<PAGE>
PAINEWEBBER AND
MITCHELL HUTCHINS/KIDDER, PEABODY MUTUAL FUNDS
PAINEWEBBER OFFERS A FAMILY OF 35 MUTUAL FUNDS WHICH ENCOMPASS A DIVERSIFIED
RANGE OF INVESTMENT GOALS. INVESTORS MAY EXCHANGE THEIR FUND SHARES WITH OTHER
FUNDS WITHIN THE FAMILY.
INCOME FUNDS
MH/KP Adjustable Rate Government Fund
MH/KP Global Fixed Income Fund
MH/KP Government Income Fund
MH/KP Intermediate Fixed Income Fund
PW Global Income Fund
PW High Income Fund
PW Investment Grade Income Fund
PW Short-Term U.S. Government Income Fund
PW Short-Term U.S. Government Income Fund for
Credit Unions
PW Strategic Income Fund
PW U.S. Government Income Fund
TAX-FREE INCOME FUNDS
MH/KP Municipal Bond Fund
PW California Tax-Free Income Fund
PW Municipal High Income Fund
PW National Tax-Free Income Fund
PW New York Tax-Free Income Fund
GROWTH FUNDS
MH/KP Emerging Markets Equity Fund
MH/KP Global Equity Fund
MH/KP Small Cap Growth Fund
PW Atlas Global Growth Fund
PW Blue Chip Growth Fund
PW Capital Appreciation Fund
PW Communications & Technology Growth Fund
PW Europe Growth Fund
PW Growth Fund
PW Regional Financial Growth Fund
PW Small Cap Value Fund
GROWTH AND INCOME FUNDS
MH/KP Asset Allocation Fund
MH/KP Equity Income Fund
PW Asset Allocation Fund
PW Growth and Income Fund
PW Global Energy Fund
PW Global Growth and Income Fund
PW Utility Income Fund
------------------
'c'1995 PAINEWEBBER INCORPORATED
['Recycled' Logo]
PAINEWEBBER
MONEY
MARKET
FUND
ANNUAL REPORT
February 28, 1995
<PAGE>
- --------------------------------------------------------------------------------
April 15, 1995
Dear Shareholder,
During the year ended February 28, 1995, the United States economy exhibited
steady growth. In a series of monetary tightenings that began early in 1994, the
Federal Reserve Board raised the benchmark Federal Funds rate, the rate banks
charge each other for overnight borrowing, six times in 1994 for a total
increase of 2.5%. These increases, which were implemented to moderate economic
expansion and forestall inflation, triggered stock and bond market volatility
throughout most of 1994. The Federal Reserve tightened another 0.5% on February
1, 1995, increasing the Federal Funds rate to 6.0%.
Productivity gains in the workplace and the increased competitiveness of United
States corporations in the global marketplace contributed to the low inflation
and steady growth which characterized the economy during the year ended February
28, 1995. Unemployment continued to decline, and retail sales remained brisk,
sparked by strengthened consumer confidence and an upward trend in personal
income. However, side effects of higher interest rates, including a decline in
single family housing starts, crept into economic data during the latter half of
1994. As we move into the second quarter of 1995, the economy remains
healthy -- although it is not yet clear what impact higher interest rates will
have on economic growth.
PORTFOLIO REVIEW
PaineWebber Money Market Fund's current yields for Class A, B and D shares for
the seven-day period ended February 28, 1995 were 4.69%, 4.16% and 4.15%,
respectively. The Fund maintained a weighted average maturity of 30 days as of
February 28, 1995. During the year ended February 28, 1995, the Federal
Reserve's credit tightening policy caused interest rates on money market
instruments to increase. For example, 30-day commercial paper rates rose to
5.95% as of February 28, 1995, from approximately 3.40% as of February 28, 1994.
The Federal Funds rate for short-term borrowing was 3.25% as of February 28,
1994 and 6.0% as of February 28, 1995.
During the year ended February 28, 1995, the Fund's performance was a function
of the Federal Funds rate increases. Rising interest rates translated into
higher yields for the portfolio. During the period, the Fund continuously
reduced its weighted average maturity, from 66 days as of February 28, 1994, to
30 days as of February 28, 1995. A shorter weighted average maturity benefits
the Fund by enabling it to have more cash available to invest as rates trend
upward. Going forward, the Fund will maintain a neutral weighted average
maturity as short-term rates find stability during uncertain economic times.
