<PAGE>
PAINEWEBBER CASHFUND, INC. SEMIANNUAL REPORT
Dear Shareholder, November 15, 2000
We are pleased to present you with the semiannual report for PaineWebber
Cashfund, Inc. (the "Fund") for the six-month period ended September 30, 2000.
MARKET REVIEW
--------------------------------------------------------------------------------
[GRAPHIC]Interest rates continued their rise during this six-month period, as
the Federal Reserve (the "Fed") continued to tighten credit. An interest rate
hike in March and another on May 16, 2000 brought the Fed Funds rate to 6.5%
(the Fed Funds rate is the rate the Fed charges for overnight loans). As a
result, rising short-term interest rates swelled yields in almost every sector
of the bond market, thus pressuring investors. The bond market began to emerge
from these difficult conditions in late spring and yields on the 30-year
Treasury began to recover, as the Treasury began buying back shorter-term debt.
Through May, yields on fixed income securities were at their highest point
in years, creating difficulty for both bond and money market funds. Money market
funds remained stable compared with other segments of the market because of
their concentration on safety and liquidity.
The last rate increase in May, however, seemed to achieve its desired
effect. The economy began to cool to more sustainable growth levels. The
prospects for slower growth prompted the Fed to remain neutral this past August
and October, and the broad market showed signs of making a recovery.
PORTFOLIO REVIEW
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERFORMANCE AND CHARACTERISTICS 9/30/00 3/31/00
--------------------------------------------------------------------------------
<S> <C> <C>
Seven-Day Yield+ 6.12% 5.49%
Weighted Average Maturity 54 days 34 days
Net Assets $6.0 billion $6.1 billion
--------------------------------------------------------------------------------
</TABLE>
+ Yields will fluctuate.
PORTFOLIO HIGHLIGHTS
During this period, the Fund had a weighted average maturity below that of
its peer group, helping the Fund weather the difficult market conditions. Even
with some positive signs of interest rate stabilization, we continued to monitor
general economic uncertainty, especially in light of unpredictable oil prices.
We continued to emphasize the highest quality money market instruments among our
holdings.
---------------------------------
PAINEWEBBER CASHFUND, INC.
INVESTMENT GOAL:
Principal stability and
current income
PORTFOLIO MANAGER:
Susan P. Ryan
Mitchell Hutchins Asset
Management Inc.
COMMENCEMENT:
May 1, 1978
DIVIDEND PAYMENTS:
Monthly
---------------------------------
1
<PAGE>
SEMIANNUAL REPORT
<TABLE>
<CAPTION>
SECTOR ALLOCATION* 9/30/00 3/31/00
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial Paper 67.7% Commercial Paper 65.3%
U.S. Gov't Obligations 14.5 U.S. Gov't & Agency 23.1
Short-Term Corporate 9.7 Short-Term Corporate 4.6
Bank Obligations 8.5 Bank Notes 3.5
Money Market Funds 0.1 Money Market Funds 2.5
Liabilities in Excess of Other Assets -0.5 Certificates of Deposit 0.8
Bankers Acceptance 0.2
----------------------------------------------------------------------------------------
Total 100.0 Total 100.0
</TABLE>
OUTLOOK
--------------------------------------------------------------------------------
As we expected, the Fed remained on the sidelines through November's
elections. Though we expect a soft landing, with an anticipated slowing to 3.0%
to 3.5% in the gross domestic product's annual growth rate in 2001, political,
economic or oil market instability could endanger that scenario. If the economy
maintains moderate growth, however, we expect that much of the uncertainty in
the debt market will subside.
We will focus on liquidity, high credit quality and portfolio diversity
through the coming months to help ensure the Fund continues to meet its goals.
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,(1) please contact your Financial
Advisor. For additional information, visit us at www.painewebber.com.
Sincerely,
/s/ Brian M. Storms /s/ Susan P. Ryan
BRIAN M. STORMS SUSAN P. RYAN
Chief Executive Officer and President Senior Vice President
Mitchell Hutchins Mitchell Hutchins
Asset Management Inc. Asset Management Inc.
Portfolio Manager,
PaineWebber Cashfund, Inc.
