<PAGE>
PAINEWEBBER CASHFUND, INC. SEMIANNUAL REPORT
November 16, 1998
Dear Shareholder,
We are pleased to present you with the semiannual report for the PaineWebber
Cashfund, Inc. (the "Fund") for the six-month period ended September 30, 1998.
GENERAL MARKET OVERVIEW
- -------------------------------------------------------------------------------
[GRAPHIC]
U.S. bond market yields fell over the period, reflecting investor demand for
high-quality securities and diminishing concern over inflation. The bond
market traded in tandem with the dollar and the yield curve flattened as
long-term rates fell more than short-term rates. Rates briefly rose during
April, when the Federal Reserve indicated it had shifted to a tightening
bias, but dropped by month-end on good employment and inflation news.
During the summer the stock market became more volatile. Investors shifted
some of their savings into Treasury bonds, causing yields to fall and prices
to rise. Corporate bond prices did not rise to the same extent, due to doubts
about corporate earnings and uncertainty in the global economy, especially
regarding Japan and Russia.
PORTFOLIO REVIEW
- -------------------------------------------------------------------------------
[GRAPHIC]
We were somewhat bullish on the fixed income markets during the six months
ended September 30, 1998, expecting interest rates to hold steady or fall
slightly. We kept the Fund's weighted average maturity slightly above its
peer group. The Fund's current yield was 5.02% for the seven-day period ended
September 30, 1998. The Fund's weighted-average maturity was 52 days, and net
assets totaled $5.8 billion as of September 30, 1998.
PAINEWEBBER
CASHFUND, INC.
FUND PROFILE
- - GOAL:
Principal stability and current income
- - PORTFOLIO MANAGER:
Susan P. Ryan, Mitchell Hutchins Asset Management Inc.
- - TOTAL NET ASSETS:
$5.8 billion as of September 30, 1998
- - DIVIDEND PAYMENTS:
Monthly
1
<PAGE>
SEMIANNUAL REPORT
PAINEWEBBER
CASHFUND, INC.
Sector Allocations(1)
<TABLE>
<CAPTION>
9/30/98 3/31/98
<S> <C> <C>
Commercial Paper 61.5% 64.2%
Bank Obligations 15.1% 17.9%
Short-term corporate obligations 11.9% 6.7%
U.S. government & agency obligations 11.3% 10.9%
Repurchase agreements 0.2% 0.3%
</TABLE>
OUTLOOK
- -------------------------------------------------------------------------------
[GRAPHIC]
As 1998 draws to a close, the volatility in the financial markets is
beginning to subside. Global economic conditions seem more positive --
especially encouraging is the Japanese government's increasing willingness to
tackle that country's problems. Interest rates in the United States reflect
both the underlying economy and a flight to quality.
After three cuts in short-term interest rates this fall, we do not believe
the Federal Reserve will lower rates again this year. Still, we look for
rates to trend lower over the long term, and therefore anticipate maintaining
the Fund's weighted average maturity slightly above that of its peer group.
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 FUND PROFILE on a mutual fund in the PaineWebber Family of
Funds,(2) please contact your investment executive.
Sincerely,
/s/ Margo Alexander /s/ Dennis L. McCauley /s/ Susan P. Ryan
MARGO ALEXANDER DENNIS L. McCAULEY SUSAN P. RYAN
President, Managing Director and Chief Senior Vice President,
Mitchell Hutchins Investment Officer-- Mitchell Hutchins
Asset Management Inc. Fixed Income, Mitchell Hutchins Asset Management Inc.
Asset Management Inc.
This letter is intended to assist shareholders in understanding how the Fund
performed during the six-month period ended September 30, 1998, and reflects
our views at the time of 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.
(1)Percentage of portfolio assets - all allocations are subject to change.
(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.
2
<PAGE>
PAINEWEBBER CASHFUND, INC.
