<PAGE>
PAINEWEBBER MONEY MARKET FUND ANNUAL REPORT
April 15, 2000
Dear Shareholder,
We are pleased to present you with the annual report for PaineWebber Money
Market Fund (the "Fund") for the fiscal year ended February 29, 2000.
MARKET REVIEW
[GRAPHIC]
During the fiscal year, fear of higher inflation became the dominant theme
of the fixed income markets. Interest rates rose as the markets reacted to
improving economic prospects in Asia and Latin America, rapidly growing U.S.
demand, higher oil prices and the possibility that wage increases might reduce
productivity. The Federal Reserve (the Fed) raised short-term interest rates
four times during the fiscal year; the Fed Funds rate (the rate the Fed charges
for overnight loans) rose from 4.75% to 5.75% during the fiscal year. After
fiscal year-end the Fed again raised rates, citing inflation risks to the
economy.
Yields on fixed income securities rose as interest rates rose, causing
losses in almost every sector of the bond market. Short-term yields (as measured
by the 90-day U.S. Treasury bill) rose from 4.70% to 5.78% during the fiscal
year and created more difficult conditions for money market funds. But because
of their emphasis on safety, money market funds fared better than the broad bond
market.
PORTFOLIO REVIEW
7-Day Yield1 2/29/00 8/31/99
- --------------------------------------------------------------------------------
Class A Shares 4.72% 4.31%
Class B Shares 4.27 3.74
Class C Shares 4.28 3.84
- --------------------------------------------------------------------------------
1 Yields will fluctuate.
PORTFOLIO HIGHLIGHTS
We expected interest rates to rise during the Fund's fiscal year, and
therefore kept the Fund's weighted-average maturity at or below its peer group
average. As 2000 approached we increased the Fund's weighting in U.S. government
and agency obligations to emphasize liquidity and principal stability in the
event of any Y2K problems. The new century dawned without major problems, and
with the Y2K
PAINEWEBBER MONEY MARKET FUND
Ivestment Goal:
Principal stability and current income
Portfolio Manager:
Susan P. Ryan,
Mitchell Hutchins Asset Management Inc
Commencement:
July 1, 1991 (Class A)
September 26, 1986 (Class B)
July 14, 1992 (Class C)
Dividend Payments:
Monthly
<PAGE>
ANNUAL REPORT PAINEWEBBER MONEY MARKET FUND
issue behind us we were able to focus on more than liquidity. We began to
restructure the Fund to balance its goals of current income and principal
stability. Throughout the fiscal year, we maintained the Fund's focus on
top-tier credit quality instruments.
Characteristics* 2/29/00 8/31/99
- --------------------------------------------------------------------------------
Weighted Average Maturity 13.6 days 28.7 days
Average Credit Quality First Tier First Tier
Net Assets ($mm) $94.7 $91.0
- --------------------------------------------------------------------------------
Sector Allocation* 2/29/00 8/31/99
- --------------------------------------------------------------------------------
Commercial Paper 61.1% Commercial Paper 64.6%
U.S. Gov't & Agency 26.8 U.S. Gov't & Agency 18.0
Certificates of Deposit 5.8 Certificates of Deposit 7.1
Short-Term Corporate 1.9 Short-Term Corporate 5.6
Bank Notes 4.4 Bank Notes 4.7
- --------------------------------------------------------------------------------
Total 100.0 Total 100.0
OUTLOOK
We expect an active Fed and rising rates across the yield curve in the
first half of 2000. We look for moderating economic growth in the second half of
the year, and believe interest rates will stabilize in response to current
growth and the absence of real inflationary pressure. As always, we intend to
maintain the Fund's emphasis on liquidity, high credit quality and portfolio
diversity.
1 Weightings represent percentages of portfolio assets. The Fund's portfolio
is actively managed and its composition will vary over time.
2
<PAGE>
PAINEWEBBER MONEY MARKET FUND ANNUAL REPORT
Our ultimate objective in managing your investments is to help you
successfully meet your financial goals. We thank you for your continued support
and welcome any comments or questions you may have. For a Quarterly Review of a
fund in the PaineWebber Family of Funds,2 please contact your Financial Advisor.
Sincerely,
/s/ MARGO ALEXANDER
MARGO ALEXANDER
Chairman and Chief Executive Officer
Mitchell Hutchins Asset Management Inc.
/s/ BRIAN M. STORMS
BRIAN M. STORMS
President and Chief Operating Officer
Mitchell Hutchins Asset Management Inc.
