<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 30, 1995
SECURITIES ACT FILE NO. 2-64685
INVESTMENT COMPANY ACT FILE NO. 811-2928
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 20 [x]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
AMENDMENT NO. 20 [x]
(CHECK APPROPRIATE BOX OR BOXES)
------------------------
PAINEWEBBER/KIDDER, PEABODY CASH RESERVE FUND, INC.
(FORMERLY, 'KIDDER, PEABODY CASH RESERVE FUND, INC.')
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
------------------------
<TABLE>
<S> <C>
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 713-2000
DIANNE E. O'DONNELL, ESQ.
MITCHELL HUTCHINS ASSET MANAGEMENT INC.
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(NAME AND ADDRESS OF AGENT FOR SERVICE)
------------------------
COPY TO:
LEWIS G. COLE, ESQ.
STROOCK & STROOCK & LAVAN
7 HANOVER SQUARE
NEW YORK, NEW YORK 10004-2696
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE
BOX)
[ ] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b) OF RULE 485
[x] ON DECEMBER 1, 1995 PURSUANT TO PARAGRAPH (b) OF RULE 485
[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(i) OF RULE 485
[ ] ON (DATE) PURSUANT TO PARAGRAPH (a)(i) OF RULE 485
[ ] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(ii) OF RULE 485
[ ] ON (DATE) PURSUANT TO PARAGRAPH (a)(ii) OF RULE 485.
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
[ ] THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW
EFFECTIVE DATE FOR A PREVIOUSLY FILED POST-EFFECTIVE
AMENDMENT.
------------------------
THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO RULE 24f-2 UNDER THE INVESTMENT COMPANY ACT
OF 1940. THE NOTICE REQUIRED BY SUCH RULE FOR THE REGISTRANT'S FISCAL YEAR ENDED
JULY 31, 1995 WAS FILED ON SEPTEMBER 15, 1995.
________________________________________________________________________________
<PAGE>
<PAGE>
PAINEWEBBER/KIDDER, PEABODY CASH RESERVE FUND, INC.
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A
ITEM NO. LOCATION
------- --------
<S> <C> <C>
PART A
Item 1. Cover Page......................................... Cover Page
Item 2. Synopsis........................................... Fee Table; Highlights
Item 3. Condensed Financial Information.................... Financial Highlights; Yield
Item 4. General Description of Registrant.................. Cover Page; Investment Objective and
Management Policies; Additional
Information About the Fund
Item 5. Management of the Fund............................. Cover Page; Fee Table; Management of the
Fund; Portfolio Transactions; Custodian,
and Transfer, Dividend Disbursing and
Recordkeeping Agent
Item 5A. Management's Discussion of Fund's Performance...... Not Applicable
Item 6. Capital Stock and Other Securities................. Cover Page; Dividends, Distributions and
Taxes; Additional Information About the
Fund
Item 7. Purchase of Securities Being Offered............... Cover Page; Fee Table; Purchase of Shares;
The Distributor; Exchange Privilege
Item 8. Redemption or Repurchase........................... Redemption of Shares
Item 9. Pending Legal Proceedings.......................... Not Applicable
PART B
Item 10. Cover Page......................................... Cover Page
Item 11. Table of Contents.................................. Cover Page
Item 12. General Information and History.................... Not Applicable
Item 13. Investment Objectives and Policies................. Investment Objective and Policies
Item 14. Management of the Fund............................. Management of the Fund
Item 15. Control Persons and Principal Holders of
Securities....................................... Management of the Fund
Item 16. Investment Advisory and Other Services............. Investment Advisory and Other Services;
Additional Information About the Fund
Item 17. Brokerage Allocation............................... Portfolio Transactions
Item 18. Capital Stock and Other Securities................. Capital Stock and Other Securities
Item 19. Purchase, Redemption and Pricing of Securities
Being Offered.................................... Redemption and Exchange of Shares;
Exchange Privilege; Determination of Net
Asset Value
Item 20. Tax Status......................................... Dividends, Distributions and Taxes in Part
A
Item 21. Underwriters....................................... Investment Advisory and Other Services
Item 22. Calculations of Performance Data................... Determination of Current and Effective
Yields
Item 23. Financial Statements............................... Financial Statements
PART C
Information required to be included in Part C is set forth under the appropriate Item, so numbered, in Part
C to this Registration Statement.
</TABLE>
<PAGE>
<PAGE>
Prospectus December 1, 1995
- --------------------------------------------------------------------------------
PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc.
1285 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10019 (800) 647-1568
PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc. (the 'Fund') is a
diversified, open-end, management investment company. Its objective is the
maximization of current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. The Fund pursues this objective by
investing in short-term money market instruments. There can be no assurance that
the Fund's objective will be realized. See 'Investment Objective and Management
Policies.' Shares of the Fund are offered exclusively to existing shareholders
and shareholders of other PaineWebber/Kidder, Peabody money market funds who may
exchange their shares for shares of the Fund.
The board of directors of the Fund has approved a Plan of Reorganization and
Termination ('Reorganization') for submission to the Fund's shareholders, at a
special meeting expected to be held on January , 1996. If the proposed
Reorganization is approved and implemented, all of the Fund's assets will be
acquired and its liabilities assumed by PaineWebber RMA Money Market Portfolio
in a tax-free reorganization. As a result of the Reorganization, the two funds'
assets would be combined and each Fund shareholder would, on the closing date of
the transaction, receive shares of PaineWebber RMA Money Market Portfolio having
an aggregate value equal to the value of the shareholder's holdings in the Fund.
There can be no assurance that the Fund's shareholders will approve the
Reorganization.
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government. While the Fund seeks to maintain a stable net asset value of $1.00
per share, there can be no assurance that it will be able to do so.
PaineWebber Incorporated ('PaineWebber'), 1285 Avenue of the Americas, New York,
New York 10019, serves as the Fund's investment adviser, administrator and
distributor. Mitchell Hutchins Asset Management Inc. ('Mitchell Hutchins'), 1285
Avenue of the Americas, New York, New York 10019, a wholly owned subsidiary of
PaineWebber, serves as the Fund's sub-adviser and sub-administrator. See
'Management of the Fund.'
The Fund's Board of Directors has approved a Plan of Distribution pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the 'Plan of
Distribution'), pursuant to which the Fund pays a maximum annual fee of .12% of
its average daily net assets to PaineWebber. See 'The Distributor.'
This Prospectus sets forth concisely the information about the Fund that a
prospective investor ought to know before investing. Investors should read this
Prospectus and retain it for future reference. Additional information about the
Fund has been filed with the Securities and Exchange Commission (the 'SEC') in a
Statement of Additional Information dated December 1, 1995 which is hereby
incorporated by reference and is available without charge upon request made to
the Fund at the above address. Shareholder inquiries may be directed to the Fund
at the same address.
- --------------------------------------------------------------------------------
INVESTMENT ADVISER, ADMINISTRATOR AND DISTRIBUTOR
PaineWebber Incorporated
SUB-ADVISER AND SUB-ADMINISTRATOR
Mitchell Hutchins Asset Management Inc.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
FEE TABLE
The purpose of the Fee Table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. For more detailed information on these costs and expenses, see
'Management of the Fund' and 'The Distributor.'
<TABLE>
<S> <C>
ANNUAL FUND OPERATING EXPENSES FOR THE FISCAL YEAR ENDED JULY 31, 1995
(as a percentage of average daily net assets)
Management Fees..................................................................................... .47%
12b-1 Fees.......................................................................................... .12
Other Expenses...................................................................................... .15
---
Total Fund Operating Expenses................................................................... .74%
---
---
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE* 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
A shareholder would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return, (2)
total annual operating expenses as
shown in the fee table set out above
and (3) redemption at the end of each
time period:......................... $7 $23 $41 $92
</TABLE>
- ------------
* The amounts shown in the example assume reinvestment of all dividends and
distributions and should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown. The assumed
5% annual return is hypothetical and should not be considered a representation
of the Fund's past or future annual return. The actual annual return of the
Fund may be greater or less than the assumed return.
2
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
HIGHLIGHTS
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------
- -------------------
The Fund
The Fund is a diversified, open-end, management investment company whose investment objective
is the maximization of current income to the extent consistent with the preservation of capital
and the maintenance of liquidity through investments in short-term money market instruments
including securities issued or guaranteed by the U.S. Government, or its agencies or
instrumentalities, corporate obligations including, but not limited to, bonds, debentures and
notes, certificates of deposit, time deposits, bankers' acceptances and other short-term bank
obligations issued by domestic banks, foreign branches of domestic banks and savings and loan
and similar associations, repurchase agreements and high grade commercial paper. In addition,
the Fund may invest in obligations of foreign banks and institutions which have the equivalent
credit ratings of domestic issues, including, but not limited to, Yankee and foreign bank
bankers' acceptances and commercial paper.
- ---------------------------------------------------------------------------------------------------------------------------
- -------------------
Benefits of
Investing
in the
Fund
Mutual funds, such as the Fund, are flexible investment tools that are increasingly
popular -- one of four American households now owns shares of at least one mutual fund -- for
very sound reasons. The Fund offers investors the following important benefits:
Professional Management
By pooling the monies of many investors, the Fund enables shareholders to obtain the benefits
of full-time professional management and a degree of diversification of investment that is
typically beyond the means of most investors. The Fund's investment adviser reviews the
fundamental characteristics of far more securities than can a typical individual investor and
may employ portfolio management techniques that frequently are not used by individual or many
institutional investors. Additionally, the larger denominations of securities in which the
Fund invests may result in better overall prices for the investments. See 'Investment
Objective and Management Policies.'
Transaction Savings
By investing in the Fund, a shareholder is able to acquire ownership in a diversified
portfolio of securities without paying the higher transaction costs generally associated with
a series of small securities purchases.
Convenience
Fund shareholders are relieved of the administrative and recordkeeping burdens and
coordination of maturities normally associated with direct ownership of securities.
Quality
All securities in which the Fund invests will be determined to be of high quality by a
nationally recognized rating organization, or determined to be of comparable quality by the
Fund's investment adviser acting under the supervision of the Board of Directors if not so
rated, and will also be determined to present minimal credit risks. Any purchase of unrated
</TABLE>
3
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
securities or securities that are rated only by a single rating agency must be approved or
ratified by the Directors.
Liquidity
The Fund's convenient purchase and redemption procedures provide shareholders with ready
access to their money and reduce the delays frequently involved in the direct purchase and
sale of securities. See 'Purchase of Shares' and 'Redemption of Shares.'
Exchange Privilege
Shareholders of the Fund may exchange all or a portion of their shares for shares of
specified PaineWebber/Kidder, Peabody money market funds. See 'Exchange Privilege.'
- ---------------------------------------------------------------------------------------------------------------------------
- -------------------
Purchase of
Shares
The purchase price for shares of the Fund is the net asset value per share next determined
after receipt by the Fund of a purchase order in proper form. Shares of the Fund are offered
exclusively to existing shareholders of the Fund and shareholders of other PaineWebber/Kidder,
Peabody money market funds who may exchange their shares for shares of the Fund. See 'Purchase
of Shares' and 'Determination of Net Asset Value.'
- ---------------------------------------------------------------------------------------------------------------------------
- -------------------
Redemption of
Shares
Shares of the Fund may be redeemed at the Fund's net asset value per share next determined
after receipt by the transfer agent of instructions from PaineWebber Incorporated
('PaineWebber'). See 'Redemption of Shares' for a discussion of the various alternative methods
of redeeming shares of the Fund and 'Determination of Net Asset Value.'
- ---------------------------------------------------------------------------------------------------------------------------
- -------------------
Management
Services
PaineWebber serves as investment adviser and administrator of the Fund and receives an annual
fee of .50% of the portion of the Fund's average daily net assets not exceeding $750 million;
.475% of the portion of the average daily net assets exceeding $750 million but not exceeding
$1 billion; .45% of the portion of the average daily net assets exceeding $1 billion but not
exceeding $1.25 billion; .425% of the portion of the average daily net assets exceeding $1.25
billion but not exceeding $1.5 billion; and .40% of the portion of the average daily net assets
exceeding $1.5 billion. Mitchell Hutchins Asset Management Inc. ('Mitchell Hutchins') serves as
the Fund's sub-adviser and sub-administrator and receives from PaineWebber (not the Fund) 20%
of the fee received by PaineWebber from the Fund. See 'Management of the Fund.'
</TABLE>
4
<PAGE>
<PAGE>
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------
- -------------------
Distributor
PaineWebber serves as distributor of the Fund's shares. See 'The Distributor.'
- ---------------------------------------------------------------------------------------------------------------------------
- -------------------
Dividends
The Fund declares dividends on each day the New York Stock Exchange is open for business of all
of its daily net income to shareholders of record. See 'Dividends, Distributions and Taxes.'
- ---------------------------------------------------------------------------------------------------------------------------
- -------------------
Risk Factors
The Fund may invest in securities issued by foreign branches of domestic banks, foreign
subsidiaries of domestic banks, domestic and foreign branches of foreign banks and commercial
paper issued by foreign issuers, which may present certain additional risks. Also, to the
extent the Fund's investments are concentrated in the banking industry, the Fund will have
correspondingly greater exposure to the risk factors which are characteristic of such
investments. In addition, the Fund may enter into repurchase agreements. In the event the other
party to a repurchase agreement defaults, the Fund may experience difficulties and incur
certain costs in exercising its rights to the collateral and may lose the interest it expected
to receive in respect of the repurchase agreement. See 'Investment Objective and Management
Policies -- Risk Factors.'
</TABLE>
5
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The table below provides selected per share data and ratios for each of the
periods shown. This information is supplemented by the financial statements and
accompanying notes appearing in the Fund's Annual Report to Shareholders for the
fiscal year ended July 31, 1995, which are incorporated by reference into the
Statement of Additional Information. The financial statements and notes, and the
financial information for the fiscal year ended July 31, 1995 appearing in the
table below, have been audited by Ernst & Young LLP, independent auditors, whose
report thereon is included in the Annual Report to Shareholders. The financial
information for the prior fiscal years was audited by other auditors whose
reports thereon were unqualified. Further information about the Fund's
performance is also included in the Annual Report to Shareholders, which may be
obtained without charge.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
- ------------------------------------------------------------------------------------
1986 1987 1988 1989 1990
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year.. $1.00 $1.00 $1.00 $1.00 $1.00
--------------------------------------------------------------
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income............. 0.0693 0.0563 0.0650 0.0834 0.0785
DISTRIBUTIONS
Dividends from net
investment income.. (0.0693) (0.0563) (0.0650) (0.0834) (0.0785)
--------------------------------------------------------------
Net asset value, end
of year............ $1.00 $1.00 $1.00 $1.00 $1.00
--------------------------------------------------------------
--------------------------------------------------------------
Total return(1)..... 7.14% 5.73% 6.69% 8.63% 8.13%
RATIOS/SUPPLEMENTAL
DATA
Net assets, end of
year (in
thousands)......... $1,546,673 $1,528,880 $1,541,747 $1,959,024 $2,091,165
--------------------------------------------------------------
--------------------------------------------------------------
RATIO TO AVERAGE NET
ASSETS
Expenses,
including
distribution
fees........... 0.65% 0.64% 0.60% 0.65% 0.68%
Net investment
income......... 6.89% 5.62% 6.49% 8.38% 7.85%
<CAPTION>
YEAR ENDED JULY 31,
- ------------------------------------------------------------------------------------
1991 1992 1993 1994 1995
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year.. $1.00 $1.00 $1.00 $1.00 $1.00
-------------------------------------------------------------
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income............. 0.0655 0.0405 0.0258 0.0285 0.0484
DISTRIBUTIONS
Dividends from net
investment income.. (0.0655) (0.0405) (0.0258) (0.0285) (0.0484)
-------------------------------------------------------------
Net asset value, end
of year............ $1.00 $1.00 $1.00 $1.00 $1.00
-------------------------------------------------------------
-------------------------------------------------------------
Total return(1)..... 6.75% 4.22% 2.62% 2.87% 4.95%
RATIOS/SUPPLEMENTAL
DATA
Net assets, end of
year (in
thousands).........$2,171,758 $1,860,557 $1,781,248 $1,750,448 $1,412,127
-------------------------------------------------------------
-------------------------------------------------------------
RATIO TO AVERAGE NET
ASSETS
Expenses,
including
distribution
fees........... 0.66% 0.68% 0.72% 0.70% 0.74%
Net investment
income......... 6.52% 4.09% 2.58% 2.85% 4.84%
</TABLE>
- ------------
(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 date and a sale at net asset value on the last
day of each period reported.
6
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
YIELD
The chart below shows the Fund's current and effective yields, calculated in
accordance with rules of the SEC, and the average portfolio maturity for the
seven-day periods ended July 31, 1995 and November 1, 1995.
<TABLE>
<CAPTION>
7/31/95 11/1/95
-------- --------
<S> <C> <C>
Current Yield.................................................................. 5.33% %
Effective Yield................................................................ 5.44% %
Average Portfolio Maturity..................................................... 47 days days
</TABLE>
From time to time, the Fund advertises its 'current yield' and 'effective
yield.' Both yield figures are based on historical earnings and are not intended
to indicate future performance. The 'current yield' of the Fund refers to the
income generated by an investment in the Fund over a seven-day period (which
period will be stated in the advertisement). This income is then 'annualized.'
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The 'effective yield' is calculated similarly but,
when annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The 'effective yield' will be slightly higher than the 'current
yield' because of the compounding effect of this assumed reinvestment. The
Statement of Additional Information describes in more detail the methods used to
calculate the yields of the Fund.
Performance data for the Fund may, in reports and promotional literature,
be compared to: (i) other mutual funds tracked by IBC/Donoghue's Money Fund
Report and Lipper Analytical Services, widely used independent research firms
which rank mutual funds by overall performance, investment objectives, and
assets, or tracked by other services, companies, publications, or persons who
rank mutual funds on overall performance or other criteria; (ii) unmanaged
indices so that investors may compare the Fund's results with those of a group
of unmanaged securities widely regarded by investors as representative of the
securities markets in general; and (iii) the Consumer Price Index, an inflation
measure. Promotional and advertising literature also may refer to discussions of
the Fund and comparative mutual fund data and ratings reported in independent
periodicals.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The Fund seeks to maximize current income to the extent consistent with the
preservation of capital and the maintenance of liquidity. The Fund's investment
objective cannot be changed without approval by the holders of a majority of the
Fund's outstanding voting shares, as defined in the Investment Company Act of
1940, as amended (the 'Act'). There can be no assurance that the Fund's
investment objective will be achieved. Securities in which the Fund invests may
not earn as high a level of current income as long-term or lower quality
securities which generally have less liquidity, greater market risk and more
fluctuation in market value.
To achieve its investment objective, the Fund invests in debt obligations
(whether or not subject to repurchase agreements) consisting exclusively of the
following short-term money market instruments: securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities, corporate
obligations (including, but not limited to, bonds, debentures and notes),
certificates of deposit ('CDs'), time deposits ('TDs'), bankers' acceptances and
other
7
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
short-term bank obligations issued by domestic banks, foreign branches of
domestic banks and savings and loan and similar associations, repurchase
agreements and high grade commercial paper. In addition, the Fund may invest in
obligations of foreign banks and institutions which have the equivalent credit
ratings of domestic issues, including, but not limited to, Yankee and foreign
bank bankers' acceptances and commercial paper. All portfolio securities are
purchased with and payable in U.S. dollars.
Securities issued or guaranteed as to principal and interest by the U.S.
Government include a variety of Treasury securities, which differ in their
interest rates, maturities and times of issuance: Treasury Bills have initial
maturities of one year or less; Treasury Notes have initial maturities of one to
ten years; and Treasury Bonds generally have initial maturities of greater than
ten years. Some obligations issued or guaranteed by agencies or
instrumentalities of the U.S. Government, such as those issued by the Government
National Mortgage Association, are supported by the full faith and credit of the
Treasury; others, such as those issued by the Federal Home Loan Banks, by the
right of the issuer to borrow from the Treasury; others, such as those issued by
the Federal National Mortgage Association, by discretionary authority of the
U.S. Government to purchase certain obligations of the agency or
instrumentality; and others, such as those issued by the Student Loan Marketing
Association, only by the credit of the agency or instrumentality. These
securities bear fixed, floating or variable rates of interest. Interest may
fluctuate based on generally recognized reference rates or the relationship of
rates. No assurance can be given that the U.S. Government will provide financial
support to such U.S. Government sponsored agencies or instrumentalities in the
future, since it is not obligated to do so by law. The Fund invests in such
securities only when the Fund is satisfied that the credit risk with respect to
the issuer is minimal.
CDs are certificates representing the obligation of a bank to repay funds
deposited with it for a specified period of time. TDs are non-negotiable
deposits maintained in a banking institution for a specified period of time at a
stated interest rate. TDs maturing in more than seven days are not purchased by
the Fund. Bankers' acceptances are credit instruments evidencing the obligation
of a bank to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity. Other short-term bank obligations may include
uninsured, direct obligations, bearing fixed, floating or variable interest
rates. Investments in CDs, TDs and bankers' acceptances are limited to banks and
savings and loan and similar associations having total assets in excess of $1
billion. The Fund generally invests at least 25% of its assets in such
securities. See 'Risk Factors' below.
Commercial paper purchased by the Fund consists only of direct obligations
issued by domestic and foreign entities. The other corporate obligations in
which the Fund may invest consist of high quality, U.S. dollar denominated
short-term bonds and notes issued by domestic and foreign corporations.
Under a repurchase agreement, the Fund acquires an underlying debt
instrument for a relatively short period (usually not more than one week)
subject to an obligation of the seller to repurchase and the Fund to resell the
instrument at a fixed price and time, thereby determining the yield during the
Fund's holding period. This results in a fixed rate of return insulated from
market fluctuations during such period. Under the Act, repurchase agreements may
be considered loans by the Fund. The Fund may enter into repurchase agreements
only with domestic banks or selected dealers or foreign banks and dealers which
are primary dealers with
8
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
respect to securities of the type in which it invests, and requires that
additional securities be deposited with it if the value of the securities
purchased should decrease below resale price. The Fund's risk of incurring a
loss on a repurchase agreement may be reduced thereby. Certain costs may be
incurred by the Fund in connection with the sale of the securities if the seller
does not repurchase them in accordance with the repurchase agreement. In
addition, if bankruptcy proceedings are commenced with respect to the seller of
the securities, realization upon the securities by the Fund may be delayed or
limited. Repurchase agreements maturing in more than seven days will not exceed
10% of the value of the Fund's net assets.
The Fund from time to time may lend securities from its portfolio to
brokers, dealers and financial institutions and receive collateral consisting of
cash or securities issued or guaranteed by the U.S. Government, which collateral
will be maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities. The Fund continues to be entitled
to the interest payable on the loaned securities and, in addition, receives
interest on the amount of the loans at a rate negotiated with the borrower. Such
loans are terminable at any time upon specified notice. The Fund has the right
to regain record ownership of loaned securities in order to exercise beneficial
rights. The Fund may pay reasonable fees to persons unaffiliated with the Fund
in connection with arranging such loans. Such loans may not exceed 20% of the
value of the Fund's total assets.
The Fund may (i) borrow money, but only from banks for the purpose of
meeting redemption requests which might otherwise require the untimely
disposition of securities, in an amount up to 10% of the value of the Fund's
total assets (including the amount borrowed) valued at the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made; (ii) pledge its assets, but only in an amount up to 10% of
the value of its total assets to secure borrowings for temporary or emergency
purposes; (iii) lend its portfolio securities up to 20% of the value of its
assets; and (iv) invest up to 25% of its assets in the securities of issuers in
any other industry, provided that there is no such limitation on investments in
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, CDs and bankers' acceptances. Further information about the
investment policies of the Fund, including a list of the Fund's investment
restrictions which cannot be changed without shareholder approval, appears in
the Statement of Additional Information.
The Fund seeks to maintain a net asset value of $1.00 per share for
purchases and redemptions. To do so, the Fund uses the amortized cost method of
valuing its securities pursuant to Rule 2a-7 under the Act, certain requirements
of which are summarized as follows. In accordance with Rule 2a-7, the Fund is
required to maintain a dollar-weighted average portfolio maturity of 90 days or
less, purchase only instruments having remaining maturities of 397 days or less
and invest only in U.S. dollar denominated securities determined in accordance
with procedures established by the Board of Directors to present minimal credit
risks and which are rated in one of the two highest rating categories for debt
obligations by at least two nationally recognized statistical rating
organizations (or one rating organization if the instrument was rated only by
one such organization) or, if unrated, are of comparable quality as determined
in accordance with procedures established by the Board of Directors. The
nationally recognized statistical rating organizations currently rating
instruments of the type the Fund may purchase are Moody's Investors Service,
Inc. and Standard & Poor's Ratings Group and their rating criteria are described
in the Fund's Statement of Additional Information.
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In addition, the Fund will not invest more than 5% of its total assets in
the securities (including the securities collateralizing a repurchase agreement)
of, or subject to puts issued by, a single issuer, except that (i) the Fund may
invest more than 5% of its total assets in a single issuer for a period of up to
three business days in certain limited circumstances, (ii) the Fund may invest
in obligations issued or guaranteed by the U.S. Government without any such
limitation, and (iii) the limitation with respect to puts does not apply to
unconditional puts if not more than 10% of the Fund's total assets is invested
in securities issued or guaranteed by the issuer of the unconditional put.
