<PAGE>
PAINEWEBBER CASHFUND, INC. ANNUAL REPORT
May 14, 1997
Dear Shareholder,
We are pleased to present you with the annual report for PaineWebber Cashfund,
Inc. (the "Fund") for the year ended March 31, 1997.
GENERAL MARKET OVERVIEW
- --------------------------------------------------------------------------------
Overall, the volatile nature of the Treasury market over the 12-month period
ended March 31, 1997 made for a sentiment-driven market. Mid-period, signs of
strength in employment and housing, coupled with healthy retail and capital
spending, created concern that the Federal Reserve Board (the "Fed") would raise
rates. Inflation fears persisted and the Fed eventually raised interest rates at
the end of March. By the end of the reporting period, however it appeared that
wages were not in danger of rising and triggering inflation. At this writing,
the Fed had not raised rates a second time.
PORTFOLIO REVIEW
- --------------------------------------------------------------------------------
The Fund's current yield for the seven-day period ended March 31, 1997 was
4.89%. Despite market volatility the Fund's yield was slightly higher compared
to the same seven-day period last year. The Fund maintained a weighted average
maturity of 46 days as of March 31, 1997.
The Fund invests exclusively in high-grade money market instruments with
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. Investment decisions in the
Fund during the period continued to be dominated by credit quality and
liquidity. Although we were interested in maintaining higher yields, we did not
do so by sacrificing the Fund's emphasis on security, quality and liquidity.
<PAGE>
ANNUAL REPORT
OUTLOOK
- --------------------------------------------------------------------------------
The Fed's decision first to raise short-term interest rates in late March and
then to leave them steady spurred some market volatility. We expect that this
volatility will continue. Currently, we plan to maintain the Fund's neutral to
slightly longer weighted average maturity as short-term rates find stability.
Our ultimate objective in managing your investments is to help you successfully
meet your financial goals. We thank you for your continued support, and welcome
any comments or questions you may have.
Sincerely,
<TABLE>
<CAPTION>
<C> <C>
/s/Margo N. Alexander /s/Dennis L. McCauley
MARGO N. ALEXANDER DENNIS L. McCAULEY
President, Managing Director and Chief Investment,
Mitchell Hutchins Asset Management Inc. Officer--Fixed Income,
Mitchell Hutchins Asset Management Inc.
/s/Susan P. Ryan /s/Kris Dorr
SUSAN P. RYAN KRIS DORR
Senior Vice President, Taxable Money Funds, Portfolio Manager,
Mitchell Hutchins Asset Management Inc. PaineWebber Cashfund, Inc.
</TABLE>
<PAGE>
PAINEWEBBER CASHFUND, INC.
STATEMENT OF NET ASSETS MARCH 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL MATURITY INTEREST
AMOUNT (000) DATES RATES VALUE
- ------------ -------------- -------------- --------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 8.97%
03/05/98 to 5.200 to
$35,000 U.S. Treasury Bills........... 04/02/98 5.570%@ $ 33,157,885
15,000 Federal Farm Credit Bank*..... 04/01/97 5.335 14,999,377
12/02/97 to
20,500 Federal Farm Credit Bank...... 02/27/98 5.400 19,969,985
10/16/97 to
155,350 Federal Home Loan Bank........ 03/24/98 5.260 to 5.910 155,109,746
10,000 Federal Home Loan Mortgage
Corporation................. 08/28/97 5.640 9,990,048
60,000 Federal National Mortgage
Association*................ 04/01/97 5.590 to 5.630 59,987,339
120,520 Student Loan Marketing
Association*................ 04/01/97 5.560 to 5.610 120,503,441
58,000 Student Loan Marketing 01/08/98 to
Association................. 03/20/98 5.750 to 5.850 58,000,000
--------------
471,717,821
Total U.S. Government and Agency Obligations
(cost -- $471,717,821).......................