/s/ DENNIS L. McCAULEY
DENNIS L. McCAULEY
Managing Director and Chief Investment Officer--Fixed Income
Mitchell Hutchins Asset Management Inc.
/s/ SUSAN P. RYAN
SUSAN P. RYAN
Portfolio Manager, PaineWebber Money Market Fund
Mitchell Hutchins Asset Management Inc.
This letter is intended to assist shareholders in understanding how the Fund
performed during the fiscal year ended February 29, 2000, and reflects our views
at the time of its writing. Of course, these views may change in response to
changing circumstances. We encourage you to consult your Financial Advisor
regarding your personal investment program.
2 Mutual funds are sold by prospectus only. The prospectuses for the funds
contain more complete information regarding risks, charges and expenses,
and should be read carefully before investing.
3
<PAGE>
PaineWebber Money Market Fund
Statement of Net Assets February 29, 2000
<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000) Dates Rates Value
--------- -------- -------- -----------
<C> <S> <C> <C> <C>
U.S. Government and Agency Obligations@ --
27.18%
$10,000 Federal Home Loan Bank............... 03/22/00 5.620% $ 9,967,216
4,000 Federal National Mortgage
Association......................... 03/09/00 5.660 3,994,969
11,763 Student Loan Marketing Association... 03/01/00 5.720 11,763,000
-----------
Total U.S. Government and Agency Obligations
(cost -- $25,725,185)........................... 25,725,185
-----------
Bank Notes -- 4.49%
Domestic -- 4.49%
2,000 First Tennessee Bank N.A. ........... 03/07/00 6.391* 2,000,000
2,250 Key Bank N.A. ....................... 04/25/00 5.750 2,251,689
-----------
Total Bank Notes (cost -- $4,251,689)........... 4,251,689
-----------
Certificates of Deposit -- 5.81%
Yankee -- 5.81%
2,000 Bayerische Hypo-und Vereinsbank AG... 04/28/00 5.150 1,999,711
1,000 Canadian Imperial Bank of Commerce... 04/12/00 5.100 999,944
2,000 Royal Bank of Canada................. 03/01/00 5.890* 1,999,825
500 Toronto-Dominion Bank................ 04/17/00 5.060 499,963
-----------
Total Certificates of Deposit (cost --
$5,499,443).................................... 5,499,443
-----------
Commercial Paper@ -- 61.92%
Asset Backed-Auto & Truck -- 3.17%
3,000 New Center Asset Trust............... 03/01/00 5.880 3,000,000
-----------
Asset Backed-Banking -- 0.74%
700 Centric Capital Corporation.......... 03/20/00 5.810 697,854
-----------
Asset Backed-Miscellaneous -- 5.72%
2,424 Enterprise Funding Corporation....... 03/16/00 5.810 2,418,132
3,000 Variable Funding Capital Corporation. 03/02/00 5.750 2,999,521
-----------
5,417,653
-----------
Banking - Domestic -- 6.33%
3,000 KFW International Finance
Incorporated........................ 03/01/00 5.840 3,000,000
3,000 Morgan (J.P.) & Company,
Incorporated........................ 03/16/00 5.780 2,992,775
-----------
5,992,775
-----------
Business Services -- 3.17%
3,000 Block Financial Corporation.......... 03/01/00 5.900 3,000,000
-----------
Chemicals -- 5.28%
2,000 Akzo Nobel, Incorporated............. 03/13/00 5.820 1,996,120
3,000 Henkel Corporation .................. 03/02/00 5.700 2,999,525
-----------
4,995,645
-----------
</TABLE>
4
<PAGE>
PaineWebber Money Market Fund
<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000) Dates Rates Value
--------- -------- -------- -----------
<C> <S> <C> <C> <C>
Commercial Paper@--(concluded)
Consumer Products -- 1.58%
$1,500 Colgate - Palmolive.................. 03/13/00 5.770% $ 1,497,115
-----------
Drugs, Health Care -- 1.06%
1,000 Merck & Co., Incorporated............ 03/10/00 5.750 998,563
-----------
Electronics -- 2.44%
2,325 Motorola Incorporated................ 03/31/00 5.720 2,313,917
-----------
Finance - Aircraft -- 3.17%
3,000 International Lease Financing ....... 03/06/00 5.750 2,997,604
-----------
Finance - Conduit -- 4.49%
1,254 MetLife Funding Incorporated......... 03/06/00 5.780 1,252,993
3,000 UBS Finance (Delaware) LLC .......... 03/01/00 5.830 3,000,000
-----------
4,252,993
-----------
Finance - Consumer -- 6.33%
3,000 American General Finance Corporation. 03/21/00 5.760 2,990,400
3,000 Household Finance Corporation........ 03/01/00 5.880 3,000,000
-----------
5,990,400
-----------
Food & Beverage -- 3.16%
3,000 Heinz (H.J.) Company................. 03/22/00 5.780 2,989,885
-----------
Insurance -- 3.17%
3,000 Allstate Corporation................. 03/01/00 5.760 3,000,000
-----------
Manufacturing - Diversified -- 1.89%
1,800 Honeywell International Incorporated. 04/05/00 5.820 1,789,815
-----------
Metals & Mining -- 3.16%
3,000 Rio Tinto America Incorporated....... 03/10/00 5.760 2,995,680