Investment decisions in the portfolio will be dominated by credit quality and
liquidity.
Effective December 21, 1994, Dennis L. McCauley became Managing Director and
Chief Investment Officer -- Fixed Income of Mitchell Hutchins. Mr. McCauley is
responsible for overseeing all active fixed income investments, including
domestic and global taxable and tax-exempt mutual funds.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Mr. McCauley and Susan P. Messina are responsible for the day-to-day portfolio
management of the Fund. Mrs. Messina is a senior vice president of Mitchell
Hutchins and the Fund's portfolio manager.
We value you as a shareholder and as a client, and thank you for your continued
support. We welcome any comments or questions you may have.
Sincerely,
<TABLE>
<S> <C>
FRANK P.L. MINARD DENNIS L. MCCAULEY
FRANK P.L. MINARD DENNIS L. MCCAULEY
Chairman, Managing Director and Chief Investment
Mitchell Hutchins Asset Management Inc. Officer-Fixed Income,
Mitchell Hutchins Asset Management Inc.
SUSAN P. MESSINA
SUSAN P. MESSINA
Senior Vice President,
Taxable Money Funds
Mitchell Hutchins Asset Management Inc.
</TABLE>
- --------------------------------------------------------------------------------
2
<PAGE>
PAINEWEBBER MONEY MARKET FUND
- --------------------------------------------------------------------------------
Statement of Net Assets
February 28, 1995
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 3.91%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000) Dates Rates Value
- --------- --------------------- ------------------- -----------
<S> <C> <C> <C> <C>
$ 500 Federal Home Loan Bank*........................ 03/02/95 6.350% $ 498,259
1,000 Federal National Mortgage Association.......... 06/15/95 5.170 984,777
1,000 Federal National Mortgage Association*......... 03/07/95 6.090 1,000,000
500 Student Loan Marketing Association*............ 06/30/95 5.480 500,000
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(cost -- $2,983,036)................................... 2,983,036
-----------
- ----------------------------------------------------------------------------------------------------------------------
BANKER'S ACCEPTANCE -- 2.60%
- ----------------------------------------------------------------------------------------------------------------------
Yankee -- 2.60%
2,000 Dai-Ichi Kangyo Bank (cost -- $1,984,281)...... 04/17/95 6.020 1,984,281
-----------
- ----------------------------------------------------------------------------------------------------------------------
BANK NOTES -- 5.24%
- ----------------------------------------------------------------------------------------------------------------------
Domestic -- 5.24%
2,000 Fifth Third Bank............................... 03/27/95 5.950 1,999,927
1,000 NationsBank of North Carolina.................. 05/19/95 5.400 999,987
1,000 Old Kent Bank*................................. 03/02/95 6.175 999,984
-----------
TOTAL BANK NOTES (cost -- $3,999,898)...................... 3,999,898
-----------
- ----------------------------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT -- 3.93%
- ----------------------------------------------------------------------------------------------------------------------
Domestic -- 1.31%
1,000 Bank One Akron N.A............................. 03/06/95 5.950 999,986
-----------
Yankee -- 2.62%
2,000 Societe Generale Bank.......................... 03/01/95 6.000 2,000,000
-----------
TOTAL CERTIFICATES OF DEPOSIT (cost -- $2,999,986)......... 2,999,986
-----------
- ----------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER -- 79.25%
- ----------------------------------------------------------------------------------------------------------------------
Asset - Backed -- 5.20%
2,000 Delaware Funding Corp.......................... 04/21/95 6.000 1,983,000
2,000 New Center Asset Trust......................... 04/07/95 to 05/02/95 6.170 to 6.380 1,982,817
-----------
3,965,817
-----------
Auto/Truck -- 1.30%
1,000 Toyota Motor Credit Corp....................... 04/04/95 6.200 994,144
-----------
Banking -- 11.74%
2,000 Abbey National North America Corp.............. 03/07/95 5.070 1,998,310
2,000 Canadian Imperial Holdings Inc................. 03/20/95 5.960 1,993,709
2,000 Cregem North America Inc....................... 04/07/95 6.090 1,987,482
2,000 MPS U.S. Commercial Paper Corp................. 04/17/95 6.050 1,984,203
