<PAGE>
As filed with the Securities and Exchange Commission on July 28, 2000
1933 Act Registration No. 2-60655
1940 Act Registration No. 811-2802
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ________ [ ]
Post-Effective Amendment No. 40 [ X ]
REGISTRATION STATEMENT UNDER INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 36 [ X ]
PAINEWEBBER CASHFUND, INC.
(Exact name of registrant as specified in charter)
51 West 52nd Street
New York, New York 10019 - 6114
(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 713-2000
DIANNE E. O'DONNELL, ESQ.
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
(Name and address of agent for service)
Copies to:
ELINOR W. GAMMON, ESQ.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
2nd Floor
Washington, D.C. 20036-1800
Telephone: (202) 778-9000
Approximate Date of Proposed Public Offering: Effective Date of this
Post-Effective Amendment.
It is proposed that this filing will become effective:
[ ] Immediately upon filing pursuant to Rule 485(b)
[ X ] On August 1, 2000, pursuant to Rule 485(b)
[ ] 60 days after filing pursuant to Rule 485(a)(1)
[ ] On pursuant to Rule 485(a)(1)
-----------------
[ ] 75 days after filing pursuant to Rule 485(a)(2)
[ ] On pursuant to Rule 485(a)(2)
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Title of Securities Being Registered: Shares of Common Stock.
<PAGE>
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
<TABLE>
<S> <C> <C>
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What every investor 3 Investment Objective, Strategies
should know about and Risks
the fund 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
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7.97% 5.87% 3.44% 2.78% 3.76% 5.46% 4.95% 5.15% 5.15% 4.74%
</TABLE>
CALENDAR YEAR
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
<TABLE>
<S> <C>
One Year................................................ 4.74%
Five Years.............................................. 5.09%
Ten Years............................................... 4.92%
</TABLE>
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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)
<TABLE>
<S> <C>
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
----
Total Annual Fund Operating Expenses........................ 0.55%
----
----
</TABLE>
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
------ ------- ------- --------
<S> <C> <C> <C>
$56 $176 $307 $689
</TABLE>
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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
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PaineWebber Cashfund
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 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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PaineWebber Cashfund
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.
<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>
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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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<PAGE>
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
Prospectus
-------------------------------------------
August 1, 2000
PaineWebber Cashfund, Inc.
Investment Company Act File No. 811-2802
'c' 2000 PaineWebber Incorporated. All rights reserved.
<PAGE>
PAINEWEBBER CASHFUND, INC.
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019-6114
STATEMENT OF ADDITIONAL INFORMATION
PaineWebber Cashfund, Inc. is a professionally managed, no load money
market fund designed to provide investors with current income, stability of
principal and high liquidity.
The fund's investment adviser, administrator and distributor is
PaineWebber Incorporated ("PaineWebber"); its sub-adviser is Mitchell Hutchins
Asset Management Inc. ("Mitchell Hutchins"), a wholly owned asset management
subsidiary of PaineWebber. Mitchell Hutchins also serves as the fund's
sub-administrator.
Portions of the fund's Annual Report to Shareholders are incorporated
by reference into this Statement of Additional Information ("SAI"). The Annual
Report accompanies this SAI. You may obtain an additional copy of the Annual
Report without charge by calling toll-free 1-800-647-1568.
This SAI is not a prospectus and should be read only in conjunction
with the fund's current Prospectus, dated August 1, 2000. A copy of the
Prospectus may be obtained by calling any PaineWebber Financial Advisor or
correspondent firm or by calling toll-free 1-800-647-1568. This SAI is dated
August 1, 2000.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Fund and Its Investment Policies................................ 2
The Fund's Investments, Related Risks and Limitations............... 2
Organization of the Fund; Directors and Officers; Principal Holders
and Management Ownership of Securities.......................... 8
Investment Advisory, Administration and
Distribution Arrangements....................................... 16
Portfolio Transactions.............................................. 18
Additional Information Regarding Redemptions;
Service Organizations........................................... 19
Valuation of Shares................................................. 19
Performance Information............................................. 20
Taxes............................................................... 22
Other Information................................................... 23
Financial Statements................................................ 23
</TABLE>
<PAGE>
THE FUND AND ITS INVESTMENT POLICIES
The fund's investment objective may not be changed without shareholder
approval. Except where noted, the other investment policies of the fund may be
changed by its board without shareholder approval. As with other mutual funds,
there is no assurance that the fund will achieve its investment objective.
The fund's investment objective is to provide current income, stability
of principal and high liquidity. The fund invests in high quality money market
instruments that have, or are deemed to have, remaining maturities of 13 months
or less. 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. These instruments include (1) U.S. and foreign government
securities, (2) obligations of U.S. and foreign banks, (3) commercial paper and
other short-term obligations of U.S. and foreign corporations, partnerships,
trusts and similar entities, (4) repurchase agreements and (5) investment
company securities. The fund maintains a dollar-weighted average portfolio
maturity of 90 days or less.
The fund may invest in obligations (including certificates of deposit,
bankers' acceptances, time deposits and similar obligations) of U.S. and foreign
banks only if the institution has total assets at the time of purchase in excess
of $1.5 billion. The fund's investments in non-negotiable time deposits of these
institutions will be considered illiquid if they have maturities greater than
seven calendar days.
The fund may purchase only those obligations that Mitchell Hutchins
determines, pursuant to procedures adopted by the board, present minimal credit
risks and are "First Tier Securities" as defined in Rule 2a-7 under the
Investment Company Act of 1940, as amended ("Investment Company Act"). A First
Tier Security is either (1) rated in the highest short-term rating category by
at least two nationally recognized statistical rating agencies ("rating
agencies"), (2) rated in the highest short-term rating category by a single
rating agency if only that rating agency has assigned the obligation a
short-term rating, (3) issued by an issuer that has received such a short-term
rating with respect to a security that is comparable in priority and security,
(4) subject to a guarantee rated in the highest short-term rating category or
issued by a guarantor that has received the highest short-term rating for a
comparable debt obligation or (5) unrated, but determined by Mitchell Hutchins
to be of comparable quality.
The fund generally may invest no more than 5% of its total assets in
the securities of a single issuer (other than U.S. government securities),
except that the fund may invest up to 25% of its total assets in First Tier
Securities of a single issuer for a period of up to three business days. The
fund may purchase only U.S. dollar denominated obligations of foreign issuers.
The fund may invest up to 10% of its net assets in illiquid securities.
The fund may purchase securities on a when-issued or delayed delivery basis. The
fund may lend its portfolio securities to qualified broker-dealers or
institutional investors in an amount up to 33 1/3% of its total assets. The fund
may borrow from banks or through reverse repurchase agreements for temporary
purposes, but not in excess of 10% of its total assets. The costs associated
with borrowing may reduce the fund's net income. The fund may invest in the
securities of other investment companies.
THE FUND'S INVESTMENTS, RELATED RISKS AND LIMITATIONS
The following supplements the information contained in the Prospectus
and above concerning the fund's investments, related risks and limitations.
Except as otherwise indicated in the Prospectus or SAI, the fund has established
no policy limitations on its ability to use the investments or techniques
discussed in these documents.
YIELDS AND CREDIT RATINGS OF MONEY MARKET INSTRUMENTS. The yields on
the money market instruments in which the fund invests are dependent on a
variety of factors, including general money market conditions, conditions in the
particular market for the obligation, the financial condition of the issuer, the
size of the offering, the maturity of the obligation and the ratings of the
issue. The ratings assigned by rating agencies represent their opinions as to
the quality of the obligations they undertake to rate. Ratings, however, are
general and are not
2
<PAGE>
absolute standards of quality. Consequently, obligations with the same rating,
maturity and interest rate may have different market prices.
Subsequent to its purchase by the fund, an issue may cease to be rated
or its rating may be reduced. If a security in the fund's portfolio ceases to be
a First Tier Security (as defined above) or Mitchell Hutchins becomes aware that
a security has received a rating below the second highest rating by any rating
agency, Mitchell Hutchins and, in certain cases, the fund's board, will consider
whether the fund should continue to hold the obligation. A First Tier Security
rated in the highest short-term category by a single rating agency at the time
of purchase that subsequently receives a rating below the highest rating
category from a different rating agency may continue to be considered a First
Tier Security.
U.S. GOVERNMENT SECURITIES include direct obligations of the U.S.
Treasury (such as Treasury bills, notes or bonds) and obligations issued or
guaranteed as to principal and interest (but not as to market value) by the U.S.
government, its agencies or its instrumentalities. These U.S. government
securities may include mortgage-backed securities issued or guaranteed by
government agencies or government-sponsored enterprises. Other U.S. government
securities may be backed by the full faith and credit of the U.S. government or
supported primarily or solely by the creditworthiness of the government-related
issuer or, in the case of mortgage-backed securities, by pools of assets.
U.S. government securities also include separately traded principal and
interest components of securities issued or guaranteed by the U.S. Treasury,
which are traded independently under the Separate Trading of Registered Interest
and Principal of Securities ("STRIPS") program. Under the STRIPS programs, the
principal and interest components are individually numbered and separately
issued by the U.S. Treasury.
COMMERCIAL PAPER AND OTHER SHORT-TERM OBLIGATIONS. Commercial paper
includes short-term obligations issued by corporations, partnerships, trusts or
other entities to finance short-term credit needs. The fund also may purchase
other types of non-convertible debt obligations subject to maturity constraints
imposed by the Securities and Exchange Commission ("SEC"). Descriptions of
certain types of short-term obligations are provided below.
ASSET-BACKED SECURITIES. The fund may invest in securities that are
comprised of financial assets that have been securitized through the use of
trusts or special purpose corporations or other entities. Such assets may
include motor vehicle and other installment sales contracts, home equity loans,
leases of various types of real and personal property and receivables from
revolving credit (credit card) agreements or other types of financial assets.
Payments or distributions of principal and interest may be guaranteed up to a
certain amount and for a certain time period by a letter of credit or pool
insurance policy issued by a financial institution unaffiliated with the issuer,
or other credit enhancements may be present. See "The Fund's Investments,
Related Risks and Limitations -- Credit and Liquidity Enhancements."