Investments in rated securities not rated in the highest category by at least
two rating organizations (or one rating organization if the instrument was rated
by only one such organization), and unrated securities not determined by the
Board of Directors to be comparable to those rated in the highest category, will
be limited to 5% of the Fund's total assets, with the investment in any one such
issuer being limited to no more than the greater of 1% of the Fund's total
assets or $1,000,000. As to each security, these percentages are measured at the
time the Fund purchases the security. For further information regarding the
amortized cost method of valuing securities, see 'Determination of Net Asset
Value' in the Fund's Statement of Additional Information. There can be no
assurance that the Fund will be able to maintain a stable net asset value of
$1.00 per share.
RISK FACTORS
Since the Fund's portfolio may contain securities issued by foreign branches of
domestic banks, foreign subsidiaries of domestic banks, domestic and foreign
branches of foreign banks, and commercial paper issued by foreign issuers, the
Fund may be subject to additional investment risks with respect to such
securities that are different in some respects from those incurred by a fund
which invests only in debt obligations of U.S. domestic issuers. In making
foreign investments, therefore, the Fund will give appropriate consideration to
the following factors, among others.
Foreign securities markets generally are not as developed or efficient as
those in the United States. Securities of some foreign issuers are less liquid
and more volatile than securities of comparable U.S. issuers. Similarly, volume
and liquidity in most foreign securities markets are less than in the United
States and, at times, volatility of price can be greater than in the United
States. The issuers of some of these securities, such as bank obligations, may
be subject to less stringent or different regulation than are U.S. issuers. In
addition, there may be less publicly available information about a non-U.S.
issuer, and non-U.S. issuers generally are not subject to uniform accounting and
financial reporting standards, practices and requirements comparable to those
applicable to U.S. issuers.
Because evidences of ownership of such securities usually are held outside
the United States, the Fund is subject to additional risks which include
possible adverse political and economic developments, possible seizure or
nationalization of foreign deposits and possible adoption of governmental
restrictions which might adversely affect the payment of principal and interest
on the foreign securities or might restrict the payment of principal and
interest to investors located outside the country of the issuer, whether from
currency blockage or otherwise. The Fund does not purchase securities which the
Fund believes, at the time of purchase, will be subject to exchange controls or
withholding taxes. However, there can be no assurance that such laws may not
become applicable to certain of the Fund's investments.
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To the extent the Fund's investments are concentrated in the banking
industry, the Fund will have correspondingly greater exposure to the risk
factors which are characteristic of such investments. Sustained increases in
interest rates can adversely affect the availability or liquidity and cost of
capital funds for a bank's lending activities, and a deterioration in general
economic conditions could increase the exposure to credit losses. In addition,
the value of and the investment return on the Fund's shares could be affected by
economic or regulatory developments in or related to the banking industry, which
industry also is subject to the effects of the concentration of loan portfolios
in leveraged transactions and in particular businesses, and competition within
the banking industry as well as with other types of financial institutions. The
Fund, however, seeks to minimize its exposure to such risks by investing only in
debt securities which are determined to be of high quality.
The Fund attempts to increase yields by trading to take advantage of
short-term market variations. This policy is expected to result in high
portfolio turnover but should not adversely affect the Fund since the Fund
usually does not pay brokerage commissions when it purchases short-term debt
obligations. The value of the portfolio securities held by the Fund varies
inversely to changes in prevailing interest rates. Thus, if interest rates have
increased from the time a security was purchased, such security, if sold, might
be sold at a price less than its purchase cost. Similarly, if interest rates
have declined from the time a security was purchased, such security, if sold,
might be sold at a price greater than its purchase cost. In either instance, if
the security was purchased at face value and held to maturity, no gain or loss
would be realized.
MANAGEMENT OF THE FUND
DIRECTORS AND OFFICERS
Overall responsibility for management and supervision of the Fund rests with its
Board of Directors, as required by Maryland law. The day-to-day operations of
the Fund are conducted through or under the direction of its officers. The
Statement of Additional Information contains general background information
regarding each Director and officer of the Fund.
MANAGEMENT
At a special meeting of shareholders on April 13, 1995, shareholders approved a
new investment advisory and administration agreement with PaineWebber and a new
sub-advisory and sub-administration agreement with Mitchell Hutchins.
PaineWebber and Mitchell Hutchins are located at 1285 Avenue of the Americas,
New York, New York 10019. Mitchell Hutchins is a wholly owned subsidiary of
PaineWebber, which in turn is wholly owned by Paine Webber Group Inc., a
publicly owned financial services holding company. As of October 31, 1995,
PaineWebber or Mitchell Hutchins served as investment adviser or sub-adviser to
38 investment companies with an aggregate of 75 separate portfolios and
aggregate assets of over $29 billion.
The Fund pays the same fee for investment advisory and administration
services to PaineWebber as previously paid to Kidder Peabody Asset Management,
Inc. ('KPAM'), the Fund's predecessor investment adviser and administrator.
PaineWebber (not the Fund) pays Mitchell Hutchins a fee for sub-advisory and
sub-administration services at the annual rate of 20% of the fee received by
PaineWebber from the Fund. PaineWebber and Mitchell Hutchins continue to manage
the Fund in accordance with the Fund's investment objective, policies and
restrictions.
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The Fund pays PaineWebber, as compensation for services rendered, a monthly
fee at the annual rate of .50% of the portion of the Fund's average daily net
assets not exceeding $750 million; .475% of the portion of the average daily net
assets exceeding $750 million but not exceeding $1 billion; .45% of the portion
of the average daily net assets exceeding $1 billion but not exceeding $1.25
billion; .425% of the portion of the average daily net assets exceeding $1.25
billion but not exceeding $1.5 billion; and .40% of the portion of the average
daily net assets exceeding $1.5 billion. For the fiscal year ended July 31,
1995, PaineWebber's fee was .47% of the Fund's average daily net assets and the
Fund's total expenses represented .74% of its average daily net assets.
Mitchell Hutchins manages the Fund's portfolio in accordance with the
stated policies of the Fund, makes investment decisions for the Fund and places
the purchase and sale orders for portfolio transactions. Although investment
decisions for the Fund are made independently from those of the other accounts
managed by Mitchell Hutchins, investments of the type the Fund may make may also
be made by those other accounts. When the Fund and one or more other accounts
managed by Mitchell Hutchins are prepared to invest in, or desire to dispose of,
the same security, available investments or opportunities for sales are
allocated in a manner believed by Mitchell Hutchins to be equitable to each. In
some cases, this procedure may adversely affect the price paid or received by
the Fund or the size of the position obtained or disposed of by the Fund.
Mitchell Hutchins investment personnel may engage in securities
transactions for their own accounts pursuant to a code of ethics that
establishes procedures for personal investing and restricts certain
transactions.
PORTFOLIO TRANSACTIONS
Mitchell Hutchins places the orders for the purchase and sale of the Fund's
portfolio securities. Transactions are allocated to various dealers by Mitchell
Hutchins in its best judgment. The primary consideration is prompt and effective
execution of orders at the most favorable price. Subject to that primary
consideration, dealers may be selected for research, statistical or other
services to enable Mitchell Hutchins to supplement its own research and analysis
with the views and information of other securities firms. No brokerage
commissions have been paid to date.
Investment decisions for the Fund are made independently from those of any
other fund(s) managed by Mitchell Hutchins. If, however, funds managed by
Mitchell Hutchins are simultaneously engaged in the purchase or sale of the same
security, the transactions are averaged as to price and allocated equitably to
each fund. In some cases, this system might adversely affect the price paid or
received by the Fund or the size of the position obtainable for the Fund.
PURCHASE OF SHARES
GENERAL INFORMATION
PaineWebber serves as the Fund's distributor. Shares of the Fund are offered
exclusively to existing shareholders and must be maintained through a brokerage
account with PaineWebber (an 'Account'). Thus, an investor who wishes to
purchase shares but has no existing Account must establish one.
PaineWebber charges no maintenance fee in connection with an Account through
which an investor purchases or holds shares of the Fund.
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Shares are sold on a continuous basis at their net asset value next
determined after an order and good funds (e.g., cash, Federal funds or certified
checks drawn on a United States bank) are received. If an investor does not have
a sufficient credit balance in his Account, payment for shares must be converted
into Federal funds before an order to purchase is effective. Purchase orders
received before 12:00 noon, Eastern time, for which payment has been received by
PaineWebber will be executed at that time and the shareholder will receive the
dividend declared on that day. Purchase orders received after 12:00 noon,
Eastern time, and purchase orders received earlier in the same day for which
payment has not been received by 12:00 noon, Eastern time, will be executed at
the close of regular trading on the New York Stock Exchange, if payment has been
received by PaineWebber by that time, and the shareholder will receive the
dividend declared on the following day.
Credit balances for accounts from $1 to $4,999 will be swept as of the
close of business each Friday for settlement on the next business day and credit
balances of $5,000 or more will be swept daily for settlement on the next
business day. The Fund reserves the right at any time to impose minimum initial
and subsequent purchase amounts.
PURCHASES WITH FUNDS HELD AT PAINEWEBBER
All deposits to a brokerage account and any free credit cash balances that may
arise in a brokerage account will be automatically invested in shares of the
Fund, according to sweep rules described above, provided that Federal funds are
available for the investment. Federal funds normally are available for cash
balances arising from the sale of securities held in a brokerage account on the
business day following settlement, but in some cases can take longer.
PURCHASES BY WIRE
Shares of the Fund may also be purchased by transferring Federal funds by wire
to a PaineWebber brokerage account. Wire transfers should be directed to: Bank
of New York, ABA 021000018, PaineWebber Inc., for RMAs/BSAs A/C 890-0114-088 and
for all other accounts A/C 890-0114-096 OBI-FBO [Account Name]/[Brokerage
Account Number]. The wire must include the investor's name and PaineWebber
brokerage account number. Participants wishing to transfer Federal funds into
their accounts should contact their PaineWebber investment executives or
correspondent firms to determine the appropriate wire instructions.
To the extent that the amounts transferred by wire create a cash balance in
an investor's account, that cash balance will be automatically invested in the
Fund, as described above under 'Purchases with Funds Held at PaineWebber.'
Participants wishing to invest amounts transferred by wire in the Fund should so
instruct their PaineWebber investment executives or correspondent firms.
If PaineWebber receives a notice from an investor's bank of a wire transfer
of Federal funds by 12:00 noon, Eastern time, on a business day, the automatic
investment will be executed on that business day. Otherwise, the automatic
investment will be executed at 12:00 noon, Eastern time, on the next business
day. PaineWebber and/or an investor's bank may impose a service charge for wire
transfers.
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REDEMPTION OF SHARES
A shareholder may redeem shares on any day that the Fund's net asset value is
determined by following the procedures set forth below.
REDEMPTION THROUGH PAINEWEBBER
PaineWebber wires the terms of any redemption request properly received to PFPC
Inc. The price at which a redemption request is executed is the net asset value
per share next determined after proper redemption instructions are received.
Payment for redemption orders, if any, that are received before 12:00 noon,
Eastern time, normally is made on the same business day. Shares redeemed in this
manner will not be entitled to the dividend declared on the day of redemption.
Payment for redemption orders, that are received at or after 12:00 noon, Eastern
time, will be made on the next business day following the redemption. Shares
redeemed in this manner are entitled to the dividend declared on the day of
redemption. Proceeds of a redemption generally are credited to the shareholder's
Account, or sent to the shareholder, as applicable.
REDEMPTION BY MAIL
Shares may also be redeemed by submitting a written request in 'good order' to
PFPC Inc. at the following address:
PFPC Inc.
P.O. Box 8950
Wilmington, Delaware 19899
Attn: PaineWebber Mutual Funds
Redemption requests received by PFPC Inc. by mail are processed by PFPC
Inc. which will mail a check in the appropriate redemption amount to the
shareholder the next business day after receipt of a redemption request in 'good
order.'
A redemption request is considered to have been received in 'good order' if
the following conditions are satisfied:
(1) the request is in writing, states the number of shares to be
redeemed and identifies the shareholder's Fund account number;
(2) the request is signed by each registered owner exactly as the
shares are registered;
(3) if the shares to be redeemed were issued in certificate form, the
certificates are endorsed for transfer (or are themselves accompanied by an
endorsed stock power) and accompany the redemption request, which should be
sent by registered mail for the protection of shareholders; and
(4) the signatures on the written redemption request have been
guaranteed by a bank, broker-dealer, municipal securities broker or dealer,
government securities broker or dealer, credit union, a member firm of a
national securities exchange, registered securities association or clearing
agency, or savings association (the purpose of a signature guarantee is to
protect shareholders against the possibility of fraud). The transfer agent
may reject redemption instructions if the guarantor is neither a member of
nor a participant in a signature guarantee program (currently known as
'STAMP'sm'').
Additional supporting documents may be required for redemptions by
corporations, executors, administrators, trustees and guardians.
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GENERAL REDEMPTION POLICIES
Signature guarantees (as described above) are required in connection with any
redemption of shares by mail and share ownership transfer requests. These
requirements may be waived by the Fund in certain instances.
If the shares to be redeemed represent an investment for which the Fund has
not yet received good funds, the Fund reserves the right not to honor the
redemption request until such time as it has assured itself that good funds have
been collected, which may take 15 or more business days. If purchases are made
with good funds, no redemption delay would occur.
Due to the relatively high cost of maintaining a Fund account, the Fund
reserves the right to redeem, upon not less than 60 days' notice, any Fund
account reduced by a shareholder to a value of $500 or less.
PaineWebber has established procedures pursuant to which shares of the Fund
held by a PaineWebber client having a deficiency (i.e., amount owed to
PaineWebber resulting from Account activity or otherwise and other amounts
authorized by the client to be paid to others from the Account, less the amount
of any free credit cash balance) in his Account will be redeemed automatically
to the extent of that deficiency, unless the client notifies PaineWebber to the
contrary in advance. The amount of the redemption will be the lesser of (a) the
total net asset value of Fund shares held in the client's account or (b) the
deficiency in the client's Account at the close of business on the redemption
day adjusted for purchase and sale transactions in other securities settling on
the following business day. Accordingly, a PaineWebber client who has previously
consented to this automatic redemption procedure and who wishes to pay for a
securities transaction other than through such automatic redemption procedure
must do so not later than the day before the settlement date for that
transaction.
THE DISTRIBUTOR
PaineWebber acts as distributor of the Fund's shares pursuant to a Distribution
Agreement dated January 30, 1995. To reimburse PaineWebber for the services it
provides and for the expenses it bears under the Distribution Agreement, the
Fund has adopted the Plan of Distribution. The Board of Directors and
shareholders of the Fund approved the Plan of Distribution on July 28, 1988 and
December 20, 1988, respectively, which was most recently amended on December 16,
1994.
The Plan of Distribution provides that the Fund reimburse PaineWebber for
the expenses incurred by it in connection with the distribution of the Fund's
shares at the annual rate of up to .12% of the Fund's average daily net assets.
The expenses which may be reimbursed include compensation to investment
executives and other employees of PaineWebber, printing of prospectuses and
reports for other than existing shareholders, and the preparation, printing and
distribution of sales literature and advertising materials. It is not
anticipated that items reimbursable under the Plan of Distribution generally
will include any profit to PaineWebber. PaineWebber anticipates that the amount
of expenses reimbursed will not exceed the amount of expenses incurred by
PaineWebber and that there will be no carryover of expenses from one year to the
next. The expenses to be reimbursed are for activities primarily intended to
result in the sale of shares of the Fund and the maintenance of Fund accounts
and account balances. PaineWebber currently intends that .10% per annum of the
Fund's daily net assets will be paid to its investment executives
proportionately in respect of Fund share balances maintained by their
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respective clients. For the fiscal year ended July 31, 1995, the Fund reimbursed
PaineWebber in an amount equal to .12% of the Fund's average daily net assets.
The Plan of Distribution remains in effect for as long as such continuance
is approved annually by vote of the Board of Directors, including a majority of
those Directors who are not interested persons and who have no direct or
indirect financial interest in the Plan of Distribution, cast in person at a
meeting called for such purpose. The Plan of Distribution may not be amended to
increase materially the amount to be spent for the services described therein
without approval of the shareholders of the Fund, and all material amendments of
the Plan of Distribution must also be approved by the Directors in the manner
described above. The Plan of Distribution may be terminated at any time, without
payment of any penalty, by vote of a majority of the Directors as described
above, or by vote by the holders of a majority of the outstanding voting
securities of the Fund, as defined in the Act, on not more than 30 days' written
notice to any other party to the Plan of Distribution. So long as the Plan of
Distribution is in effect, the election and nomination of Directors who are not
interested persons of the Fund shall be committed to the discretion of the
Directors who are not interested persons. The Directors have determined that, in
their judgment, there is a reasonable likelihood that the Plan of Distribution
will continue to benefit the Fund and its shareholders.
Pursuant to the Plan of Distribution, PaineWebber provides the Fund's
Directors, at least quarterly, with a written report of the amounts expended
under the Plan of Distribution. The report includes an itemization of the
distribution expenses incurred by PaineWebber on behalf of the Fund and the
purpose of such expenditures. In their quarterly review of the Plan of
Distribution, the Directors consider its continued appropriateness and the level
of compensation provided therein. For the fiscal year ended July 31, 1995,
PaineWebber reported to the Directors that it incurred distribution expenses of
approximately $[ ], of which approximately $1,824,254 was recovered in
the form of reimbursements made by the Fund to PaineWebber at the rate provided
in the Plan of Distribution.
EXCHANGE PRIVILEGE
Shares of the Fund may be exchanged for shares of certain other
PaineWebber/Kidder, Peabody funds, to the extent such shares are offered for
sale in the shareholder's state of residence. For a list of the
PaineWebber/Kidder, Peabody funds for which shares may be exchanged and for a
description of each of those funds, please see 'Redemption and Exchange of
Shares' in the Statement of Additional Information.
Although the Fund currently imposes no limit on the number of times the
Exchange Privilege may be exercised by any shareholder, the Fund may impose such
limits in the future, in accordance with applicable provisions of the Act and
rules thereunder. In addition, the Exchange Privilege may be terminated or
revised at any time upon 60 days' prior written notice to Fund shareholders, and
is available only to residents of states in which exchanges are permitted under
state law. The exchange of shares of one fund for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by the
shareholder, so that a shareholder may recognize a taxable gain or loss on an
exchange.
Upon receipt of proper instructions and all necessary supporting documents,
Fund shares submitted for exchange will be redeemed at their net asset value
next determined and simultaneously invested in shares of the fund being
acquired. Settlement of an exchange would occur one business day after the date
on which the request for exchange was received in proper
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form, unless the dollar amount of the transaction exceeds 5% of the Fund's net
assets on any given day, in which case settlement would occur within five
business days after the date on which the request for exchange was received in
proper form. The proceeds of a redemption of Fund shares made to facilitate the
exchange of those shares for shares of another fund must be equal to at least
(1) the minimum initial investment requirement imposed by the fund into which
the exchange is being sought if the shareholder seeking the exchange has not
previously invested in that fund or (2) the minimum subsequent investment
requirement imposed by the fund into which the exchange is being sought if the
shareholder has previously made an investment in that fund.
A shareholder of the Fund wishing to exercise the Exchange Privilege should
obtain from PaineWebber a copy of the current prospectus of the fund into which
an exchange is being sought and review that prospectus carefully before making
the exchange. PaineWebber reserves the right to reject any exchange request at
any time.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily declares dividends from its net investment income on each
day that the New York Stock Exchange is open for business. Dividends are paid
monthly and are automatically reinvested in additional Fund shares at net asset
value or, at the shareholder's option, paid in cash. The Fund's earnings for
Saturdays, Sundays and holidays are declared as dividends on the preceding
business day. If a shareholder redeems all of his shares at any time during the
month, all dividends to which the shareholder is entitled are paid to him
together with the proceeds of the redemption. Distributions of net realized
securities gains, if any, are paid once a year, but the Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code of 1986, as amended (the 'Code'), in
all events in a manner consistent with the provisions of the Act.
The Fund qualified as a regulated investment company under the Code for the
fiscal year ended July 31, 1995, and plans to continue to so qualify as long as
the Fund determines that such qualification is in the best interests of its
shareholders. Such qualification relieves the Fund of liability for Federal
income tax to the extent its income is distributed in accordance with applicable
provisions of the Code. Regulated investment companies, such as the Fund, are
subject to a nondeductible 4% excise tax, measured with respect to certain
undistributed amounts of taxable investment income and capital gains.
Dividends derived from interest and distributions from any net realized
short-term securities gains are taxable as ordinary income, whether or not
reinvested. Distributions from net realized long-term securities gains, if any,
generally are taxable as long-term capital gains, whether or not reinvested. As
the Fund is not expected to realize long-term capital gains, it does not
contemplate paying capital gains distributions as described in the Code. No
dividend will qualify for the dividends received deduction allowable to certain
U.S. corporations.
The Fund is required to withhold and remit to the U.S. Treasury 31% of
dividends and distributions from net realized securities gains of the Fund paid
to a shareholder ('backup withholding') if such shareholder fails to certify
either that the Taxpayer Identification Number, furnished in connection with
opening an account, is correct, or that such shareholder has not received notice
from the Internal Revenue Service ('IRS') of being subject to backup withholding
as a result of a failure to properly report taxable dividend or interest income
on a Federal income tax return. Furthermore, the Fund may be notified by the IRS
to institute backup withholding if
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the IRS determines a shareholder's Taxpayer Identification Number is incorrect
or if a shareholder has failed to properly report taxable dividend and interest
income on a Federal income tax return.
A Taxpayer Identification Number is either the Social Security number or
employer identification number of the record owner of the account. Any tax
withheld as a result of backup withholding does not constitute an additional tax
imposed on the record owner of the account, and may be claimed as a credit on
the record owner's Federal income tax return.
Statements as to the tax status of each shareholder's dividends and
distributions are mailed annually. Dividends and distributions may be subject to
certain state or local taxes. Shareholders are urged to consult their own tax
advisers regarding specific questions as to Federal, state or local taxes.
DETERMINATION OF NET ASSET VALUE
Net asset value is determined daily at 12:00 noon, Eastern time, Monday through
Friday, except that net asset value is not computed on any day when no orders to
purchase, sell, exchange or redeem Fund shares have been received, when there is
not sufficient trading in the Fund's portfolio securities that the Fund's net
asset value per share might be materially affected by changes in the value of
such portfolio securities or when the New York Stock Exchange is not open for
trading. The determination of net asset value is made by subtracting from the
value of the assets of the Fund the amount of its liabilities and dividing the
remainder by the number of outstanding shares of the Fund. Expenses and fees of
the Fund, including PaineWebber's fee, are accrued daily and taken into account
for the purpose of determining net asset value.
The Fund attempts to maintain a net asset value of $1.00 per share for
purchases and redemptions, although there can be no assurance that the Fund will
always be able to do so. In order to effectuate this policy, the Fund may, under
certain circumstances, consider the sale of portfolio instruments prior to
maturity to realize capital gains or losses, withhold dividends, make
distributions from capital or capital gains, or reduce the number of outstanding
shares of the Fund held by a shareholder. The Fund determines the value of its
portfolio securities by the amortized cost method of valuation which involves
valuing a security at its cost at the time of purchase and thereafter assuming a
constant amortization to maturity of any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of the instrument.
Additional information concerning the amortized cost method of valuation and
certain conditions imposed upon its use is contained in the Statement of
Additional Information.
CUSTODIAN, AND TRANSFER, DIVIDEND DISBURSING AND RECORDKEEPING AGENT
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri
64105, has been retained to act as custodian, and transfer, dividend disbursing
and recordkeeping agent.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York 10004-2696, is
counsel for the Fund. Ernst & Young LLP, located at 787 Seventh Avenue, New
York, New York 10019, serves as independent auditors for the Fund. For the
fiscal year ended July 31, 1994, and prior thereto, the Fund's independent
auditors were Deloitte & Touche LLP, 2 World Financial Center, New York, New
York 10281.
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ADDITIONAL INFORMATION ABOUT THE FUND
The Fund was incorporated under the laws of the State of Maryland on May 31,
1979 and commenced operations on August 28, 1979. On April 6, 1992, shareholders
voted to change the name of the Fund from 'Webster Cash Reserve Fund, Inc.' to
'Kidder, Peabody Cash Reserve Fund, Inc.' On January 30, 1995, the Fund's name
changed to 'PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc.'
The authorized capital stock of the Fund consists of 5 billion shares of
common stock, par value $.01 per share. Each share has one vote and, when issued
and paid for in accordance with the terms of offering, is fully paid and
non-assessable. Shares are redeemable at net asset value, at the option of the
shareholder. Shares have no pre-emptive, subscription or conversion rights and
are freely transferable.
In the interest of economy and convenience, certificates representing the
Fund's shares are not physically issued. IFTC maintains a record of each
shareholder's ownership. Each shareholder receives confirmations from IFTC which
show purchases and sales of the Fund's shares. Shares of the Fund owned by a
shareholder and dividends paid thereon are reflected in the shareholder's
monthly statement from PaineWebber.
