contractual obligations payable to
the Corporation in foreign currency and liabilities and
contractual obligations payable by the Corporation in foreign
currency shall be taken at the current cable rate of exchange as
nearly as practicable at the time as of which the net asset value
is computed.
SECTION IV
COMPLIANCE WITH INVESTMENT
COMPANY ACT OF 1940
Notwithstanding any of the foregoing provisions of this
Article SEVENTH, the board of directors may prescribe, in its
absolute discretion, such other bases and times for determining
the per share net asset value of the Corporation's Capital Stock
as it shall deem necessary or desirable to enable the Corporation
to comply with any provision of the Investment Company Act of
1940, or any rule or regulation thereunder, including any rule or
regulation adopted pursuant to Section 22 of said Act by the
Securities and Exchange Commission or any securities association
registered under the Securities Exchange Act of 1934, all as in
effect now or as hereafter amended or added.
EIGHTH: Board of Directors.
The number of directors of the Corporation shall be such
number as may from time to time be fixed in the manner provided in
the By-Laws of the Corporation, provided that the number of
directors shall not be less than three. Except as provided in the
By-Laws, the election of directors may be conducted in any way
approved at the meeting (whether of stockholders or directors) at
which the election is held, provided that such election shall be
by ballot whenever requested by any person entitled to vote. As
of the effective date of this Restatement of Articles of
Incorporation, the Board of Directors is comprised of ten members
and the following persons have been duly elected or appointed to
serve as Directors: Margo N. Alexander, Richard Q. Armstrong, E.
Garrett Bewkes, Jr., Richard Burt, Mary C. Farrell, Meyer
Feldberg, George W. Gowen, Frederic V. Malek, Carl W. Schafer, and
John R. Torell III.
NINTH: Stockholder Liability.
Neither the stockholders personally nor their property shall
be liable to any extent for the payment of the corporate debts.
TENTH: Management of the Affairs of the Corporation.
(1) Powers of the Corporation. All corporate powers and
authority of the Corporation (except as at the time otherwise
provided by statute, by these Articles of Incorporation or by the
By-Laws) shall be vested in and exercised by the Board of
Directors.
(2) By-Laws. The Board of Directors shall have the power
to make, alter or repeal the By-Laws of the Corporation except to
the extent that the By-Laws otherwise provide. The By-Laws may
provide that meetings of the stockholders may be held at any place
in the United States provided in, or fixed by the Board of
Directors pursuant to, the By-Laws. The By-Laws may also provide
for the conduct of meetings of the Board of Directors or
committees thereof by means of a telephone conference circuit.
(3) Compensation of Directors. The Board of Directors
shall have power from time to time to authorize payment of com-
pensation to the directors for services to the Corporation,
including fees for attendance at meetings of the Board of Di-
rectors and of committees.
(4) Inspection of Corporation's Books. The Board of Di-
rectors shall have power from time to time to determine whether
and to what extent, and at what times and places and under what
conditions and regulations, the
- 7 -
<PAGE>
accounts and books of the Corporation (other than the stock ledger)
or any of them shall be open to the inspection of stockholders; and
no stockholder shall have any right of inspecting any account, book
or document of the Corporation except as at the time conferred by
statute, unless authorized by a resolution of the stockholders or
the Board of Directors.
(5) Meetings, Offices, etc. Both stockholders and direc-
tors shall have power, if the By-Laws so provide, to hold their
meetings and to have one or more offices within or without the
State of Maryland and to keep the books of the Corporation (except
as at the time otherwise required by statute) outside the State of
Maryland, at such places as from time to time may be designated by
the By-Laws or the Board of Directors.
(6) Majority of Votes. Notwithstanding any provision of
the General Corporation Laws of the State of Maryland requiring a
greater proportion than a majority of the votes entitled to be
cast in order to take or authorize any action, any such action may
be taken or authorized upon the concurrence of at least a majority
of the aggregate number of votes entitled to be cast thereon.