VARIABLE AND FLOATING RATE SECURITIES AND DEMAND INSTRUMENTS. The fund
may purchase variable and floating rate securities with remaining maturities in
excess of 13 months issued by U.S. government agencies or instrumentalities or
guaranteed by the U.S. government. In addition, the fund may purchase variable
and floating rate securities of other issuers. The yields on these securities
are adjusted in relation to changes in specific rates, such as the prime rate,
and different securities may have different adjustment rates. Certain of these
obligations carry a demand feature that gives the fund the right to tender them
back to a specified party, usually the issuer or a remarketing agent, prior to
maturity. The fund's investment in variable and floating rate securities must
comply with conditions established by the SEC under which they may be considered
to have remaining maturities of 13 months or less. The fund will purchase
variable and floating rate securities of non-U.S. government issuers that have
remaining maturities of more than 13 months only if the securities are subject
to a demand feature exercisable within 13 months or less. See "The Fund's
Investments, Related Risks and Limitations -- Credit and Liquidity
Enhancements."
Generally, the fund may exercise demand features (1) upon a default
under the terms of the underlying security, (2) to maintain its portfolio in
accordance with its investment objective and policies or applicable legal or
regulatory requirements or (3) as needed to provide liquidity to the fund in
order to meet redemption requests. The ability of a bank or other financial
institution to fulfill its obligations under a letter of credit, guarantee or
other liquidity arrangement
3
<PAGE>
might be affected by possible financial difficulties of its borrowers, adverse
interest rate or economic conditions, regulatory limitations or other factors.
The interest rate on floating rate or variable rate securities ordinarily is
readjusted on the basis of the prime rate of the bank that originated the
financing or some other index or published rate, such as the 90-day U.S.
Treasury bill rate, or is otherwise reset to reflect market rates of interest.
Generally, these interest rate adjustments cause the market value of floating
rate and variable rate securities to fluctuate less than the market value of
fixed rate securities.
VARIABLE AMOUNT MASTER DEMAND NOTES. The fund may invest in variable
amount master demand notes, which are unsecured redeemable obligations that
permit investment of varying amounts at fluctuating interest rates under a
direct agreement between the fund and an issuer. The principal amount of these
notes may be increased from time to time by the parties (subject to specified
maximums) or decreased by the fund or the issuer. These notes are payable on
demand (subject to any applicable advance notice provisions) and may or may not
be rated.
INVESTING IN FOREIGN SECURITIES. The fund's investments in U.S. dollar
denominated securities of foreign issuers may involve risks that are different
from investments in U.S. issuers. These risks may include future unfavorable
political and economic developments, possible withholding taxes, seizure of
foreign deposits, currency controls, interest limitations or other governmental
restrictions that might affect the payment of principal or interest on the
fund's investments. Additionally, there may be less publicly available
information about foreign issuers because they may not be subject to the same
regulatory requirements as domestic issuers.
CREDIT AND LIQUIDITY ENHANCEMENTS. The fund may invest in securities
that have credit or liquidity enhancements or may purchase these types of
enhancements in the secondary market. Such enhancements may be structured as
demand features that permit the fund to sell the instrument at designated times
and prices. These credit and liquidity enhancements may be backed by letters of
credit or other instruments provided by banks or other financial institutions
whose credit standing affects the credit quality of the underlying obligation.
Changes in the credit quality of these financial institutions could cause losses
to the fund and affect its share price. The credit and liquidity enhancements
may have conditions that limit the ability of the fund to use them when the fund
wishes to do so.
ILLIQUID SECURITIES. The term "illiquid securities" means securities
that cannot be disposed of within seven days in the ordinary course of business
at approximately the amount at which the fund has valued the securities and
includes, among other things, repurchase agreements maturing in more than seven
days and restricted securities other than those Mitchell Hutchins has determined
are liquid pursuant to guidelines established by the board. The fund may not be
able to readily liquidate its investments in illiquid securities and may have to
sell other investments if necessary to raise cash to meet its obligations. The
lack of a liquid secondary market for illiquid securities may make it more
difficult for the fund to assign a value to those securities for purposes of
valuing its portfolio and calculating its net asset value.
Restricted securities are not registered under the Securities Act of
1933, as amended ("Securities Act"), and may be sold only in privately
negotiated or other exempted transactions or after a registration statement
under the Securities Act has become effective. Where registration is required,
the fund may be obligated to pay all or part of the registration expenses and a
considerable period may elapse between the time of the decision to sell and the
time the fund may be permitted to sell a security under an effective
registration statement. If, during such a period, adverse market conditions were
to develop, the fund might obtain a less favorable price than prevailed when it
decided to sell.
Not all restricted securities are illiquid. A large institutional
market has developed for many U.S. and foreign securities that are not
registered under the Securities Act. Institutional investors generally will not
seek to sell these instruments to the general public but instead will often
depend either on an efficient institutional market in which such unregistered
securities can be readily resold or on an issuer's ability to honor a demand for
repayment. Therefore, the fact that there are contractual or legal restrictions
on resale to the general public or certain institutions is not dispositive of
the liquidity of such investments.
4
<PAGE>
Institutional markets for restricted securities also have developed as
a result of Rule 144A under the Securities Act, which establishes a "safe
harbor" from the registration requirements of that Act for resales of certain
securities to qualified institutional buyers. These markets include automated
systems for the trading, clearance and settlement of unregistered securities of
domestic and foreign issuers, such as the PORTAL System sponsored by the
National Association of Securities Dealers, Inc. An insufficient number of
qualified institutional buyers interested in purchasing Rule 144A-eligible
restricted securities held by the fund, however, could affect adversely the
marketability of such portfolio securities, and the fund might be unable to
dispose of them promptly or at favorable prices.
The board has delegated the function of making day-to-day
determinations of liquidity to Mitchell Hutchins pursuant to guidelines approved
by the board. Mitchell Hutchins takes into account a number of factors in
reaching liquidity decisions, which may include (1) the frequency of trades for
the security, (2) the number of dealers that make quotes for the security, (3)
the nature of the security and how trading is effected (e.g., the time needed to
sell the security, how bids are solicited and the mechanics of transfer) and (4)
the existence of demand features or similar liquidity enhancements. Mitchell
Hutchins monitors the liquidity of restricted securities in the fund's portfolio
and reports periodically on such decisions to the board.
Mitchell Hutchins also monitors the fund's overall holdings of illiquid
securities. If the fund's holdings of illiquid securities exceed its limitation
on investments in illiquid securities for any reason (such as a particular
security becoming illiquid, changes in the relative market values of liquid and
illiquid portfolio securities or shareholder redemptions), Mitchell Hutchins
will consider what action would be in the best interests of the fund and its
shareholders. Such action may include engaging in an orderly disposition of
securities to reduce the fund's holdings of illiquid securities. However, the
fund is not required to dispose of illiquid securities under these
circumstances.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions in which
the fund purchases securities or other obligations from a bank or securities
dealer (or its affiliate) and simultaneously commits to resell them to the
counterparty at an agreed-upon date or upon demand and at a price reflecting a
market rate of interest unrelated to the coupon rate or maturity of the
purchased obligations. Securities or other obligations subject to repurchase
agreements may have maturities in excess of 13 months. The fund maintains
custody of the underlying obligations prior to their repurchase, either through
its regular custodian or through a special "tri-party" custodian or
sub-custodian that maintains separate accounts for both the fund and its
counterparty. Thus, the obligation of the counterparty to pay the repurchase
price on the date agreed to or upon demand is, in effect, secured by such
obligations.
Repurchase agreements carry certain risks not associated with direct
investments in securities, including a possible decline in the market value of
the underlying obligations. If their value becomes less than the repurchase
price, plus any agreed-upon additional amount, the counterparty must provide
additional collateral so that at all times the collateral is at least equal to
the repurchase price plus any agreed-upon additional amount. The difference
between the total amount to be received upon repurchase of the obligations and
the price that was paid by the fund upon acquisition is accrued as interest and
included in its net investment income. Repurchase agreements involving
obligations other than U.S. government securities (such as commercial paper and
corporate bonds) may be subject to special risks and may not have the benefit of
certain protections in the event of the counterparty's insolvency. If the seller
or guarantor becomes insolvent, the fund may suffer delays, costs and possible
losses in connection with the disposition of collateral. The fund intends to
enter into repurchase agreements only in transactions with counterparties
believed by Mitchell Hutchins to present minimum credit risks.
REVERSE REPURCHASE AGREEMENTS. Reverse repurchase agreements involve
the sale of securities held by the fund subject to its agreement to repurchase
the securities at an agreed-upon date or upon demand and at a price reflecting a
market rate of interest. Reverse repurchase agreements are subject to the fund's
limitation on borrowings and may be entered into only with banks or securities
dealers or their affiliates. While a reverse repurchase agreement is
outstanding, the fund will maintain, in a segregated account with its custodian,
cash or liquid securities, marked to market daily, in an amount at least equal
to its obligations under the reverse repurchase agreement. See "The Fund's
Investments, Related Risks and Limitations -- Segregated Accounts."
5
<PAGE>
Reverse repurchase agreements involve the risk that the buyer of the
securities sold by the fund might be unable to deliver them when the fund seeks
to repurchase. If the buyer of securities under a reverse repurchase agreement
files for bankruptcy or becomes insolvent, the buyer or trustee or receiver may
receive an extension of time to determine whether to enforce the fund's
obligation to repurchase the securities, and the fund's use of the proceeds of
the reverse repurchase agreement may effectively be restricted pending such
decision.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The fund may purchase
securities on a "when-issued" basis or may purchase or sell securities for
delayed delivery, i.e., for issuance or delivery to or by the fund later than
the normal settlement date at a stated price and yield. The fund generally would
not pay for such securities or start earning interest on them until they are
received. However, when the fund undertakes a when-issued or delayed delivery
obligation, it immediately assumes the risks of ownership, including the risks
of price fluctuation. Failure of the issuer to deliver a security purchased by
the fund on a when-issued or delayed delivery basis may result in the fund's
incurring a loss or missing an opportunity to make an alternative investment.
