<PAGE>
PAINEWEBBER CASHFUND, INC. ANNUAL REPORT
May 20, 1999
PAINEWEBBER CASHFUND, INC.
PROFILE
- -- GOAL: Principal stability and current income
- -- PORTFOLIO MANAGER: Susan P. Ryan, Mitchell Hutchins Asset Management Inc.
- -- TOTAL NET ASSETS: $6.1 billion as of March 31, 1999
- -- DIVIDEND PAYMENTS: Monthly
Dear Shareholder,
We are pleased to present you with the annual report for the PaineWebber
Cashfund, Inc. (the "Fund") for the fiscal year ended March 31, 1999.
MARKET REVIEW
[ICON] Money market mutual fund assets increased during the Fund's fiscal
year as investors emphasized safety of principal in response to market
volatility during the latter part of 1998. The Federal Reserve cut the
Federal Funds rate by 0.25% in September, October and November of 1998,
lowering the rate from 5.50% to 4.75%. At the same time, European central
banks were cutting rates in preparation for the January 1, 1999, debut of the
euro currency. Lower interest rates helped to calm the global financial
markets, which had become unsettled after Russia's default in August. Money
market yields were lower across the short-term yield curve. Because inflation
remained low, however, money market yields stayed relatively strong on an
inflation-adjusted basis and versus overseas short-term rates.
PORTFOLIO REVIEW
[ICON] We remained positive on the fixed income markets over the fiscal year
ended March 31, 1999, expecting interest rates to hold steady or fall
slightly. We kept the Fund's weighted average maturity slightly above its
peer group. The Fund's current yield for the seven-day period ended March 31,
1999 was 4.39%. The Fund's weighted-average maturity was 51 days, and net
assets totaled $6.1 billion as of March 31, 1999.
OUTLOOK
[ICON] We expect the U.S. economy's rate of growth to slow in 1999 from the
rate of the fourth quarter of 1998, with inflation remaining low and no
recession on the immediate horizon. The Federal Reserve is likely to maintain
a steady monetary policy. We believe the fixed income markets will remain
volatile in 1999. We expect to keep the Fund's weighted average maturity
slightly above its peer group. As always, we intend to keep the Fund invested
in high credit quality investments.
1
<PAGE>
ANNUAL REPORT
PAINEWEBBER
CASHFUND, INC.
Sector Allocations*
EDGAR REPRESENTATION OF PRINTED GRAPHIC
<TABLE>
<S> <C>
Commercial Paper 56.1%
U.S. Government and Agency Obligations 26.6%
Bank Obligations 10.2%
Short-Term Corporate Obligations 6.8%
Repurchase Agreements 0.3%
</TABLE>
Our ultimate objective is 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.
For a QUARTERLY REVIEW on a fund in the PaineWebber Family of Funds,(1)
please contact your Financial Advisor.
Sincerely,
<TABLE>
<S> <C> <C>
/s/ Margo Alexander /s/ Brian M. Storms /s/ Dennis L. McCauley
MARGO ALEXANDER BRIAN M. STORMS DENNIS L. McCAULEY
Chairman and Chief President and Chief Managing Director and
Executive Officer Operating Officer-- Chief Investment Officer--
Mitchell Hutchins Mitchell Hutchins Fixed Income
Asset Management Inc. Asset Management Inc. Mitchell Hutchins
Asset Management Inc.
/s/ Susan P. Ryan
SUSAN P. RYAN
Senior Vice President
Mitchell Hutchins
Asset Management Inc.
</TABLE>
This letter is intended to assist shareholders in understanding how the Fund
performed during the fiscal year ended March 31, 1999, and reflects our views
at the time of its writing. Of course, these views may change in response to
changing circumstances. We encourage you to consult your Financial Advisor
regarding your personal investment program.
(1) Mutual funds are sold by prospectus only. The prospectuses for the funds
contain more complete information regarding risks, charges and expenses, and
should be read carefully before investing.
* Weightings represent percentages of portfolio assets as of March 31, 1999.
The Fund's portfolio is actively managed and its composition will vary over
time.