Unless otherwise required by the Act, ordinarily it will not be necessary
for the Fund to hold annual meetings of shareholders. As a result, Fund
shareholders may not consider each year the election of Directors or the
appointment of independent auditors. However, pursuant to the Fund's By-Laws,
the holders of at least 10% of the shares outstanding and entitled to vote may
require the Fund to hold a special meeting of shareholders for any purpose. Fund
shareholders may remove a Director by the affirmative vote of a majority of the
Fund's outstanding voting shares. In addition, the Board of Directors will call
a special meeting of shareholders for the purpose of electing Directors if, at
any time, less than a majority of Directors then holding office were elected by
shareholders. Shareholders will have the right to call for a meeting to consider
the removal of one or more of the Directors and will be assisted in shareholder
communications in such matters.
As used in this Prospectus, when referring to the approvals to be obtained
from shareholders, the term 'majority' means the vote of the lesser of (1) 67%
of the Fund's shares present at a meeting if the holders of more than 50% of the
outstanding shares are present in person or by proxy, or (2) more than 50% of
the Fund's outstanding shares.
19
<PAGE>
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No person has been authorized to give any information or to make any
representations not contained in this Prospectus or in the Statement
of Additional Information incorporated into this Prospectus by
reference in connection with the offering made by this Prospectus,
and, if given or made, any such information or representations must
not be relied upon as having been authorized by the Fund or its
distributor. This Prospectus does not constitute an offering by the
Fund or by its distributor in any jurisdiction in which such
offering may not lawfully be made.
<TABLE>
<S> <C>
- ---------------------------------------------------
Contents
- ---------------------------------------------------
Fee Table 2
- ---------------------------------------------------
Highlights 3
- ---------------------------------------------------
Financial Highlights 6
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Yield 7
- ---------------------------------------------------
Investment Objective and
Management Policies 7
- ---------------------------------------------------
Management of the Fund 11
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Portfolio Transactions 12
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Purchase of Shares 12
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Redemption of Shares 14
- ---------------------------------------------------
The Distributor 15
- ---------------------------------------------------
Exchange Privilege 16
- ---------------------------------------------------
Dividends, Distributions and Taxes 17
- ---------------------------------------------------
Determination of Net Asset Value 18
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Custodian, and Transfer, Dividend
Disbursing and Recordkeeping Agent 18
- ---------------------------------------------------
Counsel and Independent Auditors 18
- ---------------------------------------------------
Additional Information About the
Fund 19
- ---------------------------------------------------
</TABLE>
PaineWebber/
Kidder,
Peabody
Cash
Reserve
Fund,
Inc.
Prospectus
December 1, 1995
<PAGE>
<PAGE>
Statement of Additional Information December 1, 1995
- --------------------------------------------------------------------------------
PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc.
1285 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10019 (800) 647-1568
PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc. (the 'Fund') is a
diversified, open-end, management investment company whose objective is the
maximization of current income to the extent consistent with the preservation of
capital and the maintenance of liquidity. The Fund pursues this objective by
investing in short-term money market instruments. This Statement of Additional
Information relating to the Fund is not a prospectus and should be read in
conjunction with the Fund's Prospectus. A copy of the Fund's Prospectus can be
obtained from the Fund at the above address. The date of the Prospectus to which
this Statement relates is December 1, 1995.
- --------------------------------------------------------------------------------
INVESTMENT ADVISER, ADMINISTRATOR AND DISTRIBUTOR
PaineWebber Incorporated
SUB-ADVISER AND SUB-ADMINISTRATOR
Mitchell Hutchins Asset Management Inc.
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are summarized in the Fund's
Prospectus under the heading 'Investment Objective and Management Policies.' The
Fund believes that such description requires no general augmentation as of the
date hereof.
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions as fundamental
policies. These restrictions cannot be changed without approval by the holders
of a majority, as defined in the Investment Company Act of 1940, as amended (the
'Act'), of the outstanding shares of the Fund. The Fund may not:
1. Purchase common stocks or other equity securities, state bonds,
municipal bonds or industrial revenue bonds.
2. Borrow money, except from banks for temporary or emergency purposes
including the meeting of redemption requests which might otherwise require
the untimely disposition of securities. Borrowing in the aggregate may not
exceed 10%, and borrowing for purposes other than meeting redemption
requests may not exceed 5%, of the value of the Fund's total assets
(including the amount borrowed) valued at the lesser of cost or market less
liabilities (not including the amount borrowed) at the time the borrowing
is made. The borrowings will be repaid before any additional investments
are made.
3. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except in an amount up to 10% of the value of its total assets but only to
secure borrowings for temporary or emergency purposes.
4. Sell securities short or purchase securities on margin.
5. Write or purchase put or call options.
6. Underwrite the securities of other issuers or purchase any
securities that are illiquid, if, as a result thereof, more than 10% of the
Fund's net assets would be so invested.
7. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests.
8. Make loans to others, except through the purchase of qualified debt
obligations, loans of portfolio securities and entry into repurchase
agreements referred to under 'Investment Objective and Management Policies'
in the Fund's Prospectus, provided, however, that repurchase agreements
maturing in more than seven days will not exceed 10% of its net assets.
9. Subject to the diversification requirements of Section 5 of the
Act, invest more than 15% of its assets in the obligations of any one bank,
or invest more than 5% of its assets in the commercial paper of any one
issuer. Notwithstanding the foregoing, to the extent required by the rules
of the Securities and Exchange Commission (the 'SEC'), the Fund will not
invest more than 5% of its assets in the obligations of any one bank.
2
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10. Invest more than 25% of its assets in the securities of issuers in
any single industry; provided that there shall be no limitation on the
purchase of obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, certificates of deposit ('CDs') (including
those issued by foreign branches of domestic banks) and bankers'
acceptances.
11. Invest in companies for the purpose of exercising control.
12. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of
assets.
13. Lend its portfolio securities in excess of 20% of its total
assets, taken at market value. Any loans of portfolio securities will be
made according to guidelines established by the SEC and the Fund's Board of
Directors, including maintenance of collateral of the borrower equal at all
times to the current market value of the securities loaned.
If a percentage restriction is adhered to at the time of an investment, a
later increase or decrease in percentage resulting from a change in values or
assets will not constitute a violation of such restriction.
MANAGEMENT OF THE FUND
DIRECTORS AND OFFICERS
Directors and officers of the Fund, together with information as to their
principal business occupations during the last five years, are shown below. Each
Director who is an 'interested person' of the Fund, as defined in the Act, is
indicated by an asterisk.
David J. Beaubien, 61, Director. Chairman of Yankee Environmental Systems,
Inc., manufacturer of meteorological measuring instruments. Director of IEC,
Inc., manufacturer of electronic assemblies, Belfort Instruments, Inc.,
manufacturer of environmental instruments, and Oriel Corp., manufacturer of
optical instruments. Prior to January 1991, Senior Vice President of EG&G, Inc.,
a company that makes and provides a variety of scientific and technically
oriented products and services. Mr. Beaubien is a director or trustee of 11
other investment companies for which Mitchell Hutchins or PaineWebber
Incorporated ('PaineWebber') serves as investment adviser.
William W. Hewitt, Jr., 67, Director. Trustee of The Guardian Asset
Allocation Fund, The Guardian Baillie Gifford International Fund, The Guardian
Bond Fund, Inc., The Guardian Cash Fund, Inc., The Guardian Park Ave. Fund, The
Guardian Stock Fund, Inc., The Guardian Cash Management Trust and The Guardian
U.S. Government Trust. Mr. Hewitt is a director or trustee of 11 other
investment companies for which Mitchell Hutchins or PaineWebber serves as
investment adviser.
Thomas R. Jordan, 66, Director. Principal of The Dilenschneider Group,
Inc., a corporate communications and public policy counseling firm. Prior to
January 1992, Senior Vice President of Hill & Knowlton, a public relations and
public affairs firm. Prior to April 1991, President of The Jordan Group, a
management consulting and strategies development firm. Mr. Jordan is a director
or trustee of 10 other investment companies for which Mitchell Hutchins or
PaineWebber serves as investment adviser.
3
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*Frank P.L. Minard, 50, Director. Chairman of Mitchell Hutchins, chairman
of the board of Mitchell Hutchins Institutional Investors Inc. and a director of
PaineWebber. Prior to 1993, managing director of Oppenheimer Capital in New York
and Director of Oppenheimer Capital Ltd. in London. Mr. Minard is a director or
trustee of 24 other investment companies for which Mitchell Hutchins or
PaineWebber serves as investment adviser.
Carl W. Schafer, 59, Director. President of the Atlantic Foundation, a
charitable foundation supporting mainly oceanographic exploration and research.
Director of International Agritech Resources, Inc., an agribusiness investment
and consulting firm, Ardic Exploration and Development Ltd., Evans Systems, Inc.
and Hidden Lake Gold Mines Ltd., gold mining companies, Electronic Clearing
House, Inc., a financial transactions processing company, Wainoco Oil
Corporation and Nutracentix, Inc., a biotechnology company. Prior to January
1993, chairman of the Investment Advisory Committee of the Howard Hughes Medical
Institute and director of Ecova Corporation, a toxic waste treatment firm. Mr.
Schafer is a director or trustee of 10 other investment companies for which
Mitchell Hutchins or PaineWebber serves as investment adviser.
Margo N. Alexander, 48, President. President, chief executive officer and a
director of Mitchell Hutchins. Prior to January 1995, an executive vice
president of PaineWebber. Ms. Alexander is also a trustee of two other
investment companies and president of 37 other investment companies for which
Mitchell Hutchins or PaineWebber serves as investment adviser.
Teresa M. Boyle, 37, Vice President. First vice president and
manager -- advisory administration of Mitchell Hutchins. Prior to November 1993,
compliance manager of Hyperion Capital Management, Inc., an investment advisory
firm. Prior to April 1993, a vice president and manager -- legal administration
of Mitchell Hutchins. Ms. Boyle is also a vice president of 37 other investment
companies for which Mitchell Hutchins or PaineWebber serves as investment
adviser.
Scott H. Griff, 29, Vice President and Assistant Secretary. Vice president
and attorney of Mitchell Hutchins. Prior to January 1995, an associate at the
law firm of Cleary, Gottlieb, Steen & Hamilton. Mr. Griff is also a vice
president and assistant secretary of 10 other investment companies for which
Mitchell Hutchins or PaineWebber serves as investment adviser.
C. William Maher, 34, Vice President and Assistant Treasurer. Mr. Maher is
a first vice president and the senior manager of the Fund Administration
Division of Mitchell Hutchins. Mr. Maher is also a vice president and assistant
treasurer of 37 other investment companies for which Mitchell Hutchins or
PaineWebber serves as investment adviser.
Dennis L. McCauley, 48, Vice President. Managing Director and Chief
Investment Officer -- Fixed Income of Mitchell Hutchins. Prior to December 1994,
Director of Fixed Income Investments of IBM Corporation. Mr. McCauley is also a
vice president of six other investment companies for which Mitchell Hutchins or
PaineWebber serves as investment adviser.
Susan P. Messina, 35, Vice President. Senior vice president and portfolio
manager for Mitchell Hutchins. Ms. Messina is also a vice president of three
other investment companies for which Mitchell Hutchins or PaineWebber serves as
investment adviser.
4
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<PAGE>
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Ann E. Moran, 38, Vice President and Assistant Treasurer. Vice president of
Mitchell Hutchins. Ms. Moran is also a vice president and assistant treasurer of
37 other investment companies for which Mitchell Hutchins or PaineWebber serves
as investment adviser.
Dianne E. O'Donnell, 43, Vice President and Secretary. Senior vice
president and deputy general counsel of Mitchell Hutchins. Ms. O'Donnell is also
a vice president and secretary of 37 other investment companies for which
Mitchell Hutchins or PaineWebber serves as investment adviser.
Victoria E. Schonfeld, 44, Vice President. Managing director and general
counsel of Mitchell Hutchins. From April 1990 to May 1994, a partner in the law
firm of Arnold & Porter. Ms. Schonfeld is also a vice president and assistant
secretary of 37 other investment companies for which Mitchell Hutchins or
PaineWebber serves as investment adviser.
Paul H. Schubert, 32, Vice President and Assistant Treasurer. First vice
president of Mitchell Hutchins. From August 1992 to August 1994, vice president
at BlackRock Financial Management, Inc. Prior to August 1992, an audit manager
with Ernst & Young LLP. Mr. Schubert is also a vice president and assistant
treasurer of 37 other investment companies for which Mitchell Hutchins or
PaineWebber serves as investment adviser.
Julian F. Sluyters, 35, Vice President and Treasurer. Senior vice president
and the director of the mutual fund finance division of Mitchell Hutchins. Prior
to 1991, an audit senior manager with Ernst & Young LLP. Mr. Sluyters is also a
vice president and treasurer of 37 other investment companies for which Mitchell
Hutchins or PaineWebber serves as investment adviser.
Gregory K. Todd, 38, Vice President and Assistant Secretary. First vice
president and associate general counsel of Mitchell Hutchins. Prior to 1993, a
partner with the law firm of Shereff, Friedman, Hoffman & Goodman. Mr. Todd is
also a vice president and assistant secretary of 37 other investment companies
for which Mitchell Hutchins or PaineWebber serves as investment adviser.
Certain of the Directors and officers of the Fund are directors and/or
trustees and officers of other mutual funds managed by PaineWebber or Mitchell
Hutchins. The address of each of the non-interested Directors is: Mr. Beaubien,
Montague Industrial Park, 101 Industrial Road, Box 7461, Turners Falls,
Massachusetts 01376; Mr. Hewitt, P.O. Box 2359, Princeton, New Jersey
08543-2359; Mr. Jordan, 200 Park Avenue, New York, New York 10166; and Mr.
Schafer, P.O. Box 1164, Princeton, New Jersey 08542. The address of each of Mr.
Minard and the officers listed above is 1285 Avenue of the Americas, New York,
New York 10019.
By virtue of the management responsibilities assumed by PaineWebber under
the Investment Advisory and Administration Agreement, the Fund requires no
executive employees other than its officers, none of whom devotes full time to
the affairs of the Fund. See 'Investment Advisory and Other Services -- Manager
and Investment Adviser.' Directors and officers of the Fund, as a group, owned
less than 1% of the outstanding common stock of the Fund on November 1, 1995. No
officer, director or employee of PaineWebber or Mitchell Hutchins receives any
compensation from the Fund for serving as an officer or Director of the Fund.
The Fund pays each Director who is not an officer, director or employee of
PaineWebber or Mitchell Hutchins or any of its affiliates an annual retainer of
$3,500 and $900 for each Board of Directors meeting attended, and reimburses the
Director for out-of-pocket expenses associated with attendance at
5
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Board meetings. The Chairman of the Board's audit committee receives an annual
fee of $250. The amount of compensation paid by the Fund to each Director for
the fiscal year ended July 31, 1995, and the aggregate amount of compensation
paid to each such Director for the year ended December 31, 1994 by all
investment companies in the same fund complex for which such person is a Board
member were as follows:
<TABLE>
<CAPTION>
(5)
(3) TOTAL COMPENSATION
(2) PENSION OR (4) FROM FUND AND
(1) AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL OTHER INVESTMENT
NAME OF BOARD COMPENSATION FROM ACCRUED AS PART OF BENEFITS UPON COMPANIES IN THE
MEMBER FUND FUND'S EXPENSES RETIREMENT FUND COMPLEX*
- ------------------------------ ----------------- -------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
David J. Beaubien $ None None $80,700
William W. Hewitt, Jr. $ None None $74,425
Thomas R. Jordan $ None None $83,125
Frank P.L. Minard None None None None
Carl W. Schafer $ None None $84,575
</TABLE>
- ------------
* Represents total compensation paid to each Director during the calendar year
ended December 31, 1994.
INVESTMENT ADVISORY AND OTHER SERVICES
PaineWebber, the Fund's investment adviser and administrator, and Mitchell
Hutchins, the Fund's sub-adviser and sub-administrator, are located at 1285
Avenue of the Americas, New York, New York 10019.
Subject to the supervision and direction of the Fund's Board of Directors,
Mitchell Hutchins manages the Fund's portfolio in accordance with the stated
policies of the Fund. Mitchell Hutchins makes investment decisions for the Fund
and places the purchase and sale orders for portfolio transactions. In addition,
Mitchell Hutchins pays the salaries of all officers and employees who are
employed by both it and the Fund, maintains office facilities, furnishes
statistical and research data, clerical help and accounting, data processing,
bookkeeping, internal auditing and legal services and certain other services
required by the Fund, prepares reports to shareholders, tax returns to and
filings with the SEC and state Blue Sky authorities, is responsible for the
calculation of the net asset value of shares of the Fund and generally assists
in all aspects of the Fund's operations. Mitchell Hutchins bears all expenses in
connection with the performance of its services.
Expenses incurred in the operation of the Fund, including, but not limited
to, taxes, interest, brokerage fees and commissions, if any, fees of Directors
who are not officers, directors stockholders or employees of PaineWebber or
Mitchell Hutchins, SEC fees and related expenses, state Blue Sky qualification
fees, charges of the custodian and transfer and dividend disbursing agent,
certain insurance premiums, outside auditing and legal expenses, and costs of
maintenance of corporate existence, shareholder services, printing of
prospectuses and statements of additional information for regulatory purposes or
for distribution to shareholders, shareholders' reports and corporate meetings,
are borne by the Fund.
6
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The Investment Advisory and Administration Agreement remains in effect for
successive annual periods provided continuance is approved at least annually by
(i) the Fund's Board of Directors or (ii) vote of a majority, as defined in the
Act, of the outstanding voting securities of the Fund, provided that in either
event the continuance is also approved by a majority of the Directors who are
not 'interested persons,' as defined in the Act, of the Fund or PaineWebber or
Mitchell Hutchins, by vote cast in person at a meeting called for the purpose of
voting on such approval. The Investment Advisory and Administration Agreement is
terminable without penalty, on not less than 60 days' notice, by the Fund's
Board of Directors or by vote of the holders of a majority of the Fund's shares
or by PaineWebber. The Investment Advisory and Administration Agreement will
terminate automatically in the event of its assignment.
The Fund pays PaineWebber, as compensation for services rendered, a monthly
fee at the annual rate of .50% of the portion of the average daily net assets
not exceeding $750 million; .475% of the portion of the average daily net assets
exceeding $750 million but not exceeding $1 billion; .45% of the portion of the
average daily net assets exceeding $1 billion but not exceeding $1.25 billion;
.425% of the portion of the average daily net assets exceeding $1.25 billion but
not exceeding $1.5 billion; and .40% of the portion of the average daily net
assets exceeding $1.5 billion. The fee paid to Kidder Peabody Asset Management,
Inc., the Fund's predecessor investment adviser and administrator, or
PaineWebber for the fiscal years ended July 31, 1993, 1994 and 1995 amounted to
$8,489,968, $8,505,180 and $7,194,947, respectively.
PaineWebber has agreed that if in any fiscal year the aggregate expenses of
the Fund (including fees pursuant to the Investment Advisory and Administration
Agreement but excluding interest, taxes, brokerage and, with the prior written
consent of the necessary state securities commissions, extraordinary expenses)
exceed the expense limitation of any state having jurisdiction over the Fund,
PaineWebber will reimburse the Fund for such excess expense. This expense
reimbursement obligation is not limited to the amount of PaineWebber's fees.
Such expense reimbursement, if any, will be estimated, reconciled and paid on a
monthly basis. The most stringent state expense limitation applicable to the
Fund presently requires reimbursement of expenses in any year that such expenses
exceed 2 1/2% of the first $30 million of the average value of the Fund's net
assets, 2% of the next $70 million and 1 1/2% of the remaining average net
assets of the Fund. No expense reimbursement was required for the fiscal year
ended July 31, 1995.
PaineWebber shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the matters to which the
Investment Advisory and Administration Agreement relates, except for a loss
resulting from willfull misfeasance, bad faith or gross negligence on its part
in the performance of its duties or from reckless disregard by it of its
obligations and duties under the Investment Advisory and Administration
Agreement.
Mitchell Hutchins personnel may invest in securities for their own accounts
pursuant to a code of ethics that describes the fiduciary duty owed to
shareholders of the PaineWebber and PaineWebber/Kidder, Peabody ('PW/KP') mutual
funds and other Mitchell Hutchins' advisory accounts by all Mitchell Hutchins'
directors, officers and employees, establishes procedures for personal investing
and restricts certain transactions. For example, employee accounts generally
must be maintained at PaineWebber, personal trades in most securities require
pre-clearance and short-term trading and participation in initial public
offerings generally are prohibited. In
7
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addition, the code of ethics puts restrictions on the timing of personal
investing in relation to trades by PaineWebber and PW/KP mutual funds and other
Mitchell Hutchins advisory clients.
DISTRIBUTOR
PaineWebber is the distributor of the Fund's shares and is acting on a best
efforts basis.
The Directors believe that the Fund's expenditures under the Fund's Plan of
Distribution pursuant to Rule 12b-1 benefit the Fund and its shareholders by
providing better shareholder services. For the fiscal year ended July 31, 1995,
PaineWebber received $1,824,254 from the Fund, of which $[ ] was spent
on payments to PaineWebber investment executives and $[ ] was spent on
overhead-related expenses.
CUSTODIAN, AND TRANSFER, DIVIDEND DISBURSING AND RECORDKEEPING AGENT
Investors Fiduciary Trust Company ('IFTC'), 127 West 10th Street, Kansas City,
Missouri 64105, serves as custodian. PFPC Inc. a subsidiary of PNC Bank,
National Association, whose principal address is 400 Bellevue, Wilmington,
Delaware 19809, acts as transfer, dividend disbursing and recordkeeping agent.
As custodian, IFTC maintains custody of the Fund's portfolio securities. As
transfer agent, PFPC Inc. maintains the Fund's official record of shareholders,
as dividend disbursing agent, it is responsible for crediting dividends to
shareholders' accounts, and as recordkeeping agent, it maintains certain
accounting and financial records of the Fund.
INDEPENDENT AUDITORS
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019, acts as
independent auditors for the Fund. In such capacity, Ernst & Young LLP audits
the Fund's annual financial statements. For the fiscal year ended July 31, 1994,
and prior thereto, the Fund's independent auditors were Deloitte & Touche LLP, 2
World Financial Center, New York, New York 10281.
COUNSEL
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York 10004-2696, acts
as counsel for the Fund.
PORTFOLIO TRANSACTIONS
Purchases and sales of portfolio securities usually are principal transactions.
Portfolio securities normally are purchased directly from the issuer or from an
underwriter or market maker for the securities. Usually there are no brokerage
commissions paid by the Fund for such purchases. Purchases from dealers serving
as market makers include the spread between the bid and asked price. While
Mitchell Hutchins generally seeks competitive spreads or commissions, the Fund
does not necessarily pay the lowest spread or commission available on each
transaction. No brokerage commissions have been paid by the Fund to date.
Transactions are allocated to various dealers by Mitchell Hutchins in its
best judgment. The primary consideration is prompt execution of orders in an
effective manner at the most favorable price. Subject to this consideration,
dealers may be selected for research, statistical or other services to enable
Mitchell Hutchins to supplement its own research and analysis with the views and
information of other securities firms.
8
<PAGE>
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Information so received supplements but does not replace that to be
provided by Mitchell Hutchins, and Mitchell Hutchins fee is not reduced as a
consequence of the receipt of any such supplemental information. Such
information may be useful to Mitchell Hutchins in serving both the Fund and
other clients and, conversely, supplemental information obtained by the
placement of business of other clients may be useful to Mitchell Hutchins in
carrying out its obligations to the Fund.
Investment decisions for the Fund are made independently from those of any
other funds managed by Mitchell Hutchins. If, however, funds managed by Mitchell
Hutchins are simultaneously engaged in the purchase or sale of the same
security, the transactions will be averaged as to price and allocated equitably
to each fund. In some cases, this system might adversely affect the price paid
or received by the Fund or the size of the position obtainable for the Fund.
REDEMPTION AND EXCHANGE OF SHARES
The right of redemption may be suspended or the date of payment postponed (a)
for any period during which the New York Stock Exchange ('NYSE') is closed other
than for customary weekend and holiday closings, (b) when trading in the markets
the Fund normally utilizes is restricted, or when an emergency, as defined by
the rules and regulations of the SEC, exists, making disposal of the Fund's
investments or determination of its net asset value not reasonably practicable,
or (c) for any other periods as the SEC by order may permit for protection of
the Fund's shareholders.
Shares of the Fund may be exchanged for shares of the following
PaineWebber/Kidder, Peabody funds, to the extent such shares are offered for
sale in the shareholder's state of residence:
PaineWebber/Kidder, Peabody California Tax Exempt Money Fund.
PaineWebber/Kidder, Peabody Municipal Money Market Series -- Connecticut
Series.
PaineWebber/Kidder, Peabody Municipal Money Market Series -- New Jersey
Series.
PaineWebber/Kidder, Peabody Premium Account Fund.
The right of exchange may be suspended or postponed if (a) there is a
suspension of the redemption of Fund shares under Section 22(e) of the Act, or
(b) the Fund temporarily delays or ceases the sale of its shares because it is
unable to invest amounts effectively in accordance with applicable investment
objectives, policies and restrictions.
DETERMINATION OF NET ASSET VALUE
The net asset value of the Fund will not be calculated on the following NYSE
holidays (observed): New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. If one of these
holidays falls on a Saturday or Sunday, the NYSE will be closed on the preceding
Friday or the following Monday, respectively. The days on which net asset value
is determined are the Fund's business days. The Fund's net asset value per share
is computed by dividing the value of the net assets of the Fund (i.e, assets
less liabilities) by the total number of shares outstanding. Expenses and fees
of the Fund, including PaineWebber's fee, are accrued daily and taken into
account for the purpose of determining net
9
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asset value. It is the policy of the Fund to attempt to maintain a net asset
value of $1.00 per share for purposes of sales and redemptions, although there
can be no assurance that the Fund will always be able to do so.