-----------
Telecommunications -- 3.15%
3,000 Bell Atlantic Financial Services,
Incorporated........................ 04/07/00 5.800 2,982,117
-----------
Utility - Electric -- 3.91%
1,700 Southern California Edison Company... 03/01/00 5.700 1,700,000
2,003 Southern Company..................... 03/20/00 5.770 1,996,900
-----------
3,696,900
-----------
Total Commercial Paper (cost -- $58,608,916).... 58,608,916
-----------
</TABLE>
5
<PAGE>
PaineWebber Money Market Fund
<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000) Dates Rates Value
--------- -------- -------- -----------
<C> <S> <C> <C> <C>
Short-Term Corporate Obligations -- 1.90%
Banking - Domestic -- 1.90%
$1,800 Banc One Corporation (cost --
$1,801,673)........................ 03/24/00 6.700% $ 1,801,673
-----------
Total Investments (cost -- $95,886,906 which
approximates cost for federal income
tax purposes) -- 101.30%....................... 95,886,906
Liabilities in excess of other assets --
(1.30)%........................................ (1,230,185)
-----------
Net Assets (applicable to 24,228,638, 57,010,540
and 13,418,094 shares of Class A,
Class B and Class C, respectively, each
equivalent to $1.00 per share) -- 100.00%...... $94,656,721
===========
</TABLE>
- ---------
* Variable rate securities-maturity date reflects earlier of reset date or
maturity date. The interest rates shown are the current rates as of February
29, 2000, and reset periodically.
@ Interest rates shown are discount rates at date of purchase.
Weighted average maturity -- 14 days
See accompanying notes to financial statements
6
<PAGE>
PaineWebber Money Market Fund
Statement of Operations
<TABLE>
<CAPTION>
For the Year
Ended
February 29, 2000
-----------------
<S> <C>
Investment income:
Interest...................................................... $5,144,941
----------
Expenses:
Investment advisory and administration........................ 474,438
Service fees -- Class A....................................... 96,157
Service and distribution fees -- Class B...................... 318,755
Service and distribution fees -- Class C...................... 104,451
Legal and audit............................................... 75,705
Transfer agency and related services fees..................... 53,429
State registration fees....................................... 52,066
Reports and notices to shareholders........................... 48,290
Custody and accounting........................................ 11,686
Directors' fees............................................... 10,500
Other expenses................................................ 14,206
----------
1,259,683
----------
Net investment income......................................... 3,885,258
Net realized loss from investment transactions................ (608)
----------
Net increase in net assets resulting from operations.......... $3,884,650
==========
</TABLE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Years Ended
February 28 or 29,
------------------------
2000 1999
----------- -----------
<S> <C> <C>
From operations:
Net investment income................................ $ 3,885,258 $ 2,554,316
Net realized gain (loss) from investment
transactions........................................ (608) 11,401
----------- -----------
Net increase in net assets resulting from operations. 3,884,650 2,565,717
----------- -----------
Dividends to shareholders from:
Net investment income -- Class A..................... (1,687,052) (1,514,274)
Net investment income -- Class B..................... (1,668,943) (672,891)
Net investment income -- Class C..................... (529,263) (367,151)
----------- -----------
(3,885,258) (2,554,316)
----------- -----------
Net increase in net assets from capital share
transactions........................................ 2,646,060 58,993,707
----------- -----------
Net increase in net assets........................... 2,645,452 59,005,108
Net assets:
Beginning of year.................................... 92,011,269 33,006,161
----------- -----------
End of year.......................................... $94,656,721 $92,011,269
=========== ===========
</TABLE>
See accompanying notes to financial statements
7
<PAGE>
Notes to Financial Statements
Organization and Significant Accounting Policies
PaineWebber Master Series, Inc. ("Master Series") was incorporated in Maryland
on October 29, 1985 and is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, as an open-
end, diversified series investment company which currently offers two series of
shares: PaineWebber Money Market Fund ("Fund") and PaineWebber Balanced Fund.
