<PAGE>
ANNUAL REPORT
August 21, 1998
Dear Shareholder,
We are pleased to present you with the annual report for the PaineWebber RMA
Money Market Portfolio, the PaineWebber RMA U.S. Government Portfolio and the
PaineWebber RMA Tax-Free Fund, Inc., for the fiscal year ended June 30, 1998.
GENERAL MARKET OVERVIEW
Interest rates fell across the U.S. Treasury yield curve through the first half
of 1998, aided by low inflation, a budget surplus and a strong dollar.
Short-term yields, as represented by the three-month U.S. Treasury bill, fell
from 5.3% at the beginning of January to 5.1% by the end of June.
Over the six-month period, the U.S. bond markets reflected the widening reach of
the Asian crisis. The impact of the crisis on the United States was twofold:
global support of the U.S. Treasury market and restrained inflation. These
effects persuaded the Federal Reserve to continue its "neutral stance" for the
time being--neither raising nor lowering interest rates.
PORTFOLIO REVIEWS
We remained somewhat bullish on the fixed income markets over the six months
ended June 30, 1998, expecting interest rates to hold steady or fall
slightly. Since we did not expect major changes in rates, we kept the
Portfolios' weighted average maturities slightly above their peer groups.
PAINEWEBBER RMA MONEY MARKET PORTFOLIO
The Fund's current yield for the seven-day period ended June 30, 1998 was
5.1%. Its weighted-average maturity was 76 days, and net assets totaled
$11.1 billion as of June 30, 1998.
PAINEWEBBER RMA U.S. GOVERNMENT PORTFOLIO
The Fund's current yield for the seven-day period ended June 30, 1998 was 4.8%.
Its weighted-average maturity was 67 days, and net assets totaled $1.2 billion
as of June 30, 1998.
1
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
The Fund's current yield for the seven-day period ended June 30, 1998 was 3.0%.
Its weighted-average maturity was 40 days, and net assets totaled $2.3 billion
as of June 30, 1998.
GENERAL OUTLOOK
We remain positive on bonds despite recent volatility in the marketplace. The
demand for U.S. debt remains high as the "flight to quality" continues. We
believe the Federal Reserve will hold monetary policy steady for the foreseeable
future due to the offsetting forces of a healthy domestic economy and weak
international economies, particularly in Asia.
Because we expect interest rates to remain stable with a bias toward lowering,
we plan to maintain our strategy of keeping the Funds' weighted average
maturities slightly above their peer groups.
Our ultimate objective in managing your investments is to help you successfully
meet your financial goals. We thank you for your continued support and welcome
any comments or questions you may have.
For a quarterly FUND PROFILE on any of the funds in the PaineWebber Family of
Funds,(1) please contact your investment executive.
Sincerely,
/s/Margo Alexander
MARGO ALEXANDER
President
Mitchell Hutchins Asset Management Inc.
/s/Dennis L. McCauley
DENNIS L. McCAULEY
Chief Investment Officer - Fixed Income
Mitchell Hutchins Asset Management Inc.
/s/Susan P. Ryan
SUSAN P. RYAN
Portfolio Manager
PaineWebber RMA Money Market and PaineWebber RMA
U.S. Government Portfolios
/s/Eldrige T. Gerry III
ELDRIDGE T. GERRY III
Portfolio Manager
PaineWebber Tax-Free Fund, Inc.
This letter is intended to assist shareholders in understanding how the funds
performed during the fiscal year ended June 30, 1998, and reflects our views at
the time we are writing this report. Of course, these views may change in
response to changing circumstances. We encourage you to consult your investment
executive regarding your personal investment program.
(1) Mutual funds are sold by prospectus only. The prospectuses for the funds
contain more complete information regarding risks, charges and expenses, and
should be read carefully before investing.
2
<PAGE>
PAINEWEBBER RMA MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- --------------------- --------------------- ---------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--6.52%
$ 267,000 U.S. Treasury Bills........... 10/15/98 to 06/24/99 4.910 to 5.140%@ $ 256,633,748
199,500 Federal Home Loan Bank........ 01/27/99 to 07/07/99 5.579 to 5.760 199,496,404
107,700 Federal Home Loan Bank........ 07/01/98 to 07/07/98 5.461 to 5.601* 107,686,198
47,450 Student Loan Marketing
Association................. 11/20/98 5.850 47,450,000
115,000 Student Loan Marketing
Association................. 07/07/98 5.481 to 5.621* 114,998,991
---------------
Total U.S. Government and Agency
Obligations (cost--$726,265,341)........ 726,265,341
---------------
BANK NOTES--4.12%
DOMESTIC--3.96%
37,000 Comerica Bank N.A., Detroit... 07/07/98 5.671* 36,995,572
30,000 FCC National Bank............. 01/07/99 5.700 29,995,511
75,000 FCC National Bank............. 07/01/98 5.550 to 5.610* 74,981,516
50,000 Greenwood Trust Company....... 07/20/98 5.560 50,000,000
14,800 Huntington National Bank...... 10/02/98 5.870 14,798,737
55,000 KeyBank N.A................... 07/01/98 5.550 to 5.740* 54,985,321
79,000 PNC Bank, N.A................. 07/01/98 5.600 to 5.740* 78,992,928
21,800 SunTrust Bank, Atlanta........ 07/14/98 5.830 21,799,511
78,000 Wachovia Bank of North
Carolina.................... 09/03/98 to 10/08/98 5.560 to 5.810 77,995,607
---------------
440,544,703
---------------
YANKEE--0.16%
18,000 National Australia Bank
Ltd......................... 10/05/98 5.850 17,995,131
---------------
Total Bank Notes (cost--$458,539,834)..... 458,539,834
---------------
CERTIFICATES OF DEPOSIT--18.31%
DOMESTIC--4.37%
100,000 American Express Centurion
Bank........................ 07/07/98 to 07/13/98 5.540 100,000,000
202,700 Bankers Trust Company......... 07/07/98 to 05/21/99 5.630 to 6.000 202,660,054
148,700 Bankers Trust Company......... 07/01/98 5.650 to 6.690* 148,646,955
35,000 NationsBank of Florida,
N.A......................... 07/15/98 5.540 35,000,000
---------------
486,307,009
---------------
YANKEE--13.94%
40,000 Barclays Bank PLC............. 10/22/98 5.895 39,994,565
25,000 Bayerische Hypotheken und
Wechsel-Bank................ 03/23/99 5.650 24,989,563
55,500 Bayerische Vereinsbank AG..... 10/06/98 to 02/02/99 5.600 to 5.710 55,501,473
40,000 Canadian Imperial Bank of
Commerce.................... 09/04/98 5.580 39,999,938
89,600 Credit Agricole Indosuez...... 09/30/98 to 05/19/99 5.650 to 5.830 89,572,567
50,000 Credit Suisse First Boston.... 07/07/98 5.651* 50,000,000
45,000 Deutsche Bank AG.............. 03/22/99 to 03/30/99 5.640 to 5.700 44,987,306
224,000 National Bank of Canada....... 08/10/98 to 06/10/99 5.590 to 5.920 223,981,690
39,800 National Westminster Bank
PLC......................... 07/30/98 5.790 39,799,697
15,000 Rabobank Nederland............ 05/14/99 5.750 14,993,763
74,700 Royal Bank of Canada.......... 10/01/98 to 06/23/99 5.695 to 5.800 74,686,918
240,000 Skandinaviska Enskilda
Banken...................... 07/01/98 to 12/02/98 5.580 to 5.660 240,002,567
374,000 Societe Generale.............. 07/24/98 to 04/19/99 5.550 to 5.970 373,932,737
</TABLE>
3
<PAGE>
PAINEWEBBER RMA MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- --------------------- --------------------- ---------------
<C> <S> <C> <C> <C>
</TABLE>
CERTIFICATES OF DEPOSIT (CONCLUDED)
