<PAGE>
PAINEWEBBER CASHFUND, INC. SEMIANNUAL REPORT
November 14, 1997
Dear Shareholder,
We are pleased to present the semiannual report for PaineWebber Cashfund,
Inc. for the six months ended September 30, 1997.
GENERAL MARKET OVERVIEW
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Stronger than expected economic growth and rising employment prompted the
Federal Reserve to raise interest rates in March, and volatile and difficult
financial markets ensued. Then, on April 28, 1997, the report of the
Employment Cost Index-considered the most comprehensive wage-inflation
indicator, and critical to Fed policy-indicated a very positive inflation
picture. This information, plus optimism over an agreed upon framework by
President Clinton and the Republicans to balance the budget by 2002, turned
market sentiment extremely bullish. July, August and September were also
positive months for the financial markets, as the prevailing theme that
above-trend economic growth could occur without generating higher inflation
gained strength. The Federal Reserve remained a watchful spectator.
PORTFOLIO REVIEW
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PERFORMANCE--PaineWebber Cashfund's current yield for the seven-day period
ended September 30, 1997 was 5.09% and net assets totalled approximately $5.4
billion.
PORTFOLIO HIGHLIGHTS--During the semiannual period, the Fund's weighted
average maturity was maintained at approximately 50 days. This was done in
response to economic data indicating low inflation with slight economic
growth. Additionally, we took advantage of periods of market volatility by
purchasing securities at higher yields when rates backed up (that is, when
rates rose).
One final note: as of September 30, 1997, the Fund continued to be rated
AAAm by Standard & Poor's Ratings Group ("S&P"), the highest-rating given to
money market funds. The rating of the Fund reflects S&P's view concerning
the creditworthiness of the Fund's portfolio and its sound investment and
management policies. The rating indicates the Fund's superior capacity to
maintain principal value and limit exposure to loss. The rating also
reflects S&P's view that the portfolio credit quality is strong, with at
least 75% of all assets rated either 'A-1+' or 'A-1', in accordance with
S&P's ratings guidelines.
1
<PAGE>
SEMIANNUAL REPORT
OUTLOOK
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Near-term, we intend to keep the Fund's average weighted maturity around its
present level. Going forward, every significant economic number released will be
closely scrutinized. Inflation is always a concern since it is a trigger for the
Fed to move on interest rates; as such, the inflationary environment will be
carefully monitored. Investment decisions for the Fund will continue to be
driven by creditworthiness, quality and liquidity. Although we are interested in
maintaining higher yields, we will not do so by sacrificing the Fund's emphasis
on security, quality and liquidity.
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.
/s/ Margo Alexander /s/ Dennis L. McCauley
MARGO N. ALEXANDER DENNIS L. McCAULEY
President, Managing Director and Chief Investment,
Mitchell Hutchins Asset Officer--Fixed Income,
Management Inc. Mitchell Hutchins Asset Management Inc.
/s/ Susan P. Ryan
SUSAN P. RYAN
Senior Vice President,
Mitchell Hutchins Asset Management Inc.
Portfolio Manager, PaineWebber Cashfund Inc.
This letter is intended to assist shareholders in understanding how the Fund
performed during the semiannual period ended September 30, 1997 and reflects our
views at the time we are writing this report. Of course, these views may change
in response to changing circumstances. We encourage you to consult your
investment executive regarding your personal investment program.
2
<PAGE>
PAINEWEBBER CASHFUND, INC.