1,000 Nordbanken North America Inc................... 04/17/95 6.090 992,049
-----------
8,955,753
-----------
</TABLE>
3
<PAGE>
PAINEWEBBER MONEY MARKET FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMERCIAL PAPER -- (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000) Dates Rates Value
- --------- --------------------- ------------------- -----------
<S> <C> <C> <C> <C>
Broker/Dealer -- 5.87%
$ 2,500 Goldman Sachs Group L.P........................ 03/13/95 to 03/15/95 5.220 to 5.950% $ 2,494,789
2,000 Merrill Lynch & Co. Inc........................ 04/17/95 6.050 1,984,203
-----------
4,478,992
-----------
Business Services -- 3.60%
2,750 PHH Corp....................................... 03/01/95 5.970 2,750,000
-----------
Chemicals -- 1.31%
1,000 BASF Corp...................................... 03/20/95 5.950 996,860
-----------
Drugs & Healthcare -- 3.93%
3,000 Miles Inc...................................... 03/09/95 5.900 2,996,067
-----------
Electronics -- 8.47%
464 Emerson Electric Co............................ 03/01/95 6.100 464,000
3,000 Sony Capital Corp.............................. 03/07/95 5.910 2,997,045
3,000 Vermont American Corp.......................... 03/03/95 5.970 2,999,005
-----------
6,460,050
-----------
Energy -- 2.61%
2,000 Chevron Oil Finance Co......................... 03/16/95 5.980 1,995,017
-----------
Finance-Conduit -- 5.22%
2,000 Metlife Funding Inc............................ 03/29/95 5.930 1,990,776
2,000 Svenska Handelsbanken Inc...................... 03/15/95 6.020 1,995,318
-----------
3,986,094
-----------
Finance-Consumer -- 3.92%
3,000 Household Finance Corp......................... 03/24/95 5.930 2,988,634
-----------
Finance-Diversified -- 9.12%
2,000 Associates Corp. of North America.............. 05/09/95 6.080 1,976,693
2,000 CIT Group Holdings Inc......................... 03/22/95 5.960 1,993,047
3,000 Sanwa Business Credit Corp..................... 03/22/95 5.980 2,989,535
-----------
6,959,275
-----------
Finance-Retail -- 2.61%
2,000 American Express Credit Corp................... 03/28/95 6.000 1,991,000
-----------
Finance-Subsidiary -- 1.27%
1,000 MCA Funding Corp............................... 08/15/95 6.230 971,100
-----------
Food & Beverage -- 2.61%
2,000 Nestle Capital Corp............................ 03/27/95 5.930 1,991,434
-----------
General Trade -- 3.93%
3,000 Mitsubishi International Corp.................. 03/08/95 6.020 2,996,488
-----------
Insurance-Property/Casualty -- 6.54%
2,000 AIG Funding Inc................................ 03/13/95 5.890 1,996,073
3,000 John Hancock Capital Corp...................... 03/14/95 5.930 2,993,576
-----------
4,989,649
-----------
TOTAL COMMERCIAL PAPER (cost -- $60,466,374)............... 60,466,374
-----------
</TABLE>
4
<PAGE>
PAINEWEBBER MONEY MARKET FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM CORPORATE OBLIGATIONS -- 2.28%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000) Dates Rates Value
- --------- --------------------- ------------------- -----------
<S> <C> <C> <C> <C>
Food & Beverage -- 1.63%
$ 1,250 Anheuser Busch Companies Inc................... 09/18/95 4.720% $ 1,241,949
-----------
Miscellaneous -- 0.65%
500 Beta Finance Inc............................... 12/08/95 7.050 500,000
-----------
TOTAL SHORT-TERM CORPORATE OBLIGATIONS
(cost -- $1,741,949)....................................... 1,741,949
-----------
- ----------------------------------------------------------------------------------------------------------------------
FLOATING RATE NOTES -- 1.31%
- ----------------------------------------------------------------------------------------------------------------------
Miscellaneous -- 1.31%
1,000 Beta Finance Inc.* (cost -- $1,000,000)........ 03/01/95 6.190 1,000,000
-----------
- ----------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 4.59%
- ----------------------------------------------------------------------------------------------------------------------
3,500 Repurchase Agreement dated 02/28/95, with Daiwa
Securities America Inc., collateralized by
$2,480,000 U.S. Treasury Bonds, 12.50% due
08/15/14; proceeds: $3,500,591
(cost -- $3,500,000)........................... 03/01/95 6.080 3,500,000
-----------
TOTAL INVESTMENTS (which approximates cost for federal
income tax purposes) -- 103.11%..........................