YANKEE (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 60,000 Societe Generale.............. 07/07/98 to 08/01/98 5.571 to 5.578%* $ 59,967,267
154,250 Svenska Handelsbanken......... 07/06/98 to 05/07/99 5.540 to 5.820 154,227,762
26,000 Swiss Bank Corporation........ 11/20/98 5.880 25,997,097
---------------
1,552,634,910
---------------
Total Certificates of Deposit
(cost--$2,038,941,919).................. 2,038,941,919
---------------
COMMERCIAL [email protected]%
ASSET-BACKED--10.81%
80,000 Asset Securitization
Cooperative Corporation..... 08/05/98 to 09/01/98 5.530 to 5.580 79,443,033
296,647 Atlantis One Funding
Corporation................. 07/10/98 to 09/01/98 5.380 to 5.570 295,162,309
74,000 CC (USA) Incorporated......... 07/22/98 to 09/28/98 5.550 to 5.600 73,433,408
27,591 Delaware Funding
Corporation................. 07/17/98 to 09/30/98 5.550 27,436,223
98,101 Enterprise Funding
Corporation................. 07/15/98 to 09/02/98 5.510 to 5.590 97,515,770
55,260 Falcon Asset Securitization
Corporation................. 07/24/98 5.580 55,062,998
150,000 New Center Asset Trust........ 07/01/98 to 07/07/98 5.530 to 6.500 149,953,917
244,750 Preferred Receivables Funding
Corporation................. 07/01/98 to 08/11/98 5.530 to 5.560 244,283,693
152,385 Receivables Capital
Corporation................. 07/06/98 to 07/24/98 5.540 to 5.570 151,971,978
30,000 Riverwoods Funding
Corporation................. 07/13/98 5.520 29,944,800
---------------
1,204,208,129
---------------
AUTO & TRUCK--3.33%
25,000 Daimler-Benz North America
Corporation................. 09/10/98 5.500 24,728,820
100,000 Ford Motor Credit
Corporation................. 07/01/98 to 07/02/98 5.520 to 5.530 99,992,319
160,000 General Motors Acceptance
Corporation................. 07/01/98 to 07/31/98 5.540 to 6.500 159,530,639
86,550 PACCAR Financial
Corporation................. 07/20/98 to 07/24/98 5.520 to 5.540 86,279,694
---------------
370,531,472
---------------
BANKING--8.59%
95,000 Bankers Trust New York
Corporation................. 10/02/98 to 03/22/99 5.470 to 5.508 92,245,071
70,000 Banque et Caisse d'Epargne de
L'Etat...................... 09/02/98 to 09/09/98 5.510 69,303,597
138,100 BBL North America
Incorporated................ 07/08/98 to 07/15/98 5.510 to 5.580 137,918,992
25,000 BCI Funding Corporation....... 07/08/98 5.520 24,973,167
40,000 BHF Finance Incorporated
(Delaware).................. 07/01/98 5.600 40,000,000
25,000 Credit Agricole Indosuez North
America Incorporated........ 07/20/98 5.380 24,929,014
25,000 Credito Italiano Delaware
Incorporated................ 07/02/98 5.530 24,996,160
225,000 Cregem North America
Incorporated................ 07/08/98 to 09/21/98 5.500 223,206,389
65,000 Den Danske Corporation........ 08/11/98 to 09/08/98 5.510 to 5.520 64,484,512
75,000 Den norske Bank............... 07/06/98 to 07/13/98 5.500 74,915,972
25,000 KFW International Finance
Incorporated................ 07/01/98 5.600 25,000,000
50,000 National Bank of Canada....... 07/06/98 5.470 49,962,014
75,000 Nordbanken North America
Incorporated................ 07/08/98 to 08/12/98 5.390 to 5.520 74,789,125
30,000 Unifunding.................... 09/04/98 5.510 29,701,542
---------------
956,425,555
---------------
BROKER-DEALER--7.98%
99,500 Goldman Sachs Group L.P....... 09/25/98 5.580 98,173,665
</TABLE>
4
<PAGE>
PAINEWEBBER RMA MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- --------------------- --------------------- ---------------
<C> <S> <C> <C> <C>
</TABLE>
COMMERCIAL PAPER@ (CONTINUED)
BROKER-DEALER (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 320,000 Lehman Brothers Holdings
Incorporated................ 07/01/98 to 11/16/98 5.380 to 6.500% $ 317,915,758
260,000 Merrill Lynch & Company,
Incorporated................ 07/02/98 to 12/03/98 5.500 to 5.580 257,858,217
140,000 Morgan Stanley, Dean Witter &
Company..................... 07/01/98 to 08/12/98 5.520 to 5.530 139,769,667
75,000 Morgan Stanley, Dean Witter &
Company..................... 07/07/98 to 07/09/98 5.616* 75,000,000
---------------
888,717,307
---------------
BUSINESS SERVICES--0.81%
42,572 Xerox Corporation............. 07/14/98 to 07/21/98 5.520 to 5.530 42,459,494
48,000 Xerox Credit Corporation...... 07/14/98 5.530 47,904,147
---------------
90,363,641
---------------
CHEMICALS--2.23%
249,371 DuPont (E. I.) deNemours &
Company..................... 07/08/98 to 07/21/98 5.500 to 5.520 248,833,089
---------------
DRUGS, HEALTH CARE--3.30%
89,465 Abbott Laboratories........... 07/16/98 to 07/17/98 5.510 89,251,951
130,000 Glaxo Wellcome PLC............ 07/08/98 to 07/28/98 5.500 to 5.570 129,628,243
149,000 Pfizer Incorporated........... 07/10/98 to 07/29/98 5.500 148,576,500
---------------
367,456,694
---------------
ELECTRONICS--2.90%
97,885 Emerson Electric Company...... 07/20/98 to 07/27/98 5.500 to 5.530 97,552,529
176,300 Motorola Credit Corporation... 07/10/98 to 08/21/98 5.500 to 5.540 175,583,806
50,000 Vermont American
Corporation................. 07/16/98 5.520 49,885,000
---------------
323,021,335
---------------
ENERGY--0.88%
97,725 Exxon Imperial U.S.
Incorporated................ 07/06/98 to 07/09/98 5.500 to 5.510 97,628,369
---------------
FINANCE-CONDUIT--2.69%
221,585 MetLife Funding
Incorporated................ 07/09/98 to 07/29/98 5.500 to 5.550 220,954,662
30,000 Svenska Handelsbanken
Incorporated................ 12/08/98 5.480 29,269,333
50,000 Texaco Incorporated........... 07/22/98 5.520 49,839,000
---------------
300,062,995
---------------
FINANCE-CONSUMER--1.94%
90,000 American General Finance
Corporation................. 07/08/98 to 07/23/98 5.510 to 5.530 89,788,172
100,000 Household Finance
Corporation................. 07/07/98 6.000 99,900,000
26,115 Transamerica Finance
Corporation................. 08/11/98 5.530 25,950,526
---------------
215,638,698
---------------
FINANCE-SUBSIDIARY--2.19%
165,000 Deutsche Bank Financial,
Incorporated................ 07/10/98 to 07/14/98 5.510 to 5.540 164,753,846
79,500 National Australia Funding
(Delaware) Incorporated..... 07/29/98 to 11/10/98 5.320 to 5.500 78,703,050
---------------
243,456,896
---------------
</TABLE>
5
<PAGE>
PAINEWEBBER RMA MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- --------------------- --------------------- ---------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER@ (CONCLUDED)
FOOD, BEVERAGE & TOBACCO--3.44%
$ 317,000 Diageo Capital PLC............ 07/10/98 to 08/20/98 5.430 to 5.540% $ 315,800,883
42,407 Heinz (H.J.) Company.......... 07/20/98 5.500 42,283,902
25,000 Kellogg Company............... 07/23/98 5.510 24,915,819
---------------
383,000,604
---------------
INSURANCE--PROPERTY, CASUALTY--0.16%
18,000 John Hancock Capital
Corporation................. 07/02/98 5.520 17,997,240
---------------
METALS & MINING--0.55%
61,726 Rio Tinto America
Incorporated................ 07/07/98 to 08/13/98 5.500 to 5.520 61,586,689
---------------
MISCELLANEOUS--0.24%
27,000 Beta Finance Incorporated..... 09/22/98 5.510 26,657,003
---------------
OIL EQUIPMENT & SERVICES--0.25%
28,300 Colonial Pipeline Company..... 07/09/98 5.510 28,265,348
---------------
PRINTING, PUBLISHING--0.81%
40,000 Gannett Company............... 07/13/98 5.500 39,926,667