STATEMENT OF NET ASSETS SEPTEMBER 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- -------------------- -------------- --------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--11.50%
$ 25,000 U. S. Treasury Bills.............................. 09/16/99 4.460%@ $ 23,915,972
50,000 U. S. Treasury Notes.............................. 12/31/98 5.125 49,966,061
70,000 Federal Home Loan Bank............................ 11/27/98 to 03/02/99 5.120 to 5.625 69,594,667
70,000 Federal Home Loan Bank............................ 10/06/98 4.813 to 4.978* 69,989,834
114,850 Federal Home Loan Mortgage Corporation............ 12/18/98 to 02/22/99 5.080 to 5.200 113,205,746
40,000 Federal Home Loan Mortgage Corporation............ 10/06/98 to 10/26/98 4.843 to 5.327* 39,994,446
109,062 Federal National Mortgage Association............. 02/02/99 to 08/19/99 4.970 to 5.100 107,624,627
115,000 Federal National Mortgage Association............. 10/06/98 4.723 to 5.008* 114,966,591
25,000 Student Loan Marketing Association................ 01/27/99 5.560 24,995,959
50,000 Student Loan Marketing Association................ 10/06/98 4.863 to 5.023* 50,000,000
--------------
Total U.S. Government and Agency Obligations
(cost--$664,253,903)........................................ 664,253,903
--------------
DOMESTIC BANK NOTES--9.59%
15,000 Bank of America National Trust & Savings
Association..................................... 10/22/98 5.940 14,999,505
18,000 Bank of New York.................................. 02/25/99 5.530 17,991,393
15,000 Bank One, Wisconsin N.A........................... 10/06/98 5.460* 14,999,294
15,000 Comerica Bank N.A., Detroit....................... 10/06/98 5.083* 14,999,680
210,000 FCC National Bank................................. 10/14/98 to 05/12/99 5.450 to 5.610 209,990,616
105,000 Greenwood Trust Company........................... 10/05/98 to 10/26/98 5.560 105,000,000
25,000 Harris Trust & Savings Bank....................... 10/23/98 5.550 24,999,961
16,000 Huntington National Bank.......................... 05/03/99 6.460 16,068,610
20,000 Key Bank N.A...................................... 10/01/98 5.470* 19,989,967
75,000 NationsBank N.A................................... 10/19/98 to 02/25/99 5.560 to 5.590 75,000,000
15,000 PNC Bank N.A...................................... 10/06/98 5.540* 14,992,460
25,000 Wachovia Bank of North Carolina................... 10/30/98 5.490 24,999,298
--------------
Total Bank Notes (cost-- $554,030,784)........................ 554,030,784
--------------
DOMESTIC CERTIFICATES OF DEPOSIT--5.76%
158,000 Bankers Trust Company............................. 10/01/98 to 10/06/98 5.580 to 5.990* 157,964,544
50,000 Chase Manhattan Bank.............................. 05/11/99 to 05/17/99 5.720 to 5.730 49,984,747
100,000 First Tennessee Bank N.A. Memphis................. 10/21/98 to 11/23/98 5.500 to 5.580 100,000,000
25,000 Harris Trust & Savings Bank....................... 10/27/98 5.500 25,000,000
--------------
Total Certificates of Deposit (cost-- $332,949,291)........... 332,949,291
--------------
COMMERCIAL [email protected]%
ASSET BACKED-AUTO & TRUCK--1.73%
100,000 New Center Asset Trust............................ 10/01/98 5.800 100,000,000
--------------
ASSET BACKED-BANKING--4.03%
234,455 Atlantis One Funding Corporation.................. 10/08/98 to 02/12/99 5.300 to 5.550 232,869,039
--------------
ASSET BACKED-FINANCE--2.95%
151,500 Beta Finance Incorporated......................... 10/08/98 to 03/11/99 5.180 to 5.510 150,330,289
20,000 CC (USA) Incorporated............................. 10/26/98 5.500 19,923,611
--------------
170,253,900
--------------
</TABLE>
3