STATEMENT OF NET ASSETS SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ------------- -------------------- ----------------- -------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--8.24%
$ 20,000 U.S. Treasury Bill............ 03/05/98 5.200%@ $ 19,552,222
20,500 Federal Farm Credit Bank...... 12/02/97 to 02/27/98 5.400 20,263,524
15,000 Federal Home Loan Bank*....... 10/07/97 5.250 14,997,708
119,450 Federal Home Loan Bank........ 10/16/97 to 10/15/98 5.260 to 5.900 119,376,105
75,000 Federal Home Loan Mortgage
Corporation................. 10/01/97 to 06/19/98 5.950 to 6.050 74,991,419
60,000 Federal National Mortgage
Association*................ 10/07/97 5.240 to 5.370 59,997,016
75,520 Student Loan Marketing
Association*................ 10/07/97 5.230 to 5.320 75,516,099
58,000 Student Loan Marketing
Association................. 01/08/98 to 03/20/98 5.750 to 5.850 58,000,000
-------------
Total U.S. Government and Agency Obligations
(cost--$442,694,093)......................... 442,694,093
-------------
DOMESTIC BANKERS ACCEPTANCES--3.58%
77,600 Chase Manhattan Corporation... 10/27/97 to 12/16/97 5.490 to 5.500@ 77,133,830
55,000 Nationsbank Corporation....... 10/02/97 5.530@ 54,991,551
60,242 SunTrust Banks, Atlanta....... 10/01/97 to 11/18/97 5.490 to 5.570@ 60,056,794
-------------
Total Domestic Bankers Acceptances
(cost--$192,182,175)......................... 192,182,175
-------------
DOMESTIC CERTIFICATES OF DEPOSIT--4.80%
61,000 Bankers Trust Company*........ 10/07/97 5.360 to 5.500 60,997,910
65,000 Bankers Trust Company......... 05/26/98 to 09/09/98 5.920 to 6.190 64,983,862
82,000 Morgan Guaranty Trust
Company..................... 10/29/97 to 08/06/98 5.700 to 5.910 81,994,050
50,000 Wachovia Bank of North
Carolina, N.A............... 11/20/97 5.550 50,000,659
-------------
Total Domestic Certificates of Deposit
(cost--$257,976,481)......................... 257,976,481
-------------
DOMESTIC BANK NOTES--7.35%
65,000 Bank of America Illinois...... 12/23/97 to 12/29/97 5.650 to 5.700 64,994,627
20,000 Bank of America National Trust
& Savings Association*...... 10/01/97 5.720 19,984,563
98,000 Bank of America National Trust
& Savings Association....... 10/10/97 to 09/24/98 5.540 to 6.150 97,999,852
40,000 Comerica Bank, N.A. Detroit... 06/24/98 5.930 40,007,833
15,000 F.C.C. National Bank*......... 10/01/97 5.610 14,993,993
21,800 F.C.C. National Bank.......... 03/25/98 6.000 21,790,022
35,000 Fifth Third Bank.............. 10/22/97 to 10/24/97 5.540 to 5.550 35,000,003
35,000 Huntington National Bank...... 09/18/98 to 09/22/98 5.800 to 5.890 34,983,521
10,000 KeyBank, N.A.................. 11/04/97 5.600 10,000,062
15,000 LaSalle National Bank of
Chicago..................... 04/13/98 6.230 15,000,000
20,000 SunTrust Banks, Atlanta....... 07/14/98 to 07/24/98 5.800 to 5.830 19,990,333
20,000 Wachovia Bank of North
Carolina.................... 11/20/97 5.550 20,000,000
-------------
Total Domestic Bank Notes
(cost--$394,744,809)......................... 394,744,809
-------------
COMMERCIAL [email protected]%
ASSET-BACKED--11.55%
136,550 Asset Securitization
Cooperative Corporation..... 10/14/97 to 12/08/97 5.500 to 5.530 135,594,554
151,931 Delaware Funding
Corporation................. 10/03/97 to 11/17/97 5.510 to 5.550 151,345,527
90,000 Eiger Capital Corporation..... 10/06/97 to 10/17/97 5.520 to 5.540 89,866,455
127,616 Enterprise Funding
Corporation................. 10/10/97 to 11/13/97 5.520 to 5.540 127,221,141
