<PAGE>
PAINEWEBBER/
KIDDER, PEABODY
TAX EXEMPT
MONEY FUND, INC.
SEMI-ANNUAL REPORT
March 31, 1995
<PAGE>
- --------------------------------------------------------------------------------
May 15, 1995
Dear Shareholder,
During the six months ended March 31, 1995, the United States economy exhibited
steady growth. In a series of monetary tightenings that began early in 1994, the
Federal Reserve Board raised the benchmark Federal Funds rate, the rate banks
charge each other for overnight borrowing, six times in 1994 for a total
increase of 2.5%. These increases were implemented to moderate economic
expansion and forestall inflation, and were followed by another 0.5% increase on
February 1, 1995, bringing the Federal Funds rate to 6.0%.
Productivity gains in the workplace and the increased competitiveness of United
States corporations in the global marketplace contributed to the low inflation
and steady growth which characterized the economy during the six months ended
March 31, 1995. Unemployment continued to decline, personal income exhibited an
upward trend and measures of consumer confidence continued to register positive
readings. However, side effects of higher interest rates, including a decline in
single family housing starts, crept into economic data during the latter half of
1994. As we move into the second quarter of 1995, the economy remains
healthy--although it is not yet clear what the full impact of higher interest
rates will be on economic growth.
At a special meeting of shareholders that took place on April 13, 1995,
shareholders approved the appointment of PaineWebber Incorporated
('PaineWebber') as investment adviser and administrator of PaineWebber/Kidder,
Peabody Tax Exempt Money Fund, Inc. (the 'Fund') and Mitchell Hutchins Asset
Management Inc. ('Mitchell Hutchins') as the Fund's sub-adviser and sub-
administrator. Mitchell Hutchins, a wholly owned investment management
subsidiary of PaineWebber, provides investment advisory and portfolio management
services to individuals, pension and endowment funds, trusts and institutions.
As of March 31, 1995, Mitchell Hutchins was adviser or sub-adviser to 42
investment companies with 77 separate portfolios and aggregate assets of
approximately $27 billion.
Gregory W. Serbe and Debbie Vermann are jointly responsible for the day-to-day
management of the Fund. Mr. Serbe is a Managing Director of Mitchell Hutchins
responsible for overseeing tax exempt investments. Ms. Vermann is a portfolio
manager at Mitchell Hutchins.
PORTFOLIO REVIEW
As of March 31, 1995, the Fund offered a seven-day annualized yield of 3.20% and
an effective 7-day annualized yield of 3.25%. During the six months ended March
31, 1995, the Federal Reserve's credit tightening policy caused interest rates
on money market instruments to increase. For example, the Federal Funds rate for
short-term borrowing was approximately 4.75% on September 30, 1994; as of March
31, 1995 it had increased to 6.00%.
- --------------------------------------------------------------------------------
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During the six months ended March 31, 1995, the Fund's performance was enhanced
by the Federal Funds rate increases. Rising interest rates translated into
higher yields for the portfolio. During the period, the Fund continuously
reduced its weighted average maturity. A shorter weighted average maturity
benefits the Fund by enabling it to have more cash available to invest as rates
trend upward. Going forward, the Fund will maintain a neutral weighted average
maturity as short-term rates find stability during uncertain economic times.
Investment decisions in the portfolio will be dominated by credit quality and
liquidity. Although we are interested in maintaining higher yields, we will not
do so by sacrificing the Fund's very strict emphasis on security, quality and
liquidity.
We value you as a shareholder and as a client, and thank you for your continued
support. We welcome any comments or questions you may have.
Sincerely,
/s/ Frank P.L. Minard /s/ Gregory W. Serbe
FRANK P.L. MINARD GREGORY W. SERBE
Chairman, Managing Director,
Mitchell Hutchins Asset Management Mitchell Hutchins Asset Management Inc.
Inc.
/s/ Debbie Vermann
DEBBIE VERMANN
Portfolio Manager,
PaineWebber/Kidder, Peabody Tax Exempt
Money Fund, Inc.