(7) Determination of Net Profits, etc; Dividends. The
Board of Directors is expressly authorized to determine in ac-
cordance with generally accepted accounting principles and
practices what constitutes net profits, earnings, surplus or net
assets in excess of capital, and to determine what accounting
periods shall be used by the Corporation for any purpose, whether
annual or any other period, including daily; to set apart out of
any funds of the Corporation such reserves for such purposes as it
shall determine and to abolish the same; to declare and pay
dividends and distributions in cash, securities or other property
from surplus or any funds legally available therefor, at such
intervals (which may be as frequently as daily) or on such other
periodic basis, as it shall determine; to declare such dividends
or distributions including daily dividends, by means of a formula
or other method of determination at meetings held less frequently
than the frequency of the effectiveness of such declarations; to
establish payment dates for dividends or any other distributions
on any basis including dates occurring less frequently than the
effectiveness of the declarations thereof; and to provide for the
payment of declared dividends on a date other than the specified
payment date in the case of stockholders of the Corporation
redeeming their entire ownership of shares of the Corporation.
ELEVENTH: Name.
The Corporation acknowledges that it is adopting its cor-
porate name through permission of Paine, Webber, Jackson & Curtis
Incorporated, and agrees that Paine, Webber, Jackson & Curtis
Incorporated reserves to itself and any successor to its business
the right to grant the non-exclusive right to use the name
"PaineWebber Cashfund, Inc." or "Paine, Webber, Jackson & Curtis
Fund" or "Paine Webber Fund" or "Paine Webber" or any similar name
to any other corporation or entity, including but not limited to
any investment company of which Paine, Webber, Jackson & Curtis
Incorporated or any subsidiary or affiliate thereof or any
successor to the business thereof shall be the investment adviser,
administrator or distributor.
TWELFTH: Reservation of Right to Amend.
The Corporation reserves the right to amend or repeal any
provision contained in these Articles of Incorporation from time
to time and at any time in the manner now or hereafter prescribed
by the law of the State of Maryland and all rights herein
conferred upon stockholders are granted subject to such
reservation.
THIRTEENTH: Contracts.
(a) The Board of Directors may in its discretion from time
to time enter into an exclusive or non-exclusive distribution
contract or contracts providing for the sale of the shares of
Capital Stock of the Corporation to net the Corporation not less
than the amount provided for in Section 1.02 of Article SEVENTH
hereof, whereby the Corporation may either agree to sell the
shares to the other party to the contract or appoint such other
party its sales agent for such shares (such other party being
herein sometimes called the "underwriter"), and in either case on
such
- 8 -
<PAGE>
terms and conditions as may be prescribed in the By-Laws, if
any, and such further terms and conditions as the Board of
Directors may in its discretion determine not inconsistent with
the provisions of this Article THIRTEENTH or Article SEVENTH
hereof or of the By-Laws; and such contract may also provide for
the repurchase of shares of the Corporation by such other party as
agent of the Corporation.
(b) The Board of Directors may in its discretion from time
to time enter into an investment advisory or management contract
or contracts whereby the other party to such contract shall
undertake to furnish to the Board of Directors such management,
investment advisory, statistical and research facilities and
services and such other facilities and services, if any, and all
upon such terms and conditions as the Board of Directors may in
its discretion determine.
(c) Any contract of the character described in paragraphs
(a) or (b) or for services as administrator, custodian, transfer
agent or disbursing agent or related services may be entered into
with any person (including a corporation, company, trust,
association, firm, or other business organization) although any
one or more of the directors or officers of the Corporation may be
an officer, director, trustee, shareholder or member of such other
party to the contract, and no such contract shall be invalidated
or rendered voidable by reason of the existence of any such
relationship, nor shall any person holding such relationship be
liable merely by reason of such relationship for any loss or
expense to the Corporation under or by reason of said contract or
accountable for any profit realized directly or indirectly
therefrom, provided that the contract when entered into was
reasonable and fair and not inconsistent with the provisions of
this Article THIRTEENTH. The same person (including a
corporation, company, trust, association, firm, or other business
organization) may be the other party to contracts entered into
pursuant to paragraphs (a) and (b) above, and any individual may
be financially interested or otherwise affiliated with persons who
are parties to any or all of the contracts mentioned in this
paragraph (c).
(d) Any contract entered into pursuant to paragraph (a) or
(b) above shall be consistent with and subject to the requirements
of Section 15 of the Investment Company Act of 1940, as amended,
with respect to its continuance in effect, its termination and the
method of authorization and approval of such contract or renewal
thereof.