15,000 Falcon Asset Securitization
Corporation................. 10/15/97 5.510 14,967,858
</TABLE>
3
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ------------- -------------------- ----------------- -------------
<C> <S> <C> <C> <C>
</TABLE>
COMMERCIAL PAPER@--(CONTINUED)
ASSET-BACKED--(CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 50,000 New Center Asset Trust........ 10/01/97 6.500% $ 50,000,000
11,700 Preferred Receivables Funding
Corporation................. 11/13/97 5.550 11,622,439
40,000 Riverwoods Funding
Corporation................. 10/01/97 to 10/03/97 5.520 to 5.530 39,993,867
-------------
620,611,841
-------------
AUTO & TRUCK--1.26%
18,000 PACCAR Financial
Corporation................. 10/06/97 to 10/09/97 5.500 to 5.510 17,982,569
50,000 Toyota Motor Credit
Corporation................. 10/15/97 5.500 49,893,056
-------------
67,875,625
-------------
BANKING--14.32%
26,600 Abbey National North
America..................... 10/07/97 5.520 26,575,528
80,000 ABN Amro North America Finance
Incorporated................ 10/16/97 to 12/16/97 5.480 to 5.500 79,434,250
75,000 BBL North America
Incorporated................ 10/08/97 to 10/09/97 5.520 to 5.540 74,911,736
46,000 BCI Funding Corporation....... 10/09/97 to 10/10/97 5.530 to 5.540 45,939,568
120,000 Canadian Imperial Holdings
Incorporated................ 10/02/97 to 10/23/97 5.510 to 5.570 119,803,222
13,000 Credito Italiano Delaware
Incorporated................ 10/23/97 5.540 12,955,988
184,100 Cregem North America
Incorporated................ 10/07/97 to 12/16/97 5.500 to 5.540 182,843,652
16,400 KFW International Finance
Incorporated................ 10/20/97 to 11/26/97 5.500 to 5.520 16,321,701
60,000 Nordbanken North America
Incorporated................ 10/07/97 to 12/15/97 5.530 to 5.620 59,535,756
105,000 U.S. Central Credit Union..... 11/17/97 to 12/22/97 5.490 to 5.500 103,995,070
47,700 Unifunding Incorporated....... 10/21/97 to 02/23/98 5.510 to 5.560 47,080,318
-------------
769,396,789
-------------
BROKER - DEALER--4.90%
114,000 CS First Boston
Incorporated................ 10/17/97 to 12/05/97 5.520 113,133,513
10,000 Goldman Sachs Group L.P....... 11/13/97 5.500 9,934,306
141,270 Merrill Lynch & Company
Incorporated................ 10/08/97 to 03/17/98 5.520 to 5.540 140,263,077
-------------
263,330,896
-------------
BUSINESS SERVICES--0.54%
14,108 Block Financial Corporation... 10/16/97 5.530 14,075,493
15,000 Electronic Data Systems
Corporation................. 11/04/97 5.530 14,921,658
-------------
28,997,151
-------------
CHEMICAL--1.33%
35,000 DuPont (E.I.) de Nemours &
Company..................... 10/30/97 5.490 34,845,213
36,955 Henkel Corporation............ 10/23/97 to 12/09/97 5.510 36,703,145
-------------
71,548,358
-------------
DRUGS & HEALTHCARE--2.67%
25,000 Abbott Laboratories........... 10/24/97 5.510 24,911,993
93,110 Bayer Corporation............. 10/28/97 to 12/19/97 5.500 92,375,120
26,700 Warner-Lambert Company........ 12/31/97 5.500 26,328,796
-------------
143,615,909
-------------
</TABLE>
4
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ------------- -------------------- ----------------- -------------
<C> <S> <C> <C> <C>
</TABLE>
COMMERCIAL PAPER@--(CONTINUED)
<TABLE>
<C> <S> <C> <C> <C>
ELECTRONICS--0.80%
$ 32,400 Motorola Credit Corporation... 11/06/97 5.510% $ 32,221,476
10,521 Vermont American
Corporation................. 11/06/97 5.500 10,463,135
-------------
42,684,611
-------------
ENERGY--1.58%
55,000 Exxon Imperial U.S.