- --------------------------------------------------------------------------------
2
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<TABLE>
<CAPTION>
PAINEWEBBER/KIDDER, PEABODY TAX EXEMPT MONEY FUND, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Net Assets
March 31, 1995 (unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--73.87%
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Dates Rates Value
- ---------- --------------------- -------------- ------------
<S> <C> <C> <C>
Alabama -- 6.06%
$ 11,715 Alabama Special Care Facility Finance
Authority, City of Montgomery, Adjustable
Rate Bonds.................................. 07/01/95 3.90% $ 11,715,000
3,500 Cherokee Industrial Refunding (The BOC Group),
Variable Rate Demand Notes.................. (a) 5.00 3,500,000
6,000 MacIntosh (CIBA GEIGY), Variable Rate Demand
Notes....................................... (a) 3.30 to 3.50 6,000,000
6,000 St. Claire County (National Cement Co.)
Project II, Variable Rate Demand Notes...... (a) 3.10 6,000,000
------------
27,215,000
------------
Alaska -- 1.00%
4,500 Alaska Industrial Development Authority
(Alaska Hotel), Variable Rate Demand
Notes....................................... (a) 6.25 4,500,000
------------
Arizona -- 0.27%
1,200 City of Phoenix, Variable Rate Demand Notes... (a) 4.00 1,200,000
------------
Arkansas -- 1.47%
5,800 Arkansas Finance Authority (Hospital Equipment
Revenue), Variable Rate Demand Notes, Series
1985........................................ (a) 3.85 5,800,000
800 City of Valdez (Exxon), Variable Rate Demand
Notes....................................... (a) 4.10 800,000
------------
6,600,000
------------
California -- 5.51%
7,500 California State Cash Reserve Program......... 07/05/95 4.50 7,514,008
3,000 California State Revenue Anticipation Notes... 06/28/95 5.00 3,004,592
4,200 Los Angeles County, Tax and Revenue
Anticipation Notes.......................... 06/30/95 4.50 4,206,480
10,000 Los Angeles County Unified School, Tax and
Revenue Anticipation Notes.................. 07/10/95 4.50 10,025,108
------------
24,750,188
------------
Colorado -- 0.33%
1,500 Arapahoe County, Capital Improvement
Project..................................... 08/30/95 4.45 1,500,000
------------
3
</TABLE>
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<TABLE>
<CAPTION>
PAINEWEBBER/KIDDER, PEABODY TAX EXEMPT MONEY FUND, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Net Assets--(continued)
March 31, 1995 (unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--(CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Dates Rates Value
- ---------- --------------------- -------------- ------------
<S> <C> <C> <C>
Connecticut -- 1.97%
$ 300 Connecticut Development Authority (Connecticut
Light & Power), Variable Rate Demand
Notes....................................... (a) 3.60% $ 300,000
2,800 Connecticut Development Authority Health
(Independent Living), Variable Rate Demand
Notes....................................... (a) 2.95 to 5.00 2,800,000
1,300 Connecticut Economic Recovery, Variable Rate
Demand Notes, Series B...................... (a) 3.75 to 5.00 1,300,000
2,065 Connecticut Special Tax Obligation, Variable
Rate
Demand Notes................................ (a) 3.70 to 5.00 2,065,000
265 Darien Bond Anticipation Notes................ 06/20/95 3.75 265,196
700 Easton Bond Anticipation Notes................ 06/14/95 3.57 700,095
1,400 New Canaan Bond Anticipation Notes............ 05/18/95 3.47 1,400,121
------------
8,830,412
------------
Florida -- 3.29%
9,880 City of Eustis Health Facility Authority
(Florida Hospital-Waterman Project),
Variable Rate Demand Notes, Series 1992..... (a) 2.60 to 3.125 9,880,000
2,700 Palm Beach Water & Sewer, Variable Rate Demand
Notes....................................... (a) 3.55 2,700,000
1,200 Polk County Industrial Development Authority
(IMC Fertilizer), Variable Rate Demand
Notes, Series A............................. (a) 2.70 1,200,000
1,000 Polk County Industrial Development Authority
(IMC Fertilizer), Variable Rate Demand
Notes, Series B............................. (a) 2.70 1,000,000
------------
14,780,000
------------
Georgia -- 2.74%
3,600 Brunswick & Glynn County Development Authority
(Jekyll Development Assoc.), Variable Rate
Demand Notes................................ (a) 3.80 3,600,000
