PaineWebber/
Kidder, Peabody
Cash Reserve
Fund, Inc.
Semi-Annual Report
January 31, 1996
<PAGE>
<TABLE><CAPTION>
PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc.
- -------------------------------------------------------------------------------------------------------------------------
Statement of Net Assets
January 31, 1996 (unaudited)
- -------------------------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Dates Rates Value
- ------------ ------------ -------------- ---------------
<S> <C> <C> <C>
U.S. Government Agency Obligations-2.80%
$ 9,400 Federal Home Loan Mortage Corp...................... 08/15/96 5.645% $ 9,383,483
15,000 Federal National Mortgage Association............... 10/07/96 5.680 15,014,270
---------------
Total Government Agency Obligations (cost-$24,397,753).......... 24,397,753
---------------
Bank Notes-9.75%
Domestic-6.88%
15,000 Banc One Milwaukee N.A. ............................ 02/09/96 7.250 15,000,588
10,000 Huntington National Bank............................ 02/05/96 5.530 10,000,006
10,000 LaSalle National Bank............................... 05/30/96 5.360 10,000,000
3,000 Morgan Guaranty Trust Co. .......................... 01/15/97 5.250 3,002,560
22,000 PNC Bank, N.A. ..................................... 05/24/96 6.040 22,031,415
--------------
60,034,569
--------------
Yankee-2.87%
25,000 Westdeutsche Landesbank Girozentrale................ 03/01/96 6.625 24,997,630
--------------
Total Bank Notes (cost-$85,032,199)............................. 85,032,199
--------------
Certificates of Deposit-3.44%
Yankee- 3.44%
30,000 Societe Generale (cost-$30,000,000)................. 02/09/96 to 03/04/96 5.510 to 5.750 30,000,000
-------------
Commercial Paper*-79.67%
Aero-Space/Defense-3.84%
20,000 Raytheon Co. ....................................... 02/02/96 5.600 19,996,889
13,500 Rockwell International Corp. ....................... 02/08/96 5.660 13,485,143
--------------
33,482,032
--------------
Asset-Backed-6.85%
35,000 Asset Securitization Cooperative Corp. ............. 02/22/96 to 04/04/96 5.350 to 5.480 34,840,392
10,000 Eiger Capital Corp. ................................ 02/28/96 5.440 9,959,200
10,000 New Center Asset Trust.............................. 03/04/96 5.630 9,949,956
5,000 Preferred Receivables Funding Corp. ................ 02/15/96 5.550 4,989,208
--------------
59,738,756
--------------
Auto & Truck-1.69%
15,000 PACCAR Financial Corp. ............................. 04/23/96 to 09/10/96 5.160 to 5.310 14,719,950
--------------
Banking-10.94%
6,500 ABN-Amro North America Finance Inc. ................ 10/21/96 5.000 6,262,569
15,000 Bankers Trust New York Corp. ....................... 07/03/96 5.300 14,662,125
15,000 BEX America Finance Inc. ........................... 02/13/96 5.660 14,971,700
30,000 Canadian Imperial Holdings Inc. .................... 03/11/96 5.440 29,823,200
30,000 Cregem N.A. Inc. ................................... 04/04/96 5.370 29,718,075
--------------
95,437,669
--------------
</TABLE>
1
<PAGE>
<TABLE><CAPTION>
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PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc.
- -------------------------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Dates Rates Value
- ------------ ------------- ---------------------- ------------------
<S> <C> <C> <C>
Commercial Paper*-(continued)
Broker/Dealer-8.50%
$ 10,000 Bear Stearns Companies Inc. ........................ 05/20/96 5.450% $ 9,834,986
35,000 Goldman Sachs Group L.P. ........................... 04/04/96 to 05/14/96 5.320 to 5.460 34,546,587
5,000 Merrill Lynch & Co. Inc. ........................... 04/04/96 5.420 4,952,575
25,000 Morgan Stanley Group Inc. .......................... 02/26/96 to 08/01/96 5.060 to 5.450 24,754,011
---------------
74,088,159
---------------
Business Services-1.15%
10,000 PHH Corp. .......................................... 02/06/96 5.520 9,992,333
---------------
Chemicals-1.12%
10,000 DuPont (E.I.) de Nemours & Co. ..................... 07/18/96 5.580 9,739,600
---------------
Drugs & Health Care-4.94%
14,600 Bayer Corp. ........................................ 02/27/96 to 03/15/96 5.380 to 5.570 14,530,212
13,730 Pfizer Inc. ........................................ 02/21/96 5.450 13,688,429
15,200 Warner-Lambert Co. ................................. 06/26/96 to 07/10/96 5.200 to 5.300 14,858,411
---------------
43,077,052
---------------
Electronics-2.65%
13,200 Motorola Inc. ...................................... 02/07/96 5.460 13,187,988
10,000 Siemens Corp. ...................................... 02/29/96 5.450 9,957,611
---------------
23,145,599
---------------
Energy-2.86%
15,000 Chevron Oil Finance Co. ............................ 02/01/96 5.650 15,000,000
10,000 Exxon Imperial U.S. Inc. ........................... 03/12/96 5.400 9,940,000
---------------
24,940,000
---------------
Finance-Conduit-2.29%
20,000 MetLife Funding Inc. ............................... 02/02/96 to 02/16/96 5.460 to 5.650 19,975,680
---------------
Finance-Consumer-1.60%
14,000 American General Finance Corp. ..................... 02/29/96 5.460 13,940,547
---------------
Finance-Credit Union-1.10%
9,600 U.S. Central Credit Union........................... 02/12/96 5.480 9,583,925
---------------
Finance-Diversified-4.00%
20,000 Associates Corp. of North America................... 02/22/96 5.480 19,936,067
15,000 Barclays U.S. Funding Corp. ........................ 02/08/96 5.490 14,983,987
---------------
34,920,054
---------------
Finance-Subsidiary-3.18%
20,000 National Australia Funding (DE) Inc. ............... 04/18/96 5.310 19,772,850
8,000 Pitney Bowes Credit Corp. .......................... 02/16/96 5.650 7,981,167
---------------
27,754,017
---------------
</TABLE>
2
<PAGE>
<TABLE><CAPTION>
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PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc.