The Fund maintains a dollar-weighted average portfolio maturity of 90 days
or less, purchases only instruments having remaining maturities of 397 days or
less and invests only in securities which present minimal credit risks and are
of high quality as determined by any major rating service or, in the case of any
instrument that is not rated, of comparable quality as determined by the Board
of Directors.
The valuation of the Fund's portfolio securities is based on their
amortized cost, which does not take into account unrealized gains or losses.
This involves valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or lower than the
price the Fund would receive if it sold the instrument.
In connection with the utilization of the amortized cost method of
valuation, the Board of Directors has established procedures reasonably
designed, taking into account current market conditions and the Fund's
investment objective, to stabilize net asset value per share at $1.00 for the
purpose of sales and redemptions. These procedures include periodic review, as
the Board of Directors deems appropriate and at such intervals as are reasonable
in light of current market conditions, of the relationship between the amortized
cost value per share and the net asset value per share based on available
indications of market value. In such review, investments for which market
quotations are readily available are valued at the most recent bid price or
quoted yield equivalent for such securities or for securities of comparable
maturity, quality and type as obtained from one or more of the major market
makers for the securities to be valued. Other investments and assets are valued
at fair value as determined in good faith by the Board of Directors.
The extent of any deviation between the Fund's net asset value based on
available market quotations or market equivalents and $1.00 per share based on
amortized cost is examined by the Board of Directors. If such deviation exceeds
.50%, the Board of Directors promptly will consider what action, if any, will be
initiated. In the event the Board of Directors determines that a deviation
exists which may result in material dilution or other unfair results to
shareholders, it has agreed to take such corrective action as it regards as
necessary and appropriate, including: selling portfolio instruments prior to
maturity to realize capital gains or losses or to shorten average portfolio
maturity; not declaring dividends or paying distributions from capital or
capital gains; redeeming shares in kind; or establishing a net asset value per
share by using available market quotations.
DETERMINATION OF CURRENT AND EFFECTIVE YIELDS
The Fund provides current and effective yield quotations based on its daily
dividends. See 'Dividends, Distributions and Taxes' in the Fund's Prospectus.
Such quotations are made in reports, sales literature and advertisements
published by the Fund.
10
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Current yield is computed by determining the net change exclusive of
capital changes in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of a seven day calendar period, dividing
the net change in account value by the value of the account at the beginning of
the period and multiplying the return over the seven day period by 365/7. For
purposes of the calculation, net change in account value reflects the value of
additional shares purchased with dividends from the original share and dividends
declared on both the original share and any such additional shares, but does not
reflect realized gains or losses or unrealized appreciation or depreciation.
Effective yield is computed by annualizing the seven-day return with all
dividends reinvested in additional shares of the Fund.
Current and effective yields fluctuate and are not necessarily
representative of future results. The shareholder should remember that yield is
a function of the type and quality of the instruments in the portfolio,
portfolio maturity and operating expenses. See 'Investment Objective and
Management Policies' in the Fund's Prospectus and 'Investment Advisory and Other
Services' above. Current and effective yield information is useful in reviewing
the Fund's performance but because current and effective yields will fluctuate
such information may not provide a basis for comparison with bank deposits,
other investments which pay a fixed yield for a stated period of time or other
investment companies which may use a different method of calculating yield.
A shareholder's principal in the Fund is not guaranteed. See 'Determination
of Net Asset Value' for a discussion of the manner in which the Fund's price per
share is determined.
Historical and comparative yield information may be presented by the Fund.
ADDITIONAL INFORMATION
As used in this statement of additional information, when referring to the
approvals to be obtained from shareholders, the term 'majority' means the vote
of the lesser of (1) 67% of the Fund's shares present at a meeting if the
holders of more than 50% of the outstanding shares are present in person or by
proxy, or (2) more than 50% of the Fund's outstanding shares.
FINANCIAL STATEMENTS
The Fund's Annual Report to Shareholders for the fiscal year ended July 31, 1995
is a separate document supplied with this Statement of Additional Information,
and the financial statements, accompanying notes and report of independent
auditors appearing therein are incorporated by reference in this Statement of
Additional Information.
INFORMATION WITH RESPECT TO SECURITIES RATINGS
The following is a description of Standard & Poor's Ratings Group ('S&P') and
Moody's Investors Service, Inc. ('Moody's') commercial paper and corporate bond
ratings:
COMMERCIAL PAPER RATINGS
The designation A-1 by S&P indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Paper rated A-1 must have the
following characteristics:
11
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
liquidity ratios are adequate to meet cash requirements, long-term senior debt
is rated A or better, the issuer has access to at least two additional channels
of borrowing, basic earnings and cash flow have an upward trend with allowance
made for unusual circumstances. Typically, the issuer's industry is well
established and the issuer has a strong position within the industry; the
reliability and quality of management are unquestioned. Those issues determined
to possess overwhelming safety characteristics are denoted with a plus sign (+)
designation. Paper rated A-1+ must have either the direct credit support of an
issuer or guarantor that possesses excellent long-term operating and financial
strengths combined with strong liquidity characteristics (typically, such
issuers or guarantors would display credit quality characteristics which would
warrant a senior bond rating of 'AA' or higher), or the direct credit support of
an issuer or guarantor that possesses above average long-term fundamental
operating and financing capabilities combined with ongoing excellent liquidity
characteristics. Capacity for timely payment on issues with an A-2 designation
is strong. However, the relative degree of safety is not as high as for issues
designated A-1.
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of parent company and the
relationships which exist with the issuer; and (8) recognition by the management
of obligations which may be present or may arise as a result of public interest
questions and preparations to meet such obligations.
CORPORATE BOND RATINGS
Bonds rated AA by S&P are judged by S&P to be high-grade obligations, and in the
majority of instances differ only in small degrees from issues rated AAA. Bonds
rated AAA are considered by S&P to be the highest grade obligations and possess
the ultimate degree of protection as to principal and interest.
Bonds rated Aa by Moody's are judged by Moody's to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than Aaa bonds because margins
of protection may not be as large or fluctuations of protective elements may be
of greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger. Moody's applies the numeral modifiers 1,
2 and 3 to the Aa rating classification. The modifier 1 indicates that the
security ranks in the higher end of this rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates a ranking in the
lower end of this rating category.
12
<PAGE>
<PAGE>
<TABLE>
<S> <C>
- --------------------------------------------------------
Contents
- --------------------------------------------------------
Investment Objective and Policies 2
- --------------------------------------------------------
Management of the Fund 3
- --------------------------------------------------------
Investment Advisory and Other Services 6
- --------------------------------------------------------
Portfolio Transactions 8
- --------------------------------------------------------
Redemption and Exchange of Shares 9
- --------------------------------------------------------
Determination of Net Asset Value 9
- --------------------------------------------------------
Determination of Current and Effective Yields 10
- --------------------------------------------------------
Additional Information 11
- --------------------------------------------------------
Financial Statements 11
- --------------------------------------------------------
Information with Respect to Securities
Ratings 11
- --------------------------------------------------------
</TABLE>
PaineWebber/
Kidder,
Peabody
Cash
Reserve
Fund,
Inc.
Statement of
Additional
Information
December 1, 1995
<PAGE>
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements:
Contained in Part A:
Financial Highlights for each of the fiscal years in the ten year
period ended July 31, 1995.
Contained through incorporation by reference in Part B and filed with
the Annual Report to Shareholders with the Securities and Exchange
Commission on October 2, 1995 (EDGAR Accession No. 0000950117-95-000198):
Schedule of Investments at July 31, 1995.
Statement of Assets and Liabilities at July 31, 1995.
Statement of Operations for the year ended July 31, 1995.
Statements of Changes in Net Assets for the years ended July 31,
1994 and July 31, 1995.
Financial Highlights for each of the fiscal years in the ten year
period ended July 31, 1995.
Report of Ernst & Young LLP, Independent Auditors, dated
September 21, 1995.
Contained in Part B through incorporation by reference to
Post-Effective Amendment No. 19 to Registrant's Registration Statement on
Form N-1A as filed on November 25, 1994:
Report of Deloitte & Touche LLP, Independent Auditors, dated
September 9, 1994.
(b) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------------------------------------------------
<S> <C>
1(a) --Restatement of Articles of Incorporation are incorporated by reference to Exhibit 1 of Post- Effective
Amendment No. 14 to the Registration Statement on Form N-1A, filed on November 30, 1989, and the
Registrant's Articles of Amendment are incorporated by reference to Exhibit 1 of Post-Effective Amendment
No. 17 to the Registration Statement on Form N-1A, filed on November 27, 1992.`D'
1(b) --Articles of Amendment, dated February 22, 1995.
2 --Amended By-Laws are incorporated by reference to Exhibit 2 of Post-Effective Amendment No. 12 to the
Registration Statement on Form N-1A, filed on November 25, 1987.
4 --Specimen certificate for the Registrant's Common Stock, par value $.01 per share is incorporated by
reference to Exhibit 4 of the Registration Statement on Form N-1, filed on August 17, 1979.
5(a) --Form of Investment Advisory and Administration Agreement.
5(b) --Form of Sub-Advisory and Sub-Administration Agreement.
6 --Distribution Agreement.
8 --Custody Agreement is incorporated by reference to Exhibit 8 of Post-Effective Amendment No. 14 to the
Registration Statement on Form N-1A, filed on November 30, 1989.
9 --Transfer Agency Agreement.
11(a) --Consent of Ernst & Young LLP.
11(b) --Consent of Deloitte & Touche LLP.
13 --Investment representation letter is incorporated by reference to Exhibit 13 of the Registration
Statement on Form N-1A, filed on June 6, 1979.
15(a) --Plan of Distribution pursuant to Rule 12b-1 dated December 20, 1988 and the amendment dated November 15,
1989 are incorporated by reference to Exhibit 6(b) of Post-Effective Amendment No. 14 to the Registration
Statement on Form N-1A, filed on November 30, 1989.`D'
15(b) --Amendment to Plan of Distribution, dated January 30, 1995.
16 --Schedule of computation of each performance quotation provided in the Registration Statement in response
to Item 22 is incorporated by reference to Exhibit 16 of Post-Effective Amendment No. 16 to the
Registration Statement on Form N-1A, filed on November 29, 1991.
17 --Financial Data Schedule (filed as exhibit No. 27 pursuant to EDGAR rules).
</TABLE>
C-1
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------------------------------------------------
<S> <C>
18 --Powers of Attorney.
27 --Financial Data Schedule.
</TABLE>
- ------------
`D' Refiled pursuant to rules under EDGAR
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
No person is controlled by or under common control with the Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<CAPTION>
NUMBER OF RECORDHOLDERS
TITLE OF CLASS AT NOVEMBER 21, 1995
- ------------------------------------------------------------------------------ -----------------------
<S> <C>
Common Stock, par value $.01 per share........................................ 56,022
</TABLE>
ITEM 27. INDEMNIFICATION.
Reference is made to Article Seventh of the Registrant's Restatement of
Articles of Incorporation and Section 2-418 of the General Corporation Law of
Maryland, as amended.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant and the principal underwriter pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrants of expenses incurred or paid by a director, officer, or controlling
person of the Registrant and the principal underwriter in connection with the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such director, officer or controlling person or the principal
underwriter in connection with the shares being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against policy as expressed in the Act and will be
governed by the final adjudication of such issue.
See 'Management of the Fund -- Manager and Investment Adviser' in the
Prospectus and 'Investment Advisory and Other Services -- Manager and Investment
Adviser' in the Statement of Additional Information.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
See 'Management of the Fund' in the Prospectus and 'Management of the Fund'
and 'Investment Advisory and Other Services' in the Statement of Additional
Information.
I. PaineWebber Incorporated ('PaineWebber'), a Delaware corporation, is a
registered investment adviser and is wholly owned by Paine Webber Group Inc.
PaineWebber is primarily engaged in the financial services business. Information
as to the officers and directors of PaineWebber is included in its Form ADV
filed on March 31, 1995, with the Securities and Exchange Commission
(registration number 801-7163) and is incorporated herein by reference.
II. Mitchell Hutchins Asset Management Inc. ('Mitchell Hutchins'), a
Delaware corporation, is a registered investment adviser and is wholly owned by
PaineWebber. Mitchell Hutchins is primarily engaged in the investment advisory
business. Information as to the officers and directors of Mitchell Hutchins is
included in its Form ADV filed on April 3, 1995, with the Securities and
Exchange Commission (registration number 801-13219) and is incorporated herein
by reference.
C-2
<PAGE>
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) PaineWebber serves as principal underwriter and/or investment adviser
for the following other investment companies:
PaineWebber CashFund, Inc.
PaineWebber Managed Municipal Trust
PaineWebber RMA Money Fund, Inc.
PaineWebber RMA Tax-Free Fund, Inc.
PaineWebber/Kidder, Peabody California Tax Exempt Money Fund
PaineWebber/Kidder, Peabody Municipal Money Market
Series -- Connecticut Series
PaineWebber/Kidder, Peabody Municipal Money Market Series -- New
Jersey Series
PaineWebber/Kidder, Peabody Premium Account Fund
(b) PaineWebber is the principal underwriter of the Registrant. The
directors and officers of PaineWebber, their principal business addresses, and
their positions and offices with PaineWebber are identified in its Form ADV
filed March 31, 1995, with the Securities and Exchange Commission (registration
number 801-7163), and such information is hereby incorporated herein by
reference. The information set forth below is furnished for those directors and
officers of PaineWebber who also serve as directors or officers of the
Registrant:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES
BUSINESS ADDRESS POSITION WITH REGISTRANT WITH UNDERWRITER
- ----------------------------------- ----------------------------------- -----------------------------------
<S> <C> <C>
Margo N. Alexander President Director and Executive Vice
1285 Avenue of the Americas President
New York, NY 10019
Frank P.L. Minard Director Director
1285 Avenue of the Americas
New York, NY 10019
</TABLE>
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended, and the Rules
thereunder are maintained at the offices of Investors Fiduciary Trust Company,
127 West 10th Street, Kansas City, Missouri 64105, the Fund, 1285 Avenue of the
Americas, New York, New York 10019, and PFPC Inc., 400 Bellevue Parkway,
Wilmington, Delaware 19809.
ITEM 31. MANAGEMENT SERVICES.
Not Applicable.
ITEM 32. UNDERTAKINGS.
Not Applicable.
C-3
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
this City of New York, and State of New York, on the 30th day of November, 1995.
PAINEWEBBER/KIDDER, PEABODY CASH RESERVE FUND, INC.
By: /S/ DIANNE E. O'DONNELL
...............................
DIANNE E. O'DONNELL,
VICE PRESIDENT AND SECRETARY
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to the Registrant's Registration Statement on Form N-1A has been
signed below by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------- ------------------------------------- ------------------
<S> <C> <C>
/s/ MARGO N. ALEXANDER* President (Chief Executive Officer) November 30, 1995
..........................................
MARGO N. ALEXANDER
/s/ JULIAN F. SLUYTERS Vice President and Treasurer (Chief November 30, 1995
.......................................... Financial and Accounting Officer)
JULIAN F. SLUYTERS
/s/ DAVID J. BEAUBIEN** Director November 30, 1995
..........................................
DAVID J. BEAUBIEN
/s/ WILLIAM W. HEWITT, JR.** Director November 30, 1995
..........................................
WILLIAM W. HEWITT, JR.
/s/ THOMAS R. JORDAN** Director November 30, 1995
..........................................
THOMAS R. JORDAN
/s/ FRANK P.L. MINARD*** Director November 30, 1995
..........................................
FRANK P.L. MINARD
/s/ CARL W. SCHAFER** Director November 30, 1995
..........................................
CARL W. SCHAFER
</TABLE>
- ------------
* Signature affixed by Dianne E. O'Donnell pursuant to power of attorney dated
July 21, 1995 and filed herewith.
** Signature affixed by Dianne E. O'Donnell pursuant to power of attorney dated
March 8, 1995 and filed herewith.
*** Signature affixed by Dianne E. O'Donnell pursuant to power of attorney dated
May 18, 1995 and filed herewith.
C-4
STATEMENT OF DIFFERENCES
The dagger shall be represented by .................. 'D'
The service mark shall be represented by ............ 'sm'
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
1(a) --Restatement of Articles of Incorporation are incorporated by reference to Exhibit 1 of
Post-Effective Amendment No. 14 to the Registration Statement on Form N-1A, filed on November 30,
1989, and the Registrant's Articles of Amendment are incorporated by reference to Exhibit 1 of
Post-Effective Amendment No. 17 to the Registration Statement on Form N-1A, filed on November 27,
1992.`D'.............................................................................................
1(b) --Articles of Amendment, dated February 22, 1995.......................................................
5(a) --Form of Investment Advisory and Administration Agreement.............................................
5(b) --Form of Sub-Advisory and Sub-Administration Agreement................................................
6 --Distribution Agreement...............................................................................
9 --Transfer Agency Agreement............................................................................
11(a) --Consent of Ernst & Young LLP.........................................................................
11(b) --Consent of Deloitte & Touche LLP.....................................................................
15(a) --Plan of Distribution pursuant to Rule 12b-1 dated December 20, 1988 and the amendment dated November
15, 1989 are incorporated by reference to Exhibit 6(b) of Post-Effective Amendment No. 14 to the
Registration Statement on Form N-1A, filed on November 30, 1989.`D'..................................
15(b) --Amendment to Plan of Distribution, dated January 30, 1995............................................
17 --Financial Data Schedule (filed as exhibit No. 27 pursuant to EDGAR rules)............................
18 --Powers of Attorney...................................................................................
27 --Financial Data Schedule..............................................................................
</TABLE>
- ------------
`D' Refiled pursuant to rules under EDGAR
<PAGE>
<PAGE>
EXHIBIT 1(a)
RESTATEMENT OF ARTICLES OF INCORPORATION
OF
WEBSTER CASH RESERVE FUND, INC.
------------------------
For the purposes of forming a stock corporation for one or more lawful
purposes under the provisions of Title 2 of the General Corporation Law of
Maryland (hereinafter sometimes referred to as the 'General Corporation Law'),
the natural person hereinafter named as the person acting as the incorporator of
the said corporation does hereby adopt and sign the following Articles of
Incorporation of the corporation and does hereby acknowledge that his adoption
and signing thereof are his act:
FIRST: (1) The name, including the full given name and surname, of the
incorporator is Peter Joseph.
(2) The said incorporator's post office address, including the street and
number, if any, including the city or county, and including the state or
country, is 61 Broadway, New York, New York 10006.
(3) The said incorporator is at least eighteen years of age.
(4) The said incorporator is forming the corporation named in these
Articles of Incorporation under the General Corporation Law of Maryland.
SECOND: The name of the corporation (hereinafter called the 'corporation')
is Webster Cash Reserve Fund, Inc.
THIRD: The corporation is formed for the following purpose or purposes:
(a) to conduct, operate and carry on the business of an investment
company;
(b) to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute or
otherwise dispose of and deal in and with certificates of deposit, bankers
acceptances, commercial paper, bonds, debentures, notes, bills and other
negotiable or non-negotiable instruments, obligations and evidences of
indebtedness; to pay for the same in cash or by the issue of stock,
including treasury stock, bonds or notes of the corporation or otherwise;
and to exercise any and all rights, powers and privileges of ownership or
interest in respect of any and all such investments of every kind and
description, including without limitation, the right to consent and
otherwise act with respect thereto, with power to designate one or more
persons, firms, associations or corporations to exercise any of said
rights, powers and privileges in respect of any said instruments;
(c) to borrow money or otherwise obtain credit and to secure the same
by mortgaging, pledging or otherwise subjecting as security the assets of
the corporation;
(d) to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in, shares
of Common Stock of the corporation, including shares of Common Stock of the
corporation in fractional denominations, and to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of shares
of Common Stock of the corporation any funds or property of the corporation
whether capital or surplus or otherwise, to the full extent now or
hereafter permitted by the laws of the State of Maryland;
(e) to conduct its business, promote its purposes and carry on its
operations in any and all of its branches and maintain offices both within
and without the State of Maryland, in any States of the United States of
America, in the District of Columbia and in any other parts of the world;
and
1
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<PAGE>
(f) to do all and everything necessary, suitable, convenient, or proper for the
conduct, promotion, and attainment of any of the businesses and purposes herein
specified or which at any time may be incidental thereto or may appear conducive
to or expedient for the accomplishment of any such businesses and purposes and
which might be engaged in or carried on by a corporation incorporated or
organized under the General Corporation Law, and to have and exercise all of the
powers conferred by the laws of the State of Maryland upon corporations
incorporated or organized under the General Corporation Law.
The foregoing provisions of this Article THIRD shall be construed both as
purposes and powers and each as an independent purpose and power. The foregoing
enumeration of specific purposes and powers shall not be held to limit or
restrict in any manner the purposes and powers of the corporation, and the
purposes and powers herein specified shall, except when otherwise provided in
this Article THIRD, be in no way limited or restricted by reference to, or
inference from, the terms of any provision of this or any other Article of these
Articles of Incorporation; provided, that the corporation shall not conduct any
business, promote any purpose, or exercise any power or privilege within or
without the State of Maryland which, under the laws thereof, the corporation may
not lawfully conduct, promote, or exercise.
FOURTH: The post office address, including street and number, if any, and
the city or county of the principal office of the corporation within the State
of Maryland, and of the resident agent of the corporation within the State of
Maryland, is The Corporation Trust Incorporated, 32 South Street, Baltimore, Md.
21202. The words 'principal office' and 'resident agent' as used herein shall
have the meanings ascribed to them by the General Corporation Law.
FIFTH: (1) The total number of shares of stock which the corporation has
authority to issue is five billion (5,000,000,000), all of which are of a par
value of one cent ($.01) each and are designated as Common Stock.
(2) The aggregate par value of all the authorized shares of stock is fifty
million dollars ($50,000,000).
(3) The Board of Directors of the corporation is authorized, from time to
time, to fix the price or the minimum price or the consideration or minimum
consideration for, and to issue, the shares of stock of the corporation.
(4) The Board of Directors of the corporation is authorized, from time to
time, to classify or to reclassify, as the case may be, any unissued shares of
stock of the corporation.
(5) Notwithstanding any provisions of the General Corporation Law
requiring a greater proportion than a majority of the votes of stockholders
entitled to be cast in order to take or authorize any action, any such action
may be taken or authorized upon the concurrence of at least a majority of the
aggregate number of votes entitled to be cast thereon.
(6) The corporation may issue shares of its Common Stock in fractional
denominations to the same extent as its whole shares, and shares in fractional
denominations shall be shares of Common Stock having proportionately to the
respective fractions represented thereby all the rights of whole shares,
including, without limitation, the right to vote, the right to receive dividends
and distributions and the right to participate upon liquidation of the
corporation.
2
<PAGE>
<PAGE>
(7) All shares of Common Stock of the corporation now or hereafter
authorized shall be 'subject to redemption' and 'redeemable', in the sense used
in the General Corporation Law authorizing the formation of corporations, at the
redemption or purchase price for any such shares, determined in the manner set
out in these Articles of Incorporation or in any amendment thereto; provided,
however, that the corporation shall have the right, at its option, to refuse to
redeem the shares of stock at less than the par value thereof. In the absence of
any specification as to the purpose for which shares of Common Stock of the
corporation are redeemed, shares so redeemed shall be deemed to be 'purchased
for retirement' in the sense contemplated by the laws of the State of Maryland
and the number of authorized shares of Common Stock of the corporation shall not
be reduced by the number of any shares repurchased by it.
(8) No holder of any shares of any class of the corporation shall be
entitled as of right to subscribe for, purchase, or otherwise acquire any shares
of any class of the corporation which the corporation proposes to grant for the
purchase of shares of any class of the corporation or for the purchase of any
shares, bonds, securities, or obligations of the corporation which are
convertible into or exchangeable for, or which carry any rights to subscribe
for, purchase, or otherwise acquire shares of any class of the corporation; and
any and all of such shares, bonds, securities or obligations of the corporation,
whether now or hereafter authorized or created, may be issued, or may be
reissued or transferred if the same have been reacquired and have treasury
status, and any and all of such rights and options may be granted by the Board
of Directors to such persons, firms, corporations and associations, and for such
lawful consideration, and on such terms, as the Board of Directors in its
discretion may determine, without first offering the same, or any thereof, to
any said holder.
SIXTH: (1) The number of directors of the corporation, until such number
shall be increased or decreased pursuant to the by-laws of the corporation, is
three. The number of directors shall never be less than the number prescribed by
the General Corporation Law.
(2) The names of the persons who shall act as directors of the corporation
until the first annual meeting or until their successors are duly chosen and
qualify are as follows:
Joseph S. DiMartino
Lawrence W. Kelly
John T. Roche
(3) The initial by-laws of the corporation shall be adopted by the
directors at their organizational meeting or by their informal written action,
as the case may be. Thereafter, the power to make, alter, and repeal the by-laws
of the corporation shall be vested in the Board of Directors of the Corporation.