A security purchased on a when-issued or delayed delivery basis is
recorded as an asset on the commitment date and is subject to changes in market
value, generally based upon changes in the level of interest rates. Thus,
fluctuation in the value of the security from the time of the commitment date
will affect the fund's net asset value. When the fund commits to purchase
securities on a when-issued or delayed delivery basis, its custodian segregates
assets to cover the amount of the commitment. See "The Fund's Investments,
Related Risks and Limitations--Segregated Accounts." The fund's when-issued and
delayed delivery purchase commitments could cause its net asset value per share
to be more volatile.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. The fund may invest in
securities of other money market funds, subject to limitations under the
Investment Company Act. Among other things, these limitations currently restrict
the fund's aggregate investments in other investment companies to no more than
10% of its total assets. The fund's investments in certain private investment
vehicles are not subject to this restriction. The shares of other money market
funds are subject to the management fees and other expenses of those funds. At
the same time, the fund would continue to pay its own management fees and
expenses with respect to all its investments, including shares of other money
market funds. The fund may invest in the securities of other money market funds
when Mitchell Hutchins believes that (1) the amounts to be invested are too
small or are available too late in the day to be effectively invested in other
money market instruments, (2) shares of other money market funds otherwise would
provide a better return than direct investment in other money market instruments
or (3) such investments would enhance the fund's liquidity.
LENDING OF PORTFOLIO SECURITIES. The fund is authorized to lend its
portfolio securities to broker-dealers or institutional investors that Mitchell
Hutchins deems qualified. Lending securities enables the fund to earn additional
income, but could result in a loss or delay in recovering these securities. The
borrower of the fund's portfolio securities must maintain acceptable collateral
with the fund's custodian in an amount, marked to market daily, at least equal
to the market value of the securities loaned, plus accrued interest and
dividends. Acceptable collateral is limited to cash, U.S. government securities
and irrevocable letters of credit that meet certain guidelines established by
Mitchell Hutchins. The fund may reinvest any cash collateral in money market
investments or other short-term liquid investments, including other investment
companies. The fund also may reinvest cash collateral in private investment
vehicles similar to money market funds, including one managed by Mitchell
Hutchins. In determining whether to lend securities to a particular
broker-dealer or institutional investor, Mitchell Hutchins will consider, and
during the period of the loan will monitor, all relevant facts and
circumstances, including the creditworthiness of the borrower. The fund will
retain authority to terminate any of its loans at any time. The fund may pay
fees in connection with a loan and may pay the borrower or placing broker a
negotiated portion of the interest earned on the reinvestment of cash held as
collateral. The fund will receive amounts equivalent to any interest, dividends
or other distributions on the securities loaned. The fund will regain record
ownership of loaned securities to exercise beneficial rights, such as voting and
subscription rights, when regaining such rights is considered to be in the
fund's interest.
Pursuant to procedures adopted by the board governing the fund's
securities lending program, PaineWebber has been retained to serve as lending
agent for the fund. The board also has authorized the payment of fees (including
fees calculated as a percentage of invested cash collateral) to PaineWebber for
these services. The
6
<PAGE>
board periodically reviews all portfolio securities loan transactions for which
PaineWebber acted as lending agent. PaineWebber also has been approved as a
borrower under the fund's securities lending program.
SEGREGATED ACCOUNTS. When the fund enters into certain transactions
that involve obligations to make future payments to third parties, including the
purchase of securities on a when-issued or delayed delivery basis, and reverse
repurchase agreements, it will maintain with an approved custodian in a
segregated account cash or liquid securities, marked to market daily, in an
amount at least equal to its obligation or commitment under such transactions.
INVESTMENT LIMITATIONS OF THE FUND
FUNDAMENTAL LIMITATIONS. The following investment limitations cannot be
changed for the fund without the affirmative vote of the lesser of (a) more than
50% of the outstanding shares of the fund or (b) 67% or more of the shares
present at a shareholders' meeting if more than 50% of the outstanding shares
are represented at the meeting in person or by proxy. If a percentage
restriction is adhered to at the time of an investment or transaction, a later
increase or decrease in percentage resulting from changing values of portfolio
securities or amount of total assets will not be considered a violation of any
of the following limitations. With regard to the borrowings limitation in
fundamental limitation (3), the fund will comply with the applicable
restrictions of Section 18 of the Investment Company Act.
The fund will not:
(1) purchase securities of any one issuer if, as a result, more than 5%
of the fund's total assets would be invested in securities of that issuer or the
fund would own or hold more than 10% of the outstanding voting securities of
that issuer, except that up to 25% of the fund's total assets may be invested
without regard to this limitation, and except that this limitation does not
apply to securities issued or guaranteed by the U.S. government, its agencies
and instrumentalities or to securities issued by other investment companies.
The following interpretation applies to, but is not a part of, this
fundamental restriction: Mortgage- and asset-backed securities will not be
considered to have been issued by the same issuer by reason of the securities
having the same sponsor, and mortgage- and asset-backed securities issued by a
finance or other special purpose subsidiary that are not guaranteed by the
parent company will be considered to be issued by a separate issuer from the
parent company.
(2) purchase any security if, as a result of that purchase, 25% or more
of the fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry, except that this
limitation does not apply to securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities or to municipal securities or to
certificates of deposit and bankers' acceptances of domestic branches of U.S.
banks.
The following interpretations apply to, but are not a part of, this
fundamental restriction: (a) domestic and foreign banking will be considered to
be different industries; and (b) asset-backed securities will be grouped in
industries based upon their underlying assets and not treated as constituting a
single, separate industry.
(3) issue senior securities or borrow money, except as permitted under
the Investment Company Act and then not in excess of 33 1/3% of the fund's total
assets (including the amount of the senior securities issued but reduced by any
liabilities not constituting senior securities) at the time of the issuance or
borrowing, except that the fund may borrow up to an additional 5% of its total
assets (not including the amount borrowed) for temporary or emergency purposes.
(4) make loans, except through loans of portfolio securities or through
repurchase agreements, provided that for purposes of this restriction, the
acquisition of bonds, debentures, other debt securities or instruments, or
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers' acceptances or
similar instruments will not be considered the making of a loan.
7
<PAGE>
The following interpretation applies to, but is not a part of, this
fundamental restriction: the fund's investments in master notes and similar
instruments will not be considered to be the making of a loan.
(5) engage in the business of underwriting securities of other issuers,
except to the extent that the fund might be considered an underwriter under the
federal securities laws in connection with its disposition of portfolio
securities.
(6) purchase or sell real estate, except that investments in securities
of issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by interests
in real estate are not subject to this limitation, and except that the fund may
exercise rights under agreements relating to such securities, including the
right to enforce security interests and to hold real estate acquired by reason
of such enforcement until that real estate can be liquidated in an orderly
manner.
(7) purchase or sell physical commodities unless acquired as a result
of owning securities or other instruments, but the fund may purchase, sell or
enter into financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivative instruments.
NON-FUNDAMENTAL LIMITATIONS. The following investment restrictions are
non-fundamental and may be changed by the vote of the board without shareholder
approval. If a percentage restriction is adhered to at the time of an investment
or transaction, a later increase or decrease in percentage resulting from
changing values of portfolio securities or amount of total assets will not be
considered a violation of any of the following limitations.
The fund will not:
(1) purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions and except that the fund may
make margin deposits in connection with its use of financial options and
futures, forward and spot currency contracts, swap transactions and other
financial contracts or derivative instruments.
(2) engage in short sales of securities or maintain a short position,
except that the fund may (a) sell short "against the box" and (b) maintain short
positions in connection with its use of financial options and futures, forward
and spot currency contracts, swap transactions and other financial contracts or
derivative instruments.
(3) purchase securities of other investment companies, except to the
extent permitted by the Investment Company Act and except that this limitation
does not apply to securities received or acquired as dividends, through offers
of exchange, or as a result of reorganization, consolidation, or merger.
(4) purchase portfolio securities while borrowings in excess of 5% of
its total assets are outstanding.
ORGANIZATION OF THE FUND; DIRECTORS AND OFFICERS;
PRINCIPAL HOLDERS AND MANAGEMENT OWNERSHIP OF SECURITIES
The fund was organized on January 20, 1978 as a Maryland corporation.
The fund has authority to issue 20 billion shares of common stock, par value
$.001 per share. The fund is governed by a board of directors, which oversees
its operations.
The directors ("board members") and executive officers of the fund,
their ages, business addresses and principal occupations during the past five
years are:
8
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS; AGE POSITION WITH FUND BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
--------------------- ------------------ ----------------------------------------
<S> <C> <C>
Margo N. Alexander*'D'; 53 Director and President Mrs. Alexander is Chairman (since March 1999),
chief executive officer and a director of
Mitchell Hutchins (since January 1995), and an
executive vice president and a director of
PaineWebber (since March 1984). Mrs. Alexander
is president and a director or trustee of 30
investment companies for which Mitchell
Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
Richard Q. Armstrong; 65 Director Mr. Armstrong is chairman and principal of
R.Q.A. Enterprises R.Q.A. Enterprises (management consulting
One Old Church Road firm) (since April 1991 and principal
Unit #6 occupation since March 1995). Mr. Armstrong
Greenwich, CT 06830 was chairman of the board, chief executive
officer and co-owner of Adirondack Beverages
(producer and distributor of soft drinks and
sparkling/still waters) (October 1993-March
1995). He was a partner of The New England
Consulting Group (management consulting firm)
(December 1992-September 1993). He was
managing director of LVMH U.S. Corporation
(U.S. subsidiary of the French luxury goods
conglomerate, Louis Vuitton Moet Hennessey
Corporation) (1987-1991) and chairman of its
wine and spirits subsidiary, Schieffelin &
Somerset Company (1987-1991). Mr. Armstrong is
a director or trustee of 29 investment
companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves
as investment adviser.