Incorporated................ 10/14/97 5.490 54,890,963
30,000 Koch Industries,
Incorporated................ 10/30/97 5.490 29,867,325
-------------
84,758,288
-------------
FINANCE - CONDUIT--5.06%
125,000 ANZ (Delaware) Incorporated... 10/02/97 to 12/09/97 5.500 to 5.510 124,490,482
31,000 Compagnie Bancaire USA Finance
Corporation................. 11/26/97 5.550 30,732,366
92,087 MetLife Funding
Incorporated................ 10/08/97 to 11/21/97 5.500 91,681,547
25,000 SBNSW (Delaware)
Incorporated................ 10/14/97 5.520 24,950,167
-------------
271,854,562
-------------
FINANCE - DIVERSIFIED--1.39%
50,000 Associates Corporation of
North America............... 10/22/97 5.500 49,839,584
25,000 Barclays U.S. Funding
Corporation................. 10/23/97 5.500 24,915,972
-------------
74,755,556
-------------
FINANCE - INDEPENDENT--3.10%
167,527 National Rural Utilities
Cooperative Finance
Corporation................. 10/03/97 to 12/12/97 5.490 to 5.520 166,620,050
-------------
FINANCE - SUBSIDIARY--5.14%
40,000 Deutsche Bank Financial
Incorporated................ 10/14/97 5.520 39,920,266
12,500 Grand Metropolitan Capital
Corporation................. 10/15/97 5.520 12,473,167
224,800 National Australia Funding
(Delaware) Incorporated..... 10/03/97 to 12/17/97 5.490 to 5.500 223,779,914
-------------
276,173,347
-------------
FOOD, BEVERAGE & TOBACCO--0.83%
45,000 Campbell Soup Company......... 10/15/97 to 11/03/97 5.500 to 5.510 44,827,857
-------------
GENERAL TRADE--0.65%
35,000 Mitsubishi International
Corporation................. 10/08/97 to 10/09/97 5.500 to 5.540 34,958,528
-------------
INSURANCE--2.78%
70,000 Prudential Funding
Corporation................. 10/09/97 5.500 69,914,444
25,000 St. Paul Companies,
Incorporated................ 11/13/97 to 12/15/97 5.490 to 5.500 24,787,054
55,000 USAA Capital Corporation...... 10/29/97 to 12/17/97 5.500 to 5.510 54,507,939
-------------
149,209,437
-------------
INSURANCE - PROPERTY/CASUALTY--0.19%
10,000 A.I. Credit Corporation....... 10/14/97 5.600 9,979,778
-------------
</TABLE>
5
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ------------- -------------------- ----------------- -------------
<C> <S> <C> <C> <C>
</TABLE>
COMMERCIAL PAPER@--(CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
METALS & MINING--3.48%
$ 170,140 RTZ America Incorporated...... 10/06/97 to 02/04/98 5.500 to 5.680% $ 169,027,753
18,000 U.S. Borax Incorporated....... 12/12/97 to 12/17/97 5.500 17,798,181
-------------
186,825,934
-------------
MISCELLANEOUS--0.72%
38,650 Beta Finance Incorporated..... 10/17/97 to 03/12/98 5.510 to 5.580 38,384,822
-------------
OIL EQUIPMENT & SERVICES--1.37%
73,700 Colonial Pipeline Company..... 10/08/97 to 11/19/97 5.500 to 5.550 73,374,212
-------------
PRINTING & PUBLISHING--1.14%
62,000 Reed Elsevier Incorporated.... 10/16/97 to 12/11/97 5.500 to 5.510 61,482,970
-------------
TELECOMMUNICATIONS--4.28%
47,000 Ameritech Capital Funding
Corporation................. 11/06/97 to 11/19/97 5.490 to 5.500 46,688,242
183,994 SBC Communications Capital
Corporation................. 10/07/97 to 12/09/97 5.480 to 5.500 183,403,801
-------------
230,092,043
-------------
Total Commercial Paper
(cost--$3,711,358,564)....................... 3,711,358,564
-------------
SHORT-TERM CORPORATE OBLIGATIONS--6.59%
BROKER - DEALER--3.57%
115,000 Bear Stearns Companies
Incorporated*............... 10/01/97 to 10/07/98 5.460 to 5.730 115,000,000
20,000 Bear Stearns Companies
Incorporated................ 01/14/98 to 02/12/98 5.670 to 5.830 20,000,000
32,000 Merrill Lynch & Company
Incorporated*............... 10/01/97 5.680 31,998,856
25,000 Morgan Stanley, Dean Witter,
Discover & Company*......... 11/14/97 5.692 25,000,000
-------------
191,998,856
-------------
FINANCE - DIVERSIFIED--0.56%
30,000 Associates Corporation of
North America*.............. 10/01/97 5.730 29,990,950
-------------
INSURANCE--0.47%
25,000 Prudential Funding
Corporation................. 01/06/98 5.660 25,000,000
-------------
MISCELLANEOUS--1.99%
25,000 Beta Finance Incorporated*.... 10/07/97 5.340 25,000,000
82,000 Beta Finance Incorporated..... 12/10/97 to 10/09/98 5.550 to 6.120 82,000,000
-------------
107,000,000
-------------
Total Short-Term Corporate Obligations
(cost--$353,989,806)......................... 353,989,806
-------------
</TABLE>