- -------------------------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Dates Rates Value
- ------------ -------------- ---------------- -------------
<S> <C> <C> <C>
Commercial Paper*-(concluded)
Food, Beverage and Tobacco-6.89%
$ 18,230 B.A.T. Capital Corp. ............................... 02/07/96 5.520% $ 18,213,228
12,000 Coca-Cola Co. ...................................... 02/09/96 5.500 11,985,333
10,000 Hershey Foods Co. .................................. 02/22/96 5.460 9,968,150
15,000 Philip Morris Cos. Inc. ............................ 02/12/96 5.450 14,975,021
5,000 Sara Lee Corp. ..................................... 03/27/96 5.360 4,959,055
---------------
60,100,787
---------------
General Trade-0.41%
3,580 Mitsubishi International Corp. ..................... 02/12/96 5.500 3,573,984
---------------
Insurance -3.65%
9,775 Transamerica Corp. ................................. 02/16/96 5.720 9,751,703
32,000 USAA Capital Corp. ................................. 02/01/96 to 04/12/96 5.350 to 5.640 31,829,308
---------------
41,581,011
---------------
Insurance-Property/Casualty-1.15%
10,000 AIG Funding Inc. ................................... 02/01/96 5.850 10,000,000
---------------
Miscellaneous-2.29%
20,000 Beta Finance Inc. .................................. 02/13/96 5.660 19,962,267
---------------
Oil Equipment & Services-1.14%
10,000 Colonial Pipeline Co. .............................. 02/26/96 5.450 9,962,153
---------------
Paper and Forest Products-1.72%
5,000 Kimberly-Clark Corp. ............................... 02/08/96 5.500 4,994,653
10,000 Weyerhaeuser Co. ................................... 02/08/96 5.450 9,989,403
---------------
14,984,056
---------------
Pollution Control-0.77%
6,900 WMX Technologies Inc. .............................. 08/16/96 5.360 6,697,615
---------------
Utility-Electric-0.74%
6,495 Duke Power Co. ..................................... 02/07/96 5.480 6,489,068
---------------
Utility-Telephone-3.08%
17,000 AT&T Corp. ......................................... 02/07/96 to 04/10/96 5.450 to 5.485 16,917,327
10,000 Bell South Telecommunications Inc. ................. 02/28/96 5.420 9,959,350
---------------
26,876,677
---------------
Total Commercial Paper (cost-$694,762,991)................... 694,762,991
---------------
Short-Term Corporate Obligations-2.21%
Banking-2.21%
12,000 Norwest Corporation ................................ 01/30/97 7.875 12,295,889
7,000 Morgan (JP) & Co. Inc. ............................. 05/13/96 6.200 7,000,272
---------------
Total Short-Term Corporate Obligations (cost-$19,296,161)....... 19,296,161
---------------
</TABLE>
3
<PAGE>
<TABLE><CAPTION>
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PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc.
- -------------------------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Date Rate Value
- ------------ -------------- ---------------- --------------------
<S> <C> <C> <C>
Repurchase Agreement-2.10%
$ 18,264 Repurchase Agreement dated 1/31/96, with Citicorp
Securities Inc., collateralized by $18,630,000 U.S.
