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PaineWebber
Cashfund
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PROSPECTUS
AUGUST 1, 2000
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As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved the fund's shares or determined whether this prospectus
is complete or accurate. To state otherwise is a crime.
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PaineWebber Cashfund
Contents
THE FUND
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<S> <C> <C>
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What every investor 3 Investment Objective,
should know about Strategies
the fund and Risks
4 Performance
5 Expenses and Fee Tables
6 More About Risks and
Investment Strategies
YOUR INVESTMENT
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Information for 7 Managing Your Fund Account
managing your fund -- Buying Shares
account -- Selling Shares
-- Pricing and Valuation
ADDITIONAL INFORMATION
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Additional important 10 Management
information about 10 Dividends and Taxes
the fund 11 Financial Highlights
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Where to learn more Back Cover
about the fund
</TABLE>
The fund is not a complete or
balanced investment program.
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PaineWebber Cashfund
PaineWebber Cashfund
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
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FUND OBJECTIVE
Current income, stability of principal and high liquidity.
PRINCIPAL INVESTMENT STRATEGIES
The fund is a money market fund and seeks to maintain a stable price of $1.00
per share. The fund invests in a diversified portfolio of high quality money
market instruments of governmental and private issuers.
Money market instruments are short-term debt obligations and similar securities.
They also include longer term bonds that have variable interest rates or other
special features that give them the financial characteristics of short-term
debt. The fund invests in foreign money market instruments only if they are
denominated in U.S. dollars.
PaineWebber Incorporated, the fund's investment adviser, has appointed Mitchell
Hutchins Asset Management Inc. to serve as the fund's sub-adviser. Mitchell
Hutchins selects money market instruments for the fund based on its assessment
of relative values and changes in market and economic conditions. Mitchell
Hutchins considers safety of principal and liquidity in selecting securities for
the fund and thus may not buy securities that pay the highest yield.
PRINCIPAL RISKS
An investment in the fund is not a bank deposit and is neither insured nor
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. While the fund seeks to maintain the value of your investment at $1.00
per share, you may lose money by investing in the fund. Money market instruments
generally have a low risk of loss, but they are not risk-free. The principal
risks presented by the fund are:
Credit Risk -- Issuers of money market instruments may fail to make payments
when due, or they may become less willing or less able to do so.
Interest Rate Risk -- The value of the fund's investments generally will fall
when short term interest rates rise, and its yield will tend to lag behind
prevailing rates.
Foreign Investing Risk -- The value of the fund's investments in foreign
securities may fall due to adverse political, social and economic developments
abroad. However, because the fund's foreign investments must be denominated in
U.S. dollars, it generally is not subject to the risk of changes in currency
valuations.
More information about these and other risks of an investment in the fund is
provided below in 'More About Risks and Investment Strategies.'
Information on the fund's recent holdings can be found in its current
annual/semi-annual reports (see back cover for information on ordering those
reports).
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PaineWebber Cashfund
PERFORMANCE
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RISK/RETURN BAR CHART AND TABLE
The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.
The bar chart shows how the fund's performance has varied from year to year. The
table that follows the bar chart shows the average annual returns over several
time periods for the fund's shares.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
TOTAL RETURN
[BAR GRAPH]
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<CAPTION>
CALENDAR YEAR TOTAL RETURN
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<S> <C>
1990 7.97%
1991 5.87%
1992 3.44%
1993 2.78%
1994 3.76%
1995 5.46%
1996 4.95%
1997 5.15%
1998 5.15%
1999 4.74%
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Total return January 1 to June 30, 2000 -- 2.80%
Best quarter during years shown: 4th quarter, 1990 -- 2.03%
Worst quarter during years shown: 3rd quarter, 1993 -- 0.68%
AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1999
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<S> <C>
One Year................................................ 4.74%
Five Years.............................................. 5.09%
Ten Years............................................... 4.92%
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PaineWebber Cashfund
EXPENSES AND FEE TABLES
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FEES AND EXPENSES These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investments)
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Maximum Sales Charge (Load) Imposed on Purchases
(as a % of offering price).................................. None
Maximum Deferred Sales Charge (Load)
(as a % of offering price).................................. None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted
from fund assets)
Management Fees............................................. 0.35%
Distribution and/or Service (12b-1) Fees.................... None
Other Expenses.............................................. 0.20
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Total Annual Fund Operating Expenses........................ 0.55%
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EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
This example assumes that you invest $10,000 in the fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
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<S> <C> <C> <C>
$56 $176 $307 $689
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PaineWebber Cashfund
MORE ABOUT RISKS
AND INVESTMENT STRATEGIES
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PRINCIPAL RISKS
The main risks of investing in the fund are described below. Other risks of
investing in the fund, along with further detail about some of the risks
described below, are discussed in the fund's Statement of Additional Information
('SAI'). Information on how you can obtain the SAI is on the back cover of this
prospectus.