1,900 Gwinnett County (Greens Apt.), Variable Rate
Demand Notes, Series 1985................... (a) 5.00 1,900,000
5,000 Richmond County Development Authority (The BOC
Group Inc. Project), Variable Rate Demand
Notes....................................... (a) 5.00 5,000,000
1,800 Savannah Port Authority, Variable Rate Demand
Notes....................................... (a) 3.80 1,800,000
------------
12,300,000
------------
4
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<TABLE>
<CAPTION>
PAINEWEBBER/KIDDER, PEABODY TAX EXEMPT MONEY FUND, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--(CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Dates Rates Value
- ---------- --------------------- -------------- ------------
<S> <C> <C> <C>
Illinois -- 6.53%
$ 6,500 Illinois Development Finance Authority,
Economic Revenue (CPL/Downers Grove),
Variable Rate Demand Notes.................. (a) 5.00% $ 6,500,000
5,800 Illinois Development Finance Authority, Safety
Education Foundation, Variable Rate Demand
Notes....................................... (a) 2.40 5,800,000
1,210 Illinois Development Finance Authority
(Amoco), Variable Rate Demand Notes......... (a) 3.40 1,210,000
1,600 Illinois Health Central Dupage, Variable Rate
Demand Notes................................ (a) 4.00 1,600,000
1,400 Illinois Health Elmhurst Hospital, Variable
Rate Demand Notes........................... (a) 3.80 1,400,000
300 Illinois Health Franciscan Sisters, Variable
Rate Demand Notes........................... (a) 3.90 300,000
4,500 Lislee Multi-Family Housing Revenue (Ashley of
Lislee Project), Variable Rate Demand
Notes....................................... (a) 2.25 4,500,000
8,000 Tinley Park Housing Authority (Edgewater Walk
Phase III A & B), Variable Rate Demand
Notes, Series 1984.......................... (a) 3.70 to 5.00 8,000,000
------------
29,310,000
------------
Indiana -- 0.65%
1,400 Hammond Pollution Control Revenue (Amoco),
Variable Rate Demand Notes.................. (a) 2.40 1,400,000
1,500 Indiana Health Facility Finance Authority
(Methodist Hospital), Variable Rate Demand
Notes....................................... (a) 5.00 1,500,000
------------
2,900,000
------------
Louisiana -- 1.60%
3,200 Ascension Parish (Shell Oil), Variable Rate
Demand Notes................................ (a) 3.00 to 3.80 3,200,000
1,000 Ascension Parish (Shell Oil), Variable Rate
Demand Notes................................ (a) 4.10 1,000,000
1,000 Ascension Parish (BASF), Variable Rate Demand
Notes....................................... (a) 2.90 1,000,000
2,000 Louisiana Offshore Terminal Authority,
Variable Rate Demand Notes.................. (a) 3.85 2,000,000
------------
7,200,000
------------
5
</TABLE>
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<TABLE>
<CAPTION>
PAINEWEBBER/KIDDER, PEABODY TAX EXEMPT MONEY FUND, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Net Assets--(continued)
March 31, 1995 (unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--(CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Dates Rates Value
- ---------- --------------------- -------------- ------------
<S> <C> <C> <C>
Maine -- 1.90%
$ 8,500 Maine Tax Anticipation Notes.................. 06/30/95 4.50% $ 8,516,162
------------
Michigan -- 1.12%
5,000 Michigan General Obligation Bonds............. 09/29/95 5.00 5,021,684
------------
Mississippi -- 2.23%
800 Harrison County (DuPont), Variable Rate Demand
Notes....................................... (a) 3.60 800,000
2,700 Jackson County Port Facility (Chevron),
Variable Rate Demand Notes.................. (a) 3.25 2,700,000
6,500 Perry County Pollution Control Revenue (Leaf
River Forest Project), Variable Rate Demand
Notes....................................... (a) 3.45 6,500,000
------------
10,000,000
------------
Missouri -- 6.86%
5,100 Delta Economic Development Corp. (Mead
Escambia), Variable Rate Demand Notes....... (a) 4.05 5,100,000
1,600 Missouri Environmental Improvement Authority
(Union Electric), Adjustable Rate Bonds,
Series 1985 A............................... 06/01/95 3.75 1,600,000
3,200 Missouri Environmental Improvement Authority
(Union Electric), Adjustable Rate Bonds,
Series 1984 B............................... 06/01/95 3.75 3,200,000
5,900 Missouri Health & Education Facility Authority
(Barnes Hospital Project), Variable Rate
