<PAGE>
PAINEWEBBER CASHFUND, INC. ANNUAL REPORT
Dear Shareholder, May 15, 2000
We are pleased to present you with the annual report for PaineWebber Cashfund,
Inc. (the "Fund") for the fiscal year ended March 31, 2000.
MARKET REVIEW
--------------------------------------------------------------------------------
[ICON] The Fund's fiscal year was a difficult time for the fixed income market.
Rapid economic growth caused the Federal Reserve to increase short-term interest
rates. Yields on fixed income securities rose as interest rates rose, causing
losses in almost every sector of the bond market. Diversion of investment funds
into technology stocks hurt the bond markets, as did supply surges brought on by
Y2K worries. Finally, the market was disrupted by the U.S. Treasury's
announcement of a $30 billion buyback of long-term debt for calendar year 2000.
Short-term yields (as measured by the 90-day U.S. Treasury bill) rose from 4.47%
to 5.89% during the fiscal year and created more difficult conditions for money
market funds. But because of their emphasis on safety, money market funds fared
better than the broad bond market.
PORTFOLIO REVIEW
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERFORMANCE AND CHARACTERISTICS 3/31/00 9/30/99
--------------------------------------------------------------------------------
<S> <C> <C>
Seven-Day Yield+ 5.49% 4.79%
Weighted Average Maturity 34 days 48 days
Net Assets $6.1 billion $5.7 billion
--------------------------------------------------------------------------------
</TABLE>
+ Yields will fluctuate.
HIGHLIGHTS
We expected interest rates to rise during the Fund's fiscal year, and
therefore kept the Fund's weighted-average maturity at or below its peer group
average. As 2000 approached we increased the Fund's weighting in U.S. government
and agency obligations to emphasize liquidity and principal stability in the
event of any Y2K problems. The new century dawned without major problems, and
with the Y2K issue behind us we began to restructure the Fund to balance its
goals of principal stability and current income. Due to the Fund's conservative
posture, we kept the allocation to U.S. government securities fairly high.
Throughout the fiscal year, we maintained the Fund's focus on top-tier credit
quality instruments.
[Sidenote:]
PAINEWEBBER CASHFUND, INC.
INVESTMENT GOAL:
Principal stability and
current income
PORTFOLIO MANAGER:
Susan P. Ryan
Mitchell Hutchins Asset
Management Inc.
COMMENCEMENT:
May 1, 1978
DIVIDEND PAYMENTS:
Monthly
1
<PAGE>
ANNUAL REPORT
<TABLE>
<CAPTION>
SECTOR ALLOCATION* 3/31/00 9/30/99
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial Paper 65.4% Commercial Paper 64.5%
U.S. Gov't & Agency 23.0 U.S. Gov't & Agency 24.5
Short-Term Corporate 4.6 Bank Notes 5.9
Bank Notes 3.5 Mutual Funds 3.1
Mutual Funds 2.5 Short-Term Corporate 1.1
Certificates of Deposit 0.8 Certificates of Deposit 0.9
Bankers Acceptance 0.2
--------------------------------------------------------------------------------
Total 100.0 Total 100.0
</TABLE>
OUTLOOK
--------------------------------------------------------------------------------
We expect an active Fed and rising rates across the yield curve in the first
half of 2000. We look for moderating economic growth in the second half of the
year, and believe interest rates will stabilize in response to current growth
and the absence of real inflationary pressure. As always, we intend to maintain
the Fund's emphasis on liquidity, high credit quality and portfolio diversity.
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. For a QUARTERLY REVIEW of a
fund in the PaineWebber Family of Funds,(1) please contact your Financial
Advisor.
Sincerely,
/s/Margo Alexander /s/ Brian M. Storms /s/ Dennis L. McCauley
MARGO ALEXANDER BRIAN M. STORMS DENNIS L. MCCAULEY
Chairman and President and Managing Director and
Chief Executive Officer Chief 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.
Portfolio Manager,
PaineWebber Cashfund, Inc.
This letter is intended to assist shareholders in understanding how the Fund
performed during the fiscal year ended March 31, 2000, 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.
* Weightings represent percentages of portfolio assets as of the dates
indicated. The Fund's portfolio is actively managed and its composition
will vary over time.
(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.