50,000 Reed Elsevier (USA)
Incorporated................ 07/27/98 5.540 49,799,944
---------------
89,726,611
---------------
RETAIL-MERCHANDISE--1.17%
90,000 Penney (J.C.) Funding
Corporation................. 07/07/98 to 07/21/98 5.520 89,831,333
40,000 Toys "R" Us Incorporated...... 07/27/98 5.580 39,838,800
---------------
129,670,133
---------------
TELECOMMUNICATIONS--5.65%
50,000 Ameritech Corporation......... 07/13/98 5.520 49,908,000
114,000 Bell Atlantic Financial
Services Incorporated....... 07/02/98 to 07/23/98 5.510 to 5.515 113,730,005
170,000 BellSouth Capital Funding
Corporation................. 07/06/98 to 07/30/98 5.500 to 5.560 169,608,328
170,000 Lucent Technologies
Incorporated................ 07/02/98 to 08/07/98 5.500 to 5.540 169,570,530
126,445 SBC Communications
Incorporated................ 07/09/98 to 08/26/98 5.490 to 5.510 126,012,646
---------------
628,829,509
---------------
UTILITY-ELECTRIC--0.60%
66,800 Southern Company.............. 07/10/98 to 07/15/98 5.510 to 5.520 66,695,001
---------------
UTILITY-GAS--0.17%
19,000 Consolidated Natural Gas
Company..................... 07/13/98 5.520 18,965,040
---------------
Total Commercial Paper
(cost--$6,757,737,358).................. 6,757,737,358
---------------
SHORT-TERM CORPORATE OBLIGATIONS--10.05%
BROKER-DEALER--6.44%
50,000 Bankers Trust Corporation..... 08/19/98 5.679* 49,996,808
75,000 Bear Stearns Companies,
Incorporated................ 07/14/98 to 06/14/99 5.800 to 5.910 75,000,000
228,300 Bear Stearns Companies,
Incorporated................ 07/07/98 to 07/17/98 5.531 to 5.802* 228,311,447
</TABLE>
6
<PAGE>
PAINEWEBBER RMA MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- --------------------- --------------------- ---------------
<C> <S> <C> <C> <C>
</TABLE>
SHORT-TERM CORPORATE OBLIGATIONS (CONCLUDED)
BROKER-DEALER (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 40,000 Credit Suisse First Boston.... 07/07/98 5.711%* $ 40,000,000
190,000 Lehman Brothers Holdings
Incorporated................ 07/01/98 to 07/26/98 5.656 to 5.956* 190,028,817
30,000 Merrill Lynch & Company,
Incorporated................ 10/09/98 5.960 30,000,000
50,800 Merrill Lynch & Company,
Incorporated................ 07/01/98 to 07/07/98 5.570 to 5.600* 50,800,000
52,800 Morgan Stanley, Dean Witter &
Company..................... 07/01/98 to 07/28/98 5.758 to 5.850* 52,810,066
---------------
716,947,138
---------------
COMPUTERS--0.44%
49,400 IBM Credit Corporation........ 07/07/98 to 09/21/98 5.538 to 5.731* 49,394,769
---------------
INSURANCE--1.88%
209,600 Prudential Funding
Corporation................. 07/06/98 to 07/07/98 5.586 to 5.761* 209,600,000
---------------
MISCELLANEOUS--1.29%
123,000 Beta Finance Incorporated..... 08/10/98 to 03/10/99 5.560 to 5.920 123,000,000
20,000 Beta Finance Incorporated..... 07/07/98 5.811* 20,000,000
---------------
143,000,000
---------------
Total Short-Term Corporate Obligations
(cost--$1,118,941,907).................. 1,118,941,907
---------------
REPURCHASE AGREEMENT--0.16%
17,561 Repurchase Agreement dated
06/30/98 with Citicorp
Securities Incorporated,
collateralized by
$12,220,000 U.S. Treasury
Bonds, 9.875% due 11/15/15
(value--$17,917,575);
proceeds: $17,563,878
(cost--$17,561,000)......... 07/01/98 5.900 17,561,000
---------------
Total Investments (cost--$11,117,987,359
which approximates cost for federal
income tax purposes)--99.85%............ 11,117,987,359
Other assets in excess of
liabilities--0.15%...................... 17,238,457
---------------
Net Assets (applicable to 11,139,291,700
shares of common stock outstanding at
$1.00 per share)--100.00%............... $11,135,225,816
---------------
---------------
</TABLE>
- -----------------
* Variable rate securities--maturity date reflects earlier of reset date or
stated maturity date. The interest rates shown are the current rates as of
June 30, 1998.
@ Interest rates shown are discount rates at date of purchase.
Weighted average maturity--76 days
See accompanying notes to financial statements
7
<PAGE>
PAINEWEBBER RMA U.S. GOVERNMENT PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- ------------------- --------------------- --------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--53.84%
07/15/98 to
$ 635,000 U.S. Treasury Notes (cost--$635,081,985).................. 04/30/99 4.750 to 8.250% $ 635,081,985
--------------
REPURCHASE AGREEMENTS--45.80%
50,000 Repurchase Agreement dated 06/30/98 with BT Alex Brown,
Incorporated, collateralized by $50,506,000 U.S.
Treasury Notes, 5.625% due 05/15/01 (value-$51,011,060);
proceeds: $50,007,292................................... 07/01/98 5.250 50,000,000
50,000 Repurchase Agreement dated 06/30/98 with Citicorp
Securities Incorporated, collateralized by $34,785,000
U.S. Treasury Bonds, 9.875% due 11/15/15
(value-$51,001,767); proceeds: $50,008,194.............. 07/01/98 5.900 50,000,000
40,000 Repurchase Agreement dated 06/30/98 with Dresdner
Kleinwort Benson N.A. LLC, collateralized by $41,718,000
U.S. Treasury Bills, 6.000% due 12/03/98
(value-$40,800,204); proceeds: $40,006,333.............. 07/01/98 5.700 40,000,000
40,000 Repurchase Agreement dated 06/30/98 with First Chicago
Capital Markets Incorporated, collateralized by
$39,045,000 U.S. Treasury Notes, 6.250% due 08/31/02
(value-$40,802,025); proceeds: $40,006,389.............. 07/01/98 5.750 40,000,000
40,000 Repurchase Agreement dated 06/30/98 with Goldman Sachs &
Company, collateralized by $32,145,000 U.S. Treasury
Bonds, 13.375% due 08/15/01 (value-$40,824,150);
proceeds: $40,006,111................................... 07/01/98 5.500 40,000,000
50,000 Repurchase Agreement dated 06/30/98 with HSBC Securities
Incorporated, collateralized by $48,227,000 U.S.
Treasury Bonds, 6.000% due 02/15/26 (value-$51,000,053);
proceeds: $50,007,917................................... 07/01/98 5.700 50,000,000
50,000 Repurchase Agreement dated 06/30/98 with Merrill Lynch
Government Securities Incorporated, collateralized by
$48,285,000 U.S. Treasury Notes, 6.625% due 07/31/01
(value-$50,998,617); proceeds: $50,007,778.............. 07/01/98 5.600 50,000,000
20,218 Repurchase Agreement dated 06/30/98 with J.P. Morgan
Securities Incorporated, collateralized by $20,700,000
U.S. Treasury Notes, 5.375% due 06/30/00
(value-$20,622,375); proceeds: $20,221,083.............. 07/01/98 5.490 20,218,000
50,000 Repurchase Agreement dated 06/30/98 with Salomon Brothers
Incorporated, collateralized by $36,270,000 U.S.
Treasury Bonds, 8.875% due 02/15/19 (value-$51,021,009);
proceeds: $50,008,194................................... 07/01/98 5.900 50,000,000
50,000 Repurchase Agreement dated 06/30/98 with Societe Generale
Securities Corporation, collateralized by $43,221,000
U.S. Treasury Bonds, 6.875% due 08/15/25
(value-$51,000,780); proceeds: $50,008,333.............. 07/01/98 6.000 50,000,000
</TABLE>
8
<PAGE>
PAINEWEBBER RMA U.S. GOVERNMENT PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- ------------------- --------------------- --------------
<C> <S> <C> <C> <C>
</TABLE>
REPURCHASE AGREEMENTS (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 50,000 Repurchases Agreement dated 06/30/98 with State Street
Bank Corporation, collateralized by $38,860,000 U.S.