Demand Notes................................ (a) 3.70 5,900,000
15,000 University of Missouri, Capital Project
Notes....................................... 06/30/95 4.50 15,035,716
------------
30,835,716
------------
New Jersey -- 0.76%
400 New Jersey Economic Development, Variable Rate
Demand Notes................................ (a) 3.45 400,000
3,000 New Jersey Tax & Revenue Anticipation Notes... 06/15/95 5.00 3,005,369
------------
3,405,369
------------
New Mexico -- 1.00%
4,500 Albuquerque, Variable Rate Demand Notes....... (a) 3.00 4,500,000
------------
6
</TABLE>
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<TABLE>
<CAPTION>
PAINEWEBBER/KIDDER, PEABODY TAX EXEMPT MONEY FUND, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--(CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Dates Rates Value
- ---------- --------------------- -------------- ------------
<S> <C> <C> <C>
New York -- 1.31%
$ 1,000 New York City Revenue Anticipation Notes...... 06/30/95 4.75% $ 1,001,026
600 New York City, New York, Variable Rate Demand
Notes....................................... (a) 3.60 600,000
800 New York City, New York, Variable Rate Demand
Notes....................................... (a) 4.00 800,000
400 New York City, New York, Variable Rate Demand
Notes....................................... (a) 4.00 400,000
3,000 Triborough Bridge & Tunnel Authority
(Convention Center Project), Pre-Refunded
Bonds, Series D............................. 07/01/95 9.00 3,099,165
------------
5,900,191
------------
North Dakota -- 0.45%
2,000 Grand Forks United Hospital, Variable Rate
Demand Notes................................ (a) 4.00 2,000,000
------------
Ohio -- 0.56%
2,500 Ohio State Highway, General Obligation Bonds,
Series R.................................... 05/15/95 4.30 2,502,378
------------
Oklahoma -- 1.79%
1,500 Oklahoma Water Resources Board, Adjustable
Rate Bonds.................................. 09/01/95 4.50 1,500,000
6,520 Tulsa Industrial Development Authority (St.
Johns Physicians), Adjustable Rate Bonds.... 05/01/95 4.125 6,520,000
------------
8,020,000
------------
Oregon -- 1.11%
5,000 Klamath Falls, Electric Revenue (Salt Caves
Hydroelectric Project), Mandatory Tender
Bonds, Series E............................. 05/02/95 3.75 5,000,000
------------
Pennsylvania -- 4.17%
17,500 Philadelphia General Obligation Tax & Revenue
Anticipation Notes.......................... 06/15/95 4.75 17,531,322
600 Philadelphia School District, General
Obligation Tax and Revenue Anticipation
Notes....................................... 07/01/95 3.75 600,281
600 Schuylkill County, IDA Resource Recovery
Revenue, Variable Rate Demand Notes......... (a) 3.70 600,000
------------
18,731,603
------------
Puerto Rico -- 0.28%
1,245 Puerto Rico, Public Finance Corp., General
Obligation Bonds, Series B.................. 07/01/95 6.35 1,252,466
------------
7
</TABLE>
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<TABLE>
<CAPTION>
PAINEWEBBER/KIDDER, PEABODY TAX EXEMPT MONEY FUND, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Net Assets--(continued)
March 31, 1995 (unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--(CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Dates Rates Value
- ---------- --------------------- -------------- ------------
<S> <C> <C> <C>
South Carolina -- 0.53%
$ 2,400 Lexington County Charter Rivers, Variable Rate
Demand Notes, Series 1987................... (a) 5.00% $ 2,400,000
------------
Tennessee -- 2.10%
3,000 Chattanooga Industrial Development Board
(Seaboard Farms of Chattanooga), Variable
Rate Demand Notes........................... (a) 3.10 3,000,000
2,440 Hamilton County, General Obligation Revenue
Bonds....................................... 07/01/95 5.00 2,448,280
4,000 State of Tennessee, General Obligation Bond
Anticipation Notes, Variable Rate Demand
Notes, Series 1991C......................... (a) 2.25 4,000,000
------------
9,448,280
------------
Texas -- 7.86%
3,500 Bowie County Industrial Development Authority
(Texarkana Newspapers Inc. Project),
Variable Rate Demand Notes, Series 1985..... (a) 2.25 to 5.00 3,500,000
2,600 Calhoun County Industrial Development
Authority, Variable Rate Demand Notes,
Series 1987................................. (a) 5.00 2,600,000
4,000 Capital Industrial Development Corp. (NSI Inc.