2
<PAGE>
PAINEWEBBER CASHFUND, INC.
STATEMENT OF NET ASSETS MARCH 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
--------- -------------------- ------------------ --------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--23.04%
$ 45,000 U.S. Treasury Bills ......................................... 07/20/00 to 11/09/00 4.870 to 5.203%@ $ 44,072,352
44,000 Federal Farm Credit Bank .................................... 05/04/00 to 05/08/00 5.900@ 43,746,300
196,300 Federal Home Loan Bank ...................................... 04/05/00 to 06/02/00 5.625 to 5.880@ 196,134,649
128,000 Federal Home Loan Bank ...................................... 04/03/00 to 04/04/00 6.200 to 6.395* 127,990,721
541,435 Federal Home Loan Mortgage Corporation ...................... 04/04/00 to 03/01/01 5.720 to 6.080* 538,963,269
40,000 Federal Home Loan Mortgage Corporation ...................... 04/04/00 6.385* 40,000,565
109,000 Federal National Mortgage Association ....................... 04/03/00 to 04/28/00 4.650 to 5.925@ 108,867,106
30,000 Federal National Mortgage Association ....................... 04/03/00 6.120* 29,994,672
215,350 Student Loan Marketing Association .......................... 04/04/00 6.235 to 6.585@ 215,312,799
50,000 Tennessee Valley Authority .................................. 04/03/00 5.890 49,983,639
--------------
Total U.S. Government and Agency Obligations (cost--$1,395,066,072) .... 1,395,066,072
--------------
DOMESTIC BANKERS ACCEPTANCE--0.16%
9,500 Chase Manhattan Bank (cost--$9,471,595) ..................... 04/19/00 5.980@ 9,471,595
--------------
DOMESTIC BANK NOTES--3.45%
65,000 First Tennessee Bank N.A. Memphis ........................... 04/04/00 6.405 to 6.445 65,000,000
73,000 Key Bank N.A. ............................................... 04/25/00 to 06/26/00 5.650 to 5.750 72,999,632
65,000 LaSalle National Bank ....................................... 07/17/00 to 02/05/01 5.650 to 6.700 64,980,379
6,000 Nationsbank N.A. ............................................ 06/01/00 5.390 5,997,115
--------------
Total Bank Notes (cost--$208,977,126) .................................. 208,977,126
--------------
DOMESTIC CERTIFICATE OF DEPOSIT--0.82%
50,000 Harris Trust & Savings Bank (cost--$50,000,000) ............. 04/06/00 5.880 50,000,000
--------------
COMMERCIAL [email protected]%
AGRICULTURE--0.80%
48,404 Cargill Incorporated ........................................ 04/03/00 6.250 48,387,193
--------------
ASSET BACKED-AUTO & TRUCK--0.83%
50,000 New Center Asset Trust ...................................... 04/05/00 6.010 49,966,611
--------------
ASSET BACKED-BANKING--3.69%
95,000 Atlantis One Funding Corporation ............................ 04/04/00 to 05/12/00 5.910 to 5.930 94,532,490
114,375 Centric Capital Corporation ................................. 04/11/00 to 05/19/00 5.920 to 6.060 114,014,828
15,000 WoodStreet Funding Corporation .............................. 05/12/00 5.900 14,899,209
--------------
223,446,527
--------------
ASSET BACKED-FINANCE--0.33%
20,000 Beta Finance Incorporated ................................... 04/14/00 5.880 19,957,533
--------------
ASSET BACKED-MISCELLANEOUS--12.60%
10,000 Asset Securitization Cooperative Corporation ................ 04/11/00 6.000 9,983,333
50,000 Delaware Funding Corporation ................................ 04/04/00 5.850 49,975,625
3
<PAGE>
PAINEWEBBER CASHFUND, INC.