78,675,524
Liabilities in excess of other assets -- (3.11%)...........
(2,373,253)
-----------
NET ASSETS (applicable to 21,043,428; 39,139,137; and
16,141,376 shares of Class A, Class B, and Class D,
respectively, each equivalent to $1.00 per
share) -- 100.00%........................................ $76,302,271
-----------
-----------
</TABLE>
- ------------
* Variable Rate Security -- Maturity date reflects earlier of reset date or
maturity date. The interest rates shown are the current rates as of February
28, 1995 and reset periodically.
Weighted average maturity (unaudited) -- 30 days
See accompanying notes to financial statements
5
<PAGE>
PAINEWEBBER MONEY MARKET FUND
- --------------------------------------------------------------------------------
Statement of Operations
For the Year Ended February 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest........................................................................................ $5,304,989
----------
EXPENSES:
Investment advisory and administration.......................................................... 536,405
Service fees -- Class A......................................................................... 81,709
Service and distribution fees -- Class B........................................................ 317,615
Service and distribution fees -- Class D........................................................ 241,869
Legal and audit................................................................................. 78,084
Federal and state registration.................................................................. 74,663
Transfer agency and service fees................................................................ 72,518
Custody and accounting.......................................................................... 55,705
Reports and notices to shareholders............................................................. 30,077
Directors' fees................................................................................. 10,000
Other expenses.................................................................................. 3,986
----------
1,502,631
----------
NET INVESTMENT INCOME............................................................................... 3,802,358
NET REALIZED LOSSES FROM INVESTMENT TRANSACTIONS.................................................... (6,398)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................ $3,795,960
----------
----------
</TABLE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
FEBRUARY 28, 1995 FEBRUARY 28, 1994
----------------- -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income................................................ $ 3,802,358 $ 385,592
Net realized gains (losses) from investment transactions............. (6,398) 32
----------------- -----------------
Net increase in net assets resulting from operations................. 3,795,960 385,624
----------------- -----------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income -- Class A..................................... (1,257,492) (208,295)
Net investment income -- Class B..................................... (1,465,996) (122,275)
Net investment income -- Class D..................................... (1,078,870) (55,022)
----------------- -----------------
(3,802,358) (385,592)
----------------- -----------------
NET INCREASE IN NET ASSETS DERIVED FROM CAPITAL STOCK TRANSACTIONS....... 42,855,410 4,255,269
----------------- -----------------
Net increase in net assets............................................... 42,849,012 4,255,301
NET ASSETS:
Beginning of period.................................................. 33,453,259 29,197,958
----------------- -----------------
End of period........................................................ $76,302,271 $33,453,259
----------------- -----------------
----------------- -----------------
</TABLE>
See accompanying notes to financial statements
6
<PAGE>
PAINEWEBBER MONEY MARKET FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Master Series, Inc. ('Master Series') was incorporated in Maryland
on October 29, 1985 and is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, as an open-end,
diversified series investment company which currently offers three series of
shares: PaineWebber Money Market Fund ('Fund'), PaineWebber Asset Allocation
Fund and PaineWebber Blue Chip Growth Fund. The financial statements for the
PaineWebber Blue Chip and PaineWebber Asset Allocation Fund are not included
herein.
Organizational Matters -- Prior to commencing its operations, the Fund had no
activities other than organizational matters and activities related to the
initial public offering and the issuance, at net asset value, of one Class B
share of the Fund to PaineWebber Incorporated ('PaineWebber').