6
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATE RATE VALUE
- ------------- -------------------- ----------------- -------------
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENT--0.48%
$ 25,698 Repurchase Agreement dated
9/30/97 with Citicorp
Securities Incorporated,
collateralized by
$25,730,000 U.S. Treasury
Note, 6.00% due 6/30/99;
Proceeds: $25,702,283
(cost--$25,698,000)......... 10/01/97 6.000% $ 25,698,000
-------------
Total Investments (cost--$5,378,643,928 which
approximates cost for federal tax
purposes)--100.12%........................... 5,378,643,928
Liabilities in excess of other
assets--(0.12)%.............................. (6,518,853)
-------------
Net Assets (applicable to 5,373,563,759 shares
outstanding at $1.00 per share)--100.00%..... $5,372,125,075
-------------
-------------
</TABLE>
- -----------------
* Variable rate securities--maturity date reflects earlier of reset date or
maturity date. The interest rates shown are the current rates as of September
30, 1997 and reset periodically.
@ Interest rates shown are discount rates at date of purchase.
Weighted Average Maturity--53 Days
See accompanying notes to financial statements
7
<PAGE>
PAINEWEBBER CASHFUND, INC.
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
Interest income....................................................................................... $ 150,300,568
-------------
EXPENSES:
Investment advisory and administration................................................................ 9,665,378
Transfer agency and service fees...................................................................... 4,222,660
Reports and notices to shareholders................................................................... 814,904
Custody and accounting................................................................................ 267,152
Federal and state registration........................................................................ 254,581
Legal and audit....................................................................................... 231,185
Insurance............................................................................................. 54,625
Directors' fees....................................................................................... 5,250
Other expenses........................................................................................ 4,189
-------------
15,519,924
-------------
Net investment income................................................................................. 134,780,644
NET REALIZED GAINS FROM INVESTMENT TRANSACTIONS....................................................... 49,995
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................................. $ 134,830,639
-------------
-------------
</TABLE>
See accompanying notes to financial statements
8
<PAGE>
PAINEWEBBER CASHFUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
SEPTEMBER 30, 1997 ENDED
(UNAUDITED) MARCH 31, 1997
------------------ --------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income............................. $ 134,780,644 $ 251,603,670
Net realized gains from investment transactions... 49,995 96,707
------------------ --------------
Net increase in net assets resulting from
operations...................................... 134,830,639 251,700,377
------------------ --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income............................. (134,780,644) (251,603,670)
------------------ --------------
Net increase (decrease) in net assets derived from
capital share transactions...................... 111,607,094 (48,186,525)
------------------ --------------
Net increase (decrease) in net assets............. 111,657,089 (48,089,818)
NET ASSETS:
Beginning of period............................... 5,260,467,986 5,308,557,804
------------------ --------------
End of period..................................... $5,372,125,075 $5,260,467,986
------------------ --------------
------------------ --------------
</TABLE>
See accompanying notes to financial statements
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Cashfund, Inc. (the "Fund"), was organized under the laws of
Maryland on January 20, 1978 and is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, as an open-end
diversified management investment company.