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
--------- -------------------- ------------------ --------------
<S> <C> <C> <C>
COMMERCIAL PAPER@--(CONTINUED)
ASSET BACKED-MISCELLANEOUS--(CONCLUDED)
$ 32,007 Enterprise Funding Corporation .............................. 04/03/00 to 04/06/00 5.880% $ 31,989,210
55,000 Falcon Asset Securitization Corporation ..................... 04/18/00 to 04/19/00 5.890 to 5.920 54,843,255
53,582 Parthenon Receivables Funding LLC ........................... 05/15/00 5.970 53,191,030
144,760 Preferred Receivables Funding Corporation ................... 04/13/00 to 05/22/00 5.850 to 5.970 144,263,853
133,883 Quincy Capital Corporation .................................. 04/10/00 to 04/19/00 5.880 to 5.910 133,661,536
80,214 Receivables Capital Corporation ............................. 04/10/00 to 04/11/00 5.920 to 6.020 80,087,670
130,151 Triple-A One Funding ........................................ 04/04/00 to 04/20/00 5.870 to 6.060 129,978,761
25,000 Variable Funding Capital Corporation ........................ 04/20/00 6.050 24,920,174
50,000 Variable Funding Capital Corporation ........................ 04/06/00 to 04/10/00 5.896 to 5.966 50,000,000
--------------
762,894,447
--------------
AUTO & TRUCK--5.96%
79,470 BMW US Capital Incorporated ................................. 04/03/00 to 04/24/00 5.870 to 6.000 79,298,394
75,000 Daimler-Chrysler N.A. Holding Corporation ................... 04/10/00 to 04/11/00 5.970 to 6.030 74,878,938
65,000 Ford Motor Credit Corporation ............................... 04/06/00 5.870 to 5.950 64,946,840
100,000 General Motors Acceptance Corporation ....................... 04/06/00 to 04/10/00 5.850 to 5.870 99,869,625
42,000 PACCAR Financial Corporation ................................ 04/06/00 to 04/26/00 5.840 to 6.020 41,875,602
--------------
360,869,399
--------------
BANKING-DOMESTIC--10.38%
25,000 BBL North America Funding Corporation ....................... 04/13/00 5.990 24,950,083
50,000 BCI Funding Corporation ..................................... 04/03/00 5.840 49,983,778
25,000 Canadian Imperial Holdings Incorporated ..................... 04/17/00 5.970 24,933,667
80,434 Cregem North America Incorporated ........................... 04/04/00 to 04/18/00 5.830 to 5.850 80,325,634
25,000 Den Danske Corporation ...................................... 04/06/00 5.850 24,979,688
45,000 Dexia Clf Finance Company ................................... 04/10/00 to 04/14/00 5.850 to 5.860 44,921,125
101,000 Fortis Funding LLC .......................................... 04/06/00 to 04/14/00 5.830 to 6.000 100,826,376
98,500 Santander Finance (Delaware) Incorporated ................... 04/10/00 to 05/04/00 5.850 to 5.910 98,057,252
15,000 Societe Generale North America, Incorporated ................ 04/04/00 5.850 14,992,688
45,000 Unifunding Incorporated ..................................... 04/10/00 to 04/17/00 5.850 to 6.000 44,910,104
120,000 Westpac Capital Corporation ................................. 04/07/00 to 05/11/00 5.750 to 5.860 119,669,736
--------------
628,550,131
--------------
BROKER-DEALER--7.24%
125,000 Bear Stearns Companies, Incorporated ........................ 04/04/00 to 05/08/00 5.940 124,377,125
160,000 Goldman Sachs Group Incorporated ............................ 04/04/00 to 04/20/00 5.850 to 5.860 159,739,925
50,000 Merrill Lynch & Company Incorporated ........................ 04/05/00 5.830 49,967,611
50,000 Morgan Stanley Dean Witter & Company ........................ 05/18/00 5.910 49,614,208
55,000 Morgan Stanley Dean Witter & Company ........................ 04/03/00 6.525 55,000,000
--------------
438,698,869
--------------
BUILDING MATERIALS--0.07%
4,000 Sherwin Williams Company .................................... 04/06/00 5.840 3,996,756
--------------
CHEMICALS--0.16%
10,000 Henkel Corporation .......................................... 04/07/00 5.880 9,990,200
--------------
4
<PAGE>
PAINEWEBBER CASHFUND, INC.