Prior to July 1, 1991 the Fund issued only Class B shares. On July 1, 1991 and
July 14, 1992, the Fund commenced issuing Class A and Class D shares,
respectively. Each Class represents interest in the same assets of the Fund and
the Classes are identical except for differences in their sales charge
structure, ongoing distribution charges and certain transfer agency expenses. In
addition, Class B shares automatically convert to Class A shares approximately
six years after initial issuance. Class A, Class B, and Class D shares each have
exclusive voting rights on matters pertaining to its respective plan of
distribution. All Classes of shares may be obtained only through an exchange of
shares of the corresponding class of other PaineWebber mutual funds.
Valuation and Accounting for Investments -- Investments are valued at amortized
cost which approximates market value. Investment transactions are recorded on
the trade date. Realized gains and losses from investment transactions are
calculated using the identified cost method. Interest income is recorded on an
accrual basis. Premiums are amortized and discounts are accreted as adjustments
to interest income and the identified cost of investments.
The ability of the issuers of the debt securities held by the Fund to meet their
obligations may be affected by economic developments, including those particular
to a specific industry or region.
Repurchase Agreements -- The Fund's custodian takes possession of the collateral
pledged for investments in repurchase agreements. The underlying collateral is
valued daily on a mark-to-market basis to ensure that the value, including
accrued interest, is at least equal to the repurchase price. In the event of
default of the obligation to repurchase, the Fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral may be subject
to legal proceedings. The Fund may participate in joint repurchase agreement
transactions with other funds managed by Mitchell Hutchins Asset Management Inc.
('Mitchell Hutchins'), a wholly owned subsidiary of PaineWebber.
Federal Tax Status -- The Fund intends to distribute all of its taxable income
and to comply with the other requirements of the Internal Revenue Code
applicable to regulated investment companies. Accordingly, no provision for
federal income taxes is required. In addition, by distributing during each
calendar year substantially all of its net investment income, capital gains and
certain other amounts, if any, the Fund intends not to be subject to a federal
excise tax. At February 28, 1995, the Fund had capital loss carryforwards of
$21,669 available as reductions, to the extent provided in the regulations, of
any future net realized gains, which will expire between
7
<PAGE>
PAINEWEBBER MONEY MARKET FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements -- (continued)
- --------------------------------------------------------------------------------
February 28, 1999 and February 28, 2003. To the extent that such losses are used
to offset future capital gains, it is probable that the gains so offset will not
be distributed.
Net Investment Income and Dividends -- Income and expenses (excluding
class-specific expenses) are allocated proportionately to each Class of shares
based upon the relative net asset value of dividend-eligible shares of each
Class at the beginning of the day (after adjusting for current capital share
activity of the respective Classes). Realized and unrealized gains and losses
are allocated proportionately to each class of shares based upon the relative
value of shares outstanding at the beginning of the day (after adjusting for
current capital share activity of the respective Classes). Class-specific
expenses are charged directly to the applicable class of shares.
The Fund declares dividends on a daily basis from net investment income. The
amount of dividends and distributions from net investment income and net
realized capital gains are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting principles. Net
capital gains, if any, will be distributed at least annually, but the Fund may
make more frequent distributions of such gains, if necessary, to maintain its
net asset value per share at $1.00 or to avoid income or excise taxes.
INVESTMENT ADVISER AND ADMINISTRATOR
The Board of Directors of Master Series has approved an Investment Advisory and
Administration Contract ('Advisory Contract') with Mitchell Hutchins, under
which Mitchell Hutchins serves as investment adviser and administrator of the
Fund. In accordance with the Advisory Contract, the Fund pays Mitchell Hutchins
an investment advisory and administration fee, which is accrued daily and paid
monthly, at the annual rate of 0.50% of the Fund's average daily net assets. At
February 28, 1995, the Fund owed Mitchell Hutchins $34,203 for investment
advisory and administration fees.
In compliance with applicable state securities laws, Mitchell Hutchins will
reimburse the Fund if and to the extent that the aggregate operating expenses in
any fiscal year, exclusive of taxes, interest, brokerage fees, distribution fees
and extraordinary expenses, exceed limitations imposed by various state
regulations. Currently, the most restrictive limitation applicable to the Fund
is 2.5% of the first $30 million of average daily net assets, 2.0% of the next
$70 million and 1.5% of any excess over $100 million. For the year ended
February 28, 1995, no reimbursements were required pursuant to the above
limitation.