Credit Risk. Credit risk is the risk that the issuer of a money market
instrument will not make principal or interest payments when they are due. Even
if an issuer does not default on a payment, a money market instrument's value
may decline if the market believes that the issuer has become less able, or less
willing, to make payments on time. Even the highest quality money market
instruments are subject to some credit risk.
Interest Rate Risk. The value of money market instruments generally can be
expected to fall when short-term interest rates rise and to rise when short-term
interest rates fall. Interest rate risk is the risk that interest rates will
rise, so that the value of the fund's investments will fall. Also, the fund's
yield will tend to lag behind changes in prevailing short-term interest rates.
This means that the fund's income will tend to rise more slowly than increases
in short-term interest rates. Similarly, when short-term interest rates are
falling, the fund's income generally will tend to fall more slowly.
Foreign Investing Risk. Foreign investing involves risks relating to political,
social and economic developments abroad to a greater extent than investing in
the securities of U.S. issuers. In addition, there are differences between U.S.
and foreign regulatory requirements and market practices.
ADDITIONAL INVESTMENT STRATEGIES
Like all money market funds, the fund is subject to maturity, quality and
diversification requirements designed to help it maintain a stable price of
$1.00 per share. Mitchell Hutchins may use a number of professional money
management techniques to respond to changing economic and money market
conditions and to shifts in fiscal and monetary policy. These techniques include
varying the fund's composition and weighted average maturity based upon its
assessment of the relative values of various money market instruments and future
interest rate patterns. Mitchell Hutchins also may buy or sell money market
instruments to take advantage of yield differences.
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PaineWebber Cashfund
MANAGING YOUR FUND ACCOUNT
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BUYING SHARES
You must be a PaineWebber client or a client of a PaineWebber correspondent firm
to purchase fund shares. You can purchase fund shares by contacting your
Financial Advisor.
Your order to purchase fund shares will be effective on the business day on
which federal funds become available to the fund. Federal funds are funds
deposited by a commercial bank in an account at a Federal Reserve Bank that can
be transferred to a similar account of another bank in one day and thus can be
made immediately available to the fund. A business day is any day that the
Boston offices of the fund's custodian and the New York City offices of
PaineWebber and its bank, The Bank of New York, are open for business.
The fund and PaineWebber reserve the right to reject a purchase order or suspend
the offering of fund shares.
MINIMUM INVESTMENTS:
To open a fund account................................................$1,000
To add to a fund account..............................................$ 500
The minimum to add to a fund account is waived for automatic purchases made with
free cash credit balances in your PaineWebber brokerage account, as described
below.
The fund may change its minimum investment requirements at any time.
BUYING SHARES AUTOMATICALLY
You must open your fund account with an initial investment of $1,000 or more.
Once your fund account is opened, all free cash credit balances (that is,
immediately available funds) of $500 or more in your PaineWebber brokerage
account (including proceeds from securities you have sold) are automatically
invested in the fund on a daily basis. These purchases are made daily for
settlement the next business day. All remaining free credit cash balances of
$1.00 or more are invested in fund shares on the next to last business day of
each month for settlement on the last business day of that month.
BUYING SHARES BY CHECK
You may purchase fund shares by placing an order with your Financial Advisor and
providing a check from a U.S. bank. You should make your check payable to
PaineWebber Cashfund, Inc. and should include your PaineWebber account number on
the check.
Federal funds are deemed available to the fund two business days after the
deposit of a personal check and one business day after deposit of a cashier's or
certified check. PaineWebber may benefit from the temporary use of the proceeds
of personal checks if they are converted to federal funds in less than two
business days.
BUYING SHARES BY WIRE
You may purchase fund shares by placing an order through your Financial Advisor
and
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PaineWebber Cashfund
instructing your bank to transfer federal funds by wire to:
The Bank of New York
ABA 021-000018
PaineWebber Cashfund, Inc.
A/C 890-0114-061, OBI=FBO)
[Account Name]/[Brokerage Account Number.]
The wire must include your name and PaineWebber account number.
If PaineWebber receives a notice from your bank of wire transfer of federal
funds for a purchase of fund shares by 2:00 p.m., Eastern time, PaineWebber will
execute the purchase on that day. Otherwise, PaineWebber will execute the order
on the next business day. PaineWebber and/or your bank may impose a service
charge for wire purchases.