E. Garrett Bewkes, Jr.**'D'; 73 Director and Chairman of the Mr. Bewkes is a director of Paine Webber Group
Board of Directors Inc. ("PW Group") (holding company of
PaineWebber and Mitchell Hutchins). Prior to
1996, he was a consultant to PW Group. He
serves as a consultant to PaineWebber (since
May 1999). Prior to 1988, he was chairman of
the board, president and chief executive
officer of American Bakeries Company. Mr.
Bewkes is a director of Interstate Bakeries
Corporation. Mr. Bewkes is a director or
trustee of 38 investment companies for which
Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS; AGE POSITION WITH FUND BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
--------------------- ------------------ ----------------------------------------
<S> <C> <C>
Richard R. Burt; 53 Director Mr. Burt is chairman of IEP Advisors, LLP
1275 Pennsylvania Ave, N.W. (international investments and consulting firm)
Washington, D.C. 20004 (since March 1994) and a partner of McKinsey &
Company (management consulting firm) (since
1991). He is also a director of
Archer-Daniels-Midland Co. (agricultural
commod-ities), Hollinger International Co.
(publishing), Homestake Mining Corp., (gold
mining), six investment companies in the
Deutsche Bank family of funds, nine investment
companies in the Flag Investors family of
funds, The Central European Fund, Inc. and The
Germany Fund, Inc., vice chairman of Anchor
Gaming (provides technology to gaming and
wagering industry) (since July 1999) and
chairman of Weirton Steel Corp. (makes and
finishes steel products) (since April 1996). He
was the chief negotiator in the Strategic Arms
Reduction Talks with the former Soviet Union
(1989-1991) and the U.S. Ambassador to the
Federal Republic of Germany (1985-1989). Mr.
Burt is a director or trustee of 29 investment
companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves
as investment adviser.
Mary C. Farrell**'D'; 50 Director Ms. Farrell is a managing director, senior
investment strategist and member of the
Investment Policy Committee of PaineWebber. Ms.
Farrell joined PaineWebber in 1982. She is a
member of the Financial Women's Association and
Women's Economic Roundtable and appears as a
regular panelist on Wall $treet Week with Louis
Rukeyser. She also serves on the Board of
Overseers of New York University's Stern School
of Business. Ms. Farrell is a director or
trustee of 28 investment companies for which
Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
Meyer Feldberg; 58 Director Mr. Feldberg is Dean and Professor of
Columbia University Management of the Graduate School of Business,
101 Uris Hall Columbia University. Prior to 1989, he was
New York, NY 10027 president of the Illinois Institute of
Technology. Dean Feldberg is also a director of
Primedia, Inc. (publishing), Federated
Department Stores, Inc. (operator of department
stores) and Revlon, Inc. (cosmetics). Dean
Feldberg is a director or trustee of 35
investment companies for which Mitchell
Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS; AGE POSITION WITH FUND BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
--------------------- ------------------ ----------------------------------------
<S> <C> <C>
George W. Gowen; 70 Director Mr. Gowen is a partner in the law firm of
666 Third Avenue Dunnington, Bartholow & Miller. Prior to May
New York, NY 10017 1994, he was a partner in the law firm of
Fryer, Ross & Gowen. Mr. Gowen is a director or
trustee of 35 investment companies for which
Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
Frederic V. Malek; 63 Director Mr. Malek is chairman of Thayer Capital
1455 Pennsylvania Ave, N.W. Partners (merchant bank) and chairman of Thayer
Suite 350 Hotel Investors II and Lodging Opportunities
Washington, DC 20004 Fund (hotel investment partnerships). From
January 1992 to November 1992, he was campaign
manager of Bush-Quayle `92. From 1990 to 1992,
he was vice chairman and, from 1989 to 1990, he
was president of Northwest Airlines Inc. and
NWA Inc. (holding company of Northwest Airlines
Inc.). Prior to 1989, he was employed by the
Marriott Corporation (hotels, restaurants,
airline catering and contract feeding), where
he most recently was an executive vice
president and president of Marriott Hotels and
Resorts. Mr. Malek is also a director of Aegis
Communications, Inc. (tele-services), American
Management Systems, Inc. (management consulting
and computer related services), Automatic Data
Processing, Inc. (computing services), CB
Richard Ellis, Inc. (real estate services), FPL
Group, Inc. (electric services), Global
Vacation Group (packaged vacations), HCR/Manor
Care, Inc. (health care), SAGA Systems, Inc.
(software company) and Northwest Airlines Inc.
Mr. Malek is a director or trustee of 29
investment companies for which Mitchell
Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS; AGE POSITION WITH FUND BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
--------------------- ------------------ ----------------------------------------
<S> <C> <C>
Carl W. Schafer; 64 Director Mr. Schafer is president of the Atlantic
66 Witherspoon Street, #1100 Foundation (charitable foundation supporting
Princeton, NJ 08542 mainly oceanographic exploration and research).
He is a director of Labor Ready, Inc.
(temporary employment), Roadway Express, Inc.
(trucking), The Guardian Group of Mutual Funds,
the Harding, Loevner Funds, E.I.I. Realty Trust
(investment company), Evans Systems, Inc.
(motor fuels, convenience store and diversified
company), Electronic Clearing House, Inc.
(financial transactions processing), Frontier
Oil Corporation and Nutraceutix, Inc.
(biotechnology company). Prior to January 1993,
he was chairman of the Investment Advisory
Committee of the Howard Hughes Medical
Institute. Mr. Schafer is a director or trustee
of 29 investment companies for which Mitchell
Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
Brian M. Storms*'D'; 45 Director Mr. Storms is president and chief operating
officer of Mitchell Hutchins (since March
1999). Prior to March 1999, he was president of
Prudential Investments (1996-1999). Prior to
joining Prudential, he was a managing director
at Fidelity Investments. Mr. Storms is a
director or trustee of 29 investment companies
for which Mitchell Hutchins, PaineWebber or one
of their affiliates serves as investment
adviser.
Thomas Disbrow***; 34 Vice President and Mr. Disbrow is a first vice president and a
Assistant Treasurer senior manager of the mutual fund finance
department of Mitchell Hutchins. Prior to
November 1999, he was a vice president of
Zweig/Glaser Advisers. Mr. Disbrow is a vice
president and assistant treasurer of 30
investment companies for which Mitchell
Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
John J. Lee***; 31 Vice President and Mr. Lee is a vice president and a manager of
Assistant Treasurer the mutual fund finance department of Mitchell
Hutchins. Prior to September 1997, he was an
audit manager in the financial services
practice of Ernst & Young LLP. Mr. Lee is a
vice president and assistant treasurer of 30
investment companies for which Mitchell
Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS; AGE POSITION WITH FUND BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
--------------------- ------------------ ----------------------------------------
<S> <C> <C>
Kevin J. Mahoney***; 34 Vice President and Mr. Mahoney is a first vice president and a
Assistant Treasurer senior manager of the mutual fund finance
department of Mitchell Hutchins. From August
1996 through March 1999, he was the manager of
the mutual fund internal control group of
Salomon Smith Barney. Prior to August 1996, he
was an associate and assistant treasurer of
BlackRock Financial Management L.P. Mr. Mahoney
is a vice president and assistant treasurer of
30 investment companies for which Mitchell
Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
Dennis McCauley*; 53 Vice President Mr. McCauley is a managing director and chief
investment officer--fixed income of Mitchell
Hutchins. Mr. McCauley is a vice president of
20 investment companies for which Mitchell
Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
Ann E. Moran***; 43 Vice President and Ms. Moran is a vice president and a manager of
Assistant Treasurer the mutual fund finance department of Mitchell
Hutchins. Ms. Moran is a vice president and
assistant treasurer of 30 investment companies
for which Mitchell Hutchins, PaineWebber or one
of their affiliates serves as investment
adviser.
Dianne E. O'Donnell**; 48 Vice President and Secretary Ms. O'Donnell is a senior vice president and
deputy general counsel of Mitchell Hutchins.
Ms. O'Donnell is a vice president and secretary
of 30 investment companies for which Mitchell
Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
Susan Ryan*; 40 Vice President Ms. Ryan is a senior vice president and a
portfolio manager of Mitchell Hutchins. Ms.
Ryan is a vice president of six investment
companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves
as investment adviser.
Paul H. Schubert***; 37 Vice President and Treasurer Mr. Schubert is a senior vice president and the
director of the mutual fund finance department
of Mitchell Hutchins. Mr. Schubert is a vice
president and treasurer of 30 investment
companies for which Mitchell Hutchins,
PaineWebber or one of their affiliates serves
as investment adviser.
Barney A. Taglialatela***; 39 Vice President and Mr. Taglialatela is a vice president and a
Assistant Treasurer manager of the mutual fund finance department
of Mitchell Hutchins. Mr. Taglialatela is a
vice president and assistant treasurer of 30
investment companies for which Mitchell
Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS; AGE POSITION WITH FUND BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
--------------------- ------------------ ----------------------------------------
<S> <C> <C>
Keith A. Weller**; 38 Vice President and Mr. Weller is a first vice president and
Assistant Secretary associate general counsel of Mitchell Hutchins.
Mr. Weller is a vice president and assistant
secretary of 29 investment companies for which
Mitchell Hutchins, PaineWebber or one of their
affiliates serves as investment adviser.
</TABLE>
-------------
* This person's business address is 51 West 52nd Street, New York, New York
10019-6114.
** This person's business address is 1285 Avenue of the Americas, New York, New
York 10019-6028.
*** This person's business address is Newport Center III, 499 Washington Blvd.,
14th Floor, Jersey City, New Jersey 07310-1998.
'D' Mrs. Alexander, Mr. Bewkes, Ms. Farrell and Mr. Storms are "interested
persons" of the fund as defined in the Investment Company Act by virtue of
their positions with Mitchell Hutchins, PaineWebber, and/or PW Group.
The fund pays each board member who is not an "interested person" of
the fund $1,000 annually and up to $150 for attending each board meeting and
each separate meeting of a board committee. Each chairman of the audit and
contract review committees of individual funds within the PaineWebber fund
complex receives additional compensation, aggregating $15,000 annually, from the
relevant funds. All board members are reimbursed for any expenses incurred in
attending meetings. Because PaineWebber and Mitchell Hutchins perform
substantially all the services necessary for the operation of the fund, the fund
requires no employees. No officer, director or employee of Mitchell Hutchins or
PaineWebber presently receives any compensation from the fund for acting as a
board member or officer.