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- -------------------- -------------- --------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER@ (CONTINUED)
ASSET BACKED-MISCELLANEOUS-- 8.08%
$ 70,000 Asset Securitization Cooperative Corporation...... 11/13/98 to 12/04/98 5.470 to 5.500% $ 69,400,479
63,157 Delaware Funding Corporation...................... 10/26/98 to 11/06/98 5.480 to 5.500 62,854,883
113,681 Enterprise Funding Corporation.................... 10/09/98 to 12/22/98 5.300 to 5.530 113,171,286
40,000 Falcon Asset Securitization Corporation........... 11/09/98 5.500 39,761,667
46,600 Preferred Receivables Funding Corporation......... 10/08/98 to 02/24/99 5.180 to 5.520 46,258,025
15,000 Receivables Capital Corporation................... 10/22/98 5.520 14,951,700
120,841 Triple-A One Funding Corporation.................. 10/08/98 to 10/20/98 5.530 to 5.550 120,585,824
--------------
466,983,864
--------------
AUTO & TRUCK-- 3.97%
55,000 BMW US Capital Corporation........................ 10/15/98 to 11/18/98 5.500 to 5.510 54,726,431
35,000 Daimler- Benz North America Corporation........... 12/09/98 5.470 34,633,054
75,000 Ford Motor Credit Corporation..................... 10/20/98 to 10/22/98 5.500 to 5.510 74,770,687
65,279 PACCAR Financial Corporation...................... 10/01/98 to 10/22/98 5.500 65,235,630
--------------
229,365,802
--------------
BANKING-- 10.99%
55,000 Abbey National North America...................... 10/08/98 to 02/24/99 5.420 to 5.510 54,418,331
7,490 BCI Funding Corporation........................... 10/09/98 5.510 7,480,829
75,000 BBL North America Incorporated.................... 10/28/98 to 11/20/98 5.500 to 5.510 74,602,403
25,000 Citicorp.......................................... 10/13/98 5.520 24,954,000
25,000 Cregem North America Incorporated................. 11/03/98 5.500 24,873,958
50,000 Den Danske Corporation Incorporated............... 11/16/98 5.500 49,648,611
127,300 J.P. Morgan & Company, Incorporated............... 10/15/98 to 03/22/99 5.200 to 5.510 125,977,331
25,000 Kreditbank North America Finance Corporation...... 10/07/98 5.525 24,976,979
85,000 Nordbanken North America Incorporated............. 10/19/98 to 02/12/99 5.470 to 5.520 84,325,736
25,000 PNC Bank, N.A..................................... 10/28/98 5.490 24,897,063
70,000 Scotiabank Incorporated........................... 10/05/98 to 11/09/98 5.500 to 5.520 69,705,375
20,000 Societe Generale North America, Incorporated...... 02/18/99 5.230 19,593,222
50,000 Unifunding Incorporated........................... 11/04/98 to 02/16/99 5.455 to 5.510 49,347,132
--------------
634,800,970
--------------
BROKER-DEALER--4.38%
55,000 Bear Stearns Companies, Incorporated.............. 12/17/98 to 05/14/99 5.450 to 5.480 53,796,804
25,000 Credit Suisse First Boston Incorporated........... 11/24/98 5.510 24,793,375
95,000 Goldman Sachs Group L.P........................... 10/27/98 to 10/28/98 5.500 94,611,945
50,000 Merrill Lynch & Company, Incorporated............. 10/07/98 to 10/16/98 5.510 to 5.520 49,912,633
30,000 Morgan Stanley Group Incorporated................. 10/19/98 5.520 29,917,200
--------------
253,031,957
--------------
BUSINESS SERVICES--0.13%
7,641 Block Financial Corporation....................... 10/30/98 5.500 7,607,146
--------------
CHEMICALS--1.06%
35,800 duPont (E. I.) deNemours & Company................ 10/06/98 to 10/22/98 5.480 to 5.500 35,746,379
26,000 Henkel Corporation................................ 10/16/98 to 11/24/98 5.200 to 5.510 25,853,047
--------------
61,599,426
--------------
</TABLE>
4
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- -------------------- -------------- --------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER@ (CONTINUED)
