SUPPLEMENT TO PAINEWEBBER RMA TAX-FREE FUND, INC. PROSPECTUS
DATED AUGUST 29, 1996
September 4, 1996
Dear Investor,
This is a supplement to the Prospectus of PaineWebber RMA Tax-Free Fund,
Inc. dated August 29, 1996. The purpose of the supplement is to restate the
information presented for PaineWebber RMA Tax-Free Fund ("Tax-Free Fund") under
the caption "Expenses of Investing in the Funds" on pages 5 and 6 of the
Prospectus:
EXPENSES OF INVESTING IN THE FUND. The following tables are intended to
assist investors in understanding the expenses associated with investing in
Tax-Free Fund.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales charge on purchases of shares................................................. None
Sales charge on reinvested dividends................................................ None
Redemption fee or deferred sales charge............................................. None
</TABLE>
ANNUAL FUND OPERATING EXPENSES**
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C>
Management fees...................................................................... 0.45%
12b-1 fees........................................................................... 0.08
Other expenses....................................................................... 0.07
----
Total Operating Expenses............................................................. 0.60%(1)
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----
</TABLE>
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** See "Management" for additional information. The fees and expenses shown are
those actually incurred for Tax-Free Fund's most recent fiscal year.
PaineWebber currently charges an annual $85 account charge for the Revenue
Management Account ("RMA")(R) program including the Gold MasterCard(R)
without the Bank One Line of Credit. The fee for clients who choose the Line
of Credit for their Gold MasterCard is $125. The annual account charge for
the Business Services Account ("BSA")(R) program, including the MasterCard
Business Card(R), is $125 ($165 with a MasterCard Line of Credit). The
account charges are not included in the table because certain non-RMA and
non-BSA participants are permitted to purchase shares of Tax-Free Fund.
(1) These ratios do not include non-recurring acquisition expenses of 0.01%. If
these expenses had been included, "Other expenses" would have been 0.08%.
<PAGE>
EXAMPLE OF EFFECT OF FUND EXPENSES
An investor would pay directly or indirectly the following expenses on a
$1,000 investment in Tax-Free Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Tax-Free Fund............................................... $6 $19 $33 $ 75
</TABLE>
This Example assumes that all dividends are reinvested and that the
percentage amounts listed under Annual Fund Operating Expenses remain the same
in the years shown. The above tables and the assumption in the Example of a 5%
annual return are required by regulations of the SEC applicable to all mutual
funds; the assumed 5% annual return is not a prediction of, and does not
represent, Tax-Free Fund's projected or actual performance.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND TAX-FREE FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN. The actual expenses of Tax-Free Fund will depend upon, among other
things, the level of average net assets and the extent to which the Fund incurs
variable expenses, such as transfer agency costs.
If you have any questions regarding PaineWebber RMA Tax-Free Fund, please
call your Investment Executive at PaineWebber or one of its correspondent firms.
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