2
<PAGE>
PAINEWEBBER CASHFUND, INC.
STATEMENT OF NET ASSETS MARCH 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- ------------------------- ------------------ ---------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--26.96%
$ 215,000 U.S. Treasury Bills............................... 10/14/99 to 02/03/00 3.850 to 4.375%@ $ 208,495,794
45,000 Federal Farm Credit Bank.......................... 09/01/99 to 02/01/00 4.800 to 4.870 44,994,215
37,000 Federal Farm Credit Bank Discount Notes........... 04/08/99 4.700@ 36,966,186
155,000 Federal Home Loan Bank............................ 01/27/00 to 03/17/00 5.000 to 5.250 154,978,253
146,000 Federal Home Loan Bank............................ 04/01/99 to 04/07/99 4.770 to 5.050* 145,992,945
50,475 Federal Home Loan Bank Discount Notes............. 04/07/99 4.740@ 50,435,125
15,000 Federal Home Loan Mortgage Corporation............ 04/06/99 4.811* 15,000,000
450,391 Federal Home Loan Mortgage Corporation Discount
Notes........................................... 04/06/99 to 05/07/99 4.670 to 4.780@ 449,469,356
40,000 Federal National Mortgage Association............. 02/04/00 to 02/23/00 4.800 to 5.040 39,980,626
80,000 Federal National Mortgage Association............. 04/06/99 4.682 to 4.967* 79,989,064
159,000 Federal National Mortgage Association Discount
Notes........................................... 04/01/99 to 03/07/00 4.670 to 4.830@ 156,967,943
265,000 Student Loan Marketing Association................ 04/06/99 to 05/25/99 4.810 to 5.452* 264,963,353
---------------
Total U.S. Government and Agency Obligations
(cost--$1,648,232,860)...................................... 1,648,232,860
---------------
DOMESTIC BANK NOTES--6.41%
20,000 Comerica Bank N.A., Detroit....................... 04/02/99 4.903* 19,995,048
42,000 FCC National Bank................................. 08/02/99 to 02/16/00 4.860 to 5.058 41,996,036
30,000 FCC National Bank................................. 04/01/99 4.810* 29,998,016
50,000 Fifth Third Bank of Northwestern, Ohio............ 04/12/99 4.860 50,000,244
88,600 First Tennessee Bank N.A. Memphis................. 01/14/00 to 03/08/00 5.100 to 5.250 88,591,141
40,000 First Tennessee Bank N.A. Memphis................. 04/06/99 4.825* 40,000,000
25,000 Harris Trust & Savings Bank....................... 02/01/00 5.000 24,993,942
16,000 Huntington National Bank.......................... 05/03/99 6.460 16,010,259
20,000 Key Bank N.A...................................... 04/01/99 4.800* 19,996,910
25,000 LaSalle National Bank............................. 02/07/00 5.010 24,997,939
20,000 NationsBank N.A................................... 01/11/00 5.000 19,996,987
15,000 PNC Bank N.A...................................... 04/01/99 4.790* 14,998,300
---------------
Total Bank Notes (cost--$391,574,822)......................... 391,574,822
---------------
DOMESTIC CERTIFICATES OF DEPOSIT--3.94%
50,000 American Express Centurion Bank................... 04/20/99 4.850 50,000,000
16,000 Bankers Trust Company............................. 04/06/99 5.680 15,999,806
30,000 Bankers Trust Company............................. 04/01/99 4.840* 29,994,375
50,000 Chase Manhattan Bank.............................. 05/11/99 to 05/17/99 5.720 to 5.730 49,997,026
65,000 First Tennessee Bank N.A. Memphis................. 04/09/99 to 03/06/00 4.840 to 5.280 65,000,000