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
--------- -------------------- ------------------ --------------
<S> <C> <C> <C>
COMMERCIAL PAPER@--(CONTINUED)
CONSUMER GOODS--0.92%
$ 10,500 Kimberly Clark Corporation .................................. 04/11/00 5.970% $ 10,482,588
45,700 Procter & Gamble Company .................................... 04/14/00 to 05/09/00 5.930 to 6.010 45,497,076
--------------
55,979,664
--------------
DRUGS, HEALTH CARE--3.30%
33,800 Abbott Laboratories ......................................... 04/18/00 to 04/19/00 5.970 to 5.990 33,701,195
50,000 Bayer Corporation ........................................... 04/05/00 6.000 49,966,667
25,000 Glaxo Wellcome Incorporated ................................. 04/11/00 6.000 24,958,333
10,000 Merck & Company Incorporated ................................ 04/17/00 5.950 9,973,555
60,774 Pfizer Incorporated ......................................... 04/03/00 to 04/17/00 5.800 to 5.980 60,647,510
5,800 Schering Corporation ........................................ 04/04/00 5.930 5,797,134
15,000 Warner Lambert Company ...................................... 04/10/00 5.880 14,977,950
--------------
200,022,344
--------------
ELECTRONICS--0.44%
26,875 Motorola Credit Corporation ................................. 04/27/00 5.850 26,761,453
--------------
ENERGY--1.14%
39,105 Exxon Imperial U.S. Incorporated ............................ 04/03/00 5.860 39,092,269
30,000 Texaco Incorporated ......................................... 04/12/00 6.020 29,944,817
--------------
69,037,086
--------------
FINANCE-CONDUIT--2.80%
72,288 MetLife Funding Incorporated ................................ 04/04/00 to 04/05/00 5.860 to 5.870 72,247,783
97,060 UBS Finance (Delaware) LLC .................................. 04/03/00 to 04/06/00 5.970 to 6.250 97,022,896
--------------
169,270,679
--------------
FINANCE-CONSUMER--0.33%
20,000 Household Finance Corporation ............................... 04/13/00 6.020 19,959,867
--------------
FINANCE-INDEPENDENT--0.28%
16,750 National Rural Utilities Cooperative Finance Corporation .... 04/07/00 5.820 16,733,752
--------------
FINANCE-RETAIL--0.41%
25,000 American Express Credit Company ............................. 04/06/00 5.940 24,979,375
--------------
FINANCE-SUBSIDIARY--1.48%
65,000 Deutsche Bank Financial Incorporated ........................ 04/18/00 6.000 to 6.010 64,815,644
25,000 Dresdner U.S. Finance ....................................... 04/24/00 6.030 24,903,688
--------------
89,719,332
--------------
FOOD & BEVERAGE--1.25%
20,000 Anheuser Busch Companies Incorporated ....................... 04/17/00 5.918 19,997,542
10,000 Coca Cola Enterprises Incorporated .......................... 04/11/00 5.900 9,983,611
12,000 General Mills Incorporated .................................. 04/10/00 5.810 11,982,570
13,650 Kellogg Company ............................................. 04/10/00 5.910 13,629,832
20,000 Sara Lee Corporation ........................................ 04/06/00 5.810 19,983,861
--------------
75,577,416
--------------
5
<PAGE>
PAINEWEBBER CASHFUND, INC.