SELLING SHARES
You may sell your shares by contacting your Financial Advisor in person or by
telephone or mail. You may also use the checkwriting service to sell your
shares. Your fund shares will be sold automatically to settle any outstanding
securities purchases or debits to your PaineWebber brokerage account, unless you
instruct your Financial Advisor otherwise.
SELLING BY TELEPHONE OR MAIL OR IN PERSON
You may submit a request to sell fund shares in person or by telephone or mail
to your Financial Advisor. Your proceeds will be mailed to you by check unless
you choose a wire transfer as described below. PaineWebber may charge an
administrative service fee of up to $5.00 for processing sales orders by check.
If you mail an order to sell your shares to PaineWebber or its correspondent
firms, your request must include:
Your name and address;
The fund's name;
Your fund account number;
The dollar amount or number of shares you want to sell; and
A guarantee of each registered owner's signature. A signature guarantee may be
obtained from a financial institution, broker, dealer or clearing agency that
is a participant in one of the medallion programs recognized by the Securities
Transfer Agents Association. These are: Securities Transfer Agents Medallion
Program (STAMP), Stock Exchanges Medallion Program (SEMP) and the New York
Stock Exchange Medallion Signature Program (MSP). The fund and its transfer
agent will not accept signature guarantees that are not a part of these
programs.
Sales by mail may also need to include additional supporting documents for sales
by estates, trusts, guardianships, custodianships, partnerships and
corporations.
WIRE TRANSFER OF SALE PROCEEDS
If you sell $5,000 or more of your fund shares, you may request that the sale
proceeds be paid in federal funds and wired directly to a pre-designated bank
account. To take advantage of this service, you must complete an authorization
form that can be obtained from your Financial Advisor. If PaineWebber's New York
City offices receive your wire sales order prior to noon, Eastern time, on any
business day, the sales proceeds will be wired to your bank account on that day.
Otherwise, your sales proceeds will be wired to your bank account on the next
business day. PaineWebber may impose a fee for wiring sales proceeds and may
sell automatically an appropriate number of fund shares to pay that fee.
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PaineWebber Cashfund
CHECKWRITING SERVICE
You may sell fund shares by writing a check for $500 or more against your fund
account. You may obtain a supply of checks from PaineWebber. When the fund's
transfer agent receives the check for payment, the transfer agent will arrange
for the sale of a sufficient amount of fund shares to cover the amount of the
check. You will continue to receive dividends until the transfer agent receives
the check.
You will not receive canceled checks, but you may request photocopies of
canceled checks. If you have insufficient funds in your account, the check will
be returned to the payee. Checks written in amounts less than $500 will also be
returned. You should not attempt to redeem all the shares in your account by
writing a check because the amount of fund shares in your account is likely to
change each day.
You may be charged for specially imprinted checks, business checks, stop payment
orders, copies of canceled checks, checks returned for insufficient funds, and
checks written for less than $500. You will pay these charges through automatic
redemption of an appropriate number of your fund shares. PaineWebber may modify
or terminate the checkwriting service at any time or impose service fees for
checkwriting.
You may obtain the necessary forms for the checkwriting service from your
Financial Advisor. This service generally is not available to persons who own
fund shares through any sub-account or tax-deferred retirement plan account.
ADDITIONAL INFORMATION
It costs the fund money to maintain shareholder accounts. Therefore, the fund
reserves the right to repurchase all shares in any account that has a net asset
value of less than $500. If the fund elects to do this with your account, it
will notify you that you can increase the amount invested to $500 or more within
60 days. This notice may appear on your account statement.
If you want to sell shares that you purchased recently, the fund may delay
payment until it verifies that it has received good payment. If you purchased
shares by check, this can take up to 15 days.
PRICING AND VALUATION
The price of fund shares is based on net asset value. The net asset value is the
total value of the fund divided by the total number of shares outstanding. In
determining net asset value, the fund values its securities at their amortized
cost. This method uses a constant amortization to maturity of the difference
between the cost of the instrument to the fund and the amount due at maturity.
The fund's net asset value per share is expected to be $1.00 per share, although
this value is not guaranteed.
The fund calculates net asset value once each business day at 2:00 p.m., Eastern
time. Your price for buying or selling shares will be the net asset value that
is next calculated after the fund accepts your order. Your Financial Advisor is
responsible for making sure that your order is promptly sent to the fund.