Project), Variable Rate Demand Notes........ (a) 5.00 4,000,000
12,000 Harris County, Sub Lien Toll Road, Variable
Rate
Demand Notes................................ (a) 3.40 12,000,000
9,700 Harris County, Memorial Senior Services,
Variable Rate Demand Notes.................. (a) 2.00 9,700,000
3,500 Texas Tax & Revenue Anticipation Notes........ 08/31/95 5.00 3,512,160
------------
35,312,160
------------
Utah -- 2.33%
1,200 Carbon County, Pollution Control Revenue
(Pacificorp), Variable Rate Demand Notes.... (a) 4.00 1,200,000
1,775 Salt Lake City................................ 10/01/95 4.40 1,776,704
2,500 Salt Lake City, General Obligation Tax &
Revenue Anticipation Notes.................. 06/30/95 4.50 2,505,657
5,000 Salt Lake City, Pollution Control Revenue
(British Petroleum), Variable Rate Demand
Notes....................................... (a) 3.25 5,000,000
------------
10,482,361
------------
8
</TABLE>
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<TABLE>
<CAPTION>
PAINEWEBBER/KIDDER, PEABODY TAX EXEMPT MONEY FUND, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--(CONCLUDED)
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Dates Rates Value
- ---------- --------------------- -------------- ------------
<S> <C> <C> <C>
Washington -- 1.20%
$ 1,675 Washington Health Care (Fred Hutchinson
Hospital), Variable Rate Demand Notes....... (a) 4.00 to 4.15% $ 1,675,000
1,800 Washington Suburban Sanitary District, General
Obligation Bonds............................ 06/01/95 7.50 1,812,013
1,900 Washington Suburban Water, General Obligation
Bonds....................................... 06/01/95 7.50 1,912,681
------------
5,399,694
------------
West Virginia -- 2.20%
9,900 West Virginia Hospital, Variable Rate Demand
Notes....................................... (a) 3.40 to 5.00 9,900,000
------------
Wisconsin -- 1.01%
2,000 Alma Pollution Control Revenue (Dairyland
Power Co-op), Variable Rate Demand Notes.... (a) 5.93 2,000,000
1,020 Appleton Promissory Notes, General Obligation
Bonds, Series A............................. 04/01/95 3.50 1,020,000
1,500 Wisconsin General Obligation Bonds, Series
4........................................... 05/01/95 4.00 1,500,719
------------
4,520,719
------------
Wyoming -- 1.68%
1,460 Lincoln County, Pollution Control Revenue
(Pacificorp), Variable Rate Demand Notes.... (a) 3.30 1,460,000
3,500 Lincoln County (Exxon), Variable Rate Demand
Notes....................................... (a) 3.55 to 3.90 3,500,000
500 Platte County, Variable Rate Demand Notes..... (a) 4.60 500,000
2,100 Sublette County (Exxon), Variable Rate Demand
Notes....................................... (a) 3.50 2,100,000
------------
7,560,000
------------
TOTAL MUNICIPAL BONDS AND NOTES (cost--$331,794,383)....... 331,794,383
------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--25.69%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alabama -- 0.27%
1,200 Port City Medical Clinic Mobile Infirmary..... 05/09/95 3.95 1,199,988
------------
Arizona -- 0.44%
2,000 Maricopa County, Pollution Control Revenue.... 05/10/95 3.85 2,000,000
------------
9
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAINEWEBBER/KIDDER, PEABODY TAX EXEMPT MONEY FUND, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
Statement of Net Assets--(concluded)
March 31, 1995 (unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--(CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Dates Rates Value
- ---------- --------------------- -------------- ------------
<S> <C> <C> <C>
California -- 2.85%
$ 5,300 East Bay Municipal Utility District........... 05/18/95 3.75% $ 5,300,000
7,500 California Pollution Control Revenue (Pacific
Gas & Electric)............................. 05/08/95 3.75 7,500,000
------------
12,800,000
------------
Florida -- 3.63%
2,500 Florida Local Government Finance Commission... 05/15/95 3.85 2,500,000