(4) Any determination made in good faith and, so far as accounting matters
are involved, in accordance with generally accepted accounting principles, by or
pursuant to the direction of the Board of Directors, as to: the amount of
assets, debts, obligations, or liabilities of the corporation; the amount of any
reserves or charges set up and the propriety thereof; the time of or purpose for
creating such reserves or charges; the use, alteration or cancellation of any
reserves or charges (whether or not any debt, obligation or liability for which
such reserves or charges shall have been created shall have been paid or
discharged or shall be then or thereafter required to be paid or discharged);
the price or closing bid or asked price of any investment owned or held by the
corporation; the market value of any investment or fair value of any other asset
of the corporation; the number of shares of the corporation outstanding; the
estimated expense to the corporation in connection with purchases of its shares;
the ability to liquidate investments in orderly fashion; the extent to which it
is practicable to deliver a cross-section of the portfolio of the corporation in
payment for any such shares, or as to any other matters relating to the issue,
sale, purchase and/or other acquisition or disposition
3
<PAGE>
<PAGE>
of investments or shares of the corporation, shall be final and conclusive, and
shall be binding upon the corporation and all holders of its shares, past,
present and future, and shares of the corporation are issued and sold on the
condition and understanding that any and all such determinations shall be
binding as aforesaid.
SEVENTH: (1) A director or officer of the corporation shall not be liable
to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director or officer, except to the extent such exemption
from liability or limitation thereof is not permitted by law (including the
Investment Company Act of 1940) as currently in effect or as the same may
hereafter be amended.
(2) No amendment, modification or repeal of the Article SEVENTH shall
adversely affect any right or protection of a director or officer that exists at
the time of such amendment, modification or repeal.
EIGHTH: The corporation shall indemnify to the fullest extent permitted by
law (including the Investment Company Act of 1940) as currently in effect or as
the same may hereafter be amended, any person made or threatened to be made a
party to any action, suit or proceeding, whether criminal, civil, administrative
or investigative, by reason of the fact that such person or such person's
testator or intestate is or was a director or officer of the corporation or
serves or served at the request of the corporation any other enterprise as a
director or officer. To the fullest extent permitted by law (including the
Investment Company Act of 1940) as currently in effect or as the same may
hereafter be amended, expenses incurred by any such person in defending any such
action, suit or proceeding shall be paid or reimbursed by the corporation
promptly upon receipt by it of an undertaking of such person to repay such
expenses if it shall ultimately be determined that such person is not entitled
to be indemnified by the corporation. The rights provided to any person by this
Article EIGHTH shall be enforceable against the corporation by such person who
shall be presumed to have relied upon it in serving or continuing to serve as a
director or officer as provided above. No amendment of this Article EIGHTH shall
impair the rights of any person arising at any time with respect to events
occurring prior to such amendment. For purposes of this Article EIGHTH, the term
'corporation' shall include any predecessor of the corporation and any
constituent corporation (including any constituent of a constituent) absorbed by
the corporation in a consolidation or merger; the term 'other enterprise' shall
include any corporation, partnership, joint venture, trust or employee benefit
plan; service 'at the request of the corporation' shall include service as a
director or officer of the corporation which imposes duties on, or involves
services by, such director or officer with respect to an employee benefit plan,
its participants or beneficiaries; any excise taxes assessed on a person with
respect to an employee benefit plan shall be deemed to be indemnifiable
expenses; and action by a person with respect to any employee benefit plan which
such person reasonably believes to be in the interest of the participants and
beneficiaries of such plan shall be deemed to be action not opposed to the best
interests of the corporation.
NINTH: Any holder of shares of Common Stock of the corporation shall be
entitled to require the corporation to repurchase and the corporation shall be
obligated to repurchase at the option of such holder all or any part of the
shares of Common Stock of the corporation owned by said holder, at the
repurchase price, pursuant to the method, upon the terms and subject to the
conditions hereinafter set forth:
(a) Certificates (if issued) for shares of Common Stock shall be
presented for repurchase in proper form for transfer to the corporation or
the agent of the corporation appointed for such purpose and there shall be
presented a written request that the corporation repurchase all or any part
of the shares represented thereby;
4
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<PAGE>
(b) The repurchase price per share shall be the net asset value per
share as determined by the corporation at such time or times as the Board
of Directors of the corporation shall designate, but not later than as at
the close of the New York Stock Exchange on the bank business day next
succeeding the time of presentation of certificates for shares, if issued,
and an appropriate request for repurchase, or such later time as the Board
of Directors may designate in accordance with any provision of the
Investment Company Act of 1940, any rule or regulation thereunder, or any
rule or regulation made or adopted by any securities association registered
under the Securities Exchange Act of 1934, as determined by the Board of
Directors of the Corporation.
(c) Net asset value shall be determined by dividing:
(i) The total value of the assets of the corporation determined as
provided in Subsection (d) below less, to the extent determined by or
pursuant to the direction of the Board of Directors in accordance with
generally accepted accounting principles, all debts, obligations and
liabilities of the corporation (which debts, obligations and liabilities
shall include, without limitation of the generality of the foregoing,
any and all debts, obligations, liabilities or claims, of any and every
kind and nature, fixed, accrued, unmatured or contingent, including the
estimated accrued expenses of management and supervision, administration
and distribution and any reserves or charges for any or all of the
foregoing, whether for taxes, expenses, contingencies, or otherwise, and
the price of Common Stock redeemed but not paid for) but excluding the
corporation's liability upon its shares and its surplus by:
(ii) The total number of shares of the corporation outstanding.
(Shares sold by the corporation whether or not paid for shall be treated
as outstanding and shares purchased or redeemed by the corporation
whether or not paid for and treasury shares shall be treated as not
outstanding, provided, that the Board of Directors may determine whether
shares sold or redeemed on the date of computation shall be included.)
The Board of Directors is empowered, in its absolute discretion, to
establish other methods for determining such net asset value whenever such
other methods are deemed by it to be necessary in order to enable the
corporation to comply with, or are deemed by it to be desirable provided
they are not inconsistent with, any provision of the Investment Company Act
of 1940 or any rule or regulation thereunder including any rule or
regulation made or adopted pursuant to Section 22 of the Investment Company
Act of 1940 by the Securities and Exchange Commission or any securities
association registered under the Securities Exchange Act of 1934.
(d) In determining for the purposes of these Articles of Incorporation
the total value of the assets of the corporation at any time, investments
and any other assets of the corporation shall be valued in such manner as
may be determined from time to time by the Board of Directors.
(e) Payment of the repurchase price by the corporation may be made
either in cash or in securities or other assets at the time owned by the
corporation or partly in cash and partly in securities or other assets at
the time owned by the corporation. The value of any part of such payment to
be made in securities or other assets of the corporation shall be the value
employed in determining the repurchase price. Payment of the repurchase
price shall be made on or before the seventh day following the day on which
the shares are properly presented for repurchase hereunder, except that
delivery of any securities included in any such payment shall be made as
promptly as any necessary transfers on the books of the issuers whose
securities are to be delivered may be made, and, except as postponement of
the date of payment may be permissible under the Investment Company Act of
1940 and the Rules and Regulations thereunder.
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The corporation, pursuant to resolution of the Board of Directors, may deduct
from the payment made for any shares repurchased a liquidating charge not in
excess of one per cent (1%) of the repurchase price of the shares so
repurchased, and the Board of Directors may alter or suspend any such
liquidating charge from time to time.
(f) The right of any holder of shares of Common Stock repurchased by the
corporation as provided in this Article NINTH to receive dividends or
distributions thereon and all other rights of such holder with respect to such
shares shall terminate at the time as of which the repurchase price of such
shares is determined, except the right of such holder to receive (i) the
repurchase price of such shares from the corporation in accordance with the
provisions hereof, and (ii) any dividend or distribution to which such holder
had previously become entitled as the record holder of such shares on the record
date for such dividend or distribution.
(g) Repurchase of shares of Common Stock by the corporation is conditional upon
the corporation having funds or property legally available therefor.
(h) The Corporation, either directly or through an agent, may repurchase its
shares, out of funds legally available therefor, upon such terms and conditions
and for such consideration as the Board of Directors shall deem advisable, by
agreement with the owner at a price not exceeding the net asset value per share
as determined by the corporation at such time or times as the Board of Directors
of the corporation shall designate, but not later than as at the close of the
New York Stock Exchange on the bank business day next succeeding the time when
the purchase or contract to purchase is made, less a charge not to exceed one
percent (1%) of such net asset value, if and as fixed by resolution of the Board
of Directors of the corporation from time to time, and take all other steps
deemed necessary or advisable in connection therewith.
(i) The corporation, pursuant to resolution of the Board of Directors, may cause
the repurchase, upon the terms set forth in such resolution and in subsections
(b) through (g) and subsection (j) of this Article NINTH, of shares of Common
Stock owned by stockholders whose shares have an aggregate net asset value of
five hundred dollars or less. Notwithstanding any other provision of this
Article NINTH, if certificates representing such shares have been issued, the
repurchase price need not be paid by the corporation until such certificates are
presented in proper form for transfer to the corporation or the agent of the
corporation appointed for such purpose; however, the repurchase shall be
effective, in accordance with the resolution of the Board of Directors,
regardless of whether or not such presentation has been made.
(j) The obligations set forth in this Article NINTH may be suspended or
postponed, (1) for any period (a) during which the New York Stock Exchange is
closed other than for customary week-end and holiday closings or (b) during
which such trading on the New York Stock Exchange is restricted, (2) for any
period during which an emergency exists as a result of which (a) the disposal by
the corporation of investments owned by it is not reasonably practicable, or (b)
it is not reasonably practicable for the corporation fairly to determine the
value of its net assets or (3) for such other periods as the Federal Securities
and Exchange Commission or any successor governmental authority may by order
permit for the protection of security holders of the corporation.
TENTH: From time to time any of the provisions of these Articles of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the General Corporation Law at the time in force may be added or
inserted in the manner and at the time prescribed by said Law, and all rights at
any time conferred upon the stockholders of the corporation by these Articles of
Incorporation are granted subject to the provisions of this Article.
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<PAGE>
IN WITNESS WHEREOF, I have adopted and signed this Restatement of Articles of
Incorporation and do hereby acknowledge that the adoption and signing are my
act.
Dated: January 17, 1989 WEBSTER CASH RESERVE FUND, INC.
/s/ O. Beirne Chisolm, Jr.
________________________________________
O. Beirne Chisolm, Jr.
President
Attest: /s/ Gilbert R. Ott, Jr.
______________________________________
Gilbert R. Ott, Jr
Secretary
7
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<PAGE>
ARTICLES OF AMENDMENT
WEBSTER CASH RESERVE FUND, INC., a Maryland corporation having its
principal place of business in Baltimore City, Maryland (hereinafter called the
'Corporation'), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by striking
Article SECOND of the Articles of Incorporation and inserting in lieu
thereof the following:
'SECOND: The name of the corporation (hereinafter called the
'corporation') is Kidder, Peabody Cash Reserve Fund, Inc.'
SECOND: The Board of Directors of the Corporation approved the
foregoing amendment to the charter as set forth in Article FIRST hereto,
and declared that said amendment was advisable. The Corporation's
stockholder approved the foregoing amendment at a meeting of stockholder
held April 6, 1992.
The Executive Vice President acknowledges these Articles of Amendment to be
the corporate act of the Corporation and states that to the best of his
knowledge, information and belief the matters and facts set forth in these
Articles with respect to the authorization and approval of the amendment of the
Corporation's charter are true in all material respects, and that this statement
is made under the penalties of perjury.
IN WITNESS WHEREOF, Webster Cash Reserve Fund, Inc. has ???? caused this
instrument to be filed in its name and on its ???? by its Executive Vice
President, David A. Hartman, and with ??? by its Assistant Secretary, Lisa S.
Kellman, on the 23rd ??? April, 1992.
WEBSTER CASH RESERVE FUND, INC.
By: /s/ David Hartman
...................................
David A. Hartman,
Executive Vice President
ATTEST:
/s/ Lisa S. Kellman
.................................
Lisa S. Kellman,
Assistant Secretary
<PAGE>
<PAGE>
KIDDER, PEABODY CASH RESERVE FUND, INC.
ARTICLES OF AMENDMENT
Kidder, Peabody Cash Reserve Fund, Inc., a Maryland corporation ('the
corporation'), having its principal office in the State of Maryland in the city
of Baltimore, hereby certifies to the State Department of Assessments and
Taxation of Maryland, that:
FIRST: The Restatement of Articles of Incorporation of the corporation is
hereby amended by striking out Article SECOND in its entirety and inserting in
its place the following:
'SECOND: The name of the corporation
(hereinafter called the 'corporation') is
PaineWebber/Kidder, Peabody Cash Reserve
Fund, Inc.'
SECOND: The corporation is registered as an open-end company under the
Investment Company Act of 1940. The foregoing amendment was approved by a
majority of the entire Board of Directors of the corporation and such amendment
is limited to a change expressly permitted by Section 2-605 of Title 2 of
Subtitle 6 of the Maryland General Corporation Law to be made without action by
the stockholders.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, Kidder, Peabody Cash Reserve Fund, Inc. has caused
these Articles of Amendment to be signed in its name and on its behalf by its
President and witnessed by its Secretary, this 22nd day of February, 1995.
The undersigned President acknowledges these Articles of Amendment to be
the corporate act of the corporation, and states to the best of his/her
knowledge, information and belief that the matters and facts set forth in these
Articles of Amendment with respect to the authorization and approval are
true in all material respects and that this statement is made under penalties
of perjury.
KIDDER, PEABODY CASH RESERVES, INC.
/s/
______________________________________
Name:
President
WITNESS:
/s/ DIANNE E. O'DONNELL
______________________________________
Name: Dianne E. O'Donnell
Secretary
<PAGE>
<PAGE>
EXHIBIT 1(b)
KIDDER, PEABODY CASH RESERVE FUND, INC.
ARTICLES OF AMENDMENT
Kidder, Peabody Cash Reserve Fund, Inc., a Maryland corporation ('the
corporation'), having its principal office in the State of Maryland in the city
of Baltimore, hereby certifies to the State Department of Assessments and
Taxation of Maryland, that:
FIRST: The Restatement of Articles of Incorporation of the Corporation
is hereby amended by striking out Article SECOND in its entirety and
inserting in its place the following:
'SECOND: The name of the corporation (hereinafter called the
'corporation') is Paine/Webber/Kidder, Peabody Cash Reserve Fund, Inc.'
SECOND: The corporation is registered as an open-end company under the
Investment Company Act of 1940. The foregoing amendment was approved by a
majority of the entire Board of Directors of the corporation and such
amendment is limited to a change expressly permitted by Section 2-605 of
Title 2 of Subtitle 6 of the Maryland General Corporation Law to be made
without action by the stockholders.
IN WITNESS WHEREOF, Kidder, Peabody Cash Reserve Fund, Inc. has caused
these Articles of Amendment to be signed in its name and on its behalf by its
President and witnessed by its Secretary, this 22nd day of February, 1995.
The undersigned President acknowledges these Articles of Amendment to be
the corporate act of the corporation, and states to the best of his/her
knowledge, information and belief that the matters and facts set forth in these
Articles of Amendment with respect to authorization and approval are true in all
material respects and that this statement is made under penalties of perjury.
KIDDER, PEABODY CASH RESERVE FUND,
INC.
By: /s/
...................................
Name:
President
WITNESS:
/s/ Dianne E. O'Donnell
.................................
Name: Dianne E. O'Donnell
Secretary
<PAGE>
<PAGE>
EXHIBIT 5(a)
INVESTMENT ADVISORY AND ADMINISTRATION CONTRACT
Contract made as of April 13, 1995 between PAINEWEBBER/KIDDER, PEABODY CASH
RESERVE FUND, INC., a Maryland corporation ('Fund'), and PAINEWEBBER
INCORPORATED ('Manager'), a Delaware corporation registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended ('1934 Act'), and as an
investment adviser under the Investment Advisers Act of 1940, as amended.
WHEREAS the Fund is registered under the Investment Company Act of 1940, as
amended ('1940 Act'), as an open-end management investment company, and intends
to offer for public sale distinct shares of common stock ('Shares'); and
WHEREAS the Fund desires to retain Manager as investment adviser and
administrator to furnish certain administrative, investment advisory and
portfolio management services to the Fund and Manager is willing to furnish such
services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints Manager as investment adviser
and administrator of the Fund for the period and on the terms set forth in
this Contract. Manager accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. Duties as Investment Adviser.
(a) Subject to the supervision of the Fund's Board of Directors
('Board'), Manager will provide a continuous investment program for the
Fund, including investment research and management with respect to all
securities and investments and cash equivalents in the Fund. Manager will
determine from time to time what securities and other investments will be
purchased, retained or sold by the Fund.
(b) Manager agrees that in placing orders with brokers, it will
attempt to obtain the best net result in terms of price and execution;
provided that, on behalf of the Fund, Manager may, in
<PAGE>
<PAGE>
its discretion, use brokers who provide the Fund with research, analysis,
advice and similar services to execute portfolio transactions on behalf of
the Fund, and Manager may pay to those brokers in return for brokerage and
research services a higher commission than may be charged by other brokers,
subject to Manager's determining in good faith that such commission is
reasonable in terms either of the particular transaction or of the overall
responsibility of Manager to the Fund and its other clients and that
the total commissions paid by the Fund will be reasonable in relation
to the benefits to the Fund over the long term. In no instance will
portfolio securities be purchased from or sold to Manager, or
any affiliated person thereof, except in accordance with the federal
securities laws and the rules and regulations thereunder, or any
applicable exemptive orders. Whenever Manager simultaneously places orders
to purchase or sell the same security on behalf of the Fund and one or more
other accounts advised by Manager, such orders will be allocated as to
price and amount among all such accounts in a manner believed to be
equitable to each account. The Fund recognizes that in some cases this
procedure may adversely affect the results obtained for the Fund.
(c) Manager will oversee the maintenance of all books and records with
respect to the securities transactions of the Fund, and will furnish the
Board with such periodic and special reports as the Board reasonably may
request. In compliance with the requirements of Rule 31a-3 under the 1940
Act, Manager hereby agrees that all records which it maintains for the Fund
are the property of the Fund, agrees to preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act any records which it maintains for the
Fund and which are required to be maintained by Rule 31a-1 under the 1940
Act and further agrees to surrender promptly to the Fund any records which
it maintains for the Fund upon request by the Fund.
(d) Manager will oversee the computation of the net asset value and
the net income of the Fund as described in the currently effective
registration statement of the Fund under the Securities Act of 1933, as
amended, and the 1940 Act and any supplements thereto ('Registration
Statement') or as more frequently requested by the Board.
(e) The Fund hereby authorizes Manager and any entity or person
associated with Manager which is a member of a national securities exchange
to effect any transaction on such exchange for the account of the Fund,
which transaction is permitted by Section 11(a) of the 1934 Act, and the
Fund hereby consents to the retention of compensation by Manager or any
person or entity associated with Manager for such transaction.
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3. Duties as Administrator. Manager will administer the affairs of the
Fund subject to the supervision of the Board and the following
understandings:
(a) Manager will supervise all aspects of the operations of the
Fund, including oversight of transfer agency, custodial and accounting
services, except as hereinafter set forth; provided, however, that
nothing herein contained shall be deemed to relieve or deprive the Board
of its responsibility for and control of the conduct of the affairs of
the Fund.
(b) Manager will provide the Fund with such corporate,
administrative and clerical personnel (including officers of the Fund)
and services as are reasonably deemed necessary or advisable by the
Board, including the maintenance of certain books and records of the
Fund.
(c) Manager will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of the
Fund's Registration Statement, proxy material, tax returns and required
reports to the Fund's shareholders and the Securities and Exchange
Commission and other appropriate federal or state regulatory
authorities.
(d) Manager will provide the Fund with, or obtain for it, adequate
office space and all necessary office equipment and services, including
telephone service, heat, utilities, stationery supplies and similar
items.
(e) Manager will provide the Board on a regular basis with economic
and investment analyses and reports and make available to the Board upon
request any economic, statistical and investment services normally
available to institutional or other customers of Manager.
4. Further Duties. In all matters relating to the performance of this
Contract, Manager will act in conformity with the Articles of
Incorporation, By-Laws and currently effective Registration Statement of
the Fund, as delivered to Manager and upon which it shall be entitled to
rely, and with the instructions and directions of the Board, and will
comply with the requirements of the 1940 Act, the rules thereunder, and all
other applicable federal and state laws and regulations.
5. Delegation of Manager's Duties as Investment Adviser and
Administrator. Manager may enter into one or more contracts ('Sub-Advisory
or Sub-Administration Contract') with a sub-adviser or sub-administrator in
which Manager delegates to such sub-adviser or sub-administrator any or all
of its duties specified in Paragraphs 2 and 3 of this Contract, provided
that each Sub-Advisory or Sub-Administration Contract imposes on the
sub-adviser or sub-
3
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administrator bound thereby all the duties and conditions to which Manager
is subject by Paragraphs 2, 3 and 4 of this Contract, and further provided
that each Sub-Advisory or Sub-Administration Contract meets all
requirements of the 1940 Act and rules thereunder.
6. Services Not Exclusive. The services furnished by Manager hereunder
are not to be deemed exclusive and Manager shall be free to furnish similar
services to others so long as its services under this Contract are not
impaired thereby. Nothing in this Contract shall limit or restrict the
right of any director, officer or employee of Manager, who may also be a
Direetor, officer or employee of the Fund, to engage in any other business
or to devote his or her time and attention in part to the management or
other aspects of any other business, whether of a similar nature or a
dissimilar nature.
7. Expenses.
(a) During the term of this Contract, the Fund will bear all expenses,
not specifically assumed by Manager, incurred in its operations and the
offering of its shares.
(b) Expenses borne by the Fund will include but not be limited to the
following (or the Fund's proportionate share of the following): (i) the
cost (including brokerage commissions) of securities purchased or sold by
the Fund and any losses incurred in connection therewith; (ii) fees payable
to and expenses incurred on behalf of the Fund by Manager under this
Contract; (iii) expenses of organizing the Fund; (iv) filing fees and
expenses relating to the registration and qualification of the Fund's
shares and the Fund under federal and/or state securities laws and
maintaining such registration and qualification; (v) fees and salaries
payable to the Fund's Directors and officers who are not interested persons
of the Fund or Manager; (vi) all expenses incurred in connection with the
Directors' services, including travel expenses in the case of Directors who
are not interested persons of the Fund or Manager; (vii) taxes (including
any income or franchise taxes) and governmental fees; (viii) costs of any
liability, uncollectible items of deposit and other insurance and fidelity
bonds; (ix) any costs, expenses or losses arising out of a liability of or
claim for damages or other relief asserted against the Fund for violation
of any law and any indemnification relating thereto; (x) legal, accounting
and auditing expenses, including legal fees of special counsel for those
Directors of the Fund who are not interested persons of the Fund; (xi)
charges of custodians, transfer agents and other agents; (xii) costs of
preparing share certificates; (xiii) expenses of setting in type and
printing prospectuses and supplements thereto, statements of additional
information and supplements thereto, reports and proxy materials for
existing shareholders; (xiv) costs of mailing prospectuses and supplements
4
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<PAGE>
thereto, statements of additional information and supplements thereto,
reports and proxy materials to existing shareholders; (xv) any
extraordinary expenses (including fees and disbursements of counsel, costs
of actions, suits or proceedings to which the Fund is a party and the
expenses the Fund may incur as a result of its legal obligation to provide
indemnification to its officers, Directors, agents and shareholders or to
Manager) incurred by the Fund; (xvi) fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; (xvii) cost of mailing and tabulating proxies and costs of
meetings of shareholders, the Board and any committees thereof; (xviii) the
cost of investment company literature and other publications provided by
the Fund to its Directors and officers; (xix) costs of mailing, stationery
and communications equipment; (xx) expenses incident to any dividend,
withdrawal or redemption options; (xxi) charges and expenses of any outside
pricing service used to value portfolio securities and (xxii) interest on
borrowings of the Fund.
(c) Manager will assume the cost of any compensation for services
provided to the Fund received by the officers of the Fund and by those
Directors who are interested persons of the Fund.
(d) The payment or assumption by Manager of any expenses of the Fund
that Manager is not required by this Contract to pay or assume shall not
obligate Manager to pay or assume the same or any similar expense of the
Fund on any subsequent occasion.
8. Compensation.
(a) For the services provided and the expenses assumed pursuant to
this Contract with respect to the Fund, the Fund will pay to Manager a fee,
computed daily and paid monthly, at an annual rate of .50% of the Fund's
average daily net assets up to $750 million; .475% of the Fund's average
daily net assets from $750 million to $1 billion; .45% of the Fund's daily
net assets from $1 billion to $1.25 billion; .425% of the Fund's average
daily net assets from $1.25 billion to $1.5 billion; and .40% of the Fund's
average daily net assets over $1.5 billion.
(b) The fee shall be computed daily and paid monthly to Manager on or
before the first business day of the next succeeding calendar month.
(c) If this Contract becomes effective or terminates before the end of
any month, the fee for the period from the effective day to the end of the
month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such
period bears to the full month in which such effectiveness or termination
occurs.
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9. Limitation of Liability of Manager. Manager and its delegates,
including any Sub-Adviser or Sub-Administrator to the Fund, shall not be
liable for any error of judgment or mistake of law or for any loss suffered
by the Fund or any of its shareholders, in connection with the matters to
which this Contract relates, except to the extent that such a loss results
from willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Contract. Any person, even though also an
officer, director, employee, or agent of Manager, who may be or become an
officer, Director, employee or agent of the Fund shall be deemed, when
rendering services to the Fund or acting with respect to any business of
the Fund, to be rendering such service to or acting for the Fund and not as
an officer, director, employee, or agent or one under the control or
direction of Manager even though paid by it.