Treasury Notes, 5.000% due 1/31/98 ; proceeds:
$18,266,981 (cost-$18,264,000)...................... 02/01/96 5.875% $ 18,264,000
---------------
Total Investments (cost-$871,753,104, which approximates cost
for federal income tax purposes)- 99.97%............ 871,753,104
Other assets in excess of liabilities-0.03%..................... 271,993
----------------
Net Assets (applicable to 872,025,097 shares outstanding at
$1.00 per share)-100.00%............................ $872,025,097
================
</TABLE>
Weighted average maturity - 55 days
- -----------------
* Rates noted in interest rate column are yields to maturity for discounted
securities.
See accompanying notes to financial statements
4
<PAGE>
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PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc.
- --------------------------------------------------------------------------------
Statement of Operations
For the Six Months Ended January 31, 1996 (unaudited)
Investment income:
Interest......................................... $33,686,211
-----------
Expenses:
Investment advisory and administration........... 2,785,049
Distribution fees................................ 686,432
Transfer agency fees............................. 451,465
Custody and accounting........................... 388,475
Reports and notices to shareholders.............. 193,379
State registration............................... 68,264
Legal and audit.................................. 34,695
Directors' fees.................................. 16,700
Other expenses................................... 55,137
-----------
4,679,596
-----------
Net investment income.................................. 29,006,615
-----------
Net increase in net assets resulting from operations... $29,006,615
===========
See accompanying notes to financial statements
5
<PAGE>
<TABLE><CAPTION>
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PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc.
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------------------------------------------------
For the Six
Months Ended For the
January 31, 1996 Year Ended
(unaudited) July 31, 1995
---------------- ----------------
<S> <C> <C>
From operations:
Net investment income........................... $29,006,615 $73,563,320
Net realized losses from investment transactions --- (3,124)
-------------- --------------
Net increase in net assets resulting from opera. 29,006,615 73,560,196
-------------- --------------
Dividends to shareholders from:
Net investment income........................... (29,006,615) (73,560,196)
-------------- --------------
Net decrease from capital share transactions....... (540,101,832) (338,321,268)
-------------- --------------
Net decrease in net assets...................... (540,101,832) (338,321,268)
Net Assets:
Beginning of period............................. 1,412,126,929 1,750,448,197
-------------- --------------
End of period................................... $872,025,097 $1,412,126,929
============== ==============
</TABLE>
See accompanying notes to financial statements
6
<PAGE>
PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc.
- -------------------------------------------------------------------------------
Notes to Financial Statements-(unaudited)
- -------------------------------------------------------------------------------
Organization and Significant Accounting Policies
PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc. (the "Fund") was organized
under the laws of Maryland on May 31, 1979, and is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended ("1940 Act"), as an open-end, diversified management investment company.
Valuation and Accounting for Investments--Investments are valued at amortized
cost which approximates market value. Investment transactions are recorded on
the trade date. Realized gains and losses from investment transactions are
calculated using the identified cost method. Interest income is recorded on an
accrual basis. Discounts are accreted and premiums are amortized as adjustments
to interest income and the identified cost of investments.
Repurchase Agreements--The Fund's custodian takes possession of the collateral
pledged for investments in repurchase agreements. The underlying collateral is
valued daily on a market-to-market basis to ensure that the value, including
accrued interest, is at least equal to the repurchase price. In the event of
default of the obligation to repurchase, the Fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral may be subject
to legal proceedings.
Federal Tax Status--The Fund intends to distribute all of its taxable income and
to comply with the other requirements of the Internal Revenue Code applicable to
regulated investment companies. Accordingly, no provision for federal income
taxes is required. In addition, by distributing during each calendar year,
substantially all of its net investment income, capital gains and certain other
amounts, if any, the Fund intends not to be subject to a federal excise tax.
At July 31, 1995, the Fund had a net capital loss carryforward of $15,369. The
loss carryforward is available as a reduction, to the extent provided in the
regulations, of future net realized capital gains, and will expire between
fiscal years 2002 and 2003. To the extent such losses are used to offset future
capital gains, it its probable that the gains so offset will not be distributed.
Dividends and Distributions to Shareholders--Dividends and distributions to
shareholders are recorded on the exdividend date. Dividends from net investment
income and distributions from net realized gains from investment transactions
are determined in accordance with federal income tax regulations, which may
differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Net capital gains, if
any, will be distributed at least annually, but the Fund may make more frequent
distributions of such gains, if necessary, to maintain its net asset value per
share at $1.00 or to avoid income or excise taxes.
7
<PAGE>
PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Concentration of Risk
The ability of the issuers of the debt securities held by the Fund to meet their
obligations may be affected by economic developments, including those particular
to specific industry or region.
Investment Adviser and Administrator
PaineWebber Incorporated ("PaineWebber") is the Fund's investment adviser and
administrator and receives compensation from the Fund for its services. Fees
paid by the Fund for investment advisory and administration services are accrued
daily and paid monthly at the annual rate of 0.500% of the first $750 million of
average daily net assets; 0.475% of the next $250 million; 0.450% of the next
$250 million; 0.425% of the next $250 million; and 0.400% of assets in excess of
$1.5 billion. At January 31, 1996, the Fund owed PaineWebber $377,638 in
investment advisory and administration fees.