3,100 Florida Municipal Loan Council................ 04/10/95 4.20 3,100,000
4,691 City of Gainesville Utility................... 06/01/95 4.00 4,691,000
3,000 Jacksonville Electric Authority............... 05/10/95 3.90 3,000,000
1,000 Lee County Hospital Board (Lee Memorial
Hospital)................................... 04/21/95 3.85 1,000,000
2,000 West Orange Memorial Hospital................. 04/26/95 4.15 2,000,000
------------
16,291,000
------------
Georgia -- 0.36%
1,600 Municipal Gas of Georgia...................... 04/18/95 4.10 1,600,000
------------
Illinois -- 0.78%
3,500 Illinois Development Finance Authority
(Commonwealth Ed.).......................... 05/01/95 3.95 3,500,000
------------
Indiana -- 1.78%
1,000 Hoosier City of Sullivan, National Rural
Utilities Cooperative Finance Corp. ........ 05/10/95 3.85 1,000,000
7,010 Jasper County, Pollution Control Revenue,
Northern Indiana Public Service............. 04/07/95 to 05/11/95 3.80 to 4.10 7,010,000
------------
8,010,000
------------
Kansas -- 1.80%
8,100 Burlington Pollution Control Revenue
(Kansas City Power & Light)................. 04/06/95 to 05/11/95 4.05 to 4.15 8,100,000
------------
Kentucky -- 2.65%
11,885 Pendleton County Kentucky Association of
Leasing..................................... 05/05/95 to 05/12/95 3.85 to 3.90 11,885,000
------------
Minnesota -- 0.45%
2,025 Regents of University of Minnesota............ 5/08/95 3.85 2,025,000
------------
Mississippi -- 1.29%
5,800 Claiborne Pollution Control Revenue (So.
Mississippi Electric)....................... 04/07/95 4.15 5,800,000
------------
10
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAINEWEBBER/KIDDER, PEABODY TAX EXEMPT MONEY FUND, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--(CONCLUDED)
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
Amount Maturity Interest
(000) Dates Rates Value
- ---------- --------------------- -------------- ------------
<S> <C> <C> <C>
New Jersey -- 0.20%
$ 900 New Jersey Tax & Revenue Anticipation Notes... 04/04/95 3.60% $ 900,000
------------
New York -- 0.28%
1,250 New York State Dormitory Authority (Sloan
Kettering).................................. 04/26/95 3.75 1,250,000
------------
North Carolina -- 1.40%
6,300 Durham North Carolina......................... 05/03/95 4.10 6,300,000
------------
Texas -- 6.29%
7,300 Austin Combined Utility....................... 06/09/95 4.00 7,300,000
2,000 Harris County School Health Care Sisters...... 04/27/95 4.15 2,000,000
1,000 City of Houston............................... 05/19/95 3.85 1,000,000
1,500 Texas A&M Board of Regents.................... 05/01/95 4.05 1,500,000
7,650 Texas Municipal Power Authority............... 04/05/95 4.00 7,650,000
8,800 Texas Public Finance Authority ............... 04/13/95 to 08/03/95 4.15 to 4.25 8,800,000
------------
28,250,000
------------
Utah -- 0.89%
4,000 Intermountain Power Agency.................... 04/17/95 4.15 4,000,000
------------
Wyoming -- 0.33%
1,500 Gillette Pollution Control Revenue
(Pacificorp)................................ 04/04/95 3.70 1,500,000
------------
TOTAL COMMERCIAL PAPER (cost--$115,410,988)................ 115,410,988
------------
TOTAL INVESTMENTS (cost--$447,205,371, which approximates
cost for federal income tax purposes)--99.56%............ 447,205,371
Other assets less liabilities--0.44%....................... 1,962,314
------------
NET ASSETS (applicable to 449,167,523 shares; equivalent to
$1.00 per share)--100.00%................................ $449,167,685
------------
------------
</TABLE>
- ------------
(a) Variable rate demand notes and variable rate certificates of participation
that are payable on demand. The interest rates shown are the current rates
as of March 31, 1995 and reset periodically.
See accompanying notes to financial statements
11
<PAGE>
PAINEWEBBER/KIDDER, PEABODY TAX EXEMPT MONEY FUND, INC.