This letter is intended to assist shareholders in understanding how the
Fund performed during the six-month period ended September 30, 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.
* Weightings represent percentages of net assets as of the dates indicated.
The Fund's portfolio is actively managed and its composition will vary over
time.
(1) 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, 2000(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
--------- -------------------- ---------------- -------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--14.50%
$ 15,000 U.S. Treasury Bills ......................................... 11/09/00 5.203%@ $ 14,915,459
50,000 Federal Farm Credit Bank .................................... 10/02/00 to 10/17/00 6.280 to 6.430@ 49,924,195
100,000 Federal Home Loan Bank ...................................... 10/03/00 to 10/04/00 6.653 to 6.683* 100,003,017
50,000 Federal Home Loan Bank ...................................... 10/02/00 6.280@ 49,991,278
77,000 Federal Home Loan Mortgage Corp. ............................ 10/03/00 6.553* 77,000,000
25,000 Federal Home Loan Mortgage Corp. ............................ 03/01/01 6.080@ 24,362,444
40,000 Federal National Mortgage Association ....................... 10/03/00 6.713* 40,000,000
507,000 Student Loan Marketing Association .......................... 10/03/00 6.530 to 6.883* 506,869,002
-------------
Total U.S. Government and Agency Obligations (cost--$863,065,395) ..... 863,065,395
-------------
DOMESTIC BANK NOTES--8.15%
265,000 Bank of America N.A. ........................................ 12/01/00 to 09/13/01 6.770 to 7.200 265,020,998
30,000 Comerica Bank ............................................... 10/10/00 6.570 29,993,860
30,000 Key Bank N.A. ............................................... 11/02/00 6.972 30,002,832
160,000 LaSalle National Bank N.A. .................................. 10/31/00 to 09/13/01 6.550 to 7.220 159,986,366
-------------
Total Domestic Bank Notes (cost--$485,004,056) ........................ 485,004,056
-------------
DOMESTIC CERTIFICATE OF DEPOSIT--0.42%
25,000 Morgan Guaranty Trust Co. (cost--$25,000,000) ............... 04/16/01 6.800 25,000,000
-------------
COMMERCIAL [email protected]%
ASSET BACKED-AUTO & TRUCK--0.83%
50,000 New Center Asset Trust ...................................... 11/20/00 to 02/14/01 6.490 to 6.500 49,083,911
-------------
ASSET BACKED-BANKING--2.97%
100,000 Atlantis One Funding ........................................ 11/01/00 to 02/23/01 6.500 to 6.545 98,753,198
58,589 Centric Capital Corp. ....................................... 10/10/00 to 11/30/00 6.500 to 6.510 58,227,733
20,000 Woodstreet Funding Corp. .................................... 10/27/00 6.530 19,905,678
-------------
176,886,609
-------------
ASSET BACKED-MISCELLANEOUS--15.89%
25,000 Asset Securitization Cooperative Corp. ...................... 11/09/00 6.490 24,824,229
85,000 Delaware Funding Corp. ...................................... 10/16/00 6.505 to 6.530 84,769,312
122,084 Enterprise Funding Corp. .................................... 10/16/00 to 11/15/00 6.495 to 6.510 121,200,485
150,000 Falcon Asset Securitization Corp. ........................... 10/02/00 to 10/23/00 6.500 to 6.530 149,801,125
223,301 Giro Funding U.S. Corp. ..................................... 10/12/00 to 12/13/00 6.490 to 6.540 221,835,202
35,000 Parthenon Receivables Funding LLC ........................... 10/12/00 6.540 34,930,058
74,160 Preferred Receivables Funding Corp. ......................... 10/12/00 to 10/13/00 6.510 74,005,764
64,764 Quincy Capital Corp. ........................................ 10/05/00 to 10/10/00 6.510 to 6.520 64,694,487
55,507 Receivables Capital Corp. ................................... 10/11/00 to 11/16/00 6.500 to 6.520 55,276,582
40,000 Triple-A One Funding ........................................ 10/10/00 6.510 39,934,900
75,000 Variable Funding Capital Corp. .............................. 10/10/00 to 10/17/00 6.510 74,814,646
-------------
946,086,790
-------------
</TABLE>
3
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
--------- -------------------- ---------------- -------------
<S> <C> <C> <C>
COMMERCIAL PAPER@--(CONTINUED)
AUTO & TRUCK--4.76%
$ 10,000 BMW US Capital Inc. ......................................... 10/12/00 6.480% $ 9,980,200