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"), a wholly owned
subsidiary of PaineWebber, is the Fund's sub-adviser and sub-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.
In compliance with applicable state securities laws, PaineWebber, the Fund's
investment adviser, will reimburse the Fund, if and to the extent that the
aggregate operating expenses in any fiscal year, exclusive of taxes, interest,
brokerage fees, distribution fees and extraordinary expenses, exceed limitations
imposed by various state regulations. Currently, the most restrictive limitation
is 2.5% on the first $30 million of average daily net assets, 2.0% of the next
$70 million and 1.5% of any excess over $100 million. For the six months ended
January 31, 1996, no reimbursements were required pursuant to the above
limitation.
Distribution Plan
PaineWebber is the exclusive distributor of the Fund's shares. For its services,
PaineWebber received from the Fund a distribution fee accrued daily and paid
monthly at the annual rate of 0.12% of the Fund's average daily net assets. At
January 31, 1996, $91,380 was payable to PaineWebber for such services.
Other Liabilities
At January 31, 1996, the amount for dividends payable aggregated $1,653,872.
8
<PAGE>
PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capital Share Transactions
There are 5 billion shares of $0.01 par value common stock authorized.
Transactions in shares of common stock, at $1.00 per share, were as follows:
For the Six For the Year
Months Ended Ended
January 31, July 31,
1996 1995
--------------- ---------------
Shares sold ............................ 1,707,740,075 5,330,400,604
--------------- ---------------
Shares repurchased ..................... (2,275,545,749) (5,737,627,012)
Dividends reinvested ................... 27,703,842 68,905,140
--------------- ---------------
Net decrease in shares outstanding ..... (540,101,832) (338,321,268)
--------------- ---------------
Subsequent Events
The PaineWebber RMA Money Market Portfolio ("Money Market Portfolio") acquired
the net assets of the Fund pursuant to a plan of reorganization approved by the
Fund shareholders on February 13, 1996. The acquisition was accomplished by a
taxable exchange of 881,401,323 Class A shares of Money Market Portfolio for
881,401,323 shares of the Fund outstanding on February 20, 1996. The Fund's net
assets, at that date, valued at $881,308,148, were combined with those of the
Money Market Portfolio.
9
<PAGE>
<TABLE><CAPTION>
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PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc.
Financial Highlights
- -------------------------------------------------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period
is presented below:
For the Six
Months Ended
January 31,1996 For the Years Ended July 31,
----------------------------------------------------
(unaudited) 1995 1994 1993 1992 1991
--------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- --------- --------- --------- ----------
Net investment income................... 0.0253 0.0484 0.0285 0.0258 0.0405 0.0655
Dividends from net investment
income................................ (0.0253) (0.0484) (0.0285) (0.0258) (0.0405) (0.0655)
-------- -------- --------- --------- --------- ----------
Net asset value, end of period.......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ========= ========= ========= ==========
Total investment return (1)............. 2.55% 4.95% 2.87% 2.62% 4.22% 6.75%
======== ======== ========= ========= ========= ==========
Ratios/Supplemental data:
Net assets, end of period (000's)..... $872,025 $1,412,127 $1,750,448 $1,781,248 $1,860,557 $2,171,758
Ratio of expenses to average net asset 0.82%* 0.74% 0.70% 0.72% 0.68% 0.66%
Ratio of net investment income to
average net assets................ 5.08%* 4.84% 2.85% 2.58% 4.09% 6.52%
</TABLE>
________________
* Annualized
(1) Total return is calculated assuming a $1,000 investment in Fund shares on
the first day of each period reported, reinvestment of all dividends at
net asset value on the payable dates, and a sale at net asset value on
the last day of each period reported. Total return information for periods
of less than one year have not been annualized.
10
<PAGE>
---------------------------------------
DIRECTORS
Margo N. Alexander
David J. Beaubien
Willian W. Hewitt, Jr.
Carl W. Schafer
---------------------------------------
OFFICERS
Margo N. Alexander
President
Victoria E. Schonfeld
Vice President
Dianne E. O'Donnell
Vice President and Secretary
Julian F. Sluyters
Vice President and Treasurer
---------------------------------------
INVESTMENT ADVISER,
ADMINISTRATOR AND
DISTRIBUTOR
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
---------------------------------------
SUB-ADVISER AND
SUB-ADMINISTRATOR
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
---------------------------------------
The financial information included
herein is taken from the records of
the Fund without examination by
independent accountants who do not
express an opinion thereon. This report
is not to be used in connection with the
offering of shares of the Fund unless
accompanied or preceded by an effective
prospectus.