--------------
DOMESTIC BANK NOTES -- 7.33%
05/05/97 to
95,000 Bank of America, Illinois..... 12/29/97 5.400 to 5.660 94,984,577
90,000 Bank of America National Trust 04/02/97 to
& Savings Association....... 05/07/97 5.310 to 5.500 89,999,969
24,000 Bank One, Milwaukee, N.A.*.... 04/01/97 5.600 23,997,754
30,000 Comerica Bank of Detroit...... 07/11/97 6.150 30,002,217
04/17/97 to
71,800 F.C.C. National Bank.......... 03/25/98 5.500 to 6.000 71,781,101
30,000 Fifth Third Bank of
Northwestern Ohio, N.A...... 04/10/97 5.320 29,999,994
15,000 Harris Trust & Savings Bank... 06/17/97 6.040 14,998,187
10,000 Key Bank, N.A................. 11/04/97 5.600 10,000,399
20,000 PNC Bank, N.A.*............... 04/03/97 5.378 19,997,863
--------------
385,762,061
Total Domestic Bank Notes (cost --
$385,762,061) ...............................
--------------
DOMESTIC BANKERS ACCEPTANCES -- 0.32%
17,150 Chase Manhattan Corporation 04/28/97 to
(cost -- $17,007,604)....... 06/13/97 5.290 17,007,604
--------------
DOMESTIC CERTIFICATES OF DEPOSIT -- 3.48%
10/15/97 to
61,000 Bankers Trust Company*........ 12/10/97 5.700 to 5.760 60,987,122
15,000 Chase Manhattan Bank New
York........................ 04/09/97 5.400 14,999,252
82,000 Morgan Guaranty Trust 04/10/97 to
Company..................... 03/19/98 5.300 to 5.910 82,008,812
25,000 Wachovia Bank North Carolina,
N.A......................... 04/15/97 5.330 25,000,096
--------------
182,995,282
Total Domestic Certificates of Deposit (cost
- -- $182,995,282).............................
--------------
COMMERCIAL PAPER@ -- 70.99%
AGRICULTURE -- 1.29%
19,000 Cargill Financial Services
Corporation................. 04/07/97 5.530 18,982,488
04/04/97 to
49,000 Cargill Incorporated.......... 05/08/97 5.290 to 5.550 48,917,568
--------------
67,900,056
--------------
ASSET-BACKED -- 6.80%
59,600 Asset Securitization 04/01/97 to
Cooperative Corporation..... 04/08/97 5.320 to 5.570 59,557,611
105,685 Delaware Funding 04/09/97 to
Corporation................. 05/14/97 5.320 to 5.850 105,392,583
</TABLE>
3
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL MATURITY INTEREST
AMOUNT (000) DATES RATES VALUE
- ------------ -------------- -------------- --------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER@ -- (CONTINUED)
ASSET-BACKED -- (CONCLUDED)
04/16/97 to 5.370 to
$43,500 Eiger Capital Corporation..... 04/18/97 5.430% $ 43,396,135
74,772 Enterprise Funding 04/16/97 to
Corporation................. 04/30/97 5.280 to 5.600 74,510,594
50,000 New Center Asset Trust........ 04/01/97 6.900 50,000,000
25,000 Triple A One Plus Funding
Corporation................. 04/18/97 5.350 24,936,840
--------------
357,793,763
--------------
AUTO & TRUCK -- 3.48%
40,000 Daimler Benz North America
Corporation................. 04/22/97 5.500 39,871,667
04/07/97 to
88,300 Ford Motor Credit Company..... 04/29/97 5.250 to 5.320 88,138,303
55,000 PACCAR Financial 04/01/97 to
Corporation................. 04/14/97 5.290 to 5.300 54,964,692
--------------
182,974,662
--------------