DISTRIBUTION PLANS
Mitchell Hutchins is the distributor of the Fund's shares and has appointed
PaineWebber as the exclusive dealer for the sale of those shares. Under separate
plans of distribution pertaining to the Class A, Class B and Class D shares, the
Fund pays Mitchell Hutchins monthly service fees at the annual rate of 0.25% of
the average daily net assets of each Class of shares and monthly distribution
fees at an annual rate of 0.50% of the average daily net assets of Class B and
Class D shares. At February 28, 1995, the Fund owed Mitchell Hutchins $41,883 in
service and distribution fees.
8
<PAGE>
PAINEWEBBER MONEY MARKET FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements -- (concluded)
- --------------------------------------------------------------------------------
Mitchell Hutchins also receives the proceeds of the contingent deferred sales
charges paid upon certain redemptions of Class B shares. Mitchell Hutchins has
informed the Fund that for the year ended February 28, 1995, it earned $459,933
in contingent deferred sales charges.
TRANSFER AGENCY SERVICE FEES
The Fund pays PaineWebber an annual fee of $4.00 per active PaineWebber
shareholder account for certain services not provided by the Fund's transfer
agent. For these services for the year ended February 28, 1995, PaineWebber
earned $21,549 in services fees. At February 28, 1995, the Fund owed PaineWebber
$1,851 for such fees.
OTHER LIABILITIES
At February 28, 1995, the amounts payable for Fund shares repurchased and
dividends payable aggregated $2,549,248 and $254,689, respectively.
CAPITAL STOCK
There are 10 billion shares of $0.001 par value common stock authorized for
Master Series, of which 1 billion were allocated to the Fund. Transactions in
shares of common stock, at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Class A Class B Class D
-------------------------- ------------------------- --------------------------
For the Years Ended For the Years Ended For the Years Ended
February 28, February 28, February 28,
-------------------------- ------------------------- --------------------------
1995 1994 1995 1994 1995 1994
------------ ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold........... 117,676,115 27,278,596 116,941,605 19,928,748 159,907,120 44,518,330
Shares repurchased.... (113,830,133) (28,998,464) (86,598,306) (21,453,898) (154,003,721) (37,328,145)
Shares converted from
Class B to Class
A................... 2,107,427 4,029,455 (2,107,427) (4,029,455) -- --
Dividends reinvested
in additional Fund
shares.............. 886,345 178,765 1,069,086 93,157 807,299 38,180
------------ ----------- ----------- ----------- ------------ -----------
Net increase
(decrease) in shares
outstanding......... 6,839,754 2,488,352 29,304,958 (5,461,448) 6,710,698 7,228,365
------------ ----------- ----------- ----------- ------------ -----------
------------ ----------- ----------- ----------- ------------ -----------
</TABLE>
9
<PAGE>
PAINEWEBBER MONEY MARKET FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period is
presented below:
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------
For the Years Ended For the Period
February 28, July 1, 1991`D'
------------------------------- to
1995 1994 1993 February 29, 1992
------- ------- ------- ------------------
<S> <C> <C> <C> <C>
Net asset value:
Beginning of period......................................... $1.00 $1.00 $1.00 $1.00
------- ------- ------- --------
Net investment income........................................... 0.037 0.016 0.022 0.026
Dividends from net investment income............................ (0.037) (0.016) (0.022) (0.026)
------- ------- ------- --------
Net asset value:
End of period............................................... $1.00 $1.00 $1.00 $1.00
------- ------- ------- --------
------- ------- ------- --------
Total investment return(1)...................................... 3.95% 1.64% 2.25% 2.47%
------- ------- ------- --------
------- ------- ------- --------
Ratios/supplemental data:
Net assets, end of period (000's)........................... $21,042 $14,204 $11,716 $3,806
Ratio of expenses to average net assets..................... 1.06% 1.72% 1.74% 1.90%*
Ratio of net investment income to average net assets........ 3.85% 1.70% 2.18% 3.61%*
</TABLE>
- ------------
* Annualized
`D' Commencement of issuance of shares.
(1) Total return is calculated assuming a $1,000 investment on the first day of
each period reported, reinvestment of all dividends and capital gain
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported. Total return
information for periods less than one year is not annualized.
10
<PAGE>
PAINEWEBBER MONEY MARKET FUND
- --------------------------------------------------------------------------------
Financial Highlights -- (concluded)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Class D
- ---------------------------------------------------------------- ------------------------------------------
For the Years
For the Years Ended Ended
- ----------------------------------------------------------------- ------------------
For the Period
February 28, February 29, February 28, February 28, July 14, 1992`D'
- ------------------------------- ------------ ------------ ------------------ to
1995 1994 1993 1992 1991 1995 1994 February 28, 1993
- ------- ------- ------- ------------ ------------ ------- ------ ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------- ------- ------- ------------ ------------ ------- ------ -------
0.032 0.011 0.016 0.039 0.068 0.033 0.012 0.009
(0.032) (0.011) (0.016) (0.039) (0.068) (0.033) (0.012) (0.009)
- ------- ------- ------- ------------ ------------ ------- ------ -------
$1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------- ------- ------- ------------ ------------ ------- ------ -------
- ------- ------- ------- ------------ ------------ ------- ------ -------
3.41% 1.12% 1.73% 4.16% 6.98% 3.44% 1.19% 0.81%
- ------- ------- ------- ------------ ------------ ------- ------ -------
- ------- ------- ------- ------------ ------------ ------- ------ -------
$39,123 $9,819 $15,280 $ 29,341 $ 50,842 $16,137 $9,430 $2,220
1.55% 2.25% 2.28% 2.06% 1.40% 1.55% 2.14% 2.14%*
3.46% 1.16% 1.69% 4.07% 6.82% 3.35% 1.36% 1.67%*
</TABLE>
11
<PAGE>
PAINEWEBBER MONEY MARKET FUND
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
PaineWebber Money Market Fund
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
PaineWebber Money Market Fund (the 'Fund', one of the portfolios constituting
PaineWebber Master Series, Inc.) at February 28, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as 'financial statements') are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at February 28, 1995 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
April 17, 1995
12
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PAINEWEBBER MONEY MARKET FUND
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Tax Information
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We are required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within 60 days of the Fund's fiscal year end (February
28, 1995) as to the federal tax status of distributions received by shareholders
during such fiscal year. Accordingly, we are advising you that all distributions
paid during the fiscal year were derived from net investment income and are
taxable as ordinary income. No portion of these distributions qualifies for the
corporate dividend received deduction available to corporate shareholders.
Distributions received by tax-exempt recipients (e.g., IRAs and Keoghs) need not
be reported as taxable income. Some retirement trusts (e.g., corporate, Keogh
and 403(b)(7) plans) may need this information for their annual information
reporting.
Because the Fund's fiscal year is not the calendar year, another notification
will be sent in respect of calendar 1995. The second notification, which will
reflect the amount to be used by calendar year taxpayers on their federal income
tax returns, will be made in conjunction with Form 1099 DIV and will be mailed
in January 1996. Shareholders are advised to consult their own tax advisers with
respect to the tax consequences of their investment in the Fund.
13
<PAGE>
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DIRECTORS
E. Garrett Bewkes, Jr., Chairman
Meyer Feldberg
George W. Gowen
Frederic V. Malek
Frank P.L. Minard
Judith Davidson Moyers
Thomas F. Murray
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OFFICERS
Victoria E. Schonfeld
Vice President
Dianne E. O'Donnell
Vice President and Secretary
Julian F. Sluyters
Vice President and Treasurer
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INVESTMENT ADVISER,
ADMINISTRATOR AND
DISTRIBUTOR
Mitchell Hutchins Asset Management
Inc.
1285 Avenue of the Americas
New York, New York 10019
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This report is not to be used in
connection with the offering of shares
of the Fund unless accompanied or
preceded by an effective prospectus.
A prospectus containing more complete
information for any of the Funds
listed on the back cover can be
obtained from a PaineWebber investment
executive or correspondent firm. Read
the prospectus carefully before
investing.
<PAGE>
STATEMENT OF DIFFERENCES
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The copyright symbol shall be expressed as 'c'
The dagger symbol shall be expressed as 'D'