14
<PAGE>
The table below includes certain information relating to the
compensation of the current board members who held office with the fund or with
other PaineWebber funds during the periods indicated.
COMPENSATION TABLE'D'
<TABLE>
<CAPTION>
AGGREGATE TOTAL COMPENSATION FROM
COMPENSATION FROM THE FUND AND THE FUND
NAME OF PERSON, POSITION THE FUND* COMPLEX**
------------------------ --------- ---------
<S> <C> <C>
Richard Q. Armstrong,
Director........................ $1,780 $104,650
Richard R. Burt,
Director........................ 1,780 102,850
Meyer Feldberg,
Director........................ 1,780 119,650
George W. Gowen,
Director........................ 2,172 119,650
Frederic V. Malek,
Director........................ 1,780 104,650
Carl W. Schafer,
Director........................ 1,750 104,650
</TABLE>
--------------------
'D' Only independent board members are compensated by the PaineWebber funds and
identified above; board members who are "interested persons," as defined by
the Investment Company Act, do not receive compensation from the PaineWebber
funds.
* Represents fees paid to each board member from the fund for the fiscal year
ended March 31, 2000.
** Represents total compensation paid during the calendar year ended December
31, 1999, to each board member by 31 investment companies (34 in the case of
Messrs. Feldberg and Gowen) for which Mitchell Hutchins, PaineWebber or one
of their affiliates served as investment adviser. No fund within the
PaineWebber fund complex has a bonus, pension, profit sharing or retirement
plan.
PRINCIPAL HOLDERS AND MANAGEMENT OWNERSHIP OF SECURITIES
PaineWebber, 1285 Avenue of the Americas, New York, New York
10019-6028, owned of record all of the fund's shares as of June 30, 2000. None
of the persons on whose behalf those shares were held was known by the fund to
own beneficially 5% or more of those shares.
As of June 30, 2000, directors and officers beneficially owned in the
aggregate less than 1% of the outstanding shares of the fund.
15
<PAGE>
INVESTMENT ADVISORY, ADMINISTRATION AND
DISTRIBUTION ARRANGEMENTS
INVESTMENT ADVISORY ARRANGEMENTS. PaineWebber acts as the fund's
investment adviser and administrator pursuant to a contract with the Fund
("PaineWebber Contract"). Under the PaineWebber Contract, the fund pays
PaineWebber an annual fee, computed daily and paid monthly, according to the
following schedule:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS ANNUAL RATE
------------------------ -----------
<S> <C>
Up to $500 million......................................................... 0.500%
In excess of $500 million up to $1.0 billion............................... 0.425
In excess of $1.0 billion up to $1.5 billion............................... 0.390
In excess of $1.5 billion up to $2.0 billion............................... 0.380
In excess of $2.0 billion up to $2.5 billion............................... 0.350
In excess of $2.5 billion up to $3.5 billion............................... 0.345
In excess of $3.5 billion up to $4.0 billion............................... 0.325
In excess of $4.0 billion up to $4.5 billion............................... 0.315
In excess of $4.5 billion up to $5.0 billion............................... 0.300
In excess of $5.0 billion up to $5.5 billion............................... 0.290
In excess of $5.5 billion.................................................. 0.280
</TABLE>
Services provided by PaineWebber under the PaineWebber Contract, some
of which may be delegated to Mitchell Hutchins, as discussed below, include the
provision of a continuous investment program for the fund and supervision of all
matters relating to the operation of the fund. Under the PaineWebber Contract,
PaineWebber is also obligated to distribute the fund's shares on an agency, or
"best efforts," basis under which the fund only issues such shares as are
actually sold. Shares of the fund are offered continuously. Under the
PaineWebber Contract, during the fiscal years ended March 31, 2000, 1999 and
1998, the fund paid (or accrued) to PaineWebber investment advisory and
administrative fees in the amount of $21,045,342, $20,847,408 and $19,457,916,
respectively.
Under a contract with PaineWebber ("Sub-Advisory Contract"), Mitchell
Hutchins is responsible for the actual investment management of the fund's
assets, including the responsibility for making decisions and placing orders to
buy, sell or hold particular securities. Under the Sub-Advisory Contract,
PaineWebber (not the fund) pays Mitchell Hutchins an annual fee, computed daily
and paid monthly, according to the following schedule:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS ANNUAL RATE
------------------------ -----------
<S> <C>
Up to $500 million......................................................... 0.0900%
In excess of $500 million up to $1.0 billion............................... 0.0500
In excess of $1.0 billion up to $1.5 billion............................... 0.0400
In excess of $1.5 billion up to $2.0 billion............................... 0.0300
In excess of $2.0 billion up to $2.5 billion............................... 0.0250
In excess of $2.5 billion up to $3.5 billion............................... 0.0250
In excess of $3.5 billion up to $4.5 billion............................... 0.0200
In excess of $4.5 billion up to $5.5 billion............................... 0.0125
In excess of $5.5 billion.................................................. 0.0100
</TABLE>
Under the Sub-Advisory Contract, during the fiscal years ended March
31, 2000, 1999 and 1998, PaineWebber paid (or accrued) to Mitchell Hutchins fees
in the amount of $1,793,584, $1,786,515 and $1,734,233, respectively.
Under a contract with PaineWebber ("Sub-Administration Contract"),
Mitchell Hutchins also serves as the fund's sub-administrator. Under the
Sub-Administration Contract, PaineWebber (not the fund) pays Mitchell
16
<PAGE>
Hutchins 20% of the fees received by PaineWebber under the PaineWebber Contract,
such amount to be paid monthly and reduced by any amount paid by PaineWebber in
each such month under the Sub-Advisory Contract. Under the Sub-Administration
Contract, during the fiscal years ended March 31, 2000, 1999 and 1998,
PaineWebber paid (or accrued) to Mitchell Hutchins fees in the amount of
$2,415,484, $2,382,967 and $2,157,350, respectively.
Each of the advisory, sub-advisory and sub-administration contracts
noted above provides that PaineWebber or Mitchell Hutchins, as the case may be,
shall not be liable for any error of judgment or mistake of law or for any loss
suffered by the fund in connection with the performance of the contract, except
a loss resulting from willful misfeasance, bad faith or gross negligence on the
part of PaineWebber or Mitchell Hutchins, in the performance of its duties or
from reckless disregard of its duties and obligations thereunder. The
PaineWebber Contract also provides that PaineWebber shall not be liable for
losses arising out of the receipt by PaineWebber of inadequate consideration in
connection with an order to purchase fund shares whether in the form of a
fraudulent check, draft or wire; a check returned for insufficient funds; or any
other such inadequate consideration (hereinafter "check losses"), except under
the circumstances noted above, but the fund shall not be liable for check losses
resulting from negligence on the part of PaineWebber. Each of the advisory,
sub-advisory and sub-administration contracts is terminable by vote of the
fund's board or by the holders of a majority of the outstanding voting
securities of the fund at any time without penalty, on 60 days' written notice
to PaineWebber or Mitchell Hutchins, as the case may be. Each of the advisory
and sub-advisory contracts may also be terminated by PaineWebber or Mitchell
Hutchins, as the case may be, on 90 days' written notice to the fund. The
sub-administration contract may also be terminated by Mitchell Hutchins on 60
days' written notice to the fund. Each of the advisory, sub-advisory and
sub-administration contracts terminates automatically upon its assignment.
Under the terms of the PaineWebber Contract, the fund bears all
expenses incurred in its operation that are not specifically assumed by
PaineWebber. Expenses borne by the fund include the following: (a) the cost
(including brokerage commissions, if any) of securities purchased or sold by the
fund or any losses incurred in connection therewith; (b) fees payable to and
expenses incurred on behalf of the fund by PaineWebber; (c) filing fees and
expenses relating to the registration and qualification of the fund's shares
under federal or state securities laws and maintaining such registrations and
qualifications; (d) fees and salaries payable to the fund's directors and
officers who are not officers or employees of PaineWebber or interested persons
(as defined in the Investment Company Act) of any investment adviser or
underwriter of the fund ("Independent Directors"); (e) taxes (including any
income or franchise taxes) and governmental fees; (f) costs of any liability,
uncollectible items of deposit and other insurance or fidelity bonds; (g) any
costs, expenses or losses arising out of any liability of or claim for damage or
other relief asserted against the fund for violation of any law; (h) legal,
accounting and auditing expenses, including legal fees of special counsel for
the Independent Directors; (i) charges of custodians, transfer agents and other
agents; (j) costs of preparing share certificates; (k) expenses of setting in
type and printing prospectuses, statements of additional information and
supplements thereto for existing shareholders, reports and statements to
shareholders and proxy materials; (l) any extraordinary expenses (including fees
and disbursements of counsel) incurred by the fund; and (m) fees and other
expenses incurred in connection with membership in investment company
organizations.
TRANSFER AGENCY-RELATED SERVICES. Prior to August 1, 1997, PaineWebber
provided certain services to the fund not otherwise provided by its transfer
agent. Pursuant to a separate agreement between PaineWebber and the fund
relating to those services, PaineWebber earned (or accrued) $1,002,742 for the
period April 1, 1997 to July 31, 1997. Effective August 1, 1997, PFPC, the
fund's transfer agent, (not the fund) pays PaineWebber for certain transfer
agency related services that PFPC has delegated to PaineWebber.
SECURITIES LENDING. During the fiscal years ended March 31, 2000, 1999
and 1998, the fund paid no fees to PaineWebber for its services as securities
lending agent because the fund did not engage in any securities lending
activities.
NET ASSETS. The following table shows the approximate net assets as of
June 30, 2000, sorted by category of investment objective, of the investment
companies as to which Mitchell Hutchins serves as adviser or sub-adviser. An
investment company may fall into more than one of the categories below.