The financial statements for PaineWebber Balanced Fund are not included herein.
The Fund currently offers Class A, Class B and Class C shares. Each class rep-
resents interests in the same assets of the Fund and the classes are identical
except for differences in their sales charge structure, ongoing service and
distribution charges and certain transfer agency and related services expenses.
In addition, Class B shares automatically convert to Class A shares approxi-
mately six years after initial issuance. All classes of shares have equal vot-
ing privileges, except that each class has exclusive voting rights with respect
to its service and/or distribution plan. All classes of shares may be obtained
only through an exchange of shares of the corresponding class of other
PaineWebber mutual funds.
The preparation of financial statements in accordance with generally accepted
accounting principles requires Fund management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates. The following is
a summary of significant accounting policies:
Valuation and Accounting for Investments--Investments are valued at amortized
cost which approximates market value. Investment transactions are recorded on
the trade date. Realized gains and losses from investment transactions are cal-
culated using the identified cost method. Interest income is recorded on an ac-
crual basis. Premiums are amortized and discounts are accreted as adjustments
to interest income and the identified cost of investments.
Repurchase Agreements--The Fund's custodian takes possession of the collateral
pledged for investments in repurchase agreements. The underlying collateral is
valued daily on a mark-to-market basis to ensure that the value, including ac-
crued interest, is at least equal to the repurchase price. In the event of de-
fault of the obligation to repurchase, the Fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under cer-
tain circumstances, in the event of default or bankruptcy by the other party to
the agreement, realization and/or retention of the collateral may be subject to
legal proceedings. The Fund may participate in joint repurchase agreement
transactions with other funds managed by Mitchell Hutchins Asset Management
Inc. ("Mitchell Hutchins"), an asset management subsidiary of PaineWebber In-
corporated ("PaineWebber") and investment adviser and administrator of the
Fund.
Net Investment Income and Investment Transactions--Income and expenses (ex-
cluding class-specific expenses) are allocated proportionately to each class of
shares based upon the relative net asset value of dividend-eligible shares of
each class at the beginning of the day (after adjusting for current capital
share activity of the respective classes). Realized gains and losses are allo-
cated proportionately to each class of shares based upon the relative value of
shares outstanding at the beginning of the day (after adjusting for current
capital share activity of the respective classes). Class-specific expenses are
charged directly to the applicable class of shares.
Dividends and Distributions--Dividends and distributions to shareholders are
recorded on the ex-dividend date. Dividends and distributions are determined in
accordance with federal income tax regulations, which may differ from generally
accepted accounting principles. These "book/tax" differences are either
considered temporary or permanent in nature. To the extent these differences
are permanent in nature, such amounts are reclassified within the capital
accounts based on their federal tax-basis treatment; temporary differences do
not require reclassification.
8
<PAGE>
Notes to Financial Statements
Concentration of Risk
The ability of the issuers of the debt securities held by the Fund to meet
their obligations may be affected by economic developments, including those
particular to a specific industry or region.
Investment Adviser and Administrator
The Board of Directors of Master Series has approved an Investment Advisory
and Administration Contract ("Advisory Contract") with Mitchell Hutchins, under
which Mitchell Hutchins serves as investment adviser and administrator of the
Fund. In accordance with the Advisory Contract, the Fund pays Mitchell Hutchins
an investment advisory and administration fee, which is accrued daily and paid
monthly, at the annual rate of 0.50% of the Fund's average daily net assets. At
February 29, 2000, the Fund owed Mitchell Hutchins $40,355 for investment advi-
sory and administration fees.
Distribution Plans
Mitchell Hutchins is the distributor of the Fund's shares and has appointed
PaineWebber as the exclusive dealer for the sale of those shares. Under sepa-
rate plans of service and/or distribution pertaining to Class A, Class B and
Class C shares, the Fund pays Mitchell Hutchins monthly service fees at the an-
nual rate of 0.25% of the average daily net assets of each class of shares and
monthly distribution fees at an annual rate of 0.50% of the average daily net
assets of Class B and Class C shares. At February 29, 2000 the Fund owed Mitch-
ell Hutchins $49,201 in service and distribution fees.