CONSUMER PRODUCTS--0.43%
$ 25,000 Rubbermaid Incorporated........................... 12/10/98 5.510% $ 24,732,153
--------------
DRUGS, HEALTH CARE--3.27%
20,000 Glaxo Wellcome Incorporated....................... 10/22/98 5.500 19,935,834
50,000 Lilly (Eli) & Company............................. 10/13/98 5.470 49,908,833
19,438 Novartis Finance Corporation...................... 10/14/98 5.500 19,399,394
100,000 Pfizer Incorporated............................... 10/08/98 to 10/30/98 5.470 to 5.500 99,724,083
--------------
188,968,144
--------------
ELECTRONICS--2.05%
30,000 Emerson Electric Company.......................... 10/21/98 5.500 29,908,334
42,000 Motorola Incorporated............................. 12/11/98 to 12/17/98 5.390 to 5.450 41,523,598
47,219 Vermont American Corporation...................... 10/14/98 to 10/16/98 5.460 to 5.500 47,118,331
--------------
118,550,263
--------------
ENERGY--1.04%
50,000 Koch Industries, Incorporated..................... 10/01/98 5.750 50,000,000
10,000 Texaco Incorporated............................... 10/08/98 5.510 9,989,286
--------------
59,989,286
--------------
FINANCE-CONDUIT--2.35%
46,200 Commerzbank U.S. Finance Incorporated............. 10/23/98 to 11/18/98 5.490 to 5.520 45,960,483
45,000 Svenska Handelsbanken Incorporated................ 11/04/98 to 11/12/98 5.490 to 5.510 44,735,797
45,000 UBS Finance (Delaware) Incorporated............... 10/01/98 5.750 45,000,000
--------------
135,696,280
--------------
FINANCE-CONSUMER--2.03%
50,000 Household Finance Corporation..................... 10/14/98 5.510 49,900,514
67,660 Transamerica Finance Corporation.................. 10/28/98 to 12/15/98 5.180 to 5.510 67,210,590
--------------
117,111,104
--------------
FINANCE-DIVERSIFIED--1.21%
70,000 Associates Corporation of North America........... 10/14/98 to 10/22/98 5.500 to 5.510 69,799,789
--------------
FINANCE-INDEPENDENT--0.28%
16,500 National Rural Utilities Cooperative Finance
Corporation..................................... 11/16/98 5.480 16,384,463
--------------
FINANCE-SUBSIDIARY--2.85%
125,000 Deutsche Bank Financial Incorporated.............. 10/01/98 to 10/21/98 5.510 to 5.520 124,835,340
40,000 National Australia Funding (Delaware)
Incorporated.................................... 11/10/98 to 11/23/98 5.320 to 5.490 39,720,128
--------------
164,555,468
--------------
FOOD, BEVERAGE & TOBACCO-- 0.77%
14,163 Campbell Soup Company............................. 10/15/98 5.480 14,132,817
30,818 Fortune Brands Incorporated....................... 10/14/98 to 10/15/98 5.490 to 5.520 30,753,736
--------------
44,886,553
--------------
</TABLE>
5
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- -------------------- -------------- --------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER@ (CONTINUED)
INSURANCE--2.33%
$ 55,000 American General Corporation...................... 10/07/98 to 10/15/98 5.510 to 5.520% $ 54,918,783
10,000 General Reinsurance Corporation................... 11/09/98 5.500 9,940,417
25,000 Prudential Funding Corporation.................... 10/06/98 5.530 24,980,799
10,000 St. Paul Companies Incorporated................... 10/09/98 5.500 9,987,778
34,700 USAA Capital Corporation.......................... 10/28/98 to 10/29/98 5.490 to 5.500 34,555,412
--------------
134,383,189
--------------
INSURANCE-PROPERTY/CASUALTY--0.17%
10,000 A.I. Credit Corporation........................... 11/16/98 5.380 9,931,256
--------------
MANUFACTURING-DIVERSIFIED--1.37%
79,563 BTR Dunlop Finance Incorporated................... 11/12/98 to 11/13/98 5.500 79,050,867
--------------
METALS & MINING--2.31%