17
<PAGE>
<TABLE>
<CAPTION>
NET ASSETS
INVESTMENT CATEGORY ($MIL)
------------------- ------
<S> <C>
Domestic (excluding Money Market)................................. $ 9,266.8
Global............................................................ 4,753.1
Equity/Balanced................................................... 9,728.1
Fixed Income (excluding Money Market)............................. 4,291.8
Taxable Fixed Income...................................... 2,881.0
Tax-Free Fixed Income..................................... 1,410.8
Money Market Funds................................................ 38,725.6
</TABLE>
PORTFOLIO TRANSACTIONS
The fund purchases portfolio securities from dealers and underwriters
as well as from issuers. Securities are usually traded on a net basis with
dealers acting as principal for their own accounts without a stated commission.
Prices paid to dealers in principal transactions generally include a "spread,"
which is the difference between the prices at which the dealer is willing to
purchase and sell a specific security at the time. When securities are purchased
directly from an issuer, no commissions or discounts are paid. When securities
are purchased in underwritten offerings, they include a fixed amount of
compensation to the underwriter.
The Sub-Advisory Contract authorizes Mitchell Hutchins (with the
approval of the board) to select brokers and dealers to execute purchases and
sales of the fund's portfolio securities. It directs Mitchell Hutchins to use
its best efforts to obtain the best available price and most favorable execution
with respect to all transactions for the fund. To the extent that the execution
and price offered by more than one dealer are comparable, Mitchell Hutchins may,
in its discretion, effect transactions in portfolio securities with dealers who
provide the fund or Mitchell Hutchins with research, analysis, advice and
similar services. Although Mitchell Hutchins may receive certain research or
execution services in connection with these transactions, Mitchell Hutchins will
not purchase securities at a higher price or sell securities at a lower price
than would otherwise be paid had no services been provided by the executing
dealer. Agency transactions in over-the-counter securities are entered into only
in compliance with procedures ensuring that the transaction (including
commissions) is at least as favorable as it would have been if effected directly
with a market-maker that did not provide research or execution services. These
procedures include a requirement that Mitchell Hutchins obtain multiple quotes
from dealers before executing the transaction on an agency basis. Moreover,
Mitchell Hutchins will not enter into any explicit soft dollar arrangements
relating to principal transactions and will not receive in principal
transactions the types of services that could be purchased for hard dollars.
Information and research services furnished by brokers or dealers through which
or with which the fund effects securities transactions may be used by Mitchell
Hutchins in advising other funds or accounts and, conversely, research services
furnished to Mitchell Hutchins by brokers or dealers in connection with other
funds or accounts that it advises may be used in advising the fund. Information
and research received from dealers will be in addition to, and not in lieu of,
the services required to be performed by Mitchell Hutchins under the
Sub-Advisory Contract.
During the fiscal years ended March 31, 2000, 1999 and 1998, the fund
paid no brokerage commissions. Therefore, the fund has not allocated any
brokerage transactions for research, analysis, advice and similar services.
Investment decisions for the fund and for other investment accounts
managed by Mitchell Hutchins are made independently of each other in light of
differing considerations for the various accounts. However, the same investment
decision may occasionally be made for the fund and one or more of such accounts.
In such cases, simultaneous transactions are inevitable. Purchases or sales are
then averaged as to price and allocated between the fund and such other
account(s) as to amount in a manner deemed equitable to the fund and such
account(s). While in some cases this practice could have a detrimental effect
upon the price or value of the security as far as the fund is concerned, or upon
its ability to complete its entire order, in other cases it is believed that
coordination and the ability to participate in volume transactions will be
beneficial to the fund.
As of March 31, 2000, the fund owned securities issued by the following
companies which are regular broker-dealers for the fund:
18
<PAGE>
<TABLE>
<CAPTION>
ISSUER TYPE OF SECURITY VALUE
------ ---------------- -----
<S> <C> <C>
Bear Stearns Companies, Incorporated commercial paper $ 124,377,125
Goldman Sachs Group Incorporated commercial paper 159,739,925
Merrill Lynch & Company Incorporated short-term corporate obligation 118,992,277
Merrill Lynch & Company Incorporated commercial paper 49,967,611
Morgan Stanley Dean Witter & Company commercial paper 104,614,208
</TABLE>
ADDITIONAL INFORMATION REGARDING REDEMPTIONS;
SERVICE ORGANIZATIONS
ADDITIONAL REDEMPTION INFORMATION. The fund may suspend redemption
privileges or postpone the date of payment during any period (1) when the New
York Stock Exchange is closed or trading on the New York Stock Exchange is
restricted as determined by the SEC, (2) when an emergency exists, as defined by
the SEC, that makes it not reasonably practicable for the fund to dispose of
securities owned by it or fairly to determine the value of its assets or (3) as
the SEC may otherwise permit. The redemption price may be more or less than the
shareholder's cost, depending on the market value of the fund's portfolio at the
time; although the fund attempts to maintain a constant net asset value of $1.00
per share.
Under normal circumstances, the fund will redeem shares when so
requested by a shareholder's broker-dealer other than PaineWebber by telegram or
telephone to PaineWebber. Such a redemption order will be executed at the net
asset value next determined after the order is received by PaineWebber.
Redemptions of fund shares effected through a broker-dealer other than
PaineWebber may be subject to a service charge by that broker-dealer.
SERVICE ORGANIZATIONS. The fund may authorize service organizations,
and their agents, to accept on its behalf purchase and redemption orders that
are in "good form" in accordance with the policies of those service
organizations. The fund will be deemed to have received these purchase and
redemption orders when a service organization or its agent accepts them. Like
all customer orders, these orders will be priced based on the fund's net asset
value next computed after receipt of the order by the service organizations or
their agents. Service organizations may include retirement plan service
providers who aggregate purchase and redemption instructions received from
numerous retirement plans or plan participants.
VALUATION OF SHARES
The fund uses its best efforts to maintain its net asset value at $1.00
per share. The fund's net asset value per share is determined by State Street
Bank and Trust Company ("State Street") as of 2:00 p.m., Eastern time, on each
Business Day. As defined in the Prospectus, "Business Day" means any day on
which State Street's Boston offices, and the New York City offices of
PaineWebber and PaineWebber's bank, The Bank of New York, are all open for
business. One or more of these institutions will be closed on the observance of
the following holidays: New Year's Day, Martin Luther King, Jr. Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veteran's Day, Thanksgiving Day and Christmas Day.
The fund values its portfolio securities in accordance with the
amortized cost method of valuation under Rule 2a-7 ("Rule") under the Investment
Company Act. To use amortized cost to value its portfolio securities, the fund
must adhere to certain conditions under the Rule relating to its investments,
some of which are discussed in this SAI. Amortized cost is an approximation of
market value of an instrument, whereby the difference between its acquisition
cost and value at maturity is amortized on a straight-line basis over the
remaining life of the instrument. The effect of changes in the market value of a
security as a result of fluctuating interest rates is not taken into account,
and thus the amortized cost method of valuation may result in the value of a
security being higher or lower than its actual market value. If a large number
of redemptions take place at a time when interest rates have increased, the fund
might have to sell portfolio securities prior to maturity and at a price that
might not be desirable.
The board has established procedures ("Procedures") for the purpose of
maintaining a constant net asset value of $1.00 per share, which include a
review of the extent of any deviation of net asset value per share, based on
19
<PAGE>
available market quotations, from the $1.00 amortized cost per share. If that
deviation exceeds 1/2 of 1% for the fund, the board will promptly consider
whether any action should be initiated to eliminate or reduce material dilution
or other unfair results to shareholders. Such action may include redeeming
shares in kind, selling portfolio securities prior to maturity, reducing or
withholding dividends and utilizing a net asset value per share as determined by
using available market quotations. The fund will maintain a dollar-weighted
average portfolio maturity of 90 days or less and will not purchase any
instrument having, or deemed to have, a remaining maturity of more than 397
days, will limit portfolio investments, including repurchase agreements, to
those U.S. dollar denominated instruments that are of high quality under the
Rule and that Mitchell Hutchins, acting pursuant to the Procedures, determines
present minimal credit risks, and will comply with certain reporting and
recordkeeping procedures. There is no assurance that constant net asset value
per share will be maintained. If amortized cost ceases to represent fair value
per share, the board will take appropriate action.
In determining the approximate market value of portfolio investments,
the fund may employ outside organizations, which may use a matrix or formula
method that takes into consideration market indices, matrices, yield curves and
other specific adjustments. This may result in the securities being valued at a
price different from the price that would have been determined had the matrix or
formula method not been used. Other assets, if any, are valued at fair value as
determined in good faith by or under the direction of the board.
PERFORMANCE INFORMATION
The fund's performance data quoted in advertising and other promotional
materials ("Performance Advertisements") represent past performance and are not
intended to indicate future performance. Investment return will fluctuate.
TOTAL RETURN CALCULATIONS. Average annual total return quotes
("Standardized Return") used in the fund's Performance Advertisements are
calculated according to the following formula:
<TABLE>
<S> <C> <C>
P(1+T)'pp'n = ERV
where: P = a hypothetical initial payment of $1,000 to purchase fund shares
T = average annual total return of fund shares
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment at
the beginning of that period.
</TABLE>
Under the foregoing formula, the time periods used in Performance
Advertisements will be based on rolling calendar quarters, updated to the last
day of the most recent quarter prior to submission of the advertisement for
publication. Total return, or "T" in the formula above, is computed by finding
the average annual change in the value of an initial $1,000 investment over the
period. All dividends are assumed to have been reinvested at net asset value.
The fund also may refer in Performance Advertisements to total return
performance data that are not calculated according to the formula set forth
above ("Non-Standardized Return"). The fund calculates Non-Standardized Return
for specified periods of time by assuming an investment of $1,000 in fund shares
and assuming the reinvestment of all dividends. The rate of return is determined
by subtracting the initial value of the investment from the ending value and by
dividing the remainder by the initial value.
The following table shows performance information for the fund's shares
outstanding for the periods indicated. All returns for periods of more than one
year are expressed as an average annual return.