Mitchell Hutchins also receives the proceeds of the contingent deferred sales
charges paid upon certain redemptions of Class A, Class B and Class C shares.
Mitchell Hutchins has informed the Fund that for the year ended February 29,
2000, it earned $411,884 in sales charges.
Transfer Agency and Related Services Fees
PaineWebber provides transfer agency related services to the Fund pursuant to
a delegation of authority from PFPC, Inc., the Funds' transfer agent, and is
compensated for these services by PFPC, Inc., not the Fund. For the year ended
February 29, 2000, PaineWebber received from PFPC, Inc., not the Fund, approxi-
mately 52% of the total transfer agency and related service fees collected by
PFPC, Inc. from the Fund.
Money Market Fund Insurance Bond
Effective September 30, 1999, the Fund obtained an insurance bond that pro-
vides limited coverage for certain loss events involving certain money market
instruments held by the Fund. These loss events include non-payment of princi-
pal or interest or a bankruptcy or insolvency of the issuer or credit enhance-
ment provider (if any). The insurance bond provides for coverage up to $200
million for a number of funds with a deductible of 10 basis points (0.10%) of
the total assets of the Fund for First Tier Securities and 50 basis points
(0.50%) of the total assets of the Fund for Second Tier Securities, in each
case determined as of the close of business on the first business day prior to
the loss event. In the event of a loss covered under the insurance bond, the
Fund would expect to retain the security in its portfolio, rather than having
to sell it at its current market value, until the date of payment of the loss,
which is generally no later than the maturity of the security. While the policy
is intended to provide some protection against credit risk and to help the Fund
maintain a constant price per share of $1.00, there is no guarantee that the
insurance will do so. For the period September 30, 1999 to February 29, 2000,
the Fund did not use this insurance bond.
Other Liabilities
At February 29, 2000, the amounts payable for Fund shares repurchased and div-
idends payable aggregated $9,061,956 and $59,734, respectively.
9
<PAGE>
Notes to Financial Statements
Capital Stock
There are 10 billion shares of $0.001 par value common stock authorized for
Master Series, of which 1 billion were allocated to the Fund. Transactions in
shares of common stock, at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Class A Class B Class C
-------------------------- ------------------------ --------------------------
For the Years Ended For the Years Ended For the Years Ended
February 28 or 29, February 28 or 29 February 28 or 29,
-------------------------- ------------------------ --------------------------
2000 1999 2000 1999 2000 1999
------------ ------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold............. 644,142,361 724,078,370 102,429,610 48,405,259 179,418,396 185,696,212
Shares repurchased...... (685,452,216) (683,232,436) (61,516,312) (39,655,873) (179,395,491) (178,311,578)
Shares converted from
Class B to Class A..... 4,179,473 5,296,686 (4,179,473) (5,296,686) -- --
Dividends reinvested.... 1,099,285 1,135,151 1,487,393 611,122 433,034 267,480
------------ ------------ ----------- ----------- ------------ ------------
Net increase (decrease)
in shares outstanding.. (36,031,097) 47,277,771 38,221,218 4,063,822 455,939 7,652,114
============ ============ =========== =========== ============ ============
</TABLE>
Federal Tax Status
The Fund intends to distribute substantially all of its taxable income and to
comply with the other requirements of the Internal Revenue Code applicable to
regulated investment companies. Accordingly, no provisions for federal income
taxes is required. In addition, by distributing during each calendar year
substantially all of its net investment income, capital gains and certain other
amounts, if any, the Fund intends not to be subject to a federal excise tax.
At February 29, 2000, the Fund had a net capital loss carryforward of $608
which will expire by February 28, 2008. To the extent such losses are used as
provided in the regulations, to offset future net realized capital gains, it is
probable these gains will not be distributed.
10
<PAGE>
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11
<PAGE>
PaineWebber Money Market Fund
Financial Highlights
Selected data for a share of capital stock outstanding throughout each year is
presented below:
<TABLE>
<CAPTION>
Class A
-------------------------------------------
For the Years Ended
February 28 or 29,
-------------------------------------------
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............. 0.042 0.042 0.042 0.040 0.046
Dividends from net investment
income........................... (0.042) (0.042) (0.042) (0.040) (0.046)
------- ------- ------- ------- -------
Net asset value, end of year...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total investment return(1)........ 4.32% 4.32% 4.33% 4.11% 4.69%
======= ======= ======= ======= =======
Ratios/Supplemental Data:
Net assets, end of year (000's)... $24,236 $60,267 $12,983 $11,808 $23,735
Expenses to average net assets.... 1.04% 1.17% 1.41% 1.42% 1.31%
Net investment income to average
net assets....................... 4.31% 4.29% 4.29% 4.09% 4.68%
</TABLE>
- ---------
(1) Total investment return is calculated assuming a $1,000 investment in Fund
shares on the first day of each year reported, reinvestment of all
dividends and other distributions at net asset value on the payable dates,
and a sale at net asset value on the last day of each year reported. The
figures do not include any applicable sales charges; results for each class
would be lower if they were included.