The preparation of financial statements in accordance with generally accepted
accounting principles requires Fund management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates. Following is a summary of
significant accounting policies:
VALUATION AND ACCOUNTING FOR INVESTMENTS--Investments are valued at amortized
cost which approximates market value. Investment transactions are accounted for
on the trade date. Realized gains and losses from investment transactions are
calculated using the identified cost method. Interest income is recorded on an
accrual basis. Premiums are amortized and discounts are accreted as adjustments
to interest income and the identified cost of investments.
REPURCHASE AGREEMENTS--The Fund's custodian takes possession of the collateral
pledged for investments in repurchase agreements. The underlying collateral is
valued daily on a mark-to-market basis to ensure that the value, including
accrued interest, is at least equal to the repurchase price. In the event of
default of the obligation to repurchase, the Fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/ or retention of the collateral may be subject
to legal proceedings. The Fund occasionally participates in joint repurchase
agreement transactions with other funds managed by Mitchell Hutchins.
DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions 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.
CONCENTRATION OF RISK
The ability of the issuers of the debt securities held by the Fund to meet
their obligations may be affected by economic developments, including those
particular to a specific industry or region.
INVESTMENT ADVISER AND ADMINISTRATOR
The Fund's Board of Directors has approved an investment advisory and
administration contract ("Advisory Contract") with PaineWebber Incorporated
("PaineWebber"), under which PaineWebber serves as investment adviser and
administrator of the Fund. In accordance with the Advisory Contract, PaineWebber
receives compensation from the Fund, computed daily and paid monthly equivalent
to 0.500% per annum of the Fund's first $500 million of average daily net
assets; 0.425% of the next $500 million; 0.390% of the next $500 million; 0.380%
of the next $500 million; 0.350% of the next $500 million; 0.345% of the next
$1.0 billion; 0.325% of the next $500 million; 0.315% of the next $500 million;
0.300% of the next $500 million; 0.290% of the next $500 million; and 0.280% of
assets in excess of $5.5 billion. At September 30, 1997, the Fund owed
PaineWebber $1,611,917 in investment advisory and administration fees.
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"), a wholly-owned
subsidiary of PaineWebber serves as sub-adviser to the Fund pursuant to a
Sub-Advisory Contract between PaineWebber and Mitchell Hutchins. In accordance
with the sub-advisory contract, PaineWebber (not the Fund) pays Mitchell
Hutchins for sub-advisory services provided.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
TRANSFER AGENCY SERVICE FEES
Prior to August 1, 1997, the Fund paid PaineWebber an annual fee of $4.00 per
active PaineWebber shareholder account, plus certain out-of-pocket expenses, for
certain services not provided by the Fund's transfer agent. For these services
for the four months ended July 31, 1997, PaineWebber earned $1,002,742.
Subsequent to August 1, 1997, PaineWebber provides transfer agency related
services pursuant to a delegation of authority from PFPC, Inc., the Fund's
transfer agent, and was compensated for these services by PFPC, Inc., not the
Fund. For the two months ended September 30, 1997, PFPC, Inc. paid PaineWebber
$874,822 for these services.
OTHER LIABILITIES
At September 30, 1997, the amounts payable for investments purchased and
dividends payable aggregated $17,850,000 and $5,952,581, respectively.