20
<PAGE>
<TABLE>
<S> <C>
Year ended March 31, 2000:
Standardized Return................. 4.97%
Five Years ended March 31, 2000:
Standardized Return................. 5.09%
Ten Years ended March 31, 2000:
Standardized Return................. 4.87%
</TABLE>
CALCULATION OF YIELD. The fund computes its yield and effective yield
quotations using standardized methods required by the SEC. The fund from time to
time advertises (1) its current yield based on a recently ended seven-day
period, computed by determining the net change, exclusive of capital changes, in
the value of a hypothetical pre-existing account having a balance of one share
at the beginning of the period, subtracting a hypothetical charge reflecting
deductions from that shareholder account, dividing the difference by the value
of the account at the beginning of the base period to obtain the base period
return and then multiplying the base period return by (365/7), with the
resulting yield figure carried to at least the nearest hundredth of one percent;
and (2) its effective yield based on the same seven-day period by compounding
the base period return by adding 1, raising the sum to a power equal to (365/7)
and subtracting 1 from the result, according to the following formula:
EFFECTIVE YIELD=[(BASE PERIOD RETURN+1)'pp'365/7]-1
The fund may also advertise other performance data, which may consist
of the annual or cumulative return (including net short-term capital gain, if
any) earned on a hypothetical investment in the fund since it began operations
or for shorter periods. This return data may or may not assume reinvestment of
dividends (compounding).
Yield may fluctuate daily and does not provide a basis for determining
future yields. Because the yield of the fund fluctuates, it cannot be compared
with yields on savings accounts or other investment alternatives that provide an
agreed to or guaranteed fixed yield for a stated period of time. However, yield
information may be useful to an investor considering temporary investments in
money market instruments. In comparing the yield of one money market fund to
another, consideration should be given to each fund's investment policies,
including the types of investments made, the average maturity of the portfolio
securities and whether there are any special account charges that may reduce the
yield.
The fund's yield and effective yield for the seven-day period ended
March 31, 2000 were 5.49% and 5.64%, respectively.
OTHER INFORMATION. The fund's performance data quoted in advertising
and other promotional materials ("Performance Advertisements") represent past
performance and are not intended to predict or indicate future results. The
return on an investment in the fund will fluctuate. In Performance
Advertisements, the fund may compare its yield with data published by Lipper
Analytical Services, Inc. for money funds ("Lipper"), CDA Investment
Technologies, Inc. ("CDA"), IBC Financial Data, Inc. ("IBC"), Wiesenberger
Investment Companies Service ("Wiesenberger") or Investment Company Data Inc.
("ICD"), or with the performance of recognized stock and other indices,
including the Standard & Poor's 500 Composite Stock Price Index, the Dow Jones
Industrial Average, the Morgan Stanley Capital International World Index, the
Lehman Brothers Treasury Bond Index, the Lehman Brothers Government/Corporate
Bond Index, the Salomon Smith Barney Government Bond Index and changes in the
Consumer Price Index as published by the U.S. Department of Commerce. The fund
also may refer in such materials to mutual fund performance rankings and other
data, such as comparative asset, expense and fee levels, published by Lipper,
CDA, IBC, Wiesenberger or ICD. Performance Advertisements also may refer to
discussions of the fund and comparative mutual fund data and ratings reported in
independent periodicals, including THE WALL STREET JOURNAL, MONEY MAGAZINE,
FORBES, BUSINESS WEEK, FINANCIAL WORLD, BARRON'S, FORTUNE, THE NEW YORK TIMES,
THE CHICAGO TRIBUNE, THE WASHINGTON POST and THE KIPLINGER LETTERS. Comparisons
in Performance Advertisements may be in graphic form.
21
<PAGE>
The fund may also compare its performance with the performance of bank
certificates of deposit ("CDs") as measured by the CDA Certificate of Deposit
Index and the Bank Rate Monitor National Index and the average of yields of CDs
of major banks published by Banxquotes'r' Money Markets. In comparing the fund's
performance to CD performance, investors should keep in mind that bank CDs are
insured in whole or in part by an agency of the U.S. government and offer fixed
principal and fixed or variable rates of interest, and that bank CD yields may
vary depending on the financial institution offering the CD and prevailing
interest rates. Bank accounts are insured in whole or in part by an agency of
the U.S. government and may offer a fixed rate of return. Fund shares are not
insured or guaranteed by the U.S. government and returns thereon will fluctuate.
While the fund seeks to maintain a stable net asset value of $1.00 per share,
there can be no assurance that it will be able to do so.
The fund may include discussions or illustrations of the effects of
compounding in Performance Advertisements. "Compounding" refers to the fact
that, if dividends on the fund's shares are reinvested, any future income of the
fund would increase the value, not only of the original fund investment, but
also of the additional fund shares received through reinvestment. As a result,
the value of the fund investment would increase more quickly than if dividends
had been paid in cash. The fund may also make available to shareholders a daily
accrual factor or "mil rate" representing dividends accrued to shareholder
accounts on a given day or days. Certain shareholders may find that this
information facilitates accounting or recordkeeping.
TAXES
To continue to qualify for treatment as a regulated investment company
("RIC") under the Internal Revenue Code, the fund must distribute to its
shareholders for each taxable year at least 90% of its investment company
taxable income (consisting generally of net investment income and net short-term
capital gains, if any) and must meet several additional requirements. Among
these requirements are the following: (1) the fund must derive at least 90% of
its gross income each taxable year from dividends, interest, payments with
respect to securities loans and gains from the sale or other disposition of
securities and certain other income; (2) at the close of each quarter of the
fund's taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. government securities, securities of
other RICs and other securities that are limited, in respect of any one issuer,
to an amount that does not exceed 5% of the value of the fund's total assets;
and (3) at the close of each quarter of the fund's taxable year, not more than
25% of the value of its total assets may be invested in securities (other than
U.S. government securities or the securities of other RICs) of any one issuer.
If the fund failed to qualify for treatment as a RIC for any taxable year, (1)
it would be taxed as an ordinary corporation on the full amount of its taxable
income for that year without being able to deduct the distributions it makes to
its shareholders and (2) the shareholders would treat all those distributions as
dividends (that is, ordinary income) to the extent of the fund's earnings and
profits. In addition, the fund could be required to recognize unrealized gains,
pay substantial taxes and interest, and make substantial distributions before
requalifying for RIC treatment.
OTHER INFORMATION
VOTING RIGHTS. Shareholders of the fund are entitled to one vote for
each full share held and fractional votes for fractional shares held. Voting
rights are not cumulative, and as a result the holders of more than 50% of all
the shares of the fund may elect all its board members.
The fund does not hold annual meetings. There normally will be no
meetings of shareholders to elect directors unless fewer than a majority of the
directors holding office have been elected by shareholders. The directors are
required to call a meeting of shareholders when requested in writing to do so by
the shareholders of record holding at least 25% of the fund's outstanding
shares. Each share of the fund has equal voting, dividend and liquidation
rights.
CUSTODIAN AND RECORDKEEPING AGENT; TRANSFER AND DIVIDEND AGENT. State
Street Bank and Trust Company, located at One Heritage Drive, North Quincy,
Massachusetts 02171, serves as custodian and recordkeeping agent for the fund.
PFPC, Inc., a subsidiary of PNC Bank, N.A., serves as the fund's transfer and
dividend disbursing agent. It is located at 400 Bellevue Parkway, Wilmington, DE
19809.
22
<PAGE>
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800, serves as counsel to the fund.
Kirkpatrick & Lockhart LLP also acts as counsel to PaineWebber and Mitchell
Hutchins in connection with other matters.
AUDITORS. Ernst & Young LLP, 787 Seventh Avenue, New York, New York
10019, serves as independent auditors for the fund.
FINANCIAL STATEMENTS
The fund's Annual Report to Shareholders for its last fiscal year ended
March 31, 2000 is a separate document supplied with this SAI, and the financial
statements, accompanying notes and report of independent auditors appearing
therein are incorporated herein by this reference.
23
<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR REFERRED TO IN THE
PROSPECTUS AND THIS STATEMENT OF ADDITIONAL INFORMATION. THE FUND AND ITS
DISTRIBUTOR HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS
DIFFERENT. THE PROSPECTUS AND THIS STATEMENT OF ADDITIONAL INFORMATION ARE NOT
AN OFFER TO SELL SHARES OF THE FUND IN ANY JURISDICTION WHERE THE FUND OR ITS
DISTRIBUTOR MAY NOT LAWFULLY SELL THOSE SHARES.
-----------
PaineWebber
Cashfund, Inc.
------------------------------------------
Statement of Additional Information
August 1, 2000
------------------------------------------
PAINEWEBBER
'c' 2000 PaineWebber Incorporated. All rights reserved.
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits
<TABLE>
<S> <C>
(1) Restated Articles of Incorporation 1/
(2) Restated By-Laws 2/
(3) Instruments defining the rights of holders of Registrant's common stock 3/
(4) (a)Investment Advisory, Administration and Distribution Contract between
Registrant and PaineWebber 2/
(b)Sub-Advisory Contract between PaineWebber and Mitchell Hutchins 2/
(c)Sub-Administration Contract between PaineWebber and Mitchell Hutchins 2/
(5) Underwriting Contract - See Exhibit 4(a)
(6) Bonus, profit sharing or pension plans - none
(7) Custodian Contract 2/
(8) Transfer Agency Agreement 2/
(9) Opinion and consent of counsel (filed herewith)
(10) Other opinions, appraisals, rulings and consents: Auditors' consent
(filed herewith)
(11) Financial statements omitted from Part B - none
(12) Letter of investment intent 2/
(13) Plan pursuant to Rule 12b-1 - none
(14) and
(27) Financial Data Schedule (not applicable)
(15) Plan pursuant to Rule 18f-3 - None
(16) Code of Ethics for Registrant and Mitchell Hutchins Asset Management Inc. 4/
PaineWebber Incorporated, Registrant's investment adviser and principal distributor,
is not required to have a code of ethics with respect to the Registrant because
Registrant is a money market fund.
</TABLE>
--------------
1/ Incorporated by reference from Post-Effective Amendment No. 35 to the
registration statement, SEC File No. 2-60655, filed July 31, 1996.
2/ Incorporated by reference from Post-Effective Amendment No. 37 to the
registration statement, SEC File No. 2-60655, filed July 31, 1998.