75,000 Daimler-Chrysler N.A. Holding Corp. ......................... 11/14/00 6.500 74,404,166
120,000 Ford Motor Credit Corp. ..................................... 10/05/00 to 10/06/00 6.500 to 6.530 119,900,528
30,000 General Motors Acceptance Corp. ............................. 01/17/01 6.550 29,410,500
50,000 PACCAR Financial Corp. ...................................... 10/25/00 to 11/22/00 6.480 to 6.510 49,707,700
-------------
283,403,094
-------------
BANKING-DOMESTIC--9.74%
20,000 B.B.V. Finance (Delaware) Inc. .............................. 10/17/00 6.500 19,942,222
30,000 Bank of America Corp. ....................................... 10/10/00 6.640 29,950,200
40,000 BBL North America Funding Corp. ............................. 10/17/00 to 10/19/00 6.490 to 6.510 39,880,750
40,000 BCI Funding Corp. ........................................... 10/10/00 to 11/07/00 6.490 39,808,906
20,000 BHF Finance Inc. ............................................ 10/20/00 6.510 19,931,283
25,000 Cariplo Finance (Delaware) Inc. ............................. 10/12/00 6.490 24,950,424
5,700 CBA Finance (Delaware) Inc. ................................. 12/12/00 6.460 5,626,356
25,000 Cregem North America Inc. ................................... 01/11/01 6.560 24,535,333
45,000 Den Danske Corp. ............................................ 10/30/00 to 12/27/00 6.460 to 6.500 44,453,108
163,128 Fortis Funding LLC .......................................... 10/17/00 to 12/18/00 6.460 to 6.540 161,708,761
15,000 KFW International Finance Inc. .............................. 10/12/00 6.520 14,970,117
55,000 Nordbanken North America Inc. ............................... 10/10/00 to 12/07/00 6.470 to 6.490 54,598,196
50,000 Santander Finance (Delaware) Inc. ........................... 10/30/00 6.520 49,737,389
50,000 Societe Generale North America Inc. ......................... 10/27/00 6.520 49,764,556
-------------
579,857,601
-------------
BROKER-DEALER--7.69%
105,000 Bear Stearns Companies Inc. ................................. 10/02/00 to 12/06/00 6.480 to 6.663* 104,081,366
100,000 Goldman Sachs Group Inc. .................................... 11/13/00 to 11/16/00 6.500 99,196,528
30,000 Merrill Lynch & Company Inc. ................................ 10/11/00 6.610 29,944,917
30,000 Morgan Stanley Dean Witter & Co. ............................ 10/02/00 6.900* 30,000,000
195,000 Salomon Smith Barney Holdings Inc. .......................... 10/04/00 to 11/07/00 6.500 to 6.510 194,370,653
-------------
457,593,464
-------------
CHEMICALS--1.30%
15,000 DuPont (E. I.) deNemours & Co. .............................. 10/12/00 6.480 14,970,300
63,000 Henkel Corp. ................................................ 11/03/00 to 12/15/00 6.470 to 6.490 62,469,693
-------------
77,439,993
-------------
CONSUMER PRODUCTS--1.00%
30,000 Fortune Brands Inc. ......................................... 12/08/00 6.470 29,633,367
25,000 Gillette Co. ................................................ 10/18/00 6.480 24,923,500
5,158 Procter & Gamble Co. ........................................ 10/11/00 6.500 5,148,687
-------------
59,705,554
-------------
DRUGS, HEALTH CARE--1.37%
30,000 Bayer Corp. ................................................. 10/03/00 6.500 29,989,166
15,000 Glaxo Wellcome Inc. ......................................... 11/08/00 6.480 14,897,400
17,000 Merck & Company Inc. ........................................ 10/19/00 to 10/24/00 6.470 16,938,715
20,000 Pfizer Inc. ................................................. 10/11/00 6.480 19,964,000
-------------
81,789,281
-------------
</TABLE>
4
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
--------- -------------------- ---------------- -------------
<S> <C> <C> <C>
COMMERCIAL PAPER@--(CONTINUED)
ELECTRONICS--1.44%
$ 20,000 Emerson Electric Co. ........................................ 12/15/00 6.450% $ 19,731,250
56,305 Motorola Credit Corp. ....................................... 10/10/00 to 10/26/00 6.500 to 6.520 56,121,946
10,000 Motorola Inc. ............................................... 10/18/00 6.490 9,969,353
-------------
85,822,549
-------------
ENERGY--0.42%
25,000 Exxon Imperial U.S. Inc. .................................... 10/19/00 6.480 24,919,000
-------------
FINANCE--CONDUIT--0.84%
50,000 Svenska Handelsbanken Inc. .................................. 11/02/00 6.530 49,709,778