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PaineWebber Cashfund
MANAGEMENT
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INVESTMENT ADVISER AND SUB-ADVISER
PaineWebber is the investment adviser and administrator of the fund. Mitchell
Hutchins Asset Management Inc. is its sub-adviser and sub-administrator.
PaineWebber is located at 1285 Avenue of the Americas, New York, New York,
10019-6028, and Mitchell Hutchins is located at 51 West 52nd Street, New York,
New York, 10019-6114. Mitchell Hutchins is a wholly owned asset management
subsidiary of PaineWebber, which is wholly owned by Paine Webber Group Inc. ('PW
Group'), a publicly owned financial services holding company. On June 30, 2000,
PaineWebber or Mitchell Hutchins was the adviser or sub-adviser of 31 investment
companies with 75 separate portfolios and aggregate assets of approximately
$52.7 billion.
On July 12, 2000, PW Group and UBS AG ('UBS') announced that they had reached an
agreement under which PW Group will become a wholly owned subsidiary of UBS. If
all required approvals are obtained, PW Group and UBS expect to complete the
transaction in the fourth quarter of 2000. UBS, with headquarters in Zurich,
Switzerland, is an internationally diversified organization with operations in
many areas of the financial services industry.
ADVISORY FEES
The fund paid advisory and administration fees to PaineWebber for the most
recent fiscal year at the effective annual rate of 0.35% of its average daily
net assets.
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DIVIDENDS AND TAXES
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DIVIDENDS
The fund declares dividends daily and pays them monthly. The fund distributes
any net short-term capital gain annually, but may make more frequent
distributions if necessary to maintain its share price at $1.00.
You will receive dividends in additional shares of the fund unless you elect to
receive them in cash. Contact your Financial Advisor at PaineWebber or one of
its correspondent firms if you prefer to receive dividends in cash.
TAXES
The dividends that you receive from the fund generally are subject to federal
income tax regardless of whether you receive them in additional fund shares or
in cash. If you hold fund shares through a tax-exempt account or plan, such as
an IRA or 401(k) plan, dividends on your shares generally will not be subject to
tax.
The fund expects that its dividends will be taxed as ordinary income. The fund
will tell you
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PaineWebber Cashfund
annually how you should treat its dividends for tax purposes.
The fund is required to withhold 31% of all dividends payable to any individuals
and certain other noncorporate shareholders who
have not provided the fund or PaineWebber with
a correct taxpayer identification number on Form W-9 (for U.S. citizens and
resident aliens), or
a properly completed claim for exemption on Form W-8 (for nonresident
aliens and other foreign entities), or
are otherwise subject to backup withholding.
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FINANCIAL HIGHLIGHTS
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The following financial highlights table is intended to help you understand
the fund's financial performance for the past 5 years. Certain information
re ects financial results for a single fund share. In the tables, 'total
investment return' represents the rate that an investor would have earned on an
investment in the fund (assuming reinvestment of all dividends).
This information in the financial highlights has been audited by Ernst &
Young LLP, independent auditors, whose report, along with the fund's financial
statements, is included in the fund's Annual Report to Shareholders. The Annual
Report may be obtained without charge by calling 1-800-647-1568.
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<CAPTION>
FOR THE YEARS ENDED MARCH 31,
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2000 1999 1998 1997 1996
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<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)
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Net asset value, end of year.......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
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Total investment return(1)............................ 4.97% 4.98% 5.23% 4.93% 5.36%
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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%
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(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.
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For investors who want more information about the fund, the following documents
are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS
Additional information about the fund's investments is available in its annual
and semi-annual reports to shareholders.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI provides more detailed information about the fund and is incorporated by
reference into this prospectus.
You may discuss your questions about the fund by contacting your Financial
Advisor. You may obtain free copies of the fund's annual and semi-annual reports
and its SAI by contacting the fund directly at 1-800-647-1568.
You may review and copy information about the fund, including shareholder
reports and the SAI, at the Public Reference Room of the Securities and Exchange
Commission. You may obtain information about the operations of the SEC's Public
Reference Room by calling the SEC at 1-202-942-8090. You can get text-only
copies of reports and other information about the fund:
For a fee, by electronic request at [email protected] or by writing the SEC's
Public Reference Section, Washington, D.C. 20549-0102; or
Free from the EDGAR Database on the SEC's Internet website at:
http://www.sec.gov
PaineWebber Cashfund, Inc.
Investment Company Act File No. 811-2802
'c' 2000 PaineWebber Incorporated. All rights reserved.
PAINEWEBBER
CASHFUND
Prospectus
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August 1, 2000
STATEMENT OF DIFFERENCES
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The copyright symbol shall be expressed as 'c'