3/ Incorporated by reference from Articles Sixth, Eighth, Ninth and Twelfth of
the Registrant's Restated Articles of Incorporation and Articles II, III,
VIII, X, and XI of the Registrant's Restated By-Laws.
4/ Incorporated by reference from Post-Effective Amendment No. 29 to the
registration statement of PaineWebber Mutual Fund Trust, SEC File
No. 2-98149, filed June 27, 2000.
<PAGE>
Item 24. Persons Controlled by or under Common Control with Registrant
None.
Item 25. Indemnification
Article Eleventh of the Articles of Incorporation provides
that the directors and officers of the Registrant shall not be liable
to the Registrant or to any of its stockholders for money damages to
the maximum extent permitted by applicable law. Article Eleventh also
provides that any repeal or modification of Article Eleventh or
adoption, or modification of any other provision of the Articles or
By-Laws inconsistent with Article Eleventh shall be prospective only,
to the extent that any such repeal or modification would, if applied
retroactively, adversely affect any limitation on the liability of any
director or officer of the Registrant or indemnification available to
any person covered by these provisions with respect to any act or
omission which occurred prior to such repeal, modification or adoption.
Section 10.01 of Article 10 of the By-Laws provides that the
Registrant shall indemnify its present and past directors, officers,
employees and agents, and any persons who are serving or have served at
the request of the Registrant as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust, or
enterprise, to the fullest extent permitted by law.
Section 10.02 of Article 10 of the By-Laws further provides
that the Registrant may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Registrant, or is or was serving at the request of the Registrant as a
director, officer or employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity
or arising out of his status as such, whether or not the Registrant
would have the power to indemnify him against such liability.
Section 9 of the Investment Advisory, Administration and
Distribution Contract between Registrant and PaineWebber Incorporated
("PaineWebber") provides that PaineWebber shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the
Registrant in connection with the matters to which the Contract
relates, except a loss resulting from willful misfeasance, bad faith or
gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under the
Contract.
Section 7 of the Sub-Advisory Contract between PaineWebber and
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins") provides
that Mitchell Hutchins will not be liable for any error of judgment or
mistake of law or for any loss suffered by PaineWebber or by the
Registrant or its shareholders in connection with the performance of
the Contract, except a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties
or from reckless disregard by it of its obligations or duties under the
Contract.
Section 8 of the Sub-Administration Contract between
PaineWebber and Mitchell Hutchins contains provisions similar to
Section 9 of the Investment Advisory, Administration and Distribution
Contract between the Registrant and PaineWebber.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be provided to directors,
officers and controlling persons of the Registrant, pursuant to the
foregoing provisions or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling persons of the Registrant in connection with the successful
defense of any action, suit or proceeding or payment pursuant to any
insurance policy) is asserted against the Registrant by such director,
officer or
<PAGE>
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 26. Business and Other Connections of Investment Adviser
PaineWebber, a Delaware corporation, is a registered
investment adviser and is wholly owned by Paine Webber Group Inc.
PaineWebber is primarily engaged in the financial services business.
Information as to the officers and directors of PaineWebber is included
in its Form ADV, as filed with the Securities and Exchange Commission
(registration number 801-7163) and is incorporated herein by reference.
Mitchell Hutchins, a Delaware corporation, is a registered
investment adviser and is a wholly owned subsidiary of PaineWebber.
Mitchell Hutchins is primarily engaged in the investment advisory
business. Information as to the officers and directors of Mitchell
Hutchins is included in its Form ADV, as filed with the Securities and
Exchange Commission (registration number 801-13219) and is incorporated
herein by reference.
Item 27. Principal Underwriters
(a) PaineWebber serves as principal underwriter and/or
investment adviser for the following other investment companies:
LIQUID INSTITUTIONAL RESERVES
MITCHELL HUTCHINS LIR MONEY SERIES
PAINEWEBBER RMA MONEY FUND, INC.
PAINEWEBBER RMA TAX-FREE FUND, INC.
PAINEWEBBER MUNICIPAL MONEY MARKET SERIES
PAINEWEBBER MANAGED MUNICIPAL TRUST
(b) PaineWebber is the principal underwriter of the Fund. The
directors and officers of PaineWebber, their principal business
addresses and their positions and offices with PaineWebber are
identified in its Form ADV, as filed with the Securities and Exchange
Commission (registration number 801-7163) and such information is
hereby incorporated herein by reference. The information set forth
below is furnished for those directors and officers of PaineWebber who
also serve as directors or officers of the Fund. Unless otherwise
indicated, the principal business address of each person named is 1285
Avenue of the Americas, New York, NY 10019.
<TABLE>
<CAPTION>
Name Position With Registrant Position and Offices With Underwriter
------ ------------------------ -------------------------------------
<S> <C> <C>
Margo N. Alexander Director and President Chairman, Chief Executive Officer and a
Director of Mitchell Hutchins and
Executive Vice President and a Director
of PaineWebber
Mary C. Farrell Director Managing Director, Senior Investment
Strategist and member of the Investment
Policy Committee of PaineWebber
</TABLE>
(c) None.
<PAGE>
Item 28. Location of Accounts and Records
The books and other documents required by paragraphs (b)(4),
(c) and (d) of Rule 31a-1 under the Investment Company Act of 1940 are
maintained in the physical possession of Mitchell Hutchins Asset
Management Inc. 1285 Avenue of the Americas, New York, New York 10019
and 51 West 52nd Street, New York, New York 10019-6114. All other
accounts, books and documents required by Rule 31a-1 are maintained in
the physical possession of Registrant's transfer agent and custodian.
Item 29. Management Services
Not applicable.
Item 30. Undertakings
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York and State of
New York, on the 28th day of July, 2000.
PAINEWEBBER CASHFUND, INC.
By: /s/ Dianne E. O'Donnell
-----------------------
Dianne E. O'Donnell
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Margo N. Alexander President and Director July 28, 2000
------------------------------------ (Chief Executive Officer)
Margo N. Alexander*
/s/ E. Garrett Bewkes, Jr. Director and Chairman July 28, 2000
--------------------------- of the Board of Directors
E. Garrett Bewkes, Jr.*
/s/ Richard Q. Armstrong Director July 28, 2000
---------------------------
Richard Q. Armstrong*
/s/ Richard R. Burt Director July 28, 2000
------------------------------------
Richard R. Burt*
/s/ Mary C. Farrell Director July 28, 2000
------------------------------------
Mary C. Farrell*
/s/ Meyer Feldberg Director July 28, 2000
------------------------------------
Meyer Feldberg*
/s/ George W. Gowen Director July 28, 2000
------------------------------------
George W. Gowen*
/s/ Frederic V. Malek Director July 28, 2000
------------------------------------
Frederic V. Malek*
/s/ Carl W. Schafer Director July 28, 2000
------------------------------------
Carl W. Schafer*
/s/ Brian M. Storms Director July 28, 2000
------------------------------------
Brian M. Storms**
/s/ Paul H. Schubert Vice President and Treasurer (Chief July 28, 2000
------------------------------------ Financial and Accounting Officer)
Paul H. Schubert
</TABLE>
<PAGE>
SIGNATURES (CONTINUED)
* Signature affixed by Elinor W. Gammon pursuant to powers of attorney
dated May 21, 1996 and incorporated by reference from Post-Effective
Amendment No. 25 to the registration statement of PaineWebber RMA
Tax-Free Fund, Inc., SEC File 2-78310, filed June 27, 1996.
** Signature affixed by Elinor W. Gammon pursuant to power of attorney
dated May 14, 1999 and incorporated by reference from Post-Effective
Amendment No. 38 to the registration statement of PaineWebber Cashfund,
Inc., SEC File 2-60655, filed May 28, 1999.
<PAGE>
PAINEWEBBER CASHFUND, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C>
(1) Restated Articles of Incorporation 1/
(2) Restated By-Laws 2/
(3) Instruments defining the rights of holders of Registrant's common stock 3/
(4) (a)Investment Advisory, Administration and Distribution Contract between
Registrant and PaineWebber 2/
(b)Sub-Advisory Contract between PaineWebber and Mitchell Hutchins 2/
(c)Sub-Administration Contract between PaineWebber and Mitchell Hutchins 2/
(5) Underwriting Contract - See Exhibit 4(a)
(6) Bonus, profit sharing or pension plans - none
(7) Custodian Contract 2/
(8) Transfer Agency Agreement 2/
(9) Opinion and consent of counsel (filed herewith)
(10) Other opinions, appraisals, rulings and consents: Auditors' consent
(filed herewith)
(11) Financial statements omitted from Part B - none
(12) Letter of investment intent 2/
(13) Plan pursuant to Rule 12b-1 - none
(14) and
(27) Financial Data Schedule (not applicable)
(15) Plan pursuant to Rule 18f-3 - None
(16) Code of Ethics for Registrant and Mitchell Hutchins Asset Management Inc. 4/
PaineWebber Incorporated, Registrant's investment adviser and principal distributor,
is not required to have a code of ethics with respect to the Registrant because
Registrant is a money market fund.
</TABLE>
--------------
1/ Incorporated by reference from Post-Effective Amendment No. 35 to the
registration statement, SEC File No. 2-60655, filed July 31, 1996.
2/ Incorporated by reference from Post-Effective Amendment No. 37 to the
registration statement, SEC File No. 2-60655, filed July 31, 1998.
3/ Incorporated by reference from Articles Sixth, Eighth, Ninth and Twelfth of
the Registrant's Restated Articles of Incorporation and Articles II, III,
VIII, X, and XI of the Registrant's Restated By-Laws.
4/ Incorporated by reference from Post-Effective Amendment No. 29 to the
registration statement of PaineWebber Mutual Fund Trust, SEC File
No. 2-98149, filed June 27, 2000.
STATEMENT OF DIFFERENCES
------------------------
The copyright symbol shall be expressed as............................. 'c'
The registered trademark symbol shall be expressed as.................. 'r'
The dagger symbol shall be expressed as................................ 'D'
Characters normally expressed as superscript shall be preceded by...... 'pp'