30,000 Harris Trust & Savings Bank....................... 04/21/99 4.870 30,000,000
---------------
Total Certificates of Deposit (cost--$240,991,207)............ 240,991,207
---------------
COMMERCIAL [email protected]%
ASSET BACKED-AUTO & TRUCK--2.45%
150,000 New Center Asset Trust............................ 04/01/99 5.080 150,000,000
---------------
ASSET BACKED-BANKING--0.41%
25,000 Atlantis One Funding Corporation.................. 05/17/99 4.840 24,845,389
---------------
</TABLE>
3
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- ------------------------- ------------------ ---------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER@ (CONTINUED)
ASSET BACKED-CREDIT CARDS--0.41%
$ 25,000 Riverwoods Funding Corporation.................... 04/05/99 4.870% $ 24,986,472
---------------
ASSET BACKED-FINANCE--1.09%
42,000 Beta Finance Incorporated......................... 04/20/99 to 04/21/99 4.800 to 4.810 41,891,393
25,000 CC (USA) Incorporated............................. 04/23/99 4.810 24,926,514
---------------
66,817,907
---------------
ASSET BACKED-MISCELLANEOUS--5.56%
146,125 Falcon Asset Securitization Corporation........... 04/20/99 to 05/24/99 4.840 to 4.880 145,565,173
12,965 Preferred Receivables Funding Corporation......... 04/08/99 4.880 12,952,698
19,184 Quincy Capital Corporation........................ 04/01/99 4.910 19,184,000
39,040 Receivables Capital Corporation................... 04/26/99 4.870 38,907,969
23,415 Triple-A One Funding Corporation.................. 04/15/99 4.860 23,370,745
100,000 Variable Funding Capital Corporation.............. 04/01/99 5.050 100,000,000
---------------
339,980,585
---------------
AUTO & TRUCK--4.20%
25,000 BMW US Capital Corporation........................ 04/19/99 4.800 24,940,000
50,000 Daimler Chrysler N.A. Holding Corporation......... 04/22/99 4.840 49,858,833
80,000 Ford Motor Credit Corporation..................... 04/08/99 to 04/16/99 4.800 to 4.830 79,877,053
10,000 General Motors Acceptance Corporation............. 05/05/99 4.850 9,954,194
92,202 PACCAR Financial Corporation...................... 04/05/99 to 04/30/99 4.820 to 4.850 91,925,906
---------------
256,555,986
---------------
BROKER-DEALER--3.26%
25,000 Bear Stearns Companies Incorporated............... 05/14/99 5.450 24,837,257
50,000 Goldman Sachs Group L.P........................... 04/01/99 4.880 50,000,000
125,000 Morgan Stanley, Dean Witter & Company............. 04/19/99 to 04/23/99 4.870 124,661,806
---------------
199,499,063
---------------
CHEMICALS--1.80%
110,000 DuPont (E. I.) deNemours & Company................ 04/06/99 4.820 to 4.840 109,926,264
---------------
CONSUMER PRODUCTS--1.63%
100,000 Procter & Gamble Company.......................... 04/07/99 to 05/26/99 4.800 to 4.810 99,693,076
---------------
DRUGS, HEALTH CARE--8.28%
85,500 Abbott Laboratories............................... 04/20/99 to 04/22/99 4.790 to 4.800 85,270,358
30,000 Bayer Corporation................................. 05/11/99 4.820 29,839,333
24,200 Johnson & Johnson................................. 04/06/99 4.820 24,183,800
66,124 Novartis Finance Corporation...................... 04/07/99 to 04/09/99 4.900 66,061,228
251,537 Pfizer Incorporated............................... 04/05/99 to 04/22/99 4.810 to 4.820 251,077,452
50,000 Pharmacia & Upjohn Incorporated................... 04/06/99 4.850 49,966,320
---------------
506,398,491
---------------