BANKING -- 8.48%
68,000 Abbey National North 04/02/97 to
America..................... 04/23/97 5.250 to 5.750 67,857,715
45,000 ABN Amro North America Finance 04/03/97 to
Incorporated................ 04/15/97 5.340 to 5.825 44,950,376
64,600 B.B.V. Finance (Delaware) 04/03/97 to
Incorporated................ 04/14/97 5.290 to 5.320 64,557,257
25,000 Banc One Funding
Corporation................. 04/03/97 5.750 24,992,014
20,000 Canadian Imperial Holdings
Incorporated................ 04/28/97 5.290 19,920,650
15,000 Citicorp...................... 04/01/97 7.000 15,000,000
50,000 Cregem North America 04/04/97 to
Incorporated................ 06/17/97 5.320 to 5.390 49,822,772
14,750 KFW International Finance
Incorporated................ 06/09/97 5.340 14,599,034
48,300 Societe Generale North America 04/04/97 to
Incorporated................ 04/11/97 5.350 to 5.370 48,247,954
20,000 Unifunding Incorporated....... 04/10/97 5.350 19,973,250
49,600 Vereinsbank Finance Delaware
Incorporated................ 04/08/97 5.480 49,547,149
26,500 Westpac Capital Corporation... 04/30/97 5.310 26,386,646
--------------
445,854,817
--------------
BROKER-DEALER -- 5.60%
25,000 CS First Boston
Incorporated................ 04/17/97 5.310 24,941,000
35,000 Goldman Sachs Group L.P....... 04/08/97 5.300 34,963,931
20,000 Merrill Lynch & Company
Incorporated................ 04/18/97 5.340 19,949,567
215,000 Morgan Stanley Group 04/01/97 to
Incorporated................ 05/16/97 5.270 to 6.750 214,468,736
--------------
294,323,234
--------------
BUSINESS SERVICES -- 0.47%
25,000 Electronic Data Systems
Corporation................. 04/14/97 5.320 24,951,972
--------------
CHEMICALS -- 0.95%
50,000 Great Lakes Chemical 04/03/97 to
Corporation................. 04/24/97 5.240 to 5.540 49,887,986
--------------
COMPUTER HARDWARE -- 0.57%
30,000 International Business
Machines.................... 04/22/97 5.250 29,908,125
--------------
CONSUMER DURABLES -- 0.55%
29,000 Clorox Company................ 04/01/97 6.800 29,000,000
--------------
</TABLE>
4
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL MATURITY INTEREST
AMOUNT (000) DATES RATES VALUE
- ------------ -------------- -------------- --------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER@ -- (CONTINUED)
DRUGS & MEDICINE -- 7.75%
04/04/97 to 5.300 to
$65,000 Bayer Corporation............. 04/23/97 5.380% $ 64,901,094
04/24/97 to
60,000 Lilly (Eli) & Company......... 07/28/97 5.320 to 5.350 59,407,245
131,437 Novartis Finance 04/01/97 to
Corporation................. 04/11/97 5.280 to 5.480 131,366,804
04/04/97 to
152,100 Pfizer Incorporated........... 05/02/97 5.280 to 5.530 151,767,956
--------------
407,443,099
--------------
ELECTRONICS -- 2.27%
49,900 Rockwell International
Corporation................. 04/16/97 5.300 49,789,804
04/01/97 to
70,000 Siemens Capital Corporation... 04/22/97 5.270 to 5.320 69,865,967
--------------
119,655,771
--------------
ENERGY -- 2.85%
50,000 Chevron Oil Finance Company... 04/07/97 5.450 49,954,583
49,000 Exxon Imperial U.S.