-------------
FINANCE--CONSUMER--1.66%
50,000 Household Finance Corp. ..................................... 10/11/00 6.490 49,909,861
50,000 Transamerica Finance Corp. .................................. 02/05/01 6.530 48,848,180
-------------
98,758,041
-------------
FINANCE--DIVERSIFIED--0.25%
15,000 Associates Corp. of North America ........................... 10/26/00 6.490 14,932,396
-------------
FINANCE--INDEPENDENT--0.65%
40,000 National Rural Utilities Cooperative Finance Corp. .......... 03/13/01 to 03/29/01 6.450 38,774,500
-------------
FINANCE--RETAIL--0.25%
15,000 American Express Credit Co. ................................. 10/26/00 6.490 14,932,396
-------------
FINANCE--SUBSIDIARY--2.51%
150,000 Dresdner U.S. Finance ....................................... 10/11/00 to 10/17/00 6.495 to 6.500 149,675,139
-------------
FOOD & BEVERAGE--1.72%
29,000 Campbell Soup Co. ........................................... 10/20/00 6.470 28,900,973
10,000 Coca Cola Co. ............................................... 10/17/00 6.470 9,971,244
64,000 H.J. Heinz Co. .............................................. 10/12/00 to 11/06/00 6.480 63,652,780
-------------
102,524,997
-------------
INSURANCE--2.08%
100,000 Prudential Funding Corp. .................................... 10/19/00 6.500 99,675,000
24,000 Teachers Insurance & Annuity Association of America ......... 11/01/00 6.480 23,866,080
-------------
123,541,080
-------------
INSURANCE--PROPERTY/CASUALTY--0.15%
9,000 A.I. Credit Corp. ........................................... 10/11/00 6.460 8,983,850
-------------
MACHINERY--0.27%
16,280 Caterpillar Financial Services .............................. 10/31/00 6.480 16,192,088
-------------
METALS & MINING--2.32%
15,000 Alcoa Inc. .................................................. 11/10/00 6.480 14,892,000
123,972 Rio Tinto America Inc. ...................................... 10/17/00 to 12/15/00 6.460 to 6.490 122,946,616
-------------
137,838,616
-------------
</TABLE>
5
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
--------- -------------------- ---------------- -------------
<S> <C> <C> <C>
COMMERCIAL PAPER@--(CONCLUDED)
PRINTING & PUBLISHING--1.53%
$ 77,000 Reed Elsevier USA Inc. ...................................... 10/30/00 to 12/08/00 6.470 to 6.480% $ 76,355,532
15,000 Tribune Co. ................................................. 10/20/00 6.510 14,948,463
-------------
91,303,995
-------------
RETAIL-MERCHANDISE--0.83%
50,000 Wal-Mart Stores Inc. ........................................ 11/21/00 6.480 49,541,000
-------------
TELECOMMUNICATIONS--5.08%
100,900 American Telephone & Telegraph .............................. 11/02/00 to 11/08/00 6.480 to 6.530 100,250,211
162,000 BellSouth Capital Funding Corp. ............................. 10/11/00 to 12/20/00 6.460 to 6.480 160,427,750
12,200 SBC Communications Inc. ..................................... 12/05/00 6.470 12,057,480
30,000 Verizon Global Funding Inc. ................................. 12/13/00 6.460 29,607,017
-------------
302,342,458
-------------
TRANSPORTATION SERVICES--0.12%
7,000 United Parcel Service ....................................... 12/01/00 6.480 6,923,140
-------------
Total Commercial Paper (cost--$4,028,561,320) ......................... 4,028,561,320
-------------
SHORT-TERM CORPORATE OBLIGATIONS--9.71%
ASSET BACKED-FINANCE--3.36%
200,000 Beta Finance Inc. ........................................... 10/02/00 to 08/15/01 6.620 to 6.885* 200,000,000
-------------
BANKING--1.60%
65,000 Morgan (J.P.) & Company Inc. ................................ 10/10/00 to 10/16/00 6.613 to 6.780* 65,025,282
30,000 Wells Fargo & Co. ........................................... 10/16/00 6.591* 30,000,000
-------------
95,025,282
-------------
BROKER-DEALER--4.10%
194,000 Merrill Lynch & Company Inc. ................................ 10/06/00 to 10/02/01 6.574 to 7.010* 193,990,954
50,000 Morgan Stanley Dean Witter & Co. ............................ 10/16/00 6.646* 50,000,000
-------------
243,990,954
-------------
ELECTRONICS--0.42%
25,000 Emerson Electric Co. ........................................ 10/04/00 6.570* 25,000,000
-------------
FINANCE-INDEPENDENT--0.23%
14,000 National Rural Utilities Cooperative Finance Corp. .......... 10/20/00 6.710* 14,000,000
-------------