- --------------------------------------------------------------------------------
Statement of Operations
For the Six Months Ended March 31, 1995 (unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest (net of $555,114 of premium amortization)...... $9,346,213
----------
EXPENSES:
Investment advisory and administration fees............. 1,314,734
Distribution fees....................................... 343,146
Transfer agency and service fees........................ 55,618
Federal and state registration.......................... 43,454
Custody and accounting.................................. 30,041
Reports and notices to shareholders..................... 20,546
Legal and audit......................................... 10,206
Directors' fees and expenses............................ 6,098
Other expenses.......................................... 19,255
----------
1,843,098
----------
NET INVESTMENT INCOME....................................... 7,503,115
NET REALIZED GAINS FROM INVESTMENT TRANSACTIONS............. 25
NET CHANGE IN UNREALIZED APPRECIATION OF INVESTMENTS........ (24)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $7,503,116
----------
----------
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED FOR THE
MARCH 31, YEAR ENDED
1995 SEPTEMBER
(UNAUDITED) 30, 1994
------------- ------------
FROM OPERATIONS:
Net investment income......................... $ 7,503,115 $ 13,629,265
Net realized gains (losses) from investment
transactions................................ 25 (461,701)
Net change in unrealized appreciation of
investments................................. (24) (1,085)
------------- ------------
Net increase in net assets resulting from
operations.................................. 7,503,116 13,166,479
------------- ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income......................... (7,503,115) (13,629,265)
NET DECREASE IN NET ASSETS DERIVED FROM CAPITAL
STOCK TRANSACTIONS.............................. (156,308,861) (64,463,671)
CONTRIBUTION TO CAPITAL FROM PREDECESSOR
ADVISER......................................... 731,243 --
------------- ------------
Net decrease in net assets.................... (155,577,617) (64,926,457)
NET ASSETS:
Beginning of period........................... 604,745,302 669,671,759
------------- ------------
End of period................................. $ 449,167,685 $604,745,302
------------- ------------
------------- ------------
See accompanying notes to financial statements
12
<PAGE>
PAINEWEBBER/KIDDER, PEABODY TAX EXEMPT MONEY FUND, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements--(unaudited)
- --------------------------------------------------------------------------------
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber/Kidder, Peabody Tax Exempt Money Fund Inc. (the 'Fund') was
organized under the laws of Maryland on January 18, 1983 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. Securities not subject to amortization are
valued at current market value, or, when appropriate, at cost, which
approximates current market value.
Investment transactions are recorded on trade date. Interest income, adjusted
for amortization of premiums and discounts on investments, is earned from
settlement date and recorded on an accrual basis. Premiums paid on purchases of
portfolio securities are amortized and discounts are accreted as adjustments to
interest income and the identified cost of securities. Realized gains and losses
from security transactions are calculated using the identified cost method.
The ability of the issuers of the debt securities held by the Fund to meet their
obligations may be affected by economic developments, including those particular
to a specific industry or region.
Federal Tax Status--It is the policy of the Fund to continue to qualify as a
regulated investment company, which can distribute tax exempt dividends, by
complying with the provisions available to certain investment companies, as
defined in applicable sections of the Internal Revenue Code, and to make
distributions of income and net realized capital gain sufficient to relieve it
from all, or substantially all, Federal income taxes.
Dividends--The Fund declares dividends on a daily basis from net investment
income. Such dividends are normally paid monthly. Net capital gains, if any,
will be declared and paid at least annually. To the extent that the Fund earns
net realized capital gains which can be offset by capital loss carryforwards, if
any, it is the policy of the Fund not to distribute such gains.
INVESTMENT ADVISER AND ADMINISTRATOR
The Fund's investment adviser and administrator 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
0.50% of the Fund's average daily net assets.
13
<PAGE>
PAINEWEBBER/KIDDER, PEABODY TAX EXEMPT MONEY FUND, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements--(concluded)
- --------------------------------------------------------------------------------
At a special meeting of shareholders that took place on April 13, 1995,
shareholders approved the appointment of PaineWebber Incorporated
('PaineWebber') as investment adviser and administrator of the Fund and Mitchell
Hutchins Asset Management Inc. ('Mitchell Hutchins') as the Fund's sub-adviser
and sub-administrator. The Fund pays the same fee for investment advisory and
administration services to PaineWebber as previously paid to Kidder Peabody
Asset Management, Inc. ('KPAM'), as described in the Fund's Prospectus.