ELECTRONICS--2.94%
110,000 Emerson Electric Company.......................... 04/12/99 to 04/28/99 4.820 to 4.830 109,679,260
</TABLE>
4
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- ------------------------- ------------------ ---------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER@ (CONTINUED)
ELECTRONICS (CONCLUDED)
$ 40,000 Motorola Incorporated............................. 04/30/99 4.830% $ 39,844,367
30,010 Vermont American Corporation...................... 04/09/99 to 04/28/99 4.820 to 4.830 29,952,227
---------------
179,475,854
---------------
ENERGY--3.43%
105,000 Chevron USA Incorporated.......................... 04/13/99 to 04/23/99 4.820 to 4.830 104,760,908
75,000 Exxon Imperial U.S. Incorporated.................. 04/01/99 to 04/07/99 4.800 to 4.830 74,979,875
30,000 Koch Industries Incorporated...................... 04/05/99 4.800 29,984,000
---------------
209,724,783
---------------
ENTERTAINMENT--0.65%
40,000 The Walt Disney Company........................... 04/16/99 4.840 39,919,333
---------------
FINANCE-CONDUIT--1.80%
40,000 MetLife Funding Incorporated...................... 04/05/99 4.850 39,978,444
70,000 Svenska Handelsbanken Incorporated................ 04/06/99 to 04/28/99 4.800 to 4.830 69,850,521
---------------
109,828,965
---------------
FINANCE-CONSUMER--0.82%
50,000 Household Finance Corporation..................... 04/16/99 4.840 49,899,167
---------------
FINANCE-DIVERSIFIED--0.81%
50,000 Associates Corporation of North America........... 04/28/99 4.830 49,818,875
---------------
FINANCE-INDEPENDENT--0.41%
25,000 National Rural Utilities Cooperative Finance
Corporation..................................... 05/26/99 4.830 24,815,521
---------------
FINANCE-SUBSIDIARY--0.73%
25,000 Deutsche Bank Financial Incorporated.............. 04/13/99 4.870 24,959,417
20,000 National Australia Funding (Delaware)
Incorporated.................................... 05/05/99 4.800 19,909,333
---------------
44,868,750
---------------
FOOD, BEVERAGE & TOBACCO--3.59%
144,900 Campbell Soup Company............................. 04/12/99 to 05/03/99 4.770 to 4.830 144,493,840
8,000 Heinz (H.J.) Company.............................. 05/12/99 4.840 7,955,902
17,295 McDonald's Corporation............................ 04/05/99 4.800 17,285,776
50,000 Sara Lee Corporation.............................. 04/29/99 4.830 49,812,167
---------------
219,547,685
---------------
INSURANCE--1.67%
36,250 General Reinsurance Corporation................... 04/22/99 4.830 36,147,866
20,000 St. Paul Companies Incorporated................... 04/08/99 4.820 19,981,255
21,900 Transamerica Corporation.......................... 04/27/99 4.790 21,824,238
24,000 USAA Capital Corporation.......................... 04/27/99 4.780 23,917,147
---------------
101,870,506
---------------
</TABLE>
5
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- ------------------------- ------------------ ---------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER@ (CONCLUDED)
INSURANCE-PROPERTY/CASUALTY--1.27%
$ 77,700 A.I. Credit Corporation........................... 04/13/99 to 04/26/99 4.810 to 4.820% $ 77,533,057
---------------
MANUFACTURING-DIVERSIFIED--0.82%
50,000 Minnesota Mining & Manufacturing Company.......... 04/19/99 4.780 49,880,500
---------------
METALS & MINING--0.51%
31,200 Rio Tinto America Incorporated.................... 05/20/99 to 06/01/99 4.840 to 4.860 30,976,012