120,300 Rio Tinto America Incorporated.................... 10/09/98 to 12/11/98 5.370 to 5.520 119,504,882
14,000 U.S. Borax Incorporated........................... 11/16/98 5.500 13,901,611
--------------
133,406,493
--------------
PRINTING & PUBLISHING--0.37%
21,400 Reed Elsevier Incorporated........................ 10/23/98 5.500 21,328,072
--------------
TELECOMMUNICATIONS--1.72%
54,800 BellSouth Capital Funding Corporation............. 10/08/98 to 10/16/98 5.470 to 5.480 54,697,918
25,000 Lucent Technologies, Incorporated................. 10/29/98 5.500 24,893,056
20,000 SBC Communications Incorporated................... 11/10/98 5.380 19,880,444
--------------
99,471,418
--------------
UTILITY-ELECTRIC--0.52%
30,000 Southern Company.................................. 10/21/98 5.500 29,908,333
--------------
Total Commercial Paper (cost-- $3,604,665,235)................ 3,604,665,235
--------------
SHORT-TERM CORPORATE OBLIGATIONS--12.01%
ASSET BACKED-FINANCE--1.78%
40,000 Beta Finance Incorporated......................... 10/06/98 to 10/25/98 5.223 to 5.745* 40,000,000
63,000 Beta Finance Incorporated......................... 10/09/98 to 05/13/99 5.710 to 6.000 63,000,000
--------------
103,000,000
--------------
BANKING--0.43%
25,000 Banc One Corporation.............................. 10/01/98 5.530* 24,987,420
--------------
BROKER-DEALER--7.94%
185,300 Bear Stearns Companies, Incorporated.............. 10/06/98 5.043 to 5.800* 185,300,000
20,000 Bear Stearns Companies, Incorporated.............. 06/14/99 5.800 20,000,000
53,400 Credit Suisse First Boston Incorporated........... 10/06/98 5.123 to 5.163* 53,400,000
105,000 Merrill Lynch & Company, Incorporated............. 10/01/98 to 10/28/98 5.527 to 5.870* 105,006,695
50,000 Merrill Lynch & Company, Incorporated............. 12/08/98 to 03/05/99 5.575 to 5.630 50,000,000
</TABLE>
6
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- -------------------- -------------- --------------
<C> <S> <C> <C> <C>
SHORT-TERM CORPORATE OBLIGATIONS (CONCLUDED)
BROKER-DEALER (CONCLUDED)
$ 45,000 Morgan Stanley Dean Witter & Company.............. 10/06/98 5.600 to 5.616%* $ 45,000,000
--------------
458,706,695
--------------
FINANCE-AIRCRAFT--0.17%
10,000 International Lease Finance Corporation........... 02/16/99 5.950 10,002,943
--------------
FINANCE-DIVERSIFIED--0.48%
27,100 Associates Corporation of North America........... 09/01/99 to 09/17/99 6.680 to 7.250 27,432,543
--------------
INSURANCE--0.69%
40,000 Prudential Funding Corporation.................... 10/06/98 5.043 to 5.163* 40,000,000
--------------
MACHINERY--0.52%
5,000 Caterpillar Financial Services.................... 01/15/99 5.950 5,005,061
25,000 Caterpillar Financial Services.................... 12/24/98 5.470* 25,000,000
--------------
30,005,061
--------------
Total Short-Term Corporate Obligations (cost--$694,134,662)... 694,134,662
--------------
REPURCHASE AGREEMENT--0.21%
12,344 Repurchase Agreement dated 09/30/98 with Citicorp
Securities Incorporated, collaterized by
$9,010,000 U.S. Treasury Bonds, 8.125% due
05/15/21 (value--$12,591,475); proceeds:
$12,345,913 (cost--$12,344,000)................. 10/01/98 5.580 12,344,000
--------------
Total Investments (cost--$5,862,377,875 which approximates
cost for federal income tax purposes)--101.46%.............. 5,862,377,875
Liabilities in excess of other assets--(1.46)%................ (84,567,924)
--------------
Net Assets (applicable to 5,778,908,655 shares outstanding at
$1.00 per share)--100.00%................................... $5,777,809,951
--------------
--------------
</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, 1998 and reset periodically.
@ Interest rates shown are discount rates at date of purchase.