Total Short-Term Corporate Obligations (cost--$578,016,236) ........... 578,016,236
-------------
</TABLE>
6
<PAGE>
PAINEWEBBER CASHFUND, INC.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
(000) VALUE
--------- --------------
<S> <C>
MONEY MARKET FUNDS--0.09%
5,277 AIM Liquid Assets Portfolio .......................................... $ 5,277,456
466 AIM Prime Portfolio .................................................. 465,714
--------------
Total Money Market Funds (cost--$5,743,170) .................................... 5,743,170
--------------
Total Investments (cost--$5,985,390,177 which approximates
cost for federal income tax purposes)--100.54% ............................... 5,985,390,177
Liabilities in excess of other assets--(0.54)% ................................. (32,388,474)
--------------
Net Assets (applicable to 5,953,914,653 shares outstanding at
$1.00 per share)--100.00% ...................................................... $5,953,001,703
==============
</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, 2000 and reset periodically.
@ Interest rates shown are discount rates at date of purchase.
Weighted Average Maturity--54 days
See accompanying notes to financial statements
7
<PAGE>
PAINEWEBBER CASHFUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED
SEPTEMBER 30, 2000
(UNAUDITED)
--------------------------
<S> <C>
INTEREST INCOME ................................................................ $190,897,247
------------
EXPENSES:
Investment advisory and administration ......................................... 10,416,156
Transfer agency and related services fees ...................................... 5,120,393
Reports and notices to shareholders ............................................ 483,790
Custody and accounting ......................................................... 295,959
Professional Fees .............................................................. 175,071
Insurance ...................................................................... 67,354
Federal and state registration ................................................. 28,930
Directors' fees ................................................................ 5,250
Other expenses ................................................................. 5,542
------------
16,598,445
------------
NET INVESTMENT INCOME .......................................................... 174,298,802
NET REALIZED GAIN FROM INVESTMENT TRANSACTIONS ................................. 4,924
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................... $174,303,726
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2000 YEAR ENDED
(UNAUDITED) MARCH 31, 2000
------------------ ----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income..................................................... $ 174,298,802 $ 288,504,017
Net realized gains from investment transactions........................... 4,924 58,356
------------------ ----------------
Net increase in net assets resulting from operations...................... 174,303,726 288,562,373
------------------ ----------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income..................................................... (174,298,802) (288,504,017)
------------------ ----------------
Net decrease in net assets derived from capital share transactions........ (102,392,012) (57,228,465)
------------------ ----------------
Net decrease in net assets................................................ (102,387,088) (57,170,109)
NET ASSETS:
Beginning of period....................................................... 6,055,388,791 6,112,558,900
------------------ ----------------
End of period............................................................. $5,953,001,703 $6,055,388,791
================== ================
</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. 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
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
is 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"), which is a wholly-owned indirect subsidiary of UBS AG, 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 average daily net assets
in excess of $5.5 billion. At September 30, 2000, the Fund owed PaineWebber
$1,735,128 in investment advisory and administration fees.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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.
TRANSFER AGENCY RELATED 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, 2000, PaineWebber received from PFPC Inc., not the Fund,
approximately 56% of the total transfer agency and related service fees
collected by PFPC Inc. from the Fund.
OTHER LIABILITIES
At September 30, 2000, the amounts payable for investments purchased and
dividends payable aggregated $49,996,441 and $4,965,604, 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, 2000, the Fund had a net capital loss carryforward of
$746,604. 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.
MONEY MARKET FUND INSURANCE BOND
The Fund obtained an insurance bond that provides limited coverage for
certain loss events involving certain money market instruments held by the Fund.
These loss events include non-payment of principal or interest or a bankruptcy
or insolvency of the issuer or credit enhancement 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 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 six months ended
September 30, 2000, the Fund did not use this insurance bond.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 FOR THE YEAR
SIX MONTHS ENDED ENDED
SEPTEMBER 30, 2000 MARCH 31, 2000
------------------ ----------------
<S> <C> <C>
Shares sold ............................................................... 10,664,682,098 23,824,183,354
Shares repurchased ........................................................ (10,935,026,767) (24,164,268,560)
Dividends reinvested ...................................................... 167,952,657 282,856,741
------------------ ----------------
Net decrease in shares outstanding ........................................ (102,392,012) (57,228,465)
================== ================
</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 FOR THE YEARS ENDED MARCH 31,
SIX MONTHS ENDED -------------------------------------------------------------
SEPTEMBER 30, 2000
(UNAUDITED) 2000 1999 1998 1997 1996
-------------------- --------- ----------- ---------- ---------- -----------
<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 .......................... 0.0298 0.0486 0.0487 0.0511 0.0482 0.0523
Dividends from net investment income ........... (0.0298) (0.0486) (0.0487) (0.0511) (0.0482) (0.0523)
-------------------- --------- ----------- ---------- ---------- -----------
Net asset value, end of period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==================== ========= =========== ========== ========== ===========
Total investment return(1) ..................... 3.02% 4.97% 4.98% 5.23% 4.93% 5.36%
==================== ========= =========== ========== ========== ===========
Ratios/Supplemental Data:
Net assets, end of period (000's) .............. $ 5,953,002 $ 6,055,389 $ 6,112,559 $5,683,262 $5,260,468 $ 5,308,558
Expenses to average net assets ................. 0.57%* 0.55% 0.52% 0.56% 0.63% 0.60%
Net investment income to average net assets .... 5.95%* 4.86% 4.86% 5.11% 4.82% 5.24%
</TABLE>
--------------------
* Annualized
(1) Total investment return is calculated assuming a $10,000 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
the period of less than a year.
12
<PAGE>
--------------------------------------------------------------------------------
DIRECTORS
E. Garrett Bewkes, Jr.
CHAIRMAN
Margo N. Alexander
Richard Q. Armstrong
Richard R. Burt
Meyer Feldberg
George W. Gowen
Frederic V. Malek
Carl W. Schafer
Brian M. Storms
PRINCIPAL OFFICERS
Brian M. Storms
PRESIDENT
Amy R. Doberman
VICE PRESIDENT
Dianne E. O'Donnell
VICE PRESIDENT AND SECRETARY
Paul H. Schubert
VICE PRESIDENT AND TREASURER
Susan P. Ryan
VICE PRESIDENT
INVESTMENT ADVISER,
ADMINISTRATOR AND DISTRIBUTOR
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
SUB-ADVISER AND SUB-ADMINISTRATOR
Mitchell Hutchins Asset Management Inc.
51 West 52nd Street
New York, New York 10019-6114
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.
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.
<PAGE>
PAINEWEBBER
----------------------------------
CASHFUND, INC.
SEMIANNUAL REPORT
SEPTEMBER 30, 2000
PAINEWEBBER
-C-2000 PaineWebber Incorporated
All rights reserved