---------------
OIL EQUIPMENT & SERVICES--0.17%
10,500 Colonial Pipeline Company......................... 04/21/99 4.820 10,471,883
---------------
PRINTING, PUBLISHING--0.41%
25,000 Reed Elsevier Incorporated........................ 04/19/99 4.810 24,939,875
---------------
TELECOMMUNICATIONS--6.89%
40,000 American Telephone & Telegraph.................... 04/07/99 4.800 39,968,000
182,000 BellSouth Capital Funding Corporation............. 04/07/99 to 04/14/99 4.800 to 4.830 181,770,392
200,000 SBC Communications Incorporated................... 04/05/99 to 04/22/99 4.810 to 4.840 199,645,264
---------------
421,383,656
---------------
TRANSPORTATION SERVICES--0.82%
50,000 United Parcel Service of America Incorporated..... 04/01/99 4.830 50,000,000
---------------
Total Commercial Paper (cost--$3,473,657,655)................. 3,473,657,655
---------------
SHORT-TERM CORPORATE OBLIGATIONS--6.89%
ASSET BACKED-FINANCE--1.06%
25,000 Beta Finance Incorporated......................... 05/13/99 5.865 25,000,000
40,000 Beta Finance Incorporated......................... 04/06/99 to 04/23/99 4.867 to 5.182* 40,000,000
---------------
65,000,000
---------------
BANKING--0.41%
25,000 Banc One Corporation.............................. 04/01/99 4.903* 24,993,828
---------------
BROKER-DEALER--3.91%
80,300 Bear Stearns Companies Incorporated............... 04/05/99 to 08/03/99 5.720 to 5.800 80,300,000
53,400 Credit Suisse First Boston Incorporated++......... 04/05/99 to 04/06/99 5.082 to 5.122* 53,400,000
45,000 Merrill Lynch & Company Incorporated.............. 04/27/99 to 05/04/99 5.780 to 5.870 45,000,000
60,000 Merrill Lynch & Company Incorporated.............. 04/01/99 to 04/28/99 4.850 to 4.980* 60,002,062
---------------
238,702,062
---------------
FINANCE-DIVERSIFIED--0.45%
27,100 Associates Corporation of North America........... 09/01/99 to 09/17/99 6.680 to 7.250 27,255,950
---------------
INSURANCE--0.65%
40,000 Prudential Funding Corporation.................... 04/06/99 5.002 to 5.122* 40,000,000
---------------
</TABLE>
6
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- ------------------------- ------------------ ---------------
<C> <S> <C> <C> <C>
SHORT-TERM CORPORATE OBLIGATIONS (CONCLUDED)
MACHINERY--0.41%
$ 25,000 Caterpillar Financial Services Corporation........ 06/24/99 4.970%* $ 25,000,000
---------------
Total Short-Term Corporate Obligations (cost--$420,951,840)... 420,951,840
---------------
REPURCHASE AGREEMENT--0.30%
18,270 Repurchase Agreement dated 03/31/99 with SG Cowen
Securities Corporation, collaterized by
$17,417,000 U.S. Treasury Notes, 6.500% due
08/15/05 (value--$18,636,190); proceeds:
$18,272,461
(cost--$18,270,000)............................. 04/01/99 4.850 18,270,000
---------------
Total Investments (cost--$6,193,678,384 which approximates
cost for federal income tax purposes)--101.33%.............. 6,193,678,384
Liabilities in excess of other assets--(1.33)%................ (81,119,484)
---------------
Net Assets (applicable to 6,113,535,130 shares outstanding at
$1.00 per share)-- 100.00%.................................. $ 6,112,558,900
---------------
---------------
</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,
1999 and reset periodically.
@ Interest rates shown are discount rates at date of purchase.
++ Illiquid security representing 0.9% of net assets.