Treasury Bonds, 8.125% due 08/15/19 (value-$51,003,750);
proceeds: $50,008,083................................... 07/01/98 5.820% $ 50,000,000
50,000 Repurchase Agreement dated 06/30/98 with Warburg Dillon
Reed, LLC, collateralized by $32,407,000 U.S. Treasury
Bonds, 10.625% due 08/15/15 (value-$50,998,896);
proceeds: $50,008,056................................... 07/01/98 5.800 50,000,000
--------------
Total Repurchase Agreements (cost--$540,218,000)..................... 540,218,000
--------------
Total Investments (cost--$1,175,299,985 which approximates cost for
federal income tax purposes)--99.64%............................... 1,175,299,985
Other assets in excess of liabilities--0.36%......................... 4,275,489
--------------
Net Assets (applicable to 1,179,963,966 shares of common stock
outstanding at $1.00 per share)--100.00%........................... $1,179,575,474
--------------
--------------
</TABLE>
Weighted average maturity--67 days
See accompanying notes to financial statements
9
<PAGE>
PAINEWEBBER RMA MONEY FUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
JUNE 30, 1998
--------------------------------
MONEY MARKET U.S. GOVERNMENT
PORTFOLIO PORTFOLIO
--------------- ---------------
<S> <C> <C>
INVESTMENT INCOME:
Interest........................................................................................ $ 578,449,225 $ 64,722,480
--------------- ---------------
EXPENSES:
Investment advisory and administration.......................................................... 50,859,070 5,010,616
Transfer agency and service fees................................................................ 6,255,989 221,630
Federal and state registration.................................................................. 1,212,404 70,934
Custody and accounting.......................................................................... 1,020,350 117,627
Reports and notices to shareholders............................................................. 528,445 45,462
Insurance....................................................................................... 272,951 30,525
Legal and audit................................................................................. 252,111 69,028
Directors' fees................................................................................. 10,500 10,500
Distribution fees............................................................................... -- 1,151,934
Other expenses.................................................................................. 111,025 6,137
--------------- ---------------
60,522,845 6,734,393
--------------- ---------------
NET INVESTMENT INCOME........................................................................... 517,926,380 57,988,087
NET REALIZED GAIN (LOSS) FROM INVESTMENT TRANSACTIONS........................................... (249,926) 30,199
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................ $ 517,676,454 $ 58,018,286
--------------- ---------------
--------------- ---------------
</TABLE>
See accompanying notes to financial statements
10
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
JUNE 30,
------------------------------------
1998 1997
------------------ ----------------
<S> <C> <C>
PAINEWEBBER RMA MONEY MARKET PORTFOLIO
FROM OPERATIONS:
Net investment income....................................................................... $ 517,926,380 $ 404,764,048
Net realized gain (loss) from investment transactions....................................... (249,926) 347,934
------------------ ----------------
Net increase in net assets resulting from operations........................................ 517,676,454 405,111,982
------------------ ----------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income....................................................................... (517,926,380) (404,764,048)
------------------ ----------------
NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS.................................. 2,462,420,689 1,150,094,848
------------------ ----------------
Net increase in net assets.................................................................. 2,462,170,763 1,150,442,782
NET ASSETS:
Beginning of year........................................................................... 8,673,055,053 7,522,612,271
------------------ ----------------
End of year................................................................................. $ 11,135,225,816 $ 8,673,055,053
------------------ ----------------
------------------ ----------------
PAINEWEBBER RMA U.S. GOVERNMENT PORTFOLIO
FROM OPERATIONS:
Net investment income....................................................................... $ 57,988,087 $ 55,146,698
Net realized gains from investment transactions............................................. 30,199 10,458
------------------ ----------------
Net increase in net assets resulting from operations........................................ 58,018,286 55,157,156
------------------ ----------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income....................................................................... (57,988,087) (55,146,698)
------------------ ----------------
Net increase (decrease) in net assets from capital share transactions....................... 95,678,845 (53,654,514)
------------------ ----------------
Net increase (decrease) in net assets....................................................... 95,709,044 (53,644,056)
NET ASSETS:
Beginning of year........................................................................... 1,083,866,430 1,137,510,486
------------------ ----------------
End of year................................................................................. $ 1,179,575,474 $ 1,083,866,430
------------------ ----------------
------------------ ----------------
</TABLE>
See accompanying notes to financial statements
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber RMA Money Fund, Inc. ("Corporation") was organized under the laws
of Maryland on July 2, 1982 and is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, as an open-end
management investment company. The Corporation is a series mutual fund with
three portfolios, each of which are diversified series: PaineWebber RMA Money
Market Portfolio ("Money Market Portfolio"), PaineWebber RMA U.S. Government
Portfolio ("U.S. Government Portfolio") (collectively the "Funds") and
PaineWebber Retirement Money Fund. The financial statements of PaineWebber
Retirement Money Fund are not included herein.
The preparation of financial statements in accordance with generally accepted
accounting principles requires Fund management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies:
VALUATION AND ACCOUNTING FOR INVESTMENTS AND INVESTMENT INCOME--Investments
are valued at amortized cost which approximates market value. Investment
transactions are recorded on trade date. Realized gains and losses from
investment transactions are calculated using the identified cost method.
Interest income is recorded on the accrual basis. Premiums are amortized and
discounts are accreted as adjustments to interest income and the identified cost
of investments.
REPURCHASE AGREEMENTS--The Funds' custodian takes possession of the collateral
pledged for investments in repurchase agreements. The underlying collateral is
valued daily on a mark-to-market basis to ensure that the value, including
accrued interest, is at least equal to the repurchase price. In the event of
default of the obligation to repurchase, each 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.
DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions is
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification.
CONCENTRATION OF RISK
The ability of the issuers of the debt securities held by the Funds to meet
their obligations may be affected by economic developments, including those
particular to a specific industry or region.
INVESTMENT ADVISER AND ADMINISTRATOR
The Corporation's Board of Directors has approved an Investment Advisory and
Administration Contract ("Advisory Contract") with PaineWebber Incorporated
("PaineWebber"), under which PaineWebber serves as investment adviser and
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
administrator of the Corporation and each of its series. In accordance with the
Advisory Contract, each Fund pays PaineWebber an investment advisory and
administration fee, which is accrued daily and paid monthly, in accordance with
the following schedule:
<TABLE>
<CAPTION>
ANNUAL
AVERAGE DAILY NET ASSETS RATE
- -------------------------------------------------------------------------------------- -----------
<S> <C>
MONEY MARKET PORTFOLIO:
All................................................................................... 0.50%
U.S. GOVERNMENT PORTFOLIO:
Up to $300 million.................................................................... 0.50
In excess of $300 million up to $750 million.......................................... 0.44
Over $750 million..................................................................... 0.36
</TABLE>
At June 30, 1998, the Money Market Portfolio and the U.S. Government Portfolio
owed PaineWebber $4,574,206, and $418,649 respectively, for investment advisory
and administration fees.
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"), a wholly-owned
asset management subsidiary of PaineWebber, serves as sub-adviser and
sub-administrator of the Fund pursuant to a Sub-Advisory and Sub-Administration
Contract between PaineWebber and Mitchell Hutchins. In accordance with that
contract, PaineWebber (not the Fund) pays Mitchell Hutchins a fee, computed
daily and paid monthly, at an annual rate of 20% of the fee paid by the Fund to
PaineWebber under the Advisory Contract.
DISTRIBUTION PLAN
PaineWebber is the distributor of the shares of both the U.S. Government
Portfolio and Money Market Portfolio. Under the plan of distribution, the U.S.
Government Portfolio is authorized to pay PaineWebber a monthly service fee at
the annual rate of up to 0.15% of its average daily net assets for providing
certain shareholder services. PaineWebber was compensated for providing such
services at the annual rate of 0.08% of the U.S. Government Portfolio's average
daily net assets until February 11, 1998. Effective February 12, 1998, upon
Board of Director approval, this fee became payable at the annual rate of 0.125%
of U.S. Government Portfolio's average daily net assets. No such fees are
charged by PaineWebber for the similar services it provides for the Money Market
Portfolio. At June 30, 1998, the U.S. Government Portfolio owed PaineWebber
$123,104 for such service fees.
TRANSFER AGENCY SERVICE FEES
Prior to August 1, 1997, each Fund paid PaineWebber an annual fee of $4.00 per
active PaineWebber shareholder account, plus certain out-of-pocket expenses, for
certain services not provided by the Funds' transfer agent. For these services
for the month ended July 31, 1997, PaineWebber earned $156,077 and $12,249 from
the Money Market Portfolio and the U.S. Government Portfolio, respectively.
Subsequent to July 31, 1997, PaineWebber provides transfer agency related
services to each Fund pursuant to a delegation of authority from PFPC, Inc., the
Funds' transfer agent, and is compensated for these services by PFPC, Inc., not
the Funds. For the eleven months ended June 30, 1998, PaineWebber received from
PFPC, Inc., not the Funds, approximately 54% and 52% of the total transfer
agency fees collected by PFPC, Inc. from the Money Market Portfolio and the U.S.