12
<PAGE>
<TABLE>
<CAPTION>
Class B Class C
- ------------------------------------------- ----------------------------------------
For the Years Ended For the Years Ended
February 28 or 29, February 28 or 29,
- ------------------------------------------- ----------------------------------------
2000 1999 1998 1997 1996 2000 1999 1998 1997 1996
- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
0.037 0.037 0.037 0.035 0.041 0.037 0.037 0.037 0.034 0.041
(0.037) (0.037) (0.037) (0.035) (0.041) (0.037) (0.037) (0.037) (0.034) (0.041)
- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ======= ======= ====== ====== ======
3.80% 3.79% 3.81% 3.60% 4.18% 3.81% 3.81% 3.78% 3.50% 4.14%
======= ======= ======= ======= ======= ======= ======= ====== ====== ======
$57,003 $18,782 $14,715 $18,389 $26,592 $13,418 $12,962 $5,308 $5,504 $5,754
1.50% 1.73% 1.90% 1.90% 1.79% 1.53% 1.70% 1.95% 1.99% 1.79%
3.91% 3.75% 3.78% 3.55% 4.17% 3.79% 3.80% 3.76% 3.47% 4.27%
</TABLE>
13
<PAGE>
PaineWebber Money Market Fund
Report of Independent Accountants
To the Shareholders and Board of Directors of
PaineWebber Money Market Fund
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
PaineWebber Money Market Fund (the "Fund", one of the portfolios constituting
PaineWebber Master Series, Inc.) at February 29, 2000, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at February 29, 2000 by corresponding with the custodian, provide a
reasonable basis for the opinion expressed above.
Pricewaterhouse Coopers LLP
1177 Avenue of the Americas
New York, New York 10036
April 7, 2000
14
<PAGE>
PaineWebber Money Market Fund
Tax Information
We are required by subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within 60 days of the Fund's fiscal year end (February
29, 2000), as to the federal tax status of distributions received by
shareholders during such fiscal year. Accordingly, we are advising you that all
distributions paid during the fiscal year were derived from net investment
income and are taxable as ordinary income. No portion of these distributions
qualifies for the corporate dividend received deduction available to corporate
shareholders.
Distributions received by tax-exempt recipients (e.g. IRAs and Keoghs) need
not be reported as taxable income. Some retirement trusts (e.g., corporate,
Keogh and 403(b)(7) plans) may need this information for their annual
information reporting.
Because the Fund's fiscal year is not the calendar year, another notification
will be sent in respect of calendar 2000. The second notification, which will
reflect the amount to be used by calendar year taxpayers on their federal
income tax returns, will be made in conjunction with Form 1099 DIV and will be
mailed in January 2001. Shareholders are advised to consult their own tax
advisers with respect to the tax consequences of their investment in the Fund.
15
<PAGE>
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<PAGE>
================================================================================
D I R E C T O R S
E. Garrett Bewkes, Jr.
Chairman
Margo N. Alexander
Richard Q. Armstrong
Richard R. Burt
Mary C. Farrell
Meyer Feldberg
George W. Gowen
Frederic V. Malek
Carl W. Schafer
Brian M. Storms
PRINCIPAL OFFICERS
Margo N. Alexander
President
Dianne E. O'Donnell
Vice President and Secretary
Paul H. Schubert
Vice President and Treasurer
Dennis McCauley
Vice President
Susan P. Ryan
Vice President
INVESTMENT ADVISER,
ADMINISTRATOR AND DISTRIBUTOR
Mitchell Hutchins Asset Management Inc.
51 West 52nd Street
New York, New York 10019
This report is not to be used in connection with the offering of shares of the
Fund unless accompanied or preceded by an effective prospectus.
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PaineWebber
MONEY MARKET
FUND
ANNUAL REPORT
FEBRUARY 29, 2000
PaineWebber
(C)2000 PaineWebber Incorporated
All Rights Reserved
Member SIPC