Weighted Average Maturity--51 Days
See accompanying notes to financial statements
7
<PAGE>
PAINEWEBBER CASHFUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED
MARCH 31, 1999
--------------
<S> <C>
Interest income............................................................ $ 315,539,697
--------------
EXPENSES:
Investment advisory and administration..................................... 20,847,408
Transfer agency and related services fees.................................. 7,161,676
Reports and notices to shareholders........................................ 978,869
Custody and accounting..................................................... 589,161
Federal and state registration............................................. 350,444
Legal and audit............................................................ 353,801
Insurance.................................................................. 142,447
Directors' fees............................................................ 10,500
Other expenses............................................................. 13,887
--------------
30,448,193
--------------
NET INVESTMENT INCOME...................................................... 285,091,504
NET REALIZED GAIN FROM INVESTMENT TRANSACTIONS............................. 401,710
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $ 285,493,214
--------------
--------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
---------------------------------------
1999 1998
------------------ ----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income............................. $ 285,091,504 $ 274,493,174
Net realized gains from investment transactions... 401,710 110,739
------------------ ----------------
Net increase in net assets resulting from
operations...................................... 285,493,214 274,603,913
------------------ ----------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income............................. (285,091,504) (274,493,174)
------------------ ----------------
Net increase in net assets derived from capital
share transactions.............................. 428,894,939 422,683,526
------------------ ----------------
Net increase in net assets........................ 429,296,649 422,794,265
NET ASSETS:
Beginning of year................................. 5,683,262,251 5,260,467,986
------------------ ----------------
End of year....................................... $ 6,112,558,900 $ 5,683,262,251
------------------ ----------------
------------------ ----------------
</TABLE>
See accompanying notes to financial statements
8
<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. The 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 is
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 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
average daily net assets in excess of $5.5 billion. At March 31, 1999, the Fund
owed PaineWebber $1,842,323 in investment advisory and administration fees.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"), a wholly owned
asset management 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 RELATED SERVICE FEES
PaineWebber provides transfer agency related services to the Fund pursuant to
a delegation of authority from PFPC Inc., the Fund's transfer agent, and is
compensated for these services by PFPC Inc., not the Fund. For the year ended
March 31, 1999, PaineWebber received from PFPC Inc., not the Fund, approximately
55% of the total transfer agency and related service fees collected by PFPC Inc.
from the Fund.
OTHER LIABILITIES
At March 31, 1999, the amounts payable for investments purchased and dividends
payable aggregated $89,753,861 and $6,615,029, 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, 1999, the Fund had a net capital loss carryforward of $804,959.
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.
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,
--------------------------------
1999 1998
--------------- ---------------
<S> <C> <C>
Shares sold............................. 21,758,169,027 22,110,092,602
Shares repurchased...................... (21,606,489,535) (21,952,532,510)
Dividends reinvested.................... 277,215,447 265,123,434
--------------- ---------------
Net increase in shares outstanding...... 428,894,939 422,683,526
--------------- ---------------
--------------- ---------------
</TABLE>
10
<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,
------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<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................... 0.0487 0.0511 0.0482 0.0523 0.0433
Dividends from net investment income.... (0.0487) (0.0511) (0.0482) (0.0523) (0.0433)
------------ ------------ ------------ ------------ ------------
Net asset value, end of year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Total investment return(1).............. 4.98% 5.23% 4.93% 5.36% 4.44%
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Ratios/Supplemental Data:
Net assets, end of year (000's)......... $ 6,112,559 $ 5,683,262 $ 5,260,468 $ 5,308,558 $ 3,700,678
Expenses to average net assets.......... 0.52% 0.56% 0.63% 0.60% 0.62%
Net investment income to average net
assets................................ 4.86% 5.11% 4.82% 5.24% 4.35%
</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.
11
<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. (the "Fund") as of March 31, 1999, 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 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, 1999, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
PaineWebber Cashfund, Inc. at March 31, 1999, 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.
/s/ Ernst & Young LLP
New York, New York
May 14, 1999
12
<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,
1999) 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 1999. 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 2000. Shareholders are advised to consult their own tax advisers with
respect to the tax consequences of their investment in the Fund.
13
<PAGE>
DIRECTORS
E. Garrett Bewkes, Jr.
CHAIRMAN
Margo N. Alexander
Richard Q. Armstrong
Richard R. Burt
Mary C. Farrell
Meyer Feldberg
George W. Gowen
Frederic V. Malek
Carl W. Schafer
Brian M. Storms
PRINCIPAL OFFICERS
Margo N. Alexander
PRESIDENT
Victoria E. Schonfeld
VICE PRESIDENT
Dianne E. O'Donnell
VICE PRESIDENT AND SECRETARY
Paul H. Schubert
VICE PRESIDENT AND TREASURER
Dennis L. McCauley
VICE PRESIDENT
Susan P. Ryan
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>
PAINEWEBBER
----------------------------------------
CASHFUND, INC.
ANNUAL REPORT
PAINEWEBBER
- -C-1999 PaineWebber Incorporated MARCH 31, 1999
Member SIPC