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 as stated in the Prospectus. At March 31, 1995, the Fund owed
PaineWebber $197,068 in investment advisory and administration fees.
Investment advisory functions for the Fund were previously transferred from KPAM
to Mitchell Hutchins on an interim basis as a result of an asset purchase
transaction by and among Kidder, Peabody Group Inc., its parent, General
Electric Company, and Paine Webber Group Inc. That period commenced on January
30, 1995 and ended April 13, 1995.
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 average daily net assets in excess of $100 million. For
the six months ended March 31, 1995, no reimbursements were required pursuant to
the above limitation.
DISTRIBUTION PLAN
Since January 30, 1995, PaineWebber has been serving as the exclusive
distributor of the Fund's shares. For its services, which include payment of
sales commissions to registered representatives and various other promotional
and sales related expenses, it receives 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 March 31, 1995, $47,296 was payable to PaineWebber for these
services.
OTHER LIABILITIES
At March 31, 1995, the amount payable for dividends was $360,409.
14
<PAGE>
PAINEWEBBER/KIDDER, PEABODY TAX EXEMPT MONEY FUND, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CAPITAL STOCK
There are 5 billion shares of $.01 par value common stock authorized.
Transactions in shares of common stock, at $1.00 per share, were as follows:
FOR THE FOR THE
SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
MARCH 31, 1995 1994
-------------- --------------
Shares sold................................. 1,213,196,965 3,192,477,480
Shares repurchased.......................... (1,376,230,515) (3,270,064,782)
Dividends reinvested in additional Fund
shares.................................... 6,724,689 13,123,631
-------------- --------------
Net decrease in shares outstanding.......... (156,308,861) (64,463,671)
-------------- --------------
-------------- --------------
15
<PAGE>
PAINEWEBBER/KIDDER, PEABODY TAX EXEMPT MONEY FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of common stock outstanding throughout each period is
presented below:
<TABLE>
<CAPTION>
For the
Six
Months For the Years
Ended Ended
March For the Years Ended September 30, June 30,
31, 1995 -------------------------------------- ------------------
(unaudited) 1994 1993 1992 1991+ 1991 1990
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period...................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- -------- -------- --------
Net investment income........................ .014 .020 .019 .028 .010 .048 .055
Dividends from net
investment income........................... (.014) (.020) (.019) (.028) (.010) (.048) (.055)
-------- -------- -------- -------- -------- -------- --------
Net asset value:
End of period............................ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Total investment return (1).................. 1.44% 2.00% 1.95% 2.83% 3.93%* 4.92% 5.57%
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Ratios/Supplemental Data:
Net assets, end of period (000's)........ $449,168 $604,745 $669,672 $691,231 $722,224 $725,183 $749,057
Ratio of expenses to average
net assets.............................. 0.70%* 0.69% 0.70% 0.70% 0.69%* 0.68% 0.68%
Ratio of net investment income
to average net assets................... 2.85%* 1.97% 1.89% 2.78% 3.91%* 4.83% 5.44%
</TABLE>
- ------------------
+ Effective July 1, 1991, the Fund changed its fiscal year end to September
30. The figures represent such three-month period.
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends at net
asset value on the payable date, and a sale at net asset value on the last
day of each period reported. Total returns for periods of less than one year
have not been annualized unless otherwise indicated.
16
<PAGE>
- ------------------------------------------------------
DIRECTORS
David J. Beaubien
William W. Hewitt, Jr.
Thomas R. Jordan
Frank P.L. Minard
Carl W. Schafer
- ------------------------------------------------------
OFFICERS
Frank P.L. Minard
President
Victoria E. Schonfeld
Vice President
Dianne E. O'Donnell
Vice President and Secretary
Julian F. Sluyters
Vice President and Treasurer
Gregory W. Serbe
Vice President
- ------------------------------------------------------
INVESTMENT ADVISER, ADMINISTRATOR AND DISTRIBUTOR
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
- ------------------------------------------------------
SUB-ADVISER AND SUB-ADMINISTRATOR
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
- ------------------------------------------------------
This report is not to be used in connection with the
offering of shares of the Fund unless accompanied or
preceded by an effective prospectus.
The financial information included herein is taken
from the records of the Fund without examination by
independent accountants who do not express an opinion
thereon.
RECYCLED PAPER