Weighted Average Maturity--52 Days
See accompanying notes to financial statements
7
<PAGE>
PAINEWEBBER CASHFUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS
ENDED
SEPTEMBER 30,
1998
(UNAUDITED)
--------------
<S> <C>
Interest income............................................................ $ 160,231,521
--------------
EXPENSES:
Investment advisory and administration..................................... 10,192,709
Transfer agency and related services fees.................................. 3,310,678
Reports and notices to shareholders........................................ 547,337
Custody and accounting..................................................... 286,439
Federal and state registration............................................. 133,577
Legal and audit............................................................ 180,658
Insurance.................................................................. 73,714
Directors' fees............................................................ 5,250
Other expenses............................................................. 6,374
--------------
14,736,736
--------------
NET INVESTMENT INCOME...................................................... 145,494,785
NET REALIZED GAIN FROM INVESTMENT TRANSACTIONS............................. 279,236
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $ 145,774,021
--------------
--------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED FOR THE YEAR
SEPTEMBER 30, 1998 ENDED
(UNAUDITED) MARCH 31, 1998
------------------ ----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income............................. $ 145,494,785 $ 274,493,174
Net realized gains from investment transactions... 279,236 110,739
------------------ ----------------
Net increase in net assets resulting from
operations...................................... 145,774,021 274,603,913
------------------ ----------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income............................. (145,494,785) (274,493,174)
------------------ ----------------
Net increase in net assets derived from capital
share transactions.............................. 94,268,464 422,683,526
------------------ ----------------
Net increase in net assets........................ 94,547,700 422,794,265
NET ASSETS:
Beginning of period............................... 5,683,262,251 5,260,467,986
------------------ ----------------
End of period..................................... $ 5,777,809,951 $ 5,683,262,251
------------------ ----------------
------------------ ----------------
</TABLE>
See accompanying notes to financial statements
8
<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, 1998, the Fund owed
PaineWebber $1,694,788 in investment advisory and administration fees.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"), a wholly owned
asset management subsidiary of PaineWebber serves as sub-adviser to the Fund
pursuant to a Sub-Advisory Contract between PaineWebber and Mitchell Hutchins.
In accordance with the sub-advisory contract, PaineWebber (not the Fund) pays
Mitchell Hutchins for sub-advisory services provided.
TRANSFER AGENCY SERVICE FEES
PaineWebber provides transfer agency related services to the Fund pursuant to
a delegation of authority from PFPC Inc., the Fund's transfer agent, and is
compensated for these services by PFPC Inc., not the Fund. For the six months
ended September 30, 1998, PaineWebber received from PFPC Inc., not the Fund,
approximately 55% of the total transfer agency and related service fees
collected by PFPC Inc. from the Fund.
OTHER LIABILITIES
At September 30, 1998, the amounts payable for investments purchased and
dividends payable aggregated $97,237,576 and $7,123,374, 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, 1998, the Fund had a net capital loss carryforward of $1,206,669.
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 MONTHS FOR THE YEAR
ENDED ENDED
SEPTEMBER 30, 1998 MARCH 31, 1998
------------------ ---------------
<S> <C> <C>
Shares sold............................. 10,608,804,070 22,110,092,602
Shares repurchased...................... (10,655,303,613) (21,952,532,510)
Dividends reinvested.................... 140,768,007 265,123,434
------------------ ---------------
Net increase in shares outstanding...... 94,268,464 422,683,526
------------------ ---------------
------------------ ---------------
</TABLE>
10
<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 FOR THE YEARS ENDED MARCH 31,
30, 1998 ------------------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------ ------------
<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................... 0.0256 0.0511 0.0482 0.0523 0.0433 0.0272
Dividends from net investment income.... (0.0256) (0.0511) (0.0482) (0.0523) (0.0433) (0.0272)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, end of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
Total investment return(1).............. 2.59% 5.23% 4.93% 5.36% 4.44% 2.75%
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 5,777,810 $ 5,683,262 $ 5,260,468 $ 5,308,558 $ 3,700,678 $ 3,436,278
Expenses to average net assets.......... 0.52%* 0.56% 0.63% 0.60% 0.62% 0.61%
Net investment income to average net
assets................................ 5.11%* 5.11% 4.82% 5.24% 4.35% 2.73%
</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 for period of less than one
year has not been annualized.
11
<PAGE>
- -------------------------------------------------------------------------------
DIRECTORS
E. Garrent Bewkes, Jr. Mary C. Farrell
CHAIRMAN
Meyer Feldberg
Margo N. Alexander
George W. Gowen
Richard Q. Armstrong
Frederic V. Malek
Richard R. Burt
Carl W. Schafer
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>
PAINEWEBBER
-Copyright- 1998 PaineWebber Incorporated
Member SIPC
PAINEWEBBER
------------------------------
CASHFUND INC.
SEMIANNUAL REPORT
SEPTEMBER 30, 1998