Incorporated................ 04/01/97 5.300 49,000,000
40,000 Mobil Australia Finance
Company..................... 04/30/97 5.300 39,829,222
11,000 Shell Oil Company............. 04/14/97 5.450 10,978,352
--------------
149,762,157
--------------
FINANCE-CONDUIT -- 7.30%
04/03/97 to
38,600 ANZ (Delaware) Incorporated... 08/19/97 5.260 to 5.300 38,336,037
69,625 Commerzbank U.S. Finance 04/15/97 to
Incorporated................ 05/12/97 5.270 to 5.320 69,382,162
41,796 MetLife Funding 04/03/97 to
Incorporated................ 05/01/97 5.290 to 5.310 41,696,677
20,000 SBNSW (Delaware)
Incorporated................ 04/14/97 5.300 19,961,722
145,000 Toronto-Dominion Holdings 04/07/97 to
U.S.A. Incorporated......... 06/04/97 5.280 to 5.390 144,388,631
70,000 UBS Finance (Delaware)
Incorporated................ 04/01/97 6.750 70,000,000
--------------
383,765,229
--------------
FINANCE-CONSUMER -- 0.23%
12,000 American General Finance
Corporation................. 04/21/97 5.320 11,964,533
--------------
FINANCE-DIVERSIFIED -- 1.33%
70,000 Associates Corporation of 04/09/97 to
North America............... 04/25/97 5.310 69,834,800
--------------
FINANCE-INDEPENDENT -- 1.10%
58,150 National Rural Utilities
Cooperative Finance 04/01/97 to
Corporation................. 04/14/97 5.250 to 5.300 58,134,402
--------------
FINANCE-SUBSIDIARY -- 6.93%
50,000 Creditanstalt Finance
Incorporated................ 04/04/97 5.280 to 5.300 49,977,975
55,000 Deutsche Bank Financial 04/11/97 to
Incorporated................ 04/17/97 5.285 to 5.335 54,887,650
98,000 Dresdner U.S. Finance 04/02/97 to
Incorporated................ 04/24/97 5.520 to 5.800 97,815,933
162,100 National Australia Funding 04/07/97 to
(Delaware) Incorporated..... 05/05/97 5.240 to 5.340 161,687,537
--------------
364,369,095
--------------
</TABLE>
5
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL MATURITY INTEREST
AMOUNT (000) DATES RATES VALUE
- ------------ -------------- -------------- --------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER@ -- (CONCLUDED)
FOOD & BEVERAGE -- 2.69%
$7,000 American Brands
Incorporated................ 04/10/97 5.320% $ 6,990,690
04/01/97 to
95,000 Campbell Soup Company......... 08/19/97 5.240 to 5.500 94,337,235
40,000 Sara Lee Corporation.......... 04/07/97 5.630 39,962,467
--------------
141,290,392
--------------
INSURANCE -- 2.18%
105,000 Prudential Funding 04/02/97 to
Corporation................. 04/09/97 5.250 to 5.570 104,948,492
10,000 Transamerica Corporation...... 04/04/97 5.320 9,995,567
--------------
114,944,059
--------------
INSURANCE-PROPERTY/CASUALTY -- 1.80%
20,000 A.I. Credit Corporation....... 04/09/97 5.260 19,976,622
04/16/97 to
75,000 AIG Funding Incorporated...... 04/22/97 5.290 to 5.320 74,807,462
--------------
94,784,084
--------------
MANUFACTURING-DIVERSIFIED -- 0.28%
15,000 BTR Dunlop Finance
Incorporated................ 04/03/97 5.320 14,995,567
--------------
METALS & MINING -- 2.17%
04/07/97 to
76,850 RTZ America Incorporated...... 05/14/97 5.270 to 5.400 76,568,347
04/02/97 to
37,800 U.S. Borax Incorporated....... 06/10/97 5.300 to 5.350 37,702,135
--------------
114,270,482
--------------
MISCELLANEOUS -- 0.28%
15,000 Beta Finance Incorporated..... 04/15/97 5.330 14,968,908
--------------
OIL EQUIPMENT & SERVICES -- 0.11%
6,000 Colonial Pipeline Company..... 04/11/97 5.290 5,991,183
--------------
PRINTING AND PUBLISHING -- 0.38%
20,000 Reed Elsevier Incorporated.... 04/08/97 5.300 19,979,389
--------------
TELECOMMUNICATIONS -- 2.96%
40,000 Ameritech Capital Funding
Corporation................. 07/10/97 5.280 39,413,333
85,150 BellSouth Capital Funding 04/08/97 to
Corporation................. 06/10/97 5.260 to 5.300 84,819,644
31,500 SBC Communications Capital
Corporation................. 04/09/97 5.330 31,462,690
--------------
155,695,667
--------------
UTILITY-ELECTRIC -- 0.19%
10,000 Florida Power Corporation..... 04/17/97 5.550 9,975,333
--------------
3,734,418,765
Total Commercial Paper (cost --
$3,734,418,765) .............................