FOURTEENTH: Liability of Directors and Officers.
(a) To the maximum extent permitted by applicable law
(including Maryland law and the Investment Company Act of 1940) as
currently in effect or as may hereafter be amended, no director or
officer of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages.
(b) No amendment, alteration or repeal of this Article or
the adoption, alteration or amendment of any other provision of
the Articles of Incorporation or By-Laws inconsistent with this
Article, shall adversely affect any limitation of liability of any
officer or director under this Article with respect to such
amendment, alteration, repeal or adoption.
FIFTEENTH: Duration.
The duration of the Corporation shall be perpetual.
- 9 -
<PAGE>
IN WITNESS WHEREOF, PAINEWEBBER CASHFUND, INC. has caused
these presents to be signed in its name and on its behalf by its
Vice President and attested by the Corporation's Assistant
Secretary on this 26th day of July, 1996, who swear under penalty
of perjury to the best of their knowledge, information, and
belief, the matters and facts set forth in these articles are true
in all material respects.
PAINEWEBBER CASHFUND, INC.
By: /s/ Dianne E. O'Donnell
-----------------------------
Dianne E. O'Donnell
Vice President
Attest: /s/ Keith A. Weller
-----------------------------
Keith A. Weller
Assistant Secretary
- 10 -
EXHIBIT 2(c)
PAINEWEBBER CASHFUND, INC.
CERTIFICATE OF VICE PRESIDENT AND SECRETARY
OF
AMENDMENTS TO BY-LAWS
I, Dianne E. O'Donnell, Vice President and Secretary of
PaineWebber Cashfund, Inc. ("Corporation"), hereby certify that
the By-Laws of the Corporation were amended as set forth below by
the shareholders of the Corporation on May 1, 1996:
ARTICLES XII (Miscellaneous) and XIII (Investment Policies)
of the By-Laws are deleted in their entirety.
ARTICLE XI (Amendments) of the By-Laws is amended by
deleting Section 11.02 in its entirety and revising Section
11.01 to read as follows:
All By-Laws of the Corporation, whether adopted by the
board of directors or the stockholders, shall be
subject to amendment, alteration or repeal, and new By-
Laws may be made, by affirmative vote of a majority of
either:
(A) The holders of record of the outstanding shares of
the Corporation entitled to vote, at any annual or
special meeting, the notice and waiver of notice of
which shall have specified or summarized the proposed
amendment, alteration, repeal or new By-Law; or
(B) the directors, at any regular or special meeting.
Dated: July 26, 1996 By: /s/ Dianne E. O'Donnell
-----------------------------------
Dianne E. O'Donnell
Vice President and Secretary
PaineWebber Cashfund, Inc.
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" in the Prospectus and "Auditors" in the Statement of Additional
Information and to the incorporation by reference of our report dated May 14,
1996, in this Registration Statement (Form N-1A 2-60655) of PaineWebber
Cashfund, Inc.
/s/ Ernst & Young LLP
-----------------------------
Ernst & Young LLP
New York, New York
July 29, 1996
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<ARTICLE> 6
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<NAME> PW CASHFUND, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 5,303,038
<INVESTMENTS-AT-VALUE> 5,303,038
<RECEIVABLES> 12,516
<ASSETS-OTHER> 204
<OTHER-ITEMS-ASSETS> 85
<TOTAL-ASSETS> 5,315,843
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,285
<TOTAL-LIABILITIES> 7,285
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,309,972
<SHARES-COMMON-STOCK> 5,310,143
<SHARES-COMMON-PRIOR> 3,702,596
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<ACCUMULATED-NET-GAINS> (1,414)
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 5,308,558
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 265,772
<OTHER-INCOME> 0
<EXPENSES-NET> (27,277)
<NET-INVESTMENT-INCOME> 238,495
<REALIZED-GAINS-CURRENT> 332
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 238,827
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (238,495)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 18,372,688
<NUMBER-OF-SHARES-REDEEMED> (16,994,663)
<SHARES-REINVESTED> 229,523
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<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1,746)
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<GROSS-ADVISORY-FEES> 16,999
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 27,277
<AVERAGE-NET-ASSETS> 4,555,127
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.052
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.052)
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.60
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