Government Portfolio, respectively.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
OTHER LIABILITIES
At June 30, 1998, the Money Market Portfolio and the U.S. Government
Portfolio, had dividends payable aggregating $20,219,905 and $2,047,768,
respectively, and the Money Market Portfolio had a payable for investments
purchased aggregating $20,000,000.
FEDERAL TAX STATUS
Each 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, each Fund intends not to be subject to a federal excise tax.
At June 30, 1998, Money Market Portfolio had net capital loss carryforwards of
$2,778,904. These loss carryforwards are available as reductions, to the extent
provided in the regulations, of future net realized capital gains, and will
expire by June 30, 2003 for Money Market Portfolio. To the extent that these
losses are used to offset future net capital gains, the gains so offset will not
be distributed.
CAPITAL SHARE TRANSACTIONS
There are 30 billion $0.001 par value authorized shares of common stock
relating to the Money Market Portfolio and 10 billion $0.001 par value
authorized shares of common stock relating to the U.S. Government Portfolio.
Transactions in capital shares, at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,
------------------------------------------------------------------
1998 1997
-------------------------------- --------------------------------
MONEY MARKET U.S. GOVERNMENT MONEY MARKET U.S. GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold....................................... 65,875,302,609 6,429,052,935 46,081,179,686 5,743,052,232
Shares repurchased................................ (63,913,078,006) (6,389,964,301) (45,323,952,320) (5,850,657,192)
Dividends reinvested.............................. 500,196,086 56,590,211 392,867,482 53,950,446
--------------- --------------- --------------- ---------------
Net increase (decrease) in shares outstanding..... 2,462,420,689 95,678,845 1,150,094,848 (53,654,514)
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
</TABLE>
14
<PAGE>
PAINEWEBBER RMA MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS
Selected data for a share of common stock outstanding throughout each year is
presented below:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,
-------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year.............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- ----------- -----------
Net investment income.............. 0.051 0.049 0.051 0.049 0.030
Dividends from net investment
income............................ (0.051) (0.049) (0.051) (0.049) (0.030)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total investment return(1)......... 5.21% 5.04% 5.25% 5.00% 2.95%
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's).... $11,135,226 $8,673,055 $7,522,612 $5,398,146 $4,337,009
Expenses to average net assets..... 0.60% 0.59% 0.60%(2) 0.59% 0.59%
Net investment income to average
net assets........................ 5.09% 4.94% 5.14%(2) 4.91% 2.98%
</TABLE>
- -----------------
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each year reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each year reported.
(2) These ratios include non-recurring acquisition expenses of 0.01%.
15
<PAGE>
PAINEWEBBER RMA U.S. GOVERNMENT PORTFOLIO
FINANCIAL HIGHLIGHTS
Selected data for a share of common stock outstanding throughout each year is
presented below:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,
------------------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year.............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
Net investment income.............. 0.049 0.048 0.049 0.046 0.027
Dividends from net investment
income........................... (0.049) (0.048) (0.049) (0.046) (0.027)
------ ------ ------ ------ ------
Net asset value, end of year....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total investment return(1)......... 5.05% 4.88% 5.04% 4.67% 2.74%
------ ------ ------ ------ ------
------ ------ ------ ------ ------
RATIOS/SUPPLEMENT DATA:
Net assets, end of year (000's).... $1,179,575 $1,083,866 $1,137,510 $815,781 $854,928
Expenses to average net assets..... 0.57% 0.62% 0.65%(2) 0.63% 0.62%
Net investment income to average
net assets....................... 4.93% 4.78% 4.91%(2) 4.55% 2.75%
</TABLE>
- -----------------
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each year reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each year reported.
(2) These ratios include non-recurring acquisition expenses of 0.02%.
16
<PAGE>
PAINEWEBBER RMA MONEY FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors and Shareholders
PaineWebber RMA Money Fund, Inc.
We have audited the accompanying statements of net assets of the Money Market
Portfolio and the U.S. Government Portfolio (two of the portfolios of the
PaineWebber RMA Money Fund, Inc.) as of June 30, 1998, and the related statement
of operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended. These financial statements
and financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
investments owned at June 30, 1998 by correspondence with the custodian and
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Money Market Portfolio and the U.S. Government Portfolio at June 30, 1998, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in conformity
with generally accepted accounting principles.
[ERNST & YOUNG SIGNATURE]
New York, New York
August 21, 1998
17
<PAGE>
PAINEWEBBER RMA MONEY FUND, INC.
TAX INFORMATION (UNAUDITED)
We are required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within sixty days of the Fund's fiscal year end (June 30,
1998) as to the federal tax status of distributions received by shareholders
during such fiscal year from each portfolio. Accordingly, we are advising you
that all of the distributions paid during the fiscal year were derived from net
investment income of the Money Market Portfolio and the U.S. Government
Portfolio. These amounts are taxable as ordinary income, none of which qualifies
for the dividend received deduction available to corporate shareholders.
Dividends received by tax-exempt recipients (e.g., IRAs and Keoghs) need not
be reported as taxable income. Some retirement trusts (e.g., corporate, Keogh
and 403(b)(7) plans) may need this information for their annual information
reporting.
Because the Funds' fiscal year is not the calendar year, another notification
will be sent in respect of calendar 1998. The second notification, which will
reflect the amount used by calendar year taxpayers on their federal income tax
returns, will be made in conjunction with Form 1099 DIV and will be mailed in
January 1999. Shareholders are advised to consult their own tax advisers with
respect to the tax consequences of their investment in the Funds.
18
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
STATEMENT OF NET ASSETS JUNE 30, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
ALABAMA--1.17%
$ 10,900 Birmingham Alabama Medical
Clinic Board Revenue
(U.A.H.S.F.)................ A 3.450% $ 10,900,000
9,735 Birmingham Alabama Refunding
Series A.................... A 3.500 9,735,000
40 Mcintosh Industrial
Development Board Pollution
Control Revenue Bond
(Ciba Geigy)................ A 3.800 40,000
6,000 St. Clair County Industrial
Development Board
(National Cement Company
Inc. Project)............... A 3.600 6,000,000
----------------
26,675,000
----------------
ARIZONA--2.89%
18,000 Salt River Arizona
Agricultural Improvement &
Power Project
Tax-Exempt Commercial
Paper....................... 09/14/98 to 10/15/98 3.550 to 3.750 18,000,000
11,200 Apache County Industrial
Development Authority
(Tucson Electric Power
Company Project Series B)... A 3.650 11,200,000
5,000 Apache County Industrial
Development Authority
(Tucson Electric Power
Springerville Project)...... A 3.600 5,000,000
10,000 Maricopa County Pollution
Control
(Arizona Public Service
Company).................... A 3.550 10,000,000
4,200 Phoenix Multi-Family Housing
Authority
(Del Mar Terrace Apartments
Project).................... A 3.600 4,200,000
8,400 Phoenix Multi-Family Housing
Authority
(Southwest Villages
Project).................... A 3.350 8,400,000
6,000 Pinal County Industrial and
Development
Authority Pollution Control
Revenue..................... A 3.900 6,000,000
2,750 Scottsdale Industrial
Development Authority
Hospital Revenue
(Scottsdale Memorial
Hospital)
(Pre-refunded with U.S.
Government Securities to
09/01/98 @ 101)............. 09/01/98 7.050 2,791,839
----------------
65,591,839
----------------
ARKANSAS--0.09%
2,000 Little Rock Arkansas School
District
Tax and Revenue Anticipation
Notes....................... 12/30/98 4.250 2,005,857
----------------
CALIFORNIA--2.46%
9,000 California School Cash Reserve
Program Authority Pool
Series A
Tax and Revenue Anticipation
Notes....................... 07/01/99 4.500 9,065,880
2,420 Fremont School District Santa
Clara County
Tax and Revenue Anticipation
Notes....................... 06/30/99 3.900 2,425,082
5,000 Fremont California
Tax and Revenue Anticipation
Notes....................... 07/01/99 4.000 5,014,400
10,000 Los Angeles County Series A
Tax and Revenue Anticipation
Notes....................... 06/30/99 4.500 10,079,700
7,000 Los Angeles Regional Airports
Improvement Corporation
Lease Revenue............... A 4.000 7,000,000
6,000 San Francisco County Airports
Series B
Tax-Exempt Commercial
Paper....................... 07/29/98 3.750 6,000,000
4,200 California Higher Education
Loan Authority
(Student Loans)............. A 3.800 4,200,000
6,500 California Higher Education
Loan Authority Series D-2
(Student Loans)............. A 3.65 6,500,000
</TABLE>
19
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
</TABLE>
CALIFORNIA (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 5,500 California Higher Education
Loan Authority Series D-2
(Student Loans)............. 07/01/98 4.00% $ 5,500,000
----------------
55,785,062
----------------
COLORADO--1.58%
6,250 Colorado General Fund Revenue
Series A
Tax and Revenue Anticipation
Notes....................... 06/25/99 4.000 6,274,875
10,000 Colorado Housing Finance
Authority
Multi-Family Housing Revenue
Project
(Grant Plaza Project)....... A 3.625 10,000,000
9,150 Douglas County Colorado
Multi-Family Housing Revenue
(Autumn Chase Project J).... A 3.500 9,150,000
10,500 Moffat County Pollution
Control Revenue
(Colorado-Ule Electric)..... A 3.650 10,500,000
----------------
35,924,875
----------------
CONNECTICUT--0.86%
19,600 Connecticut Development
Authority Pollution Control
Revenue
(Connecticut Light & Power
Company Project)............ A 3.500 19,600,000
----------------
DELAWARE--0.64%
14,600 Delaware Economic Development
Authority
(Hospital Billing &
Collection Service, Ltd.)... A 3.750 14,600,000
----------------
DISTRICT OF COLUMBIA--1.03%
8,500 District of Columbia Series B
Tax and Revenue Anticipation
Notes....................... 09/30/98 4.500 8,513,181
3,000 District of Columbia
Variable Refunding A 2...... A 4.000 3,000,000
5,500 District of Columbia
Variable Refunding A 4...... A 4.000 5,500,000
6,300 District of Columbia
Variable Refunding A 3...... A 4.000 6,300,000
----------------
23,313,181
----------------
FLORIDA--7.95%
9,730 Dade County Aviation
Revenue..................... A 3.550 9,730,000
9,550 Dade County Health Facilities
Authority Hospital Revenue
(Miami Childrens
Hospital)................... A 3.400 9,550,000
22,000 Dade County Water & Sewer
System Revenue.............. A 3.400 22,000,000
25,230 Florida Local Government
Finance Commission Series A
Tax-Exempt Commercial
Paper....................... 07/24/98 to 09/08/98 3.500 to 3.650 25,230,000
11,000 Hoosier City of Sullivan PCR
National Rural Utilities
(Hoosier Energy)............ 10/13/98 3.550 11,000,000
30,200 Jacksonville Electric Series A
Tax-Exempt Commercial
Paper....................... 08/27/98 to 09/15/98 3.750 to 3.800 30,200,000
4,450 Orange County Health
Facilities Authority
(Adventist Health
Systems).................... A 3.450 4,450,000
5,300 Orange County Health
Facilities Authority
(Mayflower Retirement
Center)..................... A 3.500 5,300,000
</TABLE>
20
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
</TABLE>
FLORIDA (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 6,900 Orange County Health
Facilities Authority
(Pooled Hospital Loan
Program)
Tax-Exempt Commercial
Paper....................... 07/27/98 3.500% $ 6,900,000
5,100 Pinellas County Health
Facilities Authority
Tax-Exempt Commercial
Paper....................... A 3.900 5,100,000
10,750 Sarasota County Florida
Tax-Exempt Commercial
Paper....................... 08/13/98 to 09/08/98 3.600 to 3.750 10,750,000
31,480 Sunshine State Government
Finance Commission
Tax-Exempt Commercial
Paper....................... 08/12/98 to 09/14/98 3.550 to 3.700 31,480,000
5,000 University of North Florida
Foundation Incorporated..... A 3.550 5,000,000
4,000 West Orange Memorial Hospital
A1
Tax-Exempt Commercial
Paper....................... 07/21/98 3.500 4,000,000
----------------
180,690,000
----------------
GEORGIA--6.11%
3,200 Burke County Development
Authority
(Oglethorpe Power
Corporation)
Tax-Exempt Commercial
Paper....................... 09/10/98 3.700 3,200,000
3,655 Municipal Electric Authority
Of Georgia
Tax-Exempt Commercial
Paper....................... 08/18/98 3.650 3,655,000
33,805 Burke County Development
Authority Pollution Control
(Oglethorpe Power
Corporation)................ A 3.400 33,805,000
10,000 Cobb County Housing Authority
Multi-Family Housing Revenue
(Greenhouse Frey Apartment
Project).................... A 3.600 10,000,000
10,000 De Kalb County Housing
Authority Multi-Family
Housing Revenue
Refunding Post Walk
Project..................... A 3.600 10,000,000
13,000 Georgia Municipal Electric
Authority................... A 3.500 13,000,000
3,775 Georgia Municipal Gas
Authority Tax-Exempt
Commercial Paper
(Agency Project Series A)... A 3.500 3,775,000
31,000 Georgia Municipal Gas
Authority
(Transco Portfolio I Project
B).......................... A 3.500 31,000,000
4,000 Georgia Municipal Gas
Authority Gas Revenue
(Gas Portfolio II Project
C).......................... A 3.400 4,000,000
12,860 Glynn Brunswick Memorial
Hospital Variable
Anticipation Certificates
(Southeast Georgia
Project).................... A 3.400 12,860,000
5,100 Glynn Brunswick County
Memorial Hospital Authority
Revenue..................... A 1.000 5,100,000
8,500 Gwinnett County Housing
Authority Multi-Family
Housing Revenue
Various Post Court
Project..................... A 3.600 8,500,000
----------------
138,895,000
----------------
ILLINOIS--10.94%
2,500 Illinios Healthcare
Authority--Health Facility
Authority Series 1998
(Evanston Hospital)......... A 3.700 2,500,000
6,000 Illinois Development Finance
Authority Pollution Control
Revenue
(Illinois Power Company)
Project Series C............ 11/05/98 3.550 6,000,000
1,500 Chicago Illinois Multi-Family
Housing Revenue
(Waveland Associates Project
E).......................... A 3.550 1,500,000
3,250 Chicago Multi-Family Housing
Revenue
(Waveland Associates Project
B).......................... A 3.550 3,250,000
</TABLE>
21
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
</TABLE>
ILLINOIS (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 32,200 Chicago O'Hare International
Airport Revenue Series C.... A 3.550% $ 32,200,000
3,000 Chicago Park District
Tax and Revenue Anticipation
Notes....................... 09/21/98 4.750 3,005,746
2,500 Chicago Public Building
Commerce Building Revenue
Series A.................... 12/01/98 4.500 2,507,122
27,800 Cook County Illinios.......... A 3.500 27,800,000
6,000 Illinois Development Finance
Authority
(Chicago Symphony
Orchestra).................. A 3.500 6,000,000
16,200 Illinois Development Finance
Authority Pollution Control
Revenue
(Commonwealth Edison)....... A 3.600 16,200,000
4,000 Illinois Development Finance
Authority Revenue
Variable (Provena Health)
Series C.................... A 3.650 4,000,000
23,500 Illinois Educational
Facilities Authority Revenue
(Pooled Loan)
Tax-Exempt Commercial
Paper....................... 07/07/98 to 12/31/98 3.550 23,500,000
4,845 Illinois Educational
Facilities Authority Revenue
(Northwestern University)... A 3.550 4,845,000
9,000 Illinois Educational
Facilities Authority Revenue
(Field Museum of Natural
History).................... 01/28/99 3.650 9,000,000
6,000 Illinois Educational
Facilities Authority Revenue
(Shedd Aquarium Society
B).......................... 07/23/98 3.850 6,000,000
5,800 Illinois Health Facilities