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
--------- -------------------- ------------------ --------------
<S> <C> <C> <C>
COMMERCIAL PAPER@--(CONCLUDED)
INSURANCE--1.65%
$ 10,000 Prudential Funding Corporation .............................. 04/06/00 5.940% $ 9,991,750
50,000 St. Paul Companies Incorporated ............................. 04/26/00 6.000 49,791,666
38,000 Teachers Insurance & Annuity Association of America ......... 04/13/00 6.000 37,924,000
2,329 USAA Capital Corporation .................................... 04/03/00 5.930 2,328,233
--------------
100,035,649
--------------
INSURANCE-PROPERTY/CASUALTY--0.74%
15,000 A.I. Credit Corporation ..................................... 04/03/00 5.800 14,995,167
30,000 AIG Funding Incorporated .................................... 04/13/00 5.920 29,940,800
--------------
44,935,967
--------------
MACHINERY--0.66%
40,000 Caterpillar Financial Services .............................. 05/05/00 6.020 39,772,578
--------------
MANUFACTURING-DIVERSIFIED--0.41%
25,000 United Technologies Corporation ............................. 04/04/00 5.930 24,987,646
--------------
METALS & MINING--1.27%
77,000 Rio Tinto America Incorporation ............................. 04/10/00 to 04/14/00 5.870 to 5.950 76,873,290
--------------
PRINTING, PUBLISHING--0.16%
10,000 Reed Elsevier USA Incorporated .............................. 04/12/00 5.900 9,981,972
--------------
RETAIL-MERCHANDISE--0.66%
40,000 Wal Mart Stores Incorporated ................................ 04/11/00 to 05/02/00 5.880 to 6.000 39,828,667
--------------
TELECOMMUNICATIONS--4.34%
15,000 American Telephone & Telegraph .............................. 04/10/00 5.930 14,977,763
65,000 Bell Atlantic Financial Services Incorporated ............... 04/05/00 to 04/25/00 5.800 to 5.850 64,876,722
43,219 Bell Atlantic Network Funding Corporation ................... 05/04/00 6.050 42,979,315
15,000 Bell South Capital Funding Corporation ...................... 04/10/00 5.910 14,977,837
25,000 Bell South Telecommunications ............................... 05/03/00 6.000 24,866,667
25,000 Lucent Technology Incorporated .............................. 04/04/00 5.910 24,987,687
75,000 SBC Communications Incorporated ............................. 04/07/00 5.840 to 5.960 74,926,500
--------------
262,592,491
--------------
TRANSPORTATION SERVICES--0.66%
40,000 United Parcel Service ....................................... 04/28/00 6.010 39,819,700
--------------
UTILITY-ELECTRIC--0.34%
14,000 Southern California Edison Company .......................... 04/17/00 6.010 13,962,604
6,700 Southern Company ............................................ 04/17/00 5.940 6,682,312
--------------
20,644,916
--------------
Total Commercial Paper (cost--$3,954,271,510) .......................... 3,954,271,510
--------------
6
<PAGE>
PAINEWEBBER CASHFUND, INC.
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
--------- -------------------- ------------------ --------------
<S> <C> <C> <C>
SHORT-TERM CORPORATE OBLIGATIONS--4.57%
ASSET BACKED-FINANCE--1.57%
$ 65,000 Beta Finance Incorporated .................................. 01/19/01 to 2/22/01 6.120 to 6.770% $ 65,000,000
30,000 Beta Finance Incorporated .................................. 04/03/00 6.350 30,000,000
--------------
95,000,000
--------------
BANKING--0.41%
25,000 Morgan (J.P.) & Company Incorporated ........................ 04/17/00 5.994 25,000,000
--------------
BROKER-DEALER--1.96%
49,000 Merrill Lynch & Company Incorporated ........................ 02/07/01 to 02/23/01 6.740 to 6.770 48,998,459
70,000 Merrill Lynch & Company Incorporated ........................ 04/06/00 to 04/20/00 5.879 to 6.021 69,993,818
--------------
118,992,277
--------------
FINANCE-DIVERSIFIED--0.63%
38,000 Associates Corporation of North America ..................... 04/28/00 6.060 37,994,437
--------------
Total Short-Term Corporate Obligations (cost--$276,986,714) ............ 276,986,714
--------------
<CAPTION>
NUMBER OF
SHARES
---------
<S> <C>
MUTUAL FUNDS--2.51%
145,720,750 AIM Liquid Assets Portfolio ............................... 145,720,750
6,062,137 AIM Prime Portfolio ....................................... 6,062,137
--------------
Total Mutual Funds (cost--$151,782,887) ................................ 151,782,887
--------------
Total Investments (cost--$6,046,555,904 which approximates cost for federal
income tax purposes)--99.85% .................................. 6,046,555,904
Other assets in excess of liabilities--0.15% ........................... 8,832,887
--------------
Net Assets (applicable to 6,056,306,665 shares outstanding at
$1.00 per share)--100.00% ..................................... $6,055,388,791
--------------
--------------
</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,
2000 and reset periodically.
@ Interest rates shown are discount rates at date of purchase.
Weighted Average Maturity--34 days
See accompanying notes to financial statements
7
<PAGE>
PAINEWEBBER CASHFUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED
MARCH 31, 2000
--------------
<S> <C>
Interest income ................................................................... $321,169,468
------------
EXPENSES:
Investment advisory and administration ............................................ 21,045,342
Transfer agency and related services fees ......................................... 9,508,306
Reports and notices to shareholders ............................................... 953,737
Custody and accounting ............................................................ 596,124
Legal and audit ................................................................... 350,446
Insurance ......................................................................... 134,071
Federal and state registration .................................................... 56,447
Directors' fees ................................................................... 10,500
Other expenses .................................................................... 10,478
------------
32,665,451
------------
NET INVESTMENT INCOME ............................................................. 288,504,017
NET REALIZED GAIN FROM INVESTMENT TRANSACTIONS .................................... 58,356
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .............................. $288,562,373
------------
------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
--------------------------------
2000 1999
-------------- --------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income........................................................ $ 288,504,017 $ 285,091,504
Net realized gains from investment transactions.............................. 58,356 401,710
-------------- --------------
Net increase in net assets resulting from operations......................... 288,562,373 285,493,214
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income........................................................ (288,504,017) (285,091,504)
-------------- --------------
Net increase (decrease) in net assets derived from capital share transactions (57,228,465) 428,894,939
-------------- --------------
Net increase (decrease) in net assets........................................ (57,170,109) 429,296,649
NET ASSETS:
Beginning of year............................................................ 6,112,558,900 5,683,262,251
-------------- --------------
End of year.................................................................. $6,055,388,791 $6,112,558,900
-------------- --------------
-------------- --------------
</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, 2000, the Fund
owed PaineWebber $1,817,071 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, 2000, PaineWebber received from PFPC Inc., not the Fund, approximately
56% of the total transfer agency and related service fees collected by PFPC Inc.
from the Fund.
OTHER LIABILITIES
At March 31, 2000, dividends payable to shareholders was $3,628,404.
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, 2000, the Fund had a net capital loss carryforward of $746,604.
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,
---------------------------------
2000 1999
--------------- ---------------
<S> <C> <C>
Shares sold.................................... 23,824,183,354 21,758,169,027
Shares repurchased............................. (24,164,268,560) (21,606,489,535)
Dividends reinvested........................... 282,856,741 277,215,447
--------------- ---------------
Net increase (decrease) in shares outstanding.. (57,228,465) 428,894,939
--------------- ---------------
--------------- ---------------
</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,
--------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
<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 ............................. 0.0486 0.0487 0.0511 0.0482 0.0523
Dividends from net investment income .............. (0.0486) (0.0487) (0.0511) (0.0482) (0.0523)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return(1) ........................ 4.97% 4.98% 5.23% 4.93% 5.36%
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Ratios/Supplemental Data:
Net assets, end of year (000's) ................... $6,055,389 $6,112,559 $5,683,262 $5,260,468 $5,308,558
Expenses to average net assets .................... 0.55% 0.52% 0.56% 0.63% 0.60%
Net investment income to average net assets ....... 4.86% 4.86% 5.11% 4.82% 5.24%
</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, 2000, 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 auditing standards generally
accepted in the United States. 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, 2000, 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, 2000, 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 accounting principles generally
accepted in the United States.
/s/ Ernst & Young LLP
New York, New York
May 15, 2000
12
<PAGE>
TAX INFORMATION
We are required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within 60 days of the Fund's fiscal year end (March 31,
2000) as to the federal tax status of distributions recieved by shareholders
during such fiscal year. Accordingly, we are advising you that all distrubutions
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 to calendar year 2000. 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 2001. 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. Meyer Feldberg
CHAIRMAN
George W. Gowen
Margo N. Alexander
Frederic V. Malek
Richard Q. Armstrong
Carl W. Schafer
Richard R. Burt
Brian M. Storms
Mary C. Farrell
PRINCIPAL OFFICERS
Margo N. Alexander Dennis L. McCauley
PRESIDENT VICE PRESIDENT
Dianne E. O'Donnell Susan P. Ryan
VICE PRESIDENT AND SECRETARY VICE PRESIDENT
Paul H. Schubert
VICE PRESIDENT AND TREASURER
INVESTMENT ADVISER,
ADMINISTRATOR AND DISTRIBUTOR
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
SUB-ADVISER AND SUB-ADMINISTRATOR
Mitchell Hutchins Asset Management Inc.
51 West 52nd Street
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
MARCH 31, 2000
PAINEWEBBER
-C-2000 PaineWebber Incorporated
All rights reserved
Member SIPC