--------------
</TABLE>
6
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL MATURITY INTEREST
AMOUNT (000) DATES RATES VALUE
- ------------ -------------- -------------- --------------
<C> <S> <C> <C> <C>
SHORT TERM CORPORATE OBLIGATIONS -- 8.88%
AUTO & TRUCK -- 0.19%
$10,000 Ford Motor Credit Company*.... 04/01/97 5.730% $ 10,000,000
--------------
BROKER-DEALER -- 4.70%
70,000 Bear Stearns Companies 04/01/97 to
Incorporated*............... 04/30/97 5.438 to 5.718 70,000,000
80,000 Bear Stearns Companies 04/21/97 to
Incorporated................ 01/14/98 5.750 to 6.010 80,002,316
72,000 Merrill Lynch & Company
Incorporated*............... 04/01/97 5.430 to 5.750 71,995,686
25,000 Merrill Lynch & Company 05/12/97 to
Incorporated................ 05/14/97 5.880 to 5.900 24,999,835
--------------
246,997,837
--------------
FINANCE-DIVERSIFIED -- 0.95%
30,000 Associates Corporation of
North America*.............. 04/01/97 5.570 29,980,054
20,000 CIT Group Holdings
Incorporated*............... 04/01/97 5.600 19,998,514
--------------
49,978,568
--------------
INSURANCE -- 0.47%
25,000 Prudential Funding
Corporation................. 01/06/98 5.660 25,000,000
--------------
MISCELLANEOUS -- 2.57%
45,000 Beta Finance Incorporated*.... 04/01/97 5.690 to 5.730 45,000,000
04/10/97 to
90,000 Beta Finance Incorporated..... 03/13/98 5.550 to 6.080 89,999,817
--------------
134,999,817
--------------
466,976,222
Total Short Term Corporate Obligations (cost
- -- $466,976,222) ............................
--------------
REPURCHASE AGREEMENTS -- 0.35%
17,933 Repurchase Agreement dated
03/31/97 with Citicorp
Securities Incorporated,
collateralized by
$18,465,000 U.S. Treasury
Bill, due 05/29/97;
Proceeds: $17,936,176....... 04/01/97 6.375 17,933,000
280 Repurchase Agreement dated
03/31/97 with State Street
Bank & Trust Company,
collateralized by $270,355
U.S. Treasury Bond, 7.500%
due 11/15/16; Proceeds:
$280,039.................... 04/01/97 5.000 280,000
--------------
18,213,000
Total Repurchase Agreements (cost --
$18,213,000).................................
--------------
Total Investments (cost -- $5,277,090,755 5,277,090,755
which approximates cost for federal
tax purposes) -- 100.32%...................
(16,622,769)
Liabilities in excess of other assets --
(0.32)%......................................
--------------
Net Assets (applicable to 5,261,956,665 $5,260,467,986
shares outstanding at $1.00 per
share) -- 100.00%..........................
--------------
--------------
</TABLE>
- -----------------
* Variable rate securities--maturity date reflects earlier of reset date or
maturity date. The interest rates shown are the current rates as of March
31, 1997 and reset periodically.
@ Interest rates shown are discount rates at date of purchase.
Weighted Average Maturity--46 days
See accompanying notes to financial statements
7
<PAGE>
PAINEWEBBER CASHFUND, INC.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1997
<TABLE>
<S> <C>
Interest income....................................................................................... $ 284,462,770
-------------
EXPENSES:
Investment advisory and administration................................................................ 19,013,158
Transfer agency and service fees...................................................................... 8,067,200
Reports and notices to shareholders................................................................... 3,787,009
Custody and accounting................................................................................ 1,215,633
Federal and state registration........................................................................ 311,654
Legal and audit....................................................................................... 302,371
Insurance............................................................................................. 105,321
Directors' fees....................................................................................... 12,250
Other expenses........................................................................................ 44,504
-------------
32,859,100
-------------
Net investment income................................................................................. 251,603,670
NET REALIZED GAINS FROM INVESTMENT TRANSACTIONS....................................................... 96,707
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................................. $ 251,700,377
-------------
-------------
</TABLE>
See accompanying notes to financial statements
8
<PAGE>
PAINEWEBBER CASHFUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
---------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income............................. $ 251,603,670 $ 238,494,636
Net realized gains from investment transactions... 96,707 331,945
--------------- ---------------
Net increase in net assets resulting from
operations...................................... 251,700,377 238,826,581
--------------- ---------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income............................. (251,603,670) (238,494,636)
--------------- ---------------
Net increase (decrease) in net assets derived from
capital share transactions...................... (48,186,525) 1,607,547,540
--------------- ---------------
Net increase (decrease) in net assets............. (48,089,818) 1,607,879,485
NET ASSETS:
Beginning of year................................. 5,308,557,804 3,700,678,319
--------------- ---------------
End of year....................................... $5,260,467,986 $5,308,557,804
--------------- ---------------
--------------- ---------------
</TABLE>
See accompanying notes to financial statements
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Cashfund, Inc. (the "Fund"), was organized under the laws of
Maryland on January 20, 1978 and is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, as an open-end
diversified management investment company.
The preparation of financial statements in accordance with generally accepted
accounting principles requires Fund management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates. Following is a summary of
significant accounting policies:
VALUATION AND ACCOUNTING FOR INVESTMENTS--Investments are valued at amortized
cost which approximates market value. Investment transactions are accounted for
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.
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 occasionally participates in joint repurchase
agreement transactions with other funds managed by Mitchell Hutchins.
DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/ tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification.
CONCENTRATION OF RISK
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.
INVESTMENT ADVISER AND ADMINISTRATOR
The Fund's Board of Directors has approved an investment advisory and
administration contract ("Advisory Contract") with PaineWebber Incorporated
("PaineWebber"), under which PaineWebber serves as investment adviser and
administrator of the Fund. In
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS
accordance with the Advisory Contract, PaineWebber receives compensation from
the Fund, computed daily and paid monthly equivalent to 0.500% per annum of the
Fund's first $500 million of average daily net assets; 0.425% of the next $500
million; 0.390% of the next $500 million; 0.380% of the next $500 million;
0.350% of the next $500 million; 0.345% of the next $1.0 billion; 0.325% of the
next $500 million; 0.315% of the next $500 million; 0.300% of the next $500
million; 0.290% of the next $500 million; and 0.280% of assets in excess of $5.5
billion. At March 31, 1997, the Fund owed PaineWebber $1,642,870 in investment
advisory and administration fees.
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"), a wholly-owned
subsidiary of PaineWebber serves as sub-adviser to the Fund pursuant to a
Sub-Advisory Contract between PaineWebber and Mitchell Hutchins. In accordance
with the sub-advisory contract, PaineWebber (not the Fund) pays Mitchell
Hutchins for sub-advisory services provided.
TRANSFER AGENCY SERVICE FEES
The Fund pays PaineWebber an annual fee of $4.00 per active PaineWebber
shareholder account, plus certain out-of-pocket expenses, for services not
provided by the Funds's transfer agent. For these services for the year ended
March 31, 1997, PaineWebber earned $2,893,343. At March 31, 1997, the Fund owed
PaineWebber $227,152 for such shareholder service fees and reimbursement of
out-of-pocket expenses.
OTHER LIABILITIES
At March 31, 1997, the amounts payable for investments purchased and dividends
payable aggregated $28,067,662 and $4,946,215 respectively.
FEDERAL TAX STATUS
The Fund intends to distribute all of its taxable income and to comply with
the other requirements of the Internal Revenue Code applicable to regulated
investment companies. Accordingly, no provision for federal income taxes is
required. In addition, by distributing during each calendar year substantially
all of its net investment income, capital gains and certain other amounts, if
any, the Fund intends not to be subject to federal excise tax.
At March 31, 1997, the Fund had a net capital loss carryforward of $1,317,408.
This loss carryforward is available as a reduction, to the extent provided in
the regulations, of any future net realized gains, and will expire by March 31,
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.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
CAPITAL SHARE TRANSACTIONS
There are 20 billion shares of $0.001 par value authorized shares of common
stock. Transactions in capital shares, at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
--------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
Shares sold................................................................. 21,275,322,387 18,372,688,369
Shares repurchased.......................................................... (21,566,944,490) (16,994,663,459)
Dividends reinvested in additional Fund shares.............................. 243,435,578 229,522,630
--------------- ---------------
Net increase (decrease) in shares outstanding............................... (48,186,525) 1,607,547,540
--------------- ---------------
--------------- ---------------
</TABLE>
12
<PAGE>
PAINEWEBBER CASHFUND, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH YEAR IS
PRESENTED BELOW:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
------------------------------------------------------------------------
1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ------------
<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................... 0.0482 0.0523 0.0433 0.0272 0.0317
Dividends from net investment income.... (0.0482) (0.0523) (0.0433) (0.0272) (0.0317)
------ ------ ------ ------ ------
Net asset value, end of year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total investment return(1).............. 4.93% 5.36% 4.44% 2.75% 3.17%
------ ------ ------ ------ ------
------ ------ ------ ------ ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's)......... $5,260,468 $5,308,558 $3,700,678 $3,436,278 $3,774,298
Expenses to average net assets.......... 0.63% 0.60% 0.62% 0.61% 0.57%
Net investment income to average net
assets................................. 4.82% 5.24% 4.35% 2.73% 3.17%
</TABLE>
(1)TOTAL INVESTMENT RETURN IS CALCULATED ASSUMING A $1,000 INVESTMENT ON THE
FIRST DAY OF EACH YEAR 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 YEAR REPORTED.
13
<PAGE>
PAINEWEBBER CASHFUND, INC.
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
The Board of Directors and Shareholders
PaineWebber Cashfund, Inc.
We have audited the accompanying statement of net assets of PaineWebber
Cashfund, Inc. as of March 31, 1997, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We have conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of March 31, 1997, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
PaineWebber Cashfund, Inc. as of March 31, 1997, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended in conformity with generally accepted accounting
principles.
[ERNST & YOUNG SIGNATURE]
New York, New York
May 13, 1997
14
<PAGE>
PAINEWEBBER CASHFUND, INC.
TAX INFORMATION -- (UNAUDITED)
We are required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within 60 days of the Fund's fiscal year end (March 31,
1997) as to the federal tax status of distributions received by shareholders
during such fiscal year. Accordingly, we are advising you that all distributions
paid during the fiscal year were derived from net investment income and are
taxable as ordinary income. No portion of these distributions qualifies for the
dividends received deduction available to corporate shareholders.
Dividends received by tax-exempt recipients (e.g., IRAs and Keoghs) need not
be reported as taxable income. Some retirement trusts (e.g., corporate, Keogh
and 403(b)(7) plans) may need this information for their annual information
reporting.
Because the Fund's fiscal year is not the calendar year, another notification
will be sent in respect of calendar 1997. 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 1998. Shareholders are advised to consult their own tax advisers with
respect to the tax consequences of their investment in the Fund.
15
<PAGE>
- --------------------------------------------------------------------------------
DIRECTORS
E. Garrett Bewkes, Jr. Meyer Feldberg
CHAIRMAN
George W. Gowen
Margo N. Alexander
Frederic V. Malek
Richard Q. Armstrong
Carl W. Schafer
Richard R. Burt
Mary C. Farrell
PRINCIPAL OFFICERS
Margo N. Alexander Julian F. Sluyters
PRESIDENT VICE PRESIDENT AND TREASURER
Victoria E. Schonfeld Dennis McCauley
VICE PRESIDENT VICE PRESIDENT
Dianne E. O'Donnell Susan P. Ryan
VICE PRESIDENT AND SECRETARY VICE PRESIDENT
ADMINISTRATOR AND DISTRIBUTOR
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
INVESTMENT ADVISERS
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
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.
<PAGE>
ANNUAL REPORT
PAINEWEBBER
1997 PAINEWEBBER INCORPORATED
MEMBER SIPC
PAINEWEBBER
- -------------------
CASHFUND INC.
MARCH 31, 1997