Authority Revenue
(Central Dupage
Healthcorp)................. A 3.750 5,800,000
22,170 Illinois Health Facilities
Authority Revenue
(Central Health and
Northwest Community)........ A 3.550 22,170,000
10,000 Illinois Health Facilities
Authority Revenue
(Elmhurst Memorial
Hospital)................... A 3.850 10,000,000
6,000 Illinois Health Facilities
Authority Revenue
(Evanston Hospital)......... 03/01/99 3.700 6,000,000
7,000 Illinois Health Facilities
Authority Revenue
(Evanston Hospital)
Tax-Exempt Commercial
Paper....................... 10/15/98 3.900 7,000,000
15,400 Illinois Health Facilities
Authority Revenue
(Loyola University Health
Systems B).................. A 3.400 15,400,000
9,225 Illinois Health Facilities
Authority Revenue
Series 1989 A (Rush
Presentation)
Tax-Exempt Commercial
Paper....................... 09/10/98 to 09/15/98 3.750 9,225,000
5,000 Illinois Health Facilities
Authority Revenue
Series 1997 B (Evanston
Hospital)................... 04/30/99 3.800 5,000,000
5,000 Illinois Health Facilities
Authority Revenue
(Victory Health)............ 08/14/98 3.65 5,000,000
7,100 Illinois Health Facilities
Authority Revenue
Variable Refunding Advocate
Health Care B............... A 3.550 7,100,000
7,600 Illinois State Toll and
Highway Authority........... A 3.400 7,600,000
----------------
248,602,868
----------------
INDIANA--1.27%
19,000 City of Indianapolis Gas
Utility System
Tax-Exempt Commercial
Paper....................... 07/13/98 to 10/06/98 3.550 to 3.700 19,000,000
2,750 Indianapolis Local Public
Improvement Bond
Bank Notes Series E......... 07/09/98 4.250 2,750,266
</TABLE>
22
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
</TABLE>
INDIANA (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 4,000 Indianapolis Local Public
Improvement Bond
Bank Notes Series H......... 07/09/98 4.250% $ 4,000,386
3,000 Petersburg Pollution Control
Revenue
(Indianapolis Power & Light
Company)
Tax-Exempt Commercial
Paper....................... 08/18/98 3.750 3,000,000
----------------
28,750,652
----------------
IOWA--0.88%
20,000 Iowa Finance Authority
(Village Court Project)..... A 3.500 to 3.625 20,000,000
----------------
KANSAS--0.34%
1,600 Burlington Pollution Control
Revenue Project A
(Kansas Power & Light
Company).................... 08/11/98 3.500 1,600,000
2,000 Burlington Pollution Control
Revenue Project B
(Kansas Power & Light
Company).................... 08/10/98 3.500 2,000,000
4,000 Burlington Pollution Control
Revenue Project B
(Kansas Power and Light
Company)
Tax-Exempt Commercial
Paper....................... 08/07/98 3.650 4,000,000
----------------
7,600,000
----------------
KENTUCKY--3.81%
21,735 Jefferson County Kentucky
1996 Series A PCR
(Louisville Gas and
Electric)
Tax-Exempt Commercial
Paper....................... 09/01/98 to 10/14/98 3.600 to 3.650 21,735,000
8,000 Kentucky Economic Development
Finance Authority
Hospital Facilities Revenue
(Baptist Healthcare Systems
Obligation)................. A 3.500 8,000,000
8,295 Mason County Pollution Control
Revenue
(East Kentucky Power
National Rural)............. A 3.650 8,295,000
24,780 Pendleton Multi-County Lease
Revenue
(Kentucky Associates Leasing
Program).................... 07/01/98 to 08/11/98 3.500 to 3.950 24,780,000
23,800 Trimble County Pollution
Control
(Louisville Gas & Electric
Company)
Tax-Exempt Commercial
Paper....................... 09/04/98 to 10/08/98 3.550 to 3.750 23,800,000
----------------
86,610,000
----------------
LOUISIANA--2.55%
9,700 Calcasieu Parish Industrial
Development Board
Pollution Control Revenue
(Citgo Petrol Corp.)........ A 3.600 9,700,000
11,500 Jefferson Parish Hospital
Service District Hospital
Revenue..................... A 3.600 11,500,000
12,000 Louisiana Public Facilities
Authority Pollution Control
Revenue
(Ciba Geigy)................ A 3.550 12,000,000
3,000 Louisiana Public Facilities
Authority 1997D
(Sisters of Charity)
Tax-Exempt Commercial
Paper....................... 07/20/98 3.500 3,000,000
7,890 Louisiana Public Facilities
Authority Revenue
(College and University
Equipment and Capital Series
A).......................... A 3.600 7,890,000
</TABLE>
23
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
</TABLE>
LOUISIANA (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 8,000 Plaquemines Port Harbor and
Terminal District
Marine Terminal Facilities
Revenue Electro Coal
Transfer Series A
(Tampa Electric) Tax-Exempt
Commercial Paper............ A 3.500% $ 8,000,000
5,900 South Louisiana Port
Commission Marine Terminal
Facilities Revenue
(Occidental Petroleum)...... A 3.500 5,900,000
----------------
57,990,000
----------------
MARYLAND--1.87%
2,500 Howard County Series B
Tax-Exempt Commercial
Paper....................... 08/15/98 5.500 2,505,257
24,750 Montgomery County Series B
(Consolidated Public
Improvement)................ 07/14/98 to 10/01/98 3.500 to 6.800 24,777,552
5,965 Northeast Maryland Waste
Disposal Authority Resources
Recovery Revenue
(Refunding Harford County
Resoucres).................. A 3.350 5,965,000
9,200 University of Maryland
Equipment Tender Notes...... A 3.500 9,200,000
----------------
42,447,809
----------------
MASSACHUSETTS--2.23%
11,600 Boston Water and Sewer
Commission Revenue Series
A........................... A 3.500 11,600,000
10,000 Massachusetts Health and
Educational Facilities
Authority
(Capital Asset Program)..... A 3.200 10,000,000
6,700 Massachusetts Industrial
Finance Agency Resources
Recovery Revenue
(Refunding Ogden Haverhill
Project A).................. A 3.400 6,700,000
4,000 Massachusetts Municipal
Wholesale Electric Company
Power Supply Systems
Revenue..................... A 3.350 4,000,000
6,243 Mohawk Trail Regional School
District Massachusetts
Bond Anticipation Notes..... 11/02/98 4.100 6,246,616
8,110 Whitman Hanson Regional School
District
Bond Anticipation Notes..... 10/15/98 4.000 8,114,098
4,100 Whitman Hanson Regional School
District
Bond Anticipation Notes..... 07/15/98 4.250 4,100,471
----------------
50,761,185
----------------
MICHIGAN--2.47%
3,000 Detroit City School
District.................... 07/01/99 4.250 3,024,180
8,000 Kent Hospital Finance
Authority Michigan Revenue
Refunding Spectrum Health
B........................... A 3.450 8,000,000
3,100 Michigan Strategic Fund
(Dow Chemical)
Tax-Exempt Commercial
Paper....................... 09/09/98 3.550 3,100,000
11,500 Michigan Municipal Bond
Authority Revenue........... 07/02/98 to 07/02/99 4.500 11,519,985
5,000 Michigan State Building
Authority Revenue Series
1........................... 10/01/98 3.700 5,000,000
4,000 Michigan State Housing
Development Authority
(Shoal Creek)............... A 3.550 4,000,000
16,000 Michigan State Notes.......... 09/30/98 4.500 16,028,282
</TABLE>
24
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
</TABLE>
MICHIGAN (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 5,400 Northville Township Economic
Development Corporation
Limited Obligation Revenue
(Various Thrifty Northville
Incorporated Project)....... A 3.625% $ 5,400,000
----------------
56,072,447
----------------
MINNESOTA--0.68%
10,000 Rochester Healthcare
Facilities Revenue
(Mayo Foundation Center F)
Tax-Exempt Commercial
Paper....................... 08/21/98 3.700 10,000,000
2,300 Rochester Healthcare
Facilities Revenue
(Mayo Foundation Center A)
Tax-Exempt Commercial
Paper....................... 07/23/98 3.650 2,300,000
3,100 Rochester Healthcare Facility
(Mayo Foundation)
Tax-Exempt Commercial
Paper....................... 07/20/98 3.650 3,100,000
----------------
15,400,000
----------------
MISSISSIPI--0.37%
2,000 Claiborne County Pollution
Control Revenue
(Southern Mississippi
Electric)
Tax-Exempt Commercial
Paper....................... 09/09/98 3.700 2,000,000
6,500 Perry County Pollution Control
Revenue
(Leaf River Forest)......... A 3.600 6,500,000
----------------
8,500,000
----------------
MISSOURI--1.70%
9,000 Missouri Environmental
Improvement and Energy
Resource Authority Pollution
Control Revenue
(Union Electric Company)
Series B.................... A 3.750 9,000,000
12,040 Missouri State Health &
Education Facilities
Authority