FEDERAL TAX STATUS
The Fund intends to distribute all of its taxable income and to comply with
the other requirements of the Internal Revenue Code applicable to regulated
investment companies. Accordingly, no provision for federal income taxes is
required. In addition, by distributing during each calendar year substantially
all of its net investment income, capital gains and certain other amounts, if
any, the Fund intends not to be subject to federal excise tax.
At March 31, 1997, the Fund had a net capital loss carryforward of $1,317,408.
This loss carryforward is available as a reduction, to the extent provided in
the regulations, of any future net realized gains, and will expire by March 31,
2003. To the extent that such losses are used to offset future capital gains, it
is probable that the gains so offset will not be distributed.
CAPITAL SHARE TRANSACTIONS
There are 20 billion shares of $0.001 par value authorized shares of common
stock. Transactions in capital shares, at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
SEPTEMBER 30, 1997 MARCH 31, 1997
------------------ ---------------
<S> <C> <C>
Shares sold............................. 10,745,154,018 21,275,322,387
Shares repurchased...................... (10,763,462,121) (21,566,944,490)
Dividends reinvested in additional Fund
shares................................ 129,915,197 243,435,578
------------------ ---------------
Net increase (decrease) in shares
outstanding........................... 111,607,094 (48,186,525)
------------------ ---------------
------------------ ---------------
</TABLE>
11
<PAGE>
PAINEWEBBER CASHFUND, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH PERIOD IS
PRESENTED BELOW:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS
ENDED
SEPTEMBER
30, FOR THE YEARS ENDED MARCH 31,
1997 ------------------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
Net investment income................... 0.0254 0.0482 0.0523 0.0433 0.0272 0.0317
Dividends from net investment income.... (0.0254) (0.0482) (0.0523) (0.0433) (0.0272) (0.0317)
------ ------ ------ ------ ------ ------
Net asset value, end of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
Total investment return(1).............. 2.56% 4.93% 5.36% 4.44% 2.75% 3.17%
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $5,372,125 $5,260,468 $5,308,558 $3,700,678 $3,436,278 $3,774,298
Expenses to average net assets.......... 0.58%* 0.63% 0.60% 0.62% 0.61% 0.57%
Net investment income to average net
assets................................. 5.06%* 4.82% 5.24% 4.35% 2.73% 3.17%
</TABLE>
- -----------------
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period 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 period reported. Total Investment return is not annualized for period of
less than one year.
12
<PAGE>
- --------------------------------------------------------------------------------
DIRECTORS
E. Garret Bewkes, Jr. Meyer Feldberg
CHAIRMAN
George W. Gowen
Margo N. Alexander
Frederic V. Malek
Richard Q. Armstrong
Carl W. Schafer
Richard R. Burt
Mary C. Farrell
PRINCIPAL OFFICERS
Margo N. Alexander Paul H. Schubert
PRESIDENT VICE PRESIDENT AND TREASURER
Victoria E. Schonfeld Dennis L. McCauley
VICE PRESIDENT VICE PRESIDENT
Dianne E. O'Donnell Susan P. Ryan
VICE PRESIDENT AND SECRETARY VICE PRESIDENT
ADMINISTRATOR AND DISTRIBUTOR
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
INVESTMENT ADVISERS
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
THIS REPORT IS NOT TO BE USED IN CONNECTION WITH THE OFFERING OF SHARES OF THE
FUND UNLESS ACCOMPANIED OR PRECEDED BY AN EFFECTIVE PROSPECTUS.
THE FINANCIAL INFORMATION INCLUDED HEREIN IS TAKEN FROM THE RECORDS OF THE FUND
WITHOUT EXAMINATION BY INDEPENDENT AUDITORS WHO DO NOT EXPRESS AN OPINION
THEREON.
<PAGE>
[LOGO]
PAINEWEBBER
CASHFUND INC.
SEMIANNUAL REPORT
SEPTEMBER 30, 1997
PaineWebber-C-1997 PaineWebber Incorporated
Member SIPC