10. Duration and Termination.
(a) This Contract shall become effective upon the date hereabove
written provided that, with respect to the Fund, this Contract shall not
take effect unless it has first been approved (i) by a vote of a majority
of those Directors of the Fund who are not parties to this Contract or
interested persons of any such party cast in person at a meeting called for
the purpose of voting on such approval, and (ii) by vote of a majority of
the Fund's outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter,
if not terminated, this Contract shall continue automatically for
successive periods of twelve months each, provided that such continuance is
specifically approved at least annually (i) by a vote of a majority of
those Directors of the Fund who are not parties to this Contract or
interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by the Board or by
vote of a majority of the outstanding voting securities of the Fund with
respect to the Fund.
(c) Notwithstanding the foregoing, with respect to the Fund this
Contract may be terminated at any time, without the payment of any penalty,
by vote of the Board or by a vote of a majority of the outstanding voting
securities of the Fund on sixty days' written notice to Manager or by
Manager at any time, without the payment of any penalty, on sixty days'
written notice to the Fund. This Contract will automatically terminate in
the event of its assignment.
11. Amendment of this Contract. No provision of this Contract may be
changed, waived, discharged or terminated orally,
6
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<PAGE>
but only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought, and
no material amendment of this Contract as to the Fund shall be effective
until approved by vote of a majority of the Fund's outstanding voting
securities.
12. Governing Law. This Contract shall be construed in accordance with
the laws of the State of Delaware, without giving effect to the conflicts
of laws principles thereof, and in accordance with the 1940 Act. To the
extent that the applicable laws of the State of Delaware conflict with the
applicable provisions of the 1940 Act, the latter shall control.
13. Miscellaneous. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Contract shall
not be affected thereby. This Contract shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
As used in this Contract, the terms 'majority of the outstanding voting
securities', 'affiliated person', 'interested person', 'assignment',
'broker', 'investment adviser', 'national securities exchange', 'net
assets', 'prospectus', 'sale', 'sell' and 'security' shall have the same
meaning as such terms have in the 1940 Act, subject to such exemption as
may be granted by the Securities and Exchange Commission by any rule,
regulation or order. Where the effect of a requirement of the 1940 Act
reflected in any provision of this Contract is affected by a rule,
regulation or order of the Securities and Exchange Commission, whether of
special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
<TABLE>
<S> <C>
Attest: PAINEWEBBER INCORPORATED
JENNIFER FARRELL By THOMAS EGGERS
- --------------------------- ----------------------------
Attest: PAINEWEBBER/KIDDER, PEABODY
CASH RESERVE FUND, INC.
JENNIFER FARRELL By DIANNE E. O'DONNELL
- --------------------------- ----------------------------
</TABLE>
7
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<PAGE>
EXHIBIT 5(b)
SUB-ADVISORY AND SUB-ADMINISTRATION AGREEMENT
Contract made as of April 13, 1995, between PAINEWEBBER INCORPORATED
('PaineWebber'), a Delaware corporation registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended ('1934 Act') and as an investment
adviser under the Investment Advisers Act of 1940, as amended ('Advisers Act'),
and MITCHELL HUTCHINS ASSET MANAGEMENT INC. ('Mitchell Hutchins'), a Delaware
corporation registered as a broker-dealer under the 1934 Act and as an
investment adviser under the Advisers Act.
WHEREAS PaineWebber has entered into an Investment Advisory and
Administration Contract dated April 13, 1995 ('Advisory Contract') with
PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc. ('Fund'), an open-end
investment company registered under the Investment Company Act of 1940, as
amended ('1940 Act'), which offers for public sale distinct shares of common
stock; and
WHEREAS under the Advisory Contract PaineWebber has agreed to provide
certain investment advisory and administrative services to the Fund; and
WHEREAS the Advisory Contract authorizes PaineWebber to delegate certain of
its duties as investment adviser and administrator under the Advisory Contract
to a sub-adviser or sub-administrator; and
WHEREAS PaineWebber wishes to retain Mitchell Hutchins as sub-adviser and
sub-administrator to provide certain investment advisory an administrative
services to PaineWebber and the Fund and Mitchell Hutchins is willing to render
such services as described herein upon the terms set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. PaineWebber hereby appoints Mitchell Hutchins as its
sub-adviser and sub-administrator with respect to the Fund and Mitchell
Hutchins accepts such appointment and agrees that it will furnish the
services set forth in Paragraph 2.
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2. Services and Duties of Mitchell Hutchins.
(a) Subject to the supervision of the Board of Directors ('Board') and
PaineWebber, Mitchell Hutchins will provide a continuous investment program
for the Fund, including investment research and management with respect to
all securities, investments and cash equivalents held in the portfolio of
the Fund. Mitchell Hutchins will determine from time to time what
investments will be purchased, retained or sold by the Fund. Mitchell
Hutchins will be responsible for placing purchase and sale orders for
investments and for other related transactions. Mitchell Hutchins will
provide services under this agreement in accordance with the Fund's
investment objective, policies and restrictions as stated in the Fund's
Prospectuses.
(b) Mitchell Hutchins agrees that, in placing orders with brokers, it
will attempt to obtain the best net result in terms of price and execution;
provided that, on behalf of the Fund, Mitchell Hutchins may, in its
discretion, effect securities transactions with brokers and dealers who
provide the Fund with research, analysis, advice and similar services, and
Mitchell Hutchins may pay to those brokers and dealers, in return for
brokerage and research services and analysis, a higher commission than may
be charged by other brokers and dealers, subject to Mitchell Hutchins'
determining in good faith that such commission is reasonable in terms
either of the particular transaction or of the overall responsibility of
Mitchell Hutchins and its affiliates to such Fund and its other clients and
that the total commissions paid by such Fund will be reasonable in relation
to the benefits to the Fund over the long term. In no instance will
portfolio securities be purchased from or sold to PaineWebber, Mitchell
Hutchins or any affiliated person thereof, except in accordance with the
federal securities laws and the rules and regulations thereunder, or any
applicable exemptive orders. Whenever Mitchell Hutchins simultaneously
places orders to purchase or sell the same security on behalf of the Fund
and one or more other accounts advised by Mitchell Hutchins, such orders
will be allocated as to price and amount among all such accounts in a
manner believed to be equitable to each account. The Fund recognizes that
in some cases this procedure may adversely affect the results obtained for
the Fund.
(c) Mitchell Hutchins will oversee the maintenance of all books and
records with respect to the securities transactions of the Fund and will
furnish the Board with such periodic and special reports as PaineWebber or
the Board reasonably may request. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, Mitchell Hutchins hereby agrees that all
records which it maintains for the Fund are the property of the Fund,
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940
Act any records which it maintains for the Fund and which are required to
be maintained by Rule 31a-1 under the 1940 Act, and further agrees to
surrender promptly to the Fund any records which it maintains for the Fund
upon request by the Fund.
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(d) Mitchell Hutchins will oversee the computation of the net asset
value and net income of the Fund as described in the currently effective
registration statement of the Fund under the Securities Act of 1933, as
amended, and 1940 Act and any supplements thereto ('Registration
Statement') or as more frequently requested by the Board.
(e) Mitchell Hutchins will assist in administering the affairs of the
Fund, subject to the supervision of the Board and PaineWebber, and further
subject to the following understandings:
(i) Mitchell Hutchins will supervise all aspects of the operation
of the Fund except as hereinafter set forth; provided, however, that
nothing herein contained shall be deemed to relieve or deprive the Board
of its responsibility for and control of the conduct of affairs of the
Fund.
(ii) Mitchell Hutchins will provide the Fund with such
administrative and clerical personnel (including officers of the Fund)
as are reasonably deemed necessary or advisable by the Board and
PaineWebber and Mitchell Hutchins will pay the salaries of all such
personnel.
(iii) Mitchell Hutchins will provide the Fund with such
administrative and clerical services as are reasonably deemed necessary
or advisable by the Board and PaineWebber, including the maintenance of
certain of the books and records of the Fund.
(iv) Mitchell Hutchins will arrange, but not pay for, the periodic
preparation, updating, filing and dissemination (as applicable) of the
Fund's Registration Statement, proxy material, tax returns and reports
to shareholders of the Fund, the Securities and Exchange Commission and
other appropriate federal or state regulatory authorities.
(v) Mitchell Hutchins will provide the Fund with, or obtain for it,
adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities, stationery supplies and
similar items.
3. Duties Retained by PaineWebber. PaineWebber will continue to
provide to the Board and the Fund the services described in subparagraph
3(e) of the Advisory Contract.
4. Further Duties. In all matters relating to the performance of this
Contract, Mitchell Hutchins will act in conformity with the Fund's Articles
of Incorporation, By-Laws and Registration Statement of the Fund and with
the written instructions and directions of the Board and PaineWebber, and
will comply with the requirements of the 1940 Act, the Investment Advisers
Act of 1940 ('Advisers Act'), the rules thereunder, and all other
applicable federal and state laws and regulations.
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5. Services Not Exclusive. The services furnished by Mitchell Hutchins
hereunder are not to be deemed exclusive, and Mitchell Hutchins shall be
free to furnish similar services to others so long as its services under
this Contract are not impaired thereby. Nothing in this Contract shall
limit or restrict the right of any director, officer or employee of
Mitchell Hutchins, who may also be a director, officer or employee of the
Fund, to engage in any other business or to devote his or her time and
attention in part to the management or other aspects of any other business,
whether of a similar nature or a dissimilar nature.
6. Expenses. During the term of this Contract, Mitchell Hutchins will
pay all expenses incurred by it in connection with its services under this
Contract.
7. Compensation. For the services provided and the expenses assumed by
Mitchell Hutchins pursuant to this Contract with respect to the Fund,
PaineWebber will pay to Mitchell Hutchins a fee equal to 20% of the fee
received by PaineWebber from the Fund pursuant to the Advisory Contract
with respect to the Fund, such compensation to be paid monthly.
8. Limitation of Liability. Mitchell Hutchins and its delegates will
not be liable for any error of judgment or mistake of law or for any loss
suffered by PaineWebber or the Fund or the shareholders of the Fund in
connection with the performance of this Contract, except a loss resulting
from willful misfeasance, bad faith or gross negligence on its part in the
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Contract. Any person, even though also an
officer, director, employee, or agent of Mitchell Hutchins, who may be or
become an officer, director, employee or agent of the Fund shall be deemed,
when rendering services to the Fund or acting with respect to any business
of the Fund, to be rendering such services to or acting solely for the Fund
and not as an officer, director, employee, or agent or one under the
control or direction of Mitchell Hutchins even though paid by it.
9. Duration and Termination.
(a) This Contract will become effective upon the date first above
written, provided that, with respect to the Fund, this Contract shall not
take effect unless it has first been approved (i) by a vote of a majority
of those directors of the Fund who are not parties to this Contract or
interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by vote of a majority
of the Fund's outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract will
continue in effect for two years from the above written date. Thereafter,
if not terminated, this Contract will
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continue automatically for successive periods of twelve months each,
provided that such continuance is specifically approved at least annually
(i) by a vote of a majority of those directors of the Fund who are not
parties to this Contract or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and
(ii) by the Board or, by vote of a majority of the outstanding voting
securities of the Fund.
(c) Notwithstanding the foregoing, with respect to the Fund, this
Contract may be terminated by any party hereto at any time, without the
payment of any penalty, on sixty days' written notice to the other party;
this Contract also may be terminated at any time, without the payment of
any penalty, by vote of the Board or by a vote of a majority of the
outstanding voting securities of the Fund on sixty days' written notice to
Mitchell Hutchins and PaineWebber. This Contract will terminate
automatically in the event of its assignment or upon termination of the
Advisory Contract.
10. Amendment of this Agreement. No provision of this Contract may be
changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change,
waiver, discharge or termination is sought, and no amendment of this
Contract as to the Fund shall be effective until approved by vote of a
majority of the Fund's outstanding voting securities.
11. Governing Law. This Contract shall be construed in accordance with
the laws of the State of Delaware without giving effect to the conflicts of
laws principles thereof and the 1940 Act. To the extent that the applicable
laws of the State of Delaware conflict with the applicable provisions of
the 1940 Act, the latter shall control.
12. Miscellaneous. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Contract shall
not be affected thereby. This Contract shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
As used in this Contract, the terms 'majority of the outstanding voting
securities,' 'affiliated person,' 'interested person,' 'assignment,'
'broker,' 'investment adviser,' 'net assets,' 'sale,' 'sell' and 'security'
shall have the same meaning as such terms have in the 1940 Act, subject to
such exemption as may be granted by the SEC by any rule, regulation or
order. Where the effect of a requirement of the federal securities laws
reflected in any provision of this Agreement is affected by a rule,
regulation or order of the SEC,
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whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.
<TABLE>
<S> <C>
Attest: PAINEWEBBER INCORPORATED
JENNIFER FARRELL By THOMAS EGGERS
- ------------------------------ ----------------------------
Title: Managing Director
Attest: MITCHELL HUTCHINS ASSET
MANAGEMENT INC.
JENNIFER FARRELL By DIANNE E. O'DONNELL
- ------------------------------ ----------------------------
Title: Senior Vice President
</TABLE>
6
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EXHIBIT 6
PAINEWEBBER/KIDDER, PEABODY CASH RESERVE FUND
DISTRIBUTION CONTRACT
CONTRACT made as of January 30, 1995, between PAINEWEBBER/KIDDER, PEABODY
CASH RESERVE FUND, a Maryland Corporation, ('Fund'), and PAINEWEBBER
INCORPORATED, a Delaware corporation ('PaineWebber').
WHEREAS the Fund is registered under the Investment Company Act of 1940, as
amended ('1940 Act'), as an open-end management investment company and has one
series of shares of common stock ('Shares'); and
WHEREAS PaineWebber is willing to act as principal distributor for the Fund
on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints PaineWebber as its exclusive
agent to be the principal distributor to sell and to arrange for the sale
of the Shares on the terms and for the period set forth in this Contract.
PaineWebber hereby accepts such appointment and agrees to act hereunder.
2. Services and Duties of PaineWebber.
(a) PaineWebber agrees to solicit orders for the sale of Shares and to
undertake advertising and promotion that it believes reasonable in
connection with such solicitation as agent for the Fund and upon the terms
described in the Registration Statement. As used in this Contract, the term
'Registration Statement' shall mean the currently effective registration
statement of the Fund, and any supplements thereto, under the Securities
Act of 1933, as amended ('1933 Act'), and the 1940 Act.
(b) Upon the later of the date of this Contract or the initial
offering of the Shares to the public by the Fund, PaineWebber will hold
itself available to receive purchase orders, satisfactory to PaineWebber,
for Shares and will accept such orders on behalf of the Fund as of the time
of receipt of
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such orders and promptly transmit such orders as are accepted to the
Fund's transfer agent. Purchase orders shall be deemed effective at the
time and in the manner set forth in the Registration Statement.
(c) PaineWebber in its discretion may enter into agreements to sell
Shares to such registered and qualified retail dealers, including but not
limited to Mitchell Hutchins Asset Management Inc. ('Mitchell Hutchins'),
as it may select. In making agreements with such dealers, PaineWebber shall
act only as principal and not as agent for the Fund.
(d) The offering price of the Shares shall be the net asset value per
Share as next determined by the Fund following receipt of an order at
PaineWebber's principal office. The Fund shall promptly furnish PaineWebber
with a statement of each computation of net asset value.
(e) PaineWebber shall not be obligated to sell any certain number of
Shares.
(f) To facilitate redemption of Shares by shareholders directly or
through dealers, PaineWebber is authorized but not required on behalf of
the Fund to repurchase Shares presented to it by shareholders and dealers
at the price determined in accordance with, and in the manner set forth in,
the Registration Statement.
(g) PaineWebber shall provide ongoing shareholder services, which
include responding to shareholder inquiries, providing shareholders with
information on their investments in the Shares and any other services now
or hereafter deemed to be appropriate subjects for the payments of 'service
fees' under Section 26(d) of the National Association of Securities
Dealers, Inc. ('NASD') Rules of Fair Practice (collectively, 'service
activities').
(h) PaineWebber shall have the right to use any list of shareholders
of the Fund or any other list of investors which it obtains in connection
with its provision of services under this Contract; provided, however, that
PaineWebber shall not sell or knowingly provide such list or lists to any
unaffiliated person.
3. Authorization to Enter into Exclusive Dealer Agreements and to
Delegate Duties as Distributor. With respect to the Shares of the Fund,
PaineWebber may enter into an exclusive dealer agreement with Mitchell
Hutchins or any other registered and qualified dealer with respect to sales
of the Shares or the provision of service activities. In a separate
contract or as part of any such exclusive dealer agreement, PaineWebber
also may delegate to Mitchell Hutchins or another registered and qualified
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dealer ('sub-distributor') any or all of its duties specified in this Contract,
provided that such separate contract or exclusive dealer agreement imposes on
the sub-distributor bound thereby all applicable duties and conditions to which
PaineWebber is subject under this Contract, and further provided that such
separate contract or exclusive dealer agreement meets all requirements of the
1940 Act and rules thereunder.
4. Services Not Exclusive. The services furnished by PaineWebber hereunder
are not to be deemed exclusive and PaineWebber shall be free to furnish similar
services to others so long as its services under this Contract are not impaired
thereby. Nothing in this Contract shall limit or restrict the right of any
director, officer or employee of PaineWebber, who may also be a director,
officer or employee of the Fund, to engage in any other business or to devote
his or her time and attention in part to the management or other aspects of any
other business, whether of a similar or a dissimilar nature.
5. Compensation.
(a) As compensation for its service activities under this Contract,
PaineWebber shall receive from the Fund a service fee at the rate and under the
terms and conditions of the Plan of Distribution pursuant to Rule 12b-1 under
the 1940 Act ('Plan') adopted by the Fund, as such Plan is amended from time to
time, and subject to any further limitations on such fee as the board of
trustees ('Board') may impose.
(b) PaineWebber may reallow any or all of the service fees which it is paid
under this Contract to such dealers as PaineWebber may from time to time
determine.
6. Duties of the Fund.
(a) The Fund reserves the right at any time to withdraw offering Shares of
the Fund by written notice to PaineWebber at its principal office.
(b) The Fund shall determine in its sole discretion whether certificates
shall be issued with respect to the Shares. If the Fund has determined that
certificates shall be issued, the Fund will not cause certificates representing
Shares to be issued unless so requested by shareholders. If such request is
transmitted by PaineWebber, the Fund will cause certificates evidencing Shares
to be issued in such names and denominations as PaineWebber shall from time to
time direct.
(c) The Fund shall keep PaineWebber fully informed of its affairs and shall
make available to PaineWebber copies of all information, financial statements,
and other papers which PaineWebber may reasonably request for use in connection
with the
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distribution of Shares, including, without limitation, certified copies of any
financial statements prepared for the Fund by its independent public accountant
and such reasonable number of copies of the most current prospectus, statement
of additional information, and annual and interim reports of the Fund as
PaineWebber may request, and the Fund shall cooperate fully in the efforts of
PaineWebber to sell and arrange for the sale of the Shares and in the
performance of PaineWebber under this Contract.
(d) The Fund shall take, from time to time, all necessary action, including
payment of the related filing fee, as may be necessary to register the Shares
under the 1933 Act to the end that there will be available for sale such number
of Shares as PaineWebber may be expected to sell. The Fund agrees to file, from
time to time, such amendments, reports, and other documents as may be necessary
in order that there will be no untrue statement of a material fact in the
Registration Statement, nor any omission of a material fact which omission would
make the statements therein misleading.
(e) The Fund shall use its best efforts to qualify and maintain the
qualification of an appropriate number of Shares for sale under the securities
laws of such states or other jurisdictions as PaineWebber and the Fund may
approve, and, if necessary or appropriate in connection therewith, to qualify
and maintain the qualification of the Fund as a broker or dealer in such
jurisdictions; provided that the Fund shall not be required to execute a general
consent to the service of process in any state. PaineWebber shall furnish such
information and other material relating to its affairs and activities as may be
required by the Fund in connection with such qualifications.
7. Expenses of the Fund. The Fund shall bear all costs and expenses of
registering the Shares with the Securities and Exchange Commission and state and
other regulatory bodies, and shall assume expenses related to communications
with shareholders of the Fund, including (i) fees and disbursements of its
counsel and independent public accountant; (ii) the preparation, filing and
printing of registration statements and/or prospectuses or statements of
additional information required under the federal securities laws; (iii) the
preparation and mailing of annual and interim reports, prospectuses, statements
of additional information and proxy materials to shareholders; and (iv) the
qualifications of Shares for sale and of the Fund as a broker or dealer under
the securities laws of such jurisdictions as shall be selected by the Fund and
PaineWebber pursuant to Paragraph 6(e) hereof, and the costs and expenses
payable to each such jurisdiction for continuing qualification therein.
8. Expenses of PaineWebber. PaineWebber shall bear all costs and expenses
of (i) preparing, printing and distributing
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any materials not prepared by the Fund and other materials used by PaineWebber
in connection with the sale of Shares under this Contract, including the
additional cost of printing copies of prospectuses, statements of additional
information, and annual and interim shareholder reports other than copies
thereof required for distribution to existing shareholders or for filing with
any federal or state securities authorities; (ii) any expenses of advertising
incurred by PaineWebber in connection with such offering; (iii) the expenses of
registration or qualification of PaineWebber as a broker or dealer under federal
or state laws and the expenses of continuing such registration or qualification;
and (iv) all compensation paid to PaineWebber's employees and others for selling
Shares, and all expenses of PaineWebber, its employees and others who engage in
or support the sale of Shares as may be incurred in connection with their sales
efforts.
9. Indemnification.
(a) The Fund agrees to indemnify, defend and hold PaineWebber, its officers and
directors, and any person who controls PaineWebber within the meaning of Section
15 of the 1933 Act, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees incurred in
connection therewith) which PaineWebber, its officers, directors or any such
controlling person may incur under the 1933 Act, or under common law or
otherwise, arising out of or based upon any untrue statement, or alleged untrue
statement, of a material fact contained in the Registration Statement or any
related prospectus ('Prospectus') or arising out of or based upon any omission,
or alleged omission, to state a material fact required to be stated in the
Registration Statement or Prospectus or necessary to make the statements therein
not misleading, except insofar as such claims, demands, liabilities or expenses
arise out of or are based upon any such untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information furnished in writing by PaineWebber to the Fund for use in the
Registration Statement or Prospectus; provided, however, that this indemnity
agreement shall not inure to the benefit of any person who is also an officer or
director of the Fund or who controls the Fund within the meaning of Section 15
of the 1933 Act, unless a court of competent jurisdiction shall determine, or it
shall have been determined by controlling precedent, that such result would not
be against public policy as expressed in the 1933 Act; and further provided,
that in no event shall anything contained herein be so construed as to protect
PaineWebber against any liability to the Fund or to the shareholders to which
PaineWebber would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations under this
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Contract. The Fund shall not be liable to PaineWebber under this indemnity
agreement with respect to any claim made against PaineWebber or any person
indemnified unless PaineWebber or other such person shall have notified the Fund
in writing of the claim within a reasonable time after the summons or other
first written notification giving information of the nature of the claim shall
have been served upon PaineWebber or such other person (or after PaineWebber or
the person shall have received notice of service on any designated agent).
However, failure to notify the Fund of any claim shall not relieve the Fund from
any liability which it may have to PaineWebber or any person against whom such
action is brought otherwise than on account of this indemnity agreement. The
Fund shall be entitled to participate at its own expense in the defense or, if
it so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity agreement. If the Fund elects to assume the defense of
any such claim, the defense shall be conducted by counsel chosen by the Fund and
satisfactory to the indemnified defendants in the suit. In the event that the
Fund elects to assume the defense of any suit and retain counsel, the
indemnified defendants shall bear the fees and expenses of any additional
counsel retained by them. If the Fund does not elect to assume the defense of a
suit, it will reimburse the indemnified defendants for the reasonable fees and
expenses of any counsel retained by the indemnified defendants. The Fund agrees
to notify PaineWebber promptly of the commencement of any litigation or
proceedings against it or any of its officers or directors in connection with
the issuance or sale of any of its Shares.
(b) The Fund's indemnification agreement contained in this Section 9 will
remain operative and in full force and effect regardless of any investigation
made by or on behalf of PaineWebber, its officers and directors, or any
controlling person, and will survive the delivery of any shares of the Fund.