(SSM Healthcare)............ A 4.300 12,040,000
4,000 Missouri State Health &
Educational Facilities
Authority
(Mehlville School District
Series H)................... 09/14/98 4.500 4,004,723
13,600 Missouri State Health &
Educational Facilities
Authority
(SSM Healthcare)
Tax-Exempt Commercial
Paper....................... 08/17/98 3.750 13,600,000
----------------
38,644,723
----------------
NEBRASKA--1.13%
10,600 Lancaster County Hospital
Revene
(Bryan Memorial Hospital
Project).................... A 3.400 10,600,000
15,100 Nebraska Higher Education Loan
Authority
Multiple Mode Student Loan
Series E.................... A 3.550 15,100,000
----------------
25,700,000
----------------
NEVADA--2.24%
19,000 Las Vegas Valley Water Series
A
Tax-Exempt Commercial
Paper....................... 08/10/98 to 08/21/98 3.500 to 3.650 19,000,000
</TABLE>
25
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
</TABLE>
NEVADA (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 31,899 Clark County Airport
Improvement Revenue......... A 3.400% $ 31,899,000
----------------
50,899,000
----------------
NEW HAMPSHIRE--1.65%
4,900 Strafford County Lot A
Tax Anticipation Notes...... 12/31/98 3.900 4,902,437
19,525 New Hampshire Housing Finance
Authority Multi-Family
Revenue
(EQR Bond Partnership
Project).................... A 3.600 19,525,000
5,000 New Hampshire Business Finance
Authority Series A
Resource Recovery Revenue... A 3.550 5,000,000
8,000 Rockingham County
Tax Anticipation Notes...... 12/31/98 4.000 8,013,560
----------------
37,440,997
----------------
NEW JERSEY--1.31%
2,500 New Jersey State
Transportation Authority
Trust Fund
Transportation Systems
Series A.................... 06/15/99 4.500 2,519,517
4,000 New Jersey State
Transportation Authority
Trust Fund
Transportation Systems
Series A.................... 12/15/98 5.000 4,025,068
10,000 Essex County Bond Anticipation
Notes
Series A.................... 08/07/98 4.250 10,003,315
5,000 Jersey City Bond Anticipation
Notes....................... 09/18/98 4.375 5,005,045
2,200 Pleasantville School District
Temporary Notes............. 08/28/98 4.250 2,201,464
6,000 South Plainfield
Bond Anticipation Notes..... 07/22/98 4.250 6,000,762
----------------
29,755,171
----------------
NEW MEXICO--2.00%
3,500 New Mexico
Tax and Revenue Anticipation
Notes....................... 06/30/99 4.250 3,521,840
13,000 Albuquerque Airport Revenue... A 3.400 13,000,000
10,050 Albuquerque Gross Receipts
(Lodges Tax Revenue) Series
A........................... A 3.500 10,050,000
1,390 Gallup Pollution Control
Revenue
(Plains Electric
Generation)................. 08/15/98 5.500 1,392,716
17,435 University of New Mexico
University Revenues......... A 3.400 17,435,000
----------------
45,399,556
----------------
NEW YORK--5.71%
22,000 Babylon New York Industrial
Development Agency Resources
(Ogden Martin Project)...... A 3.250 22,000,000
6,000 Central Islip New York Union
Free School
Tax Anticipation Notes...... 06/30/99 4.000 6,014,400
5,000 Dover Union Free School
District
Bond Anticipation Notes..... 09/11/98 4.250 5,003,033
2,000 Municipal Assistance
Corporation for New York
City........................ A 3.200 2,000,000
6,000 Nassau County New York
Revenue Anticipation Notes
Series A.................... 03/10/99 4.000 6,007,940
</TABLE>
26
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
</TABLE>
NEW YORK (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 2,000 Nassau County New York
Tax Anticipation Notes
Series B.................... 08/31/98 4.250% $ 2,002,501
5,500 New York City Municipal Water
Finance Authority
Water & Sewer Systems
Revenue Series A............ A 3.800 5,500,000
500 New York City Transitional
Finance Authority
Revenue..................... A 3.650 500,000
12,760 New York State Dormitory
Authority
(Sloan Kettering)
Tax-Exempt Commercial
Paper....................... 08/07/98 to 08/14/98 3.600 to 3.750 12,760,000
4,800 New York State Energy Research
& Development Authority
Pollution Control Revenue
(Orange and Rockland Project
A).......................... A 3.250 4,800,000
7,000 New York State Housing Finance
Agency
(Normandie Court I
Project).................... A 3.200 7,000,000
6,300 New York State Local
Government Assistance
Corporation................. A 3.200 6,300,000
3,000 Rome New York City School
District
Revenue Anticipation
Notes....................... 06/30/99 4.000 3,005,744
2,000 State of New York Series V
Tax-Exempt Commercial
Paper....................... 08/17/98 3.750 2,000,000
9,000 Suffolk County New York Water
Authority................... A 3.350 9,000,000
31,535 Suffolk County New York Water
Authority
Bond Anticipation Notes..... A 3.350 31,535,000
4,300 Triborough Bridge and Tunnel
Authority................... A 3.200 4,300,000
----------------
129,728,618
----------------
NORTH CAROLINA--5.94%
16,880 Charlotte Airport Revenue..... A 3.400 16,880,000
16,400 Charlotte Mecklenberg Hospital
Authority
Health Care Systems Revenue
Series D.................... A 3.450 16,400,000
21,300 North Carolina Education and
Medicare
(Duke University)........... A 3.450 21,300,000
11,145 North Carolina Educational
Facilities Finance Agency
Revenue
(Guilford College).......... A 3.600 11,145,000
22,000 North Carolina Educational
Facility
(Bowman Grey School Medical
Project).................... A 3.500 22,000,000
6,000 North Carolina Educational
Facility
(Duke University Project
Series A)................... A 3.450 6,000,000
14,000 North Carolina Educational
Facility
(Duke University Project
Series B)................... A 3.450 14,000,000
5,785 North Carolina Medical Care
Commission Hospital Revenue
(Duke University Hospital
Project C).................. A 3.450 5,785,000
9,815 North Carolina Educational
Facility
(Elon College).............. A 3.450 9,815,000
4,000 North Carolina Medical Care
Commission Revenue
(Carol Woods Project)....... A 4.100 4,000,000
7,600 Union County Industrial
Facilities and Pollution
Control
Financing Authority
(Square D Company
Project).................... A 3.500 7,600,000
----------------
134,925,000
----------------
</TABLE>
27
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
NORTH DAKOTA--0.18%
$ 4,100 Grand Forks Healthcare
Facilities Revenue
(The United Hospital Group
Project).................... A 3.800% $ 4,100,000
----------------
OHIO--1.25%
5,600 Columbus Electric Systems
Revenue..................... A 3.500 5,600,000
12,700 Columbus Sewer Revenue........ A 3.500 12,700,000
10,000 Cuyahoga County Hospital
Revenue
(Cleveland Clinic Foundation
A).......................... A 3.500 10,000,000
----------------
28,300,000
----------------
OKLAHOMA--0.15%
3,370 Tulsa Parking Authority
Revenue
(Williams Center)........... A 3.750 3,370,000
----------------
OREGON--1.94%
4,500 Multnomah County Oregon School
District Number 1J
Tax and Revenue Anticipation
Notes....................... 06/30/99 4.250 4,525,875
29,500 Oregon State General
Obligation
(Veterans Welfare).......... A 3.500 29,500,000
10,000 Oregon State Variable Rate
Series 73 H................. A 3.500 10,000,000
----------------
44,025,875
----------------
PENNSYLVANIA--3.66%
14,000 Allegheny County Hospital
Development Authority
Revenue
(St Francis Systems)........ A 3.550 14,000,000
7,000 Allegheny County Pollution
Control Revenue
(U.S. Steel)
Tax-Exempt Commercial
Paper....................... 10/09/98 3.650 7,000,000
7,400 Bucks County Industrial
Development Authority
Revenue
(Edgcomb Metals Company).... A 3.500 7,400,000
21,200 Delaware Valley Regional
Finance Authority
Local Government Revenue.... A 3.450 21,200,000
4,600 Delaware Valley Regional
Finance Authority Series A
Local Government Revenue.... A 3.450 4,600,000
4,200 Delaware Valley Regional
Finance Authority Series B
Local Government Revenue.... A 3.450 4,200,000
5,300 Northumberland County
Industrial Development
Authority
Pollution Control Revenue
(Merck and Company Inc)..... A 3.750 5,300,000
6,900 Northumberland County
Industrial Development
Authority
Pollution Control Revenue
(Merck and Company)......... A 3.850 6,900,000
4,500 Philadelphia Pennsylvania
Series A
Tax and Revenue Anticipation
Notes