(c) PaineWebber agrees to indemnify, defend, and hold the Fund, its
officers and directors and any person who controls the Fund within the meaning
of Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the cost of investigating
or defending against such claims, demands or liabilities and any counsel fees
incurred in connection therewith) which the Fund, its directors or officers, or
any such controlling person may incur under the 1933 Act or under common law or
otherwise arising out of or based upon any alleged untrue statement of a
material fact contained in information furnished in writing by PaineWebber to
the Fund for use in the Registration Statement, or arising out of or based upon
any alleged omission to state a material fact in connection with such
information required to be stated in the Registration Statement necessary to
make such information not misleading, or in the event that Shares of the Fund
are offered to eligible participants in the PaineWebber/Kidder, Peabody
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Premium Account program ('PW/KPPA'), losses or costs in connection with the
redemption of Shares due to unauthorized use of a Visa card or Visa checks or
due to any error, fault or breakdown of the PW/KPPA computer programs or
operating procedures. PaineWebber shall have the right to control the defense of
any action contemplated by this Section 9(c), with counsel of its own choosing,
satisfactory to the Fund, unless the action is not based solely upon an alleged
misstatement or omission on PaineWebber's part. In such event, the Fund, its
officers or directors or controlling persons will each have the right to
participate in the defense or preparation of the defense of the action. In the
event that PaineWebber elects to assume the defense of any suit and retain
counsel, the defendants in the suit shall bear the fees and expenses of any
additional counsel retained by them. If PaineWebber does not elect to assume the
defense of any suit, it will reimburse the indemnified defendants in the suit
for the reasonable fees and expenses of any counsel retained by them.
(d) PaineWebber shall not be liable to the Fund under this indemnity
agreement with respect to any claim made against the Fund or any person
indemnified unless the Fund or other such person shall have notified PaineWebber
in writing of the claim within a reasonable time after the summons or other
first written notification giving information of the nature of the claim shall
have been served upon the Fund or such other person (or after the Fund shall
have received notice of service on any designated agent). PaineWebber will not
be obligated to indemnify any entity or person against any liability to which
the Fund, its officers and directors, or any controlling person would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
performance of, or reckless disregard of, the obligations and duties set forth
in this Agreement.
10. Services Provided to the Fund by Employees of PaineWebber. Any person,
even though also an officer, director, employee or agent of PaineWebber, who may
be or become an officer, director, employee or agent of the Fund, shall be
deemed, when rendering services to the Fund or acting in any business of the
Fund, to be rendering such services to or acting solely for the Fund and not as
an officer, director, employee or agent or one under the control or direction of
PaineWebber even though paid by PaineWebber.
11. Duration and Termination.
(a) This Contract shall become effective upon the date hereabove written,
provided that this Contract shall not take effect unless such action has first
been approved by vote of a majority of the Board and by vote of a majority of
those directors of the Fund who are not interested persons of the Fund, and have
no direct or indirect financial interest in the operation of
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the Plan relating to the Shares or in any agreements related thereto (all such
directors collectively being referred to herein as the 'Independent Directors')
cast in person at a meeting called for the purpose of voting on such action.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for one year from the above written date. Thereafter, if not
terminated, this Contract shall continue automatically for successive periods of
twelve months each, provided that such continuance is specifically approved at
least annually (i) by a vote of a majority of the Independent Directors, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by the Board or by vote of a majority of the outstanding voting securities of
the Shares of the Fund.
(c) Notwithstanding the foregoing, this Contract may be terminated at any
time, without the payment of any penalty, by vote of the Board, by vote of a
majority of the Independent Directors or by vote of a majority of the
outstanding voting securities of the Fund on sixty days' written notice to
PaineWebber or by PaineWebber at any time, without the payment of any penalty,
on sixty days' written notice to the Fund. This Contract will automatically
terminate in the event of its assignment.
12. Amendment of this Contract. No provision of this Contract may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
13. Governinq Law. This Contract shall be construed in accordance with the
laws of the State of Delaware and the 1940 Act. To the extent that the
applicable laws of the State of Delaware conflict with the applicable provisions
of the 1940 Act, the latter shall control.
14. Notice. Any notice required or permitted to be given by either party to
the other shall be deemed sufficient upon receipt in writing at the other
party's principal offices.
15. Miscellaneous. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms 'majority of the outstanding voting securities,' 'interested person'
and 'assignment'
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shall have the same meaning as such terms have in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
executed by their officers designated as of the day and year first above
written.
ATTEST: PAINEWEBBER/KIDDER, PEABODY
CASH RESERVE FUND
/s/ Ilene Shore By: /s/ Dianne E. O'Donnell
__________________________________ ___________________________
ATTEST: PAINEWEBBER INCORPORATED
/s/ Ilene Shore /s/ THOMAS EGGERS
__________________________________ __________________________________
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Exhibit 9
TRANSFER AGENCY SERVICES AND SHAREHOLDER SERVICES AGREEMENT
TERMS AND CONDITIONS
This Agreement is made as of January 30, 1995, to be effective as of such
date as is agreed to in writing by the parties, by and between
PAINEWEBBER/KIDDER, PEABODY CASH RESERVE FUND, INC. (the 'Fund'), a Maryland
corporation and PFPC INC. ('PFPC'), a Delaware corporation, which is an indirect
wholly-owned subsidiary of PNC Bank Corp.
The Fund is registered as an open-end management series investment company
under the Investment Company Act of 1940, as amended ('1940 Act'). The Fund
wishes to retain PFPC to serve as the transfer agent, registrar, dividend
disbursing agent and shareholder servicing agent for such series listed in
Appendix C to this agreement, as amended from time to time (the 'Series'), and
PFPC wishes to furnish such services.
In consideration of the promises and mutual covenants herein contained, the
parties agree as follows:
1. Definitions.
(a) 'Authorized Person'. The term 'Authorized Person' shall mean any
officer of the Fund and any other person who is duly authorized by the
Fund's Governing Board to give Oral and Written Instructions on behalf of
the Fund. Such persons are listed in the Certificate attached hereto as the
Authorized Persons Appendix or any amendment thereto as may be received by
PFPC from time to time. If PFPC provides more than one service hereunder,
the Fund's designation of Authorized Persons may vary by service.
<PAGE>
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(b) 'Governing Board'. The term 'Governing Board' shall mean the
Fund's Board of Directors if the Fund is a corporation or the Fund's Board
of Trustees if the Fund is a trust, or, where duly authorized, a competent
committee thereof.
(c) 'Oral Instructions'. The term 'Oral Instructions' shall mean oral
instructions received by PFPC from an Authorized Person by telephone or in
person.
(d) 'SEC'. The term 'SEC' shall mean the Securities and Exchange
Commission.
(e) 'Securities Laws'. The term 'Securities Laws' shall mean the 1933
Act, the 1934 Act and the 1940 Act. The terms the '1933 Act' shall mean the
Securities Act of 1933, as amended, and the '1934 Act' shall mean the
Securities Exchange Act of 1934, as amended.
(f) 'Shares'. The term 'Shares' shall mean the shares of beneficial
interest of any Series or class of the Fund.
(g) 'Written Instructions'. The term 'Written Instructions' shall mean
written instructions signed by one Authorized Person and received by PFPC.
The instructions may be delivered by hand, mail, tested telegram, cable,
telex or facsimile sending device.
2. Appointment. The Fund hereby appoints PFPC to serve as transfer agent,
registrar, dividend disbursing agent and shareholder servicing agent to each of
its Series, in accordance with the terms set forth in this Agreement, and PFPC
accepts such appointment and agrees to furnish such services.
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3. Delivery of Documents. The Fund has provided or, where applicable, will
provide PFPC with the following:
(a) Certified or authenticated copies of the resolutions of the Fund's
Governing Board, approving the appointment of PFPC to provide services to
each Series and approving this agreement;
(b) A copy of the Fund's most recent Post-Effective Amendment to its
Registration Statement on Form N-1A under the 1933 Act and 1940 Act as
filed with the SEC;
(c) A copy of the Fund's investment advisory and administration
agreement or agreements;
(d) A copy of the Fund's distribution agreement or agreements;
(e) Copies of any shareholder servicing agreements made in respect of
the Fund; and
(f) Copies of any and all amendments or supplements to the foregoing.
4. Compliance with Government Rules and Regulations. PFPC undertakes to
comply with all applicable requirements of the Securities Laws, and any laws,
rules and regulations of governmental authorities having jurisdiction with
respect to all duties to be performed by PFPC hereunder. Except as specifically
set forth herein, PFPC assumes no responsibility for such compliance by the
Fund.
5. Instructions. Unless otherwise provided in this Agreement, PFPC shall
act only upon Oral and Written Instructions. PFPC shall be entitled to rely upon
any Oral and Written
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Instruction it receives from an Authorized Person pursuant to this Agreement.
PFPC may assume that any Oral or Written Instruction received hereunder is not
in any way inconsistent with the provisions of organizational documents or of
any vote, resolution or proceeding of the Fund's Governing Board or of the
Fund's shareholders, unless and until it receives Written Instructions to the
contrary.
The Fund agrees to forward to PFPC Written Instructions confirming Oral
Instructions so that PFPC receives the Written Instructions by the close of
business on the next business day after such Oral Instructions are received. The
fact that such confirming Written Instructions are not received by PFPC shall in
no way invalidate the transactions or enforceability of the transactions
authorized by the Oral Instructions. Where Oral or Written Instructions
reasonably appear to have been received from an Authorized Person, PFPC shall
incur no liability to the Fund in acting upon such instructions provided that
PFPC's actions comply with the other provisions of this Agreement.
6. Right to Receive Advice.
(a) Advice of the Fund. If PFPC is in doubt as to any action it should
or should not take, PFPC will request directions or advice, including Oral
or Written Instructions, from the Fund.
(b) Advice of Counsel. If PFPC shall be in doubt as to any question of
law pertaining to any action it should or should not take, PFPC may request
advice at its own cost from such counsel
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of its own choosing (who may be counsel for the Fund, the Fund's investment
adviser or PFPC, at the option of PFPC).
(c) Conflicting Advice. In the event of a conflict between directions,
advice or Oral or Written Instructions PFPC receives from the Fund and the
advice it receives from counsel, PFPC may rely upon and follow the advice
of counsel. In the event PFPC so relies on the advice of counsel, PFPC
remains liable for any action or omission on the part of PFPC which
constitutes willful misfeasance, bad faith, negligence or reckless
disregard by PFPC of any duties, obligations or responsibilities provided
for in this Agreement.
(d) Protection of PFPC. PFPC shall be protected in any action it takes
or does not take in reliance upon directions, advice or Oral or Written
Instructions it receives from the Fund or from counsel in accordance with
this Agreement and which PFPC believes, in good faith, to be consistent
with those directions, advice or Oral or Written Instructions.
Nothing in this paragraph shall be construed to impose an obligation upon
PFPC (i) to seek such directions, advice or Oral or Written Instructions, or
(ii) to act in accordance with such directions, advice or Oral or Written
Instructions unless, under the terms of other provisions of this Agreement, the
same is a condition of PFPC's properly taking or not taking such action. Nothing
in this subsection shall excuse PFPC when an action or omission on the part of
PFPC constitutes willful misfeasance, bad
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faith, negligence or reckless disregard of PFPC of any duties, obligations or
responsibilities provided for in this Agreement.
7. Records and Visits. PFPC shall prepare and maintain in complete and
accurate form all books and records necessary for it to serve as transfer agent,
registrar, dividend disbursing agent and shareholder servicing agent to the
Fund, including (a) all those records required to be prepared and maintained by
the Fund under the 1940 Act, by other applicable Securities Laws, rules and
regulations and by state laws and (b) such books and records as are necessary
for PFPC to perform all of the services it agrees to provide in this Agreement
and the appendices attached hereto, including but not limited to the books and
records necessary to effect the conversion of Class B Shares, the calculation of
any contingent deferred sales charges and the calculation of front-end sales
charges. The books and records pertaining to the Fund which are in the
possession, or under the control, of PFPC shall be the property of the Fund. The
Fund or the Fund's Authorized Persons shall have access to such books and
records at all times during PFPC's normal business hours. Upon the reasonable
request of the Fund, copies of any such books and records shall be provided by
PFPC to the Fund or to an Authorized Person of the Fund. Upon reasonable notice
by the Fund, PFPC shall make available during regular business hours its
facilities and premises employed in connection with its performance of this
Agreement for reasonable visits by the Fund, any agent or person designated by
the Fund or any regulatory agency having authority over the Fund.
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8. Confidentiality. PFPC agrees on its own behalf and that of its employees
to keep confidential all records of the Fund and information relating to the
Fund and its shareholders (past, present and future), its investment adviser and
its principal underwriter, unless the release of such records or information is
otherwise consented to, in writing, by the Fund prior to its release. The Fund
agrees that such consent shall not be unreasonably withheld, and may not be
withheld where PFPC may be exposed to civil or criminal contempt proceedings or
when required to divulge such information or records to duly constituted
authorities.
9. Cooperation with Accountants. PFPC shall cooperate with the Fund's
independent public accountants and shall take all reasonable actions in the
performance of its obligations under this Agreement to ensure that the necessary
information is made available to such accountants for the expression of their
opinion, as required by the Fund.
10. Disaster Recovery. PFPC shall enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable provision for
periodic backup of computer files and data with respect to the Fund and
emergency use of electronic data processing equipment. In the event of equipment
failures, PFPC shall, at no additional expense to the Fund, take all reasonable
steps to minimize service interruptions. PFPC shall have no liability with
respect to the loss of data or service interruptions caused by equipment
failures, provided such loss or
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interruption is not caused by the negligence of PFPC and provided further that
PFPC has complied with the provisions of this Paragraph 10.
11. Compensation. As compensation for services rendered by PFPC during the
term of this Agreement, the Fund will pay to PFPC a fee or fees as may be agreed
to, from time to time, in writing by the Fund and PFPC.
12. Indemnification.
(a) The Fund agrees to indemnify and hold harmless PFPC and its
nominees from all taxes, charges, expenses, assessments, claims and
liabilities (including, without limitation, liabilities arising under the
Securities Laws, and any state and foreign securities and blue sky laws,
and amendments thereto), and expenses, including, without limitation,
reasonable attorneys' fees and disbursements arising directly or indirectly
from any action or omission to act which PFPC (i) at the request of or on
the direction of or in reliance on the advice of the Fund or (ii) upon Oral
or Written Instructions. Neither PFPC, nor any of its nominees, shall be
indemnified against any liability (or any expenses incident to such
liability) arising out of PFPC's or its nominees' own willful misfeasance,
bad faith, negligence or reckless disregard of its duties and obligations
under this Agreement.
(b) PFPC agrees to indemnify and hold harmless the Fund from all
taxes, charges, expenses, assessments, claims and liabilities arising from
PFPC's obligations pursuant to this
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Agreement (including, without limitation, liabilities arising under the
Securities Laws, and any state and foreign securities and blue sky laws, and
amendments thereto) and expenses, including, without limitation, reasonable
attorneys' fees and disbursements, arising directly or indirectly out of
PFPC's or its nominee's own willful misfeasance, bad faith, negligence or
reckless disregard of its duties and obligations under this Agreement.
(c) In order that the indemnification provisions contained in this
Paragraph 12 shall apply, upon the assertion of a claim for which either
party may be required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such assertion,
and shall keep the other party advised with respect to all developments
concerning such claim. The party who may be required to indemnify shall
have the option to participate with the party seeking indemnification in
the defense of such claim. The party seeking indemnification shall in no
case confess any claim or make any compromise in any case in which the
other party may be required to indemnify it except with the other party's
prior written consent.
13. Insurance. PFPC shall maintain insurance of the types and in the
amounts deemed by it to be appropriate. To the extent that policies of insurance
may provide for coverage of claims for liability or indemnity by the parties set
forth in this Agreement, the contracts of insurance shall take precedence, and
no provision of this Agreement shall be construed to relieve an insurer of any
obligation to pay claims to the Fund, PFPC or other insured party
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which would otherwise be a covered claim in the absence of any provision of this
Agreement.
14. Security. PFPC represents and warrants that, to the best of its
knowledge, the various procedures and systems which PFPC has implemented with
regard to the safeguarding from loss or damage attributable to fire, theft or
any other cause (including provision for twenty-four hours a day restricted
access) of the Fund's blank checks, certificates, records and other data and
PFPC's equipment, facilities and other property used in the performance of its
obligations hereunder are adequate, and that it will make such changes therein
from time to time as in its judgment are required for the secure performance of
its obligations hereunder. PFPC shall review such systems and procedures on a
periodic basis and the Fund shall have access to review these systems and
procedures.
15. Responsibility of PFPC. PFPC shall be under no duty to take any action
on behalf of the Fund except as specifically set forth herein or as may be
specifically agreed to by PFPC in writing. PFPC shall be obligated to exercise
due care and diligence in the performance of its duties hereunder, to act in
good faith and to use its best efforts in performing services provided for under
this Agreement. PFPC shall be liable only for any damages arising out of or in
connection with PFPC's performance of or omission or failure to perform its
duties under this Agreement to the extent such damages arise out of PFPC's
negliqence, reckless disregard of its duties, bad faith or willful misfeasance.
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Without limiting the generality of the foregoing or of any other provision
of this Agreement, PFPC, in connection with its duties under this Agreement,
shall not be under any duty or obligation to inquire into and shall not be
liable for (a) the validity or invalidity or authority or lack thereof of any
Oral or Written Instruction, notice or other instrument which conforms to the
applicable requirements of this Agreement, and which PFPC reasonably believes to
be genuine; or (b) subject to the provisions of Paragraph 10, delays or errors
or loss of data occurring by reason of circumstances beyond PFPC's control,
including acts of civil or military authority, national emergencies, labor
difficulties, fire, flood or catastrophe, acts of God, insurrection, war, riots
or failure of the mails, transportation, communication or power supply.
16. Description of Services. PFPC shall perform the duties of the transfer
agent, registrar, dividend disbursing agent and shareholder servicing agent of
the Fund and its specified Series.
(a) Purchase of Shares. PFPC shall issue and credit an account of an
investor in the manner described in each Series prospectus once it
receives:
(i) A purchase order;
(ii) Proper information to establish a shareholder account; and
(iii) Confirmation of receipt or crediting of funds for such order
from the Series' custodian.
(b) Redemption of Shares. PFPC shall redeem a Series' Shares only if
that function is properly authorized by the Fund's
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organizational documents or resolution of the Fund's Governing Board.
Shares shall be redeemed and payment therefor shall be made in accordance
with each Series' prospectus when the shareholder tenders his or her Shares
in proper form and directs the method of redemption.
(c) Dividends and Distributions. Upon receipt of a resolution of the
Fund's Governing Board authorizing the declaration and payment of dividends
and distributions, PFPC shall issue dividends and distributions declared by
the Fund in Shares, or, upon shareholder election, pay such dividends and
distributions in cash if provided for in each Series' prospectus. Such
issuance or payment, as well as payments upon redemption as described
above, shall be made after deduction and payment of the required amount of
funds to be withheld in accordance with any applicable tax law or other
laws, rules or regulations. PFPC shall mail to each Series' shareholders
such tax forms and other information, or permissible substitute notice,
relating to dividends and distributions paid by the Fund as are required to
be filed and mailed by applicable law, rule or regulation.
PFPC shall prepare, maintain and file with the IRS and other
appropriate taxing authorities reports relating to all dividends above a
stipulated amount paid by the Fund to its shareholders as required by tax
or other law, rule or regulation.
(d) PFPC will provide the services listed on Appendix A and Appendix B
on an ongoing basis. Performance of certain of these services, with
accompanying responsibilities and liabilities,
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may be delegated and assigned to PaineWebber Incorporated or Mitchell
Hutchins Asset Management Inc. or to an affiliated person of either.
17. Duration and Termination.
(a) This Agreement shall continue until January 30, 1997 and shall
automatically be renewed thereafter on a year-to-year basis and with
respect to the year-to-year renewal, provided that the Fund's Governing
Board approves such renewal; and provided further that this Agreement may
be terminated by either party for cause.
(b) With respect to the Fund, cause includes, but is not limited to:
(i) PFPC's material breach of this Agreement causing it to fail to
substantially perform its duties under this Agreement. In order for such
material breach to constitute 'cause' under this Paragraph, PFPC must
receive written notice from the Fund specifying the material breach and
PFPC shall not have corrected such breach within a 15-day period; (ii)
financial difficulties of PFPC evidenced by the authorization or
commencement of a voluntary or involuntary bankruptcy under the U.S.
Bankruptcy Code or any applicable bankruptcy or similar law, or under any
applicable law of any jurisdiction relating to the liquidation or
reorganization of debt, the appointment of a receiver or to the
modification or alleviation of the rights of creditors; and (iii) issuance
of an administrative or court order against PFPC with reqard to the
material violation or alleged material violation of
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the Securities Laws or other applicable laws related to its business of
performing transfer agency services.
(c) With respect to PFPC, cause includes, but is not limited to, the
failure of the Fund to pay the compensation set forth in writing pursuant
to Paragraph 11 of this Agreement.
(d) Any notice of termination for cause in conformity with
subparagraphs (a), (b) and (c) of this Paragraph by the Fund shall be
effective thirty (30) days from the date of such notice. Any notice of
termination for cause by PFPC shall be effective 90 days from the date of
such notice.
(e) Upon the termination hereof, the Fund shall pay to PFPC such
compensation as may be due for the period prior to the date of such
termination. In the event that the Fund designates a successor to any of
PFPC's obligations under this Agreement, PFPC shall, at the direction and
expense of the Fund, transfer to such successor all relevant books, records
and other data established or maintained by PFPC hereunder including a
certified list of the shareholders of each Series of the Fund with name,
address, and if provided taxpayer identification or Social Security number,
and a complete record of the account of each shareholder. To the extent
that PFPC incurs expenses related to a transfer of responsibilities to a
successor, other than expenses involved in PFPC's providing the Fund's
books and records to the successor, PFPC shall be entitled to be reimbursed
for such expenses, including any out-of-pocket expenses reasonably incurred
by PFPC in connection with the transfer.
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(f) Any termination effected pursuant to this Paragraph shall not
affect the rights and obligations of the parties under Paragraph 12 hereof.
(g) Notwithstanding the foregoing, this Agreement shall terminate with
respect to the Fund and any Series thereof upon the liquidation, merger or
other dissolution of the Fund or Series or upon the Fund's ceasing to be
registered investment company.
19. Registration as a Transfer Agent. PFPC represents that it is currently
registered with the appropriate federal agency for the registration of transfer
agents, or is otherwise permitted to lawfully conduct its activities without
such registration and that it will remain so registered for the duration of this
Agreement. PFPC agrees that it will promptly notify the Fund in the event of any
material change in its status as a registered transfer agent. Should PFPC fail
to be registered with the SEC as a transfer agent at any time during this
Agreement, and such failure to register does not permit PFPC to lawfully conduct
its activities, the Fund may terminate this Agreement upon five days written
notice to PFPC.
20. Notices. All notices and other communications, other than Oral or
Written Instructions, shall be in writing or by confirming telegram, cable,
telex or facsimile sending device. Notice shall be addressed (a) if to PFPC at
PFPC's address, 400 Bellevue Parkway, Wilmington, Delaware 19809; (b) if to the
Fund, at 1285 Avenue of the Americas, 15th Floor, New York, N.Y. 10005; or (c)
if to neither of the foregoing, at such other address as shall have been
notified to the sender of any such notice or other
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communication. If the notice is sent by confirming telegram, cable telex or
facsimile sending device during regular business hours, it shall be deemed to
have been given immediately. If sent during a time other than regular business
hours, such notice shall be deemed to have been given at the opening of the next
business day. If notice is sent by first-class mail, it shall be deemed to have
been given three business days after it has been mailed. If notice is sent by
messenger, it shall be deemed to have been given on the day it is delivered. All
postage, cable, telegram, telex and facsimile sending device charges arising
from the sending of a notice hereunder shall be paid by the sender.
21. Amendments. This Agreement, or any term thereof, may be changed or
waived only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
22. Additional Series. In the event that the Fund establishes one or more
investment Series in addition to and with respect to which it desires to have
PFPC render services as transfer agent, registrar, dividend disbursing agent and
shareholder servicing agent under the terms set forth in this Agreement, it
shall so notify PFPC in writing, and PFPC shall agree in writing to provide such
services, and such investment Series shall become a Series hereunder, subject to
such additional terms, fees and conditions as are agreed to by the parties.
23. Assignment and Delegation.
(a) PFPC may, at its owns expense, assign its rights and delegate its
duties hereunder to any wholly-owned direct or
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indirect subsidiary of PNC Bank, National Association or PNC Bank Corp.,
provided that (i) PFPC gives the Fund thirty (30) days' prior written
notice; (ii) the delegate agrees with PFPC to comply with all relevant
provisions of the Securities Laws; and (iii) PFPC and such delegate
promptly provide such information as the Fund may request and respond to
such questions as the Fund may ask relating to the delegation, including,
without limitation, the capabilities of the delegate. The assignment and
delegation of any of PFPC's duties under this subparagraph (a) shall not
relieve PFPC of any of its responsibilities or liabilities under this
Agreement.
(b) PFPC may assign its rights and delegate its duties hereunder to
PaineWebber Incorporated or Mitchell Hutchins Asset Management Inc. or
affiliated person of either provided that (i) PFPC gives the Fund thirty
(30) days' prior written notice; (ii) the delegate agrees to comply with
all relevant provisions of the Securities Laws; and (iii) PFPC and such
delegate promptly provide such information as the Fund may request and
respond to such questions as the Fund may ask relative to the delegation,
including, without limitation, the capabilities of the delegate. In
assigning its rights and delegating its duties under this paragraph, PFPC
may impose such conditions or limitations as it determines appropriate
including the condition that PFPC be retained as a sub-transfer agent.
(c) In the event that PFPC assigns its rights and delegates its duties
under this section, no amendment of the terms
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of this Agreement shall become effective without the written consent of
PFPC.
24. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
25. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
26. Limitation of Liability. Notice is hereby given that this Agreement is
executed on behalf of the Fund and that the obligations of this instrument are
not binding upon any of the directors, officers or shareholders individually but
are binding only upon the assets and property of the Fund. PFPC agrees that, in
asserting any rights or claims under this Agreement, it shall look only to the
assets and property of the Fund or the particular Series of the Fund in
settlement of such right or claims, and not to such directors, officers or
shareholders.
27. Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, provided that the parties
may embody in one or more separate documents their agreement, if any, with
respect to services to be performed and compensation to be paid under this
Agreement.
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The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect.
This Agreement shall be deemed to be a contract made in Delaware and
governed by Delaware Law, except that, to the extent provision of the
Securities Laws govern the subject matter of this Agreement, such Securities
Laws will controlling. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be binding and
inure to the benefit of the parties hereto and their respective successors and
assigns.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
PFPC INC.
By: /s/ GEORGE GAINES, JR.
...................................
/s/ GEORGE GAINES, JR.
PAINEWEBBER/KIDDER, PEABODY CASH
RESERVE FUND, INC.
By: /s/ DIANNE E. O'DONNELL
................................
/s/ DIANNE E. O'DONNELL
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APPENDIX A
Description of Services
(a) Services Provided on an Ongoing Basis by PFPC to the Fund. If
Applicable.
<TABLE>
<C> <S>
(i) Calculate 12b-1 payments and broker trail commissions;
(ii) Develop, monitor and maintain all systems necessary to implement and operate the three-tier distribution
system, including Class B conversion feature, as described in the registration statement and related
documents of the Fund, as they may be amended from time to time;
(iii) Calculate contingent deferred sales charge amounts upon redemption of Fund Shares and deduct such amounts
from redemption proceeds;
(iv) Calculate front-end sales load amounts at time of purchase of Shares;
(v) Determine dates of Class B conversion and effect same;
(vi) Establish and maintain proper shareholder registrations, unless requested by the Fund;
(vii) Review new applications with correspondence to shareholders to complete or correct information;
(viii) Direct payment processing of checks or wires;
(ix) Prepare and certify stockholder lists in conjunction with proxy solicitations;
(x) Countersign share certificates;
(xi) Prepare and mail to shareholders confirmation of activity;
(xii) Provide toll-free lines for direct shareholder use, plus customer liaison staff for on-line inquiry
response;
(xiii) Send duplicate confirmations to broker-dealers of their clients' activity, whether executed through the
broker-dealer or directly with PFPC;
</TABLE>
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<TABLE>
<C> <S>
(xiv) Provide periodic shareholder lists, outstanding share calculations and related statistics to the Fund;
(xv) Provide detailed data for underwriter/broker confirmations;
(xvi) Periodic mailing of year-end tax and statement information;
(xvii) Notify on a daily basis the investment advisor, accounting agent, and custodian of fund activity; and
(xviii) Perform other participating broker-dealer shareholder services as may be agreed upon from time to time.
</TABLE>
(b) Services Provided by PFPC Under Oral or Written Instructions of the
Fund.
<TABLE>
<C> <S>
(i) Accept and post daily Series and class purchases and redemptions;
(ii) Accept, post and perform shareholder transfers and exchanges;
(iii) Pay dividends and other distributions;
(iv) Solicit and tabulate proxies; and
(v) Issue and cancel certificates.
</TABLE>
(c) Shareholder Account Services.
(i) PFPC may arrange, in accordance with the Series' prospectus, for
issuance of Shares obtained through:
The transfer of funds from shareholders' account at financial
institutions; and
Any pre-authorized check plan.
(ii) PFPC, if requested, shall arrange for a shareholder's:
Exchange of Shares for shares of a fund for which the Fund has
exchange privileges;
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Systematic withdrawal from an account where that shareholder
participates in a systematic withdrawal plan; and/or
Redemption of Shares from an account with a checkwriting
privilege.
(d) Communications to Shareholders. Upon timely written instructions, PFPC
shall mail all communications by the Fund to its shareholders, including:
<TABLE>
<C> <S>
(i) Reports to shareholders;
(ii) Confirmations of purchases and sales of fund Shares;
(iii) Monthly or quarterly statements;
(iv) Dividend and distribution notices;
(v) Proxy material; and
(vi) Tax form information.
</TABLE>
If requested by the Fund, PFPC will receive and tabulate the proxy cards
for the meetings of the Fund's shareholders and supply personnel to serve as
inspectors of election.
(e) Records. PFPC shall maintain records of the accounts for each
shareholder showing the following information:
<TABLE>
<C> <S>
(i) Name, address and United States Tax Identification or Social Security number;
(ii) Number and class of Shares held and number and class of Shares for which certificates, if any, have been
issued, including certificate numbers and denominations;
(iii) Historical information regarding the account of each shareholder, including dividends and distributions
paid and the date and price for all transactions on a shareholder's account;
(iv) Any stop or restraining order placed against a shareholder's account;
(v) Any correspondence relating to the current maintenance of a shareholder's account;
(vi) Information with respect to withholdings; and
</TABLE>
A-3
<PAGE>
<PAGE>
<TABLE>
<C> <S>
(vii) Any information required in order for the transfer agent to perform any calculations contemplated or
required by this Agreement.
</TABLE>
(f) Lost or Stolen Certificates. PFPC shall place a stop notice against any
certificate reported to be lost or stolen and comply with all applicable federal
regulatory requirements for reporting such loss or alleged misappropriation.
A new certificate shall be registered and issued upon:
<TABLE>
<C> <S>
(i) Shareholder's pledge of a lost instrument bond or such other and appropriate indemnity bond issued by a
surety company approved by PFPC; and
(ii) Completion of a release and indemnification agreement signed by the shareholder to protect PFPC.
</TABLE>
(g) Shareholder Inspection of Stock Records. Upon requests from Fund
shareholders to inspect stock records, PFPC will notify the Fund and require
instructions granting or denying such request prior to taking any action. Unless
PFPC has acted contrary to the Fund's instructions, the Fund agrees to release
PFPC from any liability for refusal of permission for a particular shareholder
to inspect the Fund's shareholder records.
A-4
<PAGE>
<PAGE>
APPENDIX B
PFPC will perform or arrange for others to perform the following
activities, some or all of which may be delegated and assigned by PFPC to
PaineWebber Incorporated ('PaineWebber) or Mitchell Hutchins Asset Management
Inc. ('Mitchell Hutchins) or to an affiliated person of either:
<TABLE>
<C> <S>
(i) providing, to the extent reasonable, uninterrupted processing of new accounts, shareholder account changes,
sales and redemption activity, dividend calculations and payments, check settlements, blue sky reporting,
tax reporting, recordkeeping, communication with all shareholders, resolution of discrepancies and
shareholder inquiries and adjustments, maintenance of dual system, development and maintenance of repricing
system, and development and maintenance of correction system;
(ii) develop and maintain all systems for custodian interface and reporting, and underwriter interface and
reporting;
(iii) develop and maintain all systems necessary to implement and operate the three-tier distribution system,
including Class B conversion features as described in the registration statement and related documents of
the Fund, as they may be amended from time to time; and
(iv) provide administrative, technical and legal support for the foregoing services.
</TABLE>
In undertaking its activities and responsibilities under this Appendix,
PFPC will not be responsible, except to the extent caused by PFPC's own willful
misfeasance, bad faith, negligence or reckless disregard of its duties and
obligations under this agreement, for any charges or fees billed, expenses
incurred or penalties, imposed by any party, including the Fund or any current
or prior services providers of the Fund, without the prior written approval by
PFPC.
<PAGE>
<PAGE>
APPENDIX C
PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc.
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions 'Financial
Highlights' in the Propectus and 'Independent Auditors' in the Prospectus and
Statement of Additional Information and to the incorporation by reference of our
report dated September 21, 1995, in this Registration Statement (Form N-1A No.
2-64685) of PaineWebber Kidder, Peabody Cash Reserve Fund, Inc.
ERNST & YOUNG LLP
ERNST & YOUNG LLP
New York, New York
November 30, 1995
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc.
(Formerly the Kidder, Peabody Cash Reserve Fund, Inc.):
We consent to the incorporation by reference in the Statement of Additional
Information in this Post-Effective Amendment No. 20 to Registration Statement
No. 2-64685 of our report dated September 9, 1994, appearing in the annual
report to shareholders for the year ended July 31, 1994.
Deloitte & Touche LLP
Deloitte & Touche LLP
New York, New York
November 28, 1995
<PAGE>
<PAGE>
EXHIBIT 15(a)
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
WEBSTER CASH RESERVE FUND, INC.
WHEREAS, Webster Cash Reserve Fund, Inc. (the 'Fund') is engaged in
business as an open-end management investment company and is registered as such
under the Investment Company Act of 1940, as amended (the 'Act'); and
WHEREAS, the Fund desires to adopt a Plan of Distnbution pursuant to Rule
12b-1 (the 'Plan') under the Act, and the Board of Directors has determined that
there is a reasonable likelihood that adoption of this Plan will benefit the
Fund and its shareholders; and
WHEREAS, the Fund currently employs Kidder, Peabody & Co. Incorporated
('Kidder, Peabody') as exclusive principal underwriter of the securities of
which it is the issuer (the 'Fund's Shares'); and
WHEREAS, the Fund and Kidder, Peabody propose, subject to the adoption of
the Plan, to enter into an amended Distribution Agreement (the 'Amended
Distribution Agreement') pursuant to which the Fund will continue to employ
Kidder, Peabody as such exclusive principal underwriter;
NOW, THEREFORE, the Fund hereby adopts, and Kidder, Peabody hereby agrees
to the terms of, this Plan in accordance with Rule 12b-1 under the Act on the
following terms and conditions:
1. The Fund shall reimburse Kidder, Peabody as the exclusive principal
underwriter of the Fund's Shares for its expenses in respect of the
distribution of the Fund's Shares at the rate of up to .12 of 1% per annum
of the Fund's average daily net assets. The amount of such reimbursement
shall be accrued daily at the rate of .12 of 1% per annum and paid monthly
or at such other intervals as the Board of Directors shall determine and
shall be reconciled with Kidder, Peabody's actual expenses, but not greater
than such .12 of 1% per annum, on an annual basis. The Fund is not
authorized hereunder to reimburse Kidder, Peabody for expenses incurred
more than 12 months prior to the date of such reimbursement.
2. The expenses for which reimbursement is authorized hereunder are
those which Kidder, Peabody may spend on any activities primarily intended
to result in the sale of the Pund's Shares and the maintenance of accounts
and account balances with the Fund, including, but not limited to,
compensation to and expenses of Kidder, Peabody's Registered
Representatives or other employees of Kidder, Peabody who engage in or
support distribution of the Fund's Shares, service shareholder accounts or
provide other services to current or prospective shareholders of the Fund;
printing of prospectuses and reports for other than existing shareholders;
and preparation, printing and distribution of sales literature and
advertising materials. It is understood that Kidder, Peabody currently
intends that approximately .10 of 1% per annum of the Fund's average daily
net assets shall be paid to Registered Representatives proportionately in
respect of Fund Share balances maintained by clients of such Registered
Representatives, and the balance on other activities. At least annually and
in advance of any annual continuance of the Plan as contemplated by
paragraph 3, Kidder, Peabody shall prepare and present to the Board of
Directors a marketing plan and budgets, including reasonable estimates and
projections of its contemplated distribution activities and attendant
expenses, for the succeeding 12 month period.
<PAGE>
<PAGE>
3. The Plan will continue in effect until October 31, 1989 unless
terminated pursuant to its terms. This Plan shall, unless terminated as
hereinafter provided, continue in full force and effect from year to year
thereafter for so long as such continuance is specifically approved at
least annually by votes of a majority of both (a) the Board of Directors of
the Fund and (b) those Directors of the Fund who are not 'interested
persons' of the Fund (as defined in the Act) and have no direct or indirect
financial interest in the operation of this Plan or any agreements related
to it (the 'Rule 12b-1 Directors'), cast in person at a meeting (or
meetings) called for the purpose of voting on this Plan.
4. Agreements related to the Plan shall be subject to the approval of
the Trustees and the Rule 12b-1 Directors in the manner required for
continuance of this Plan, and shall be subject to the annual continuance
thereof in the same manner. It is currently contemplated that the only such
related agreement shall be the Amended Distribution Agreement.
5. Kidder, Peabody shall provide to the Board of Directors of the Fund
and the Directors shall review, at least quarterly, a written report of the
amounts so expended and the purposes for which such expenditures were made.
Such reports shall provide a comparison with the budgets presented pursuant
to paragraph 2 and shall explain material discrepancies between actual and
budgeted expenditures.
6. This Plan may be terminated at any time by vote of a majority of
the Rule 12b-1 Directors, or by a vote of a majority of the outstanding
voting securities of the Fund. Upon termination as provided in this
paragraph 6, the Fund shall immediately cease to make any payments
hereunder or under any related agreement.
7. This Plan may not be amended to increase materially the amount of
distribution expenses provided for in paragraph 2 hereof, unless such
amendment is approved by a vote of at least a majority (as defined in the
Act) of the outstanding voting securities of the Fund and no material
amendment to this Plan shall be made unless approved in the manner provided
for annual continuance in paragraph 3 hereof.
8. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the
Fund shall be committed to the discretion of the Directors who are not
interested persons.
9. The Fund shall preserve copies of this Plan, any related agreements
and all plans presented and reports made pursuant to paragraphs 2 and 5
hereof for a period of not less than six years from the date of this Plan,
or the agreements or such plans and reports, as the case may be, the first
two years in an easily accessible place.
2
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Fund and Kidder, Peabody have executed this Plan on
the day and year set forth below in New York, New York.
Date: ...............................
WEBSTER CASH RESERVE FUND, INC.
By: /s/ O. B. CHISHOLM
...................................
Attest: /s/ RONAN ATTWORTH
................................
KIDDER, PEABODY & CO. INCORPORATED
By: /s/
.....................................
Attest: /S/ WILLIAM E. MCKINLEY
...............................
<PAGE>
<PAGE>
AMENDMENT EFFECTIVE FEBRUARY 1, 1990 TO
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
WEBSTER CASH RESERVE FUND, INC.
DATED DECEMBER 20, 1988
Amend paragraph 2 to read in its entirety as follow:
2. The expenses for which reimbursement is authorized hereunder are those
which Kidder, Peabody may spend on any activities primarily intended to
result in the sale of the Fund's Shares and the maintenance of accounts and
account balances with the Fund, including, but not limited to, compensation
to and expenses of Kidder, Peabody's Registered Representatives, other
selected broker-dealers or their Registered Representatives, or other
employees of Kidder, Peabody who engage in or support distribution of the
Fund's Shares, service shareholder accounts or provide other services to
current or prospective shareholders of the Fund; printing of prospectuses
and reports for other than existing shareholders; and preparation, printing
and distribution of sales literature and advertising materials. It is
understood that Kidder, Peabody currently intends that approximately .10 of
1% per annum of the Fund's average daily net assets shall be paid to
Registered Representatives proportionately in respect of Fund Share balances
maintained by clients of such Registered Representatives, and the balance on
other activites. At least anually and in advance of any annual continuance
of the Plan as contemplated by paraagraph 3, Kidder, Peabody shall prepare
and present to the Board of Directors a marketing plan and budgets,
including reasonable estimates and projections of its contemplated
distribution activities and attendant expenses, for the succeeding 12 month
period.
IN WITNESS WHEREOF, the Fund and Kidder, Peabody have executed this
Amendment on the day and year set forth below in New Yok, New York.
Date: November 15, 1989
WEBSTER CASH RESERVE FUND, INC.
By: /s/ Ronald Hunter
Attest:
/s/ Lisa Kellman
KIDDER, PEABODY & CO. INCORPORATED
By: /s/ Russell Luft
Attest:
/s/ Elizabeth M. Krislock
<PAGE>
<PAGE>
EXHIBIT 15(b)
AMENDMENT TO
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
KIDDER, PEABODY CASH RESERVE FUND, INC.
WHEREAS, pursuant to resolutions adopted by the Board of Directors of
Kidder, Peabody Cash Reserve Fund, Inc. ('Fund') on December 16, 1994,
PaineWebber Incorporated ('PaineWebber') was appointed distributor of the Fund,
and it was determined to change the name of the Fund to the 'PaineWebber/Kidder,
Peabody Cash Reserve Fund.'
NOW, THEREFORE, the Fund hereby adopts the following amendments to the
above-referenced plan ('Plan'):
1. All references to the 'Kidder, Peabody Cash Reserve Fund, Inc.'
contained in the Plan are hereby replaced with 'PaineWebber/Kidder, Peabody
Cash Reserve Fund.'
2. All references to 'Kidder, Peabody & Co. Incorporated' contained in
the Plan are hereby replaced with 'PaineWebber Incorporated,' and all
references to 'Kidder, Peabody' contained in the Plan are hereby replaced
with 'PaineWebber.'
IN WITNESS WHEREOF, the Fund and PaineWebber have executed this 'Amendment
to the Plan of Distribution Pursuant to Rule 12b-1 of Kidder, Peabody Cash
Reserve Fund' on the day and year set forth below.
Date: January 30, 1995
PAINEWEBBER/KIDDER, PEABODY
CASH RESERVE FUND
By: /s/ DIANNE E. O'DONNELL
...................................
DIANNE E. O'DONNELL
Attest: /s/ ILENE SHORE
...............................
ILENE SHORE
PAINEWEBBER INCORPORATED
By: /s/ THOMAS EGGERS
...................................
Attest: /s/ ILENE SHORE
...............................
ILENE SHORE
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, Margo N. Alexander, President of Mitchell Hutchins/Kidder, Peabody
Equity Income Fund, Inc., Mitchell Hutchins/Kidder, Peabody Government Income
Fund, Inc., PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc.,
PaineWebber/Kidder, Peabody Government Money Fund, Inc., and PaineWebber/Kidder,
Peabody Tax Exempt Money Fund, Inc. (collectively, the 'Funds'), hereby
constitute and appoint Victoria E. Schonfeld, Dianne E. O'Donnell, Gregory K.
Todd and Scott Griff, and each of them singly, my true and lawful attorneys,
with full power to them to sign for me, and in my capacity as President for each
of the Funds, any and all amendments to each of the particular registration
statements of the Funds, and all instruments necessary or desirable in
connection therewith, filed with the Securities and Exchange Commission, hereby
ratifying and confirming my signature as it may be signed by said attorneys to
any and all amendments to said registration statements.
Pursuant to the requirements of the Securities Act of 1933, this instrument
has been signed below by the following in the capacity and on the date
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------------- ---------------
<S> <C> <C>
/s/ MARGO N. ALEXANDER President July 21, 1995
.........................................
(MARGO N. ALEXANDER)
</TABLE>
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, Frank P.L. Minard, Director of Mitchell Hutchins/Kidder, Peabody Equity
Income Fund, Inc., Mitchell Hutchins/Kidder, Peabody Government Income Fund,
Inc., PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc., PaineWebber/Kidder,
Peabody Government Money Fund, Inc., and PaineWebber/Kidder, Peabody Tax Exempt
Money Fund, Inc. (collectively, the 'Funds'), hereby constitute and appoint
Victoria E. Schonfeld, Dianne E. O'Donnell, Gregory K. Todd and Scott Griff, and
each of them singly, my true and lawful attorneys, with full power to them to
sign for me, and in my capacity as Director for each of the Funds, any and all
amendments to each of the particular registration statements of the Funds, and
all instruments necessary or desirable in connection therewith, filed with the
Securities and Exchange Commission, hereby ratifying and confirming my signature
as it may be signed by said attorneys to any and all amendments to said
registration statements.
Pursuant to the requirements of the Securities Act of 1933, this instrument
has been signed below by the following in the capacity and on the date
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------------- ---------------
<S> <C> <C>
/s/ FRANK P.L. MINARD Director May 18, 1995
.........................................
(FRANK P.L. MINARD)
</TABLE>
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, David J. Beaubien, Director of Mitchell Hutchins/Kidder, Peabody Equity
Income Fund, Inc., Mitchell Hutchins/Kidder, Peabody Government Income Fund,
Inc., PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc., PaineWebber/Kidder,
Peabody Government Money Fund, Inc., and PaineWebber/Kidder, Peabody Tax Exempt
Money Fund, Inc. (collectively, the 'Funds'), hereby constitute and appoint
Victoria E. Schonfeld, Dianne E. O'Donnell, Gregory K. Todd and Scott Griff, and
each of them singly, my true and lawful attorneys, with full power to them to
sign for me, and in my capacity as Director for each of the Funds, any and all
amendments to each of the particular registration statements of the Funds, and
all instruments necessary or desirable in connection therewith, filed with the
Securities and Exchange Commission, hereby ratifying and confirming my signature
as it may be signed by said attorneys to any and all amendments to said
registration statements.
Pursuant to the requirements of the Securities Act of 1933, this instrument
has been signed below by the following in the capacity and on the date
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------------- ---------------
<S> <C> <C>
/s/ DAVID J. BEAUBIEN Director March 8, 1995
.........................................
(DAVID J. BEAUBIEN)
</TABLE>
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, William W. Hewitt, Jr., Director of Mitchell Hutchins/Kidder, Peabody
Equity Income Fund, Inc., Mitchell Hutchins/Kidder, Peabody Government Income
Fund, Inc., PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc.,
PaineWebber/Kidder, Peabody Government Money Fund, Inc., and PaineWebber/Kidder,
Peabody Tax Exempt Money Fund, Inc. (collectively, the 'Funds'), hereby
constitute and appoint Victoria E. Schonfeld, Dianne E. O'Donnell, Gregory K.
Todd and Scott Griff, and each of them singly, my true and lawful attorneys,
with full power to them to sign for me, and in my capacity as Director for each
of the Funds, any and all amendments to each of the particular registration
statements of the Funds, and all instruments necessary or desirable in
connection therewith, filed with the Securities and Exchange Commission, hereby
ratifying and confirming my signature as it may be signed by said attorneys to
any and all amendments to said registration statements.
Pursuant to the requirements of the Securities Act of 1933, this instrument
has been signed below by the following in the capacity and on the date
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------------- ---------------
<S> <C> <C>
/s/ WILLIAM W. HEWITT, JR. Director March 8, 1995
.........................................
(WILLIAM W. HEWITT, JR.)
</TABLE>
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, Thomas R. Jordan, Director of Mitchell Hutchins/Kidder, Peabody Equity
Income Fund, Inc., Mitchell Hutchins/Kidder, Peabody Government Income Fund,
Inc., PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc., PaineWebber/Kidder,
Peabody Government Money Fund, Inc., and PaineWebber/Kidder, Peabody Tax Exempt
Money Fund, Inc. (collectively, the 'Funds'), hereby constitute and appoint
Victoria E. Schonfeld, Dianne E. O'Donnell, Gregory K. Todd and Scott Griff, and
each of them singly, my true and lawful attorneys, with full power to them to
sign for me, and in my capacity as Director for each of the Funds, any and all
amendments to each of the particular registration statements of the Funds, and
all instruments necessary or desirable in connection therewith, filed with the
Securities and Exchange Commission, hereby ratifying and confirming my signature
as it may be signed by said attorneys to any and all amendments to said
registration statements.
Pursuant to the requirements of the Securities Act of 1933, this instrument
has been signed below by the following in the capacity and on the date
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------------- ---------------
<S> <C> <C>
/s/ THOMAS R. JORDAN Director March 8, 1995
.........................................
(THOMAS R. JORDAN)
</TABLE>
<PAGE>
<PAGE>
POWER OF ATTORNEY
I, Carl W. Schafer, Director of Mitchell Hutchins/Kidder, Peabody Equity
Income Fund, Inc., Mitchell Hutchins/Kidder, Peabody Government Income Fund,
Inc., PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc., PaineWebber/Kidder,
Peabody Government Money Fund, Inc., and PaineWebber/Kidder, Peabody Tax Exempt
Money Fund, Inc. (collectively, the 'Funds'), hereby constitute and appoint
Victoria E. Schonfeld, Dianne E. O'Donnell, Gregory K. Todd and Scott Griff, and
each of them singly, my true and lawful attorneys, with full power to them to
sign for me, and in my capacity as Director for each of the Funds, any and all
amendments to each of the particular registration statements of the Funds, and
all instruments necessary or desirable in connection therewith, filed with the
Securities and Exchange Commission, hereby ratifying and confirming my signature
as it may be signed by said attorneys to any and all amendments to said
registration statements.
Pursuant to the requirements of the Securities Act of 1933, this instrument
has been signed below by the following in the capacity and on the date
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------------------------- ---------------
<S> <C> <C>
/s/ CARL W. SCHAFER Director March 8, 1995
.........................................
(CARL W. SCHAFER)
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 1,414,792
<INVESTMENTS-AT-VALUE> 1,414,792
<RECEIVABLES> 1,399
<ASSETS-OTHER> 135
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 416,325
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> (4,199)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,412,127
<SHARES-COMMON-STOCK> 1,412,127
<SHARES-COMMON-PRIOR> 1,750,448
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,412,127
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 84,837
<OTHER-INCOME> 0
<EXPENSES-NET> 11,274
<NET-INVESTMENT-INCOME> 73,563
<REALIZED-GAINS-CURRENT> (3)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 73,560
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (73,560)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,330,401
<NUMBER-OF-SHARES-REDEEMED> (5,737,627)
<SHARES-REINVESTED> 68,905
<NET-CHANGE-IN-ASSETS> (338,321)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,195
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (11,274)
<AVERAGE-NET-ASSETS> 1,520,211
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.048
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.048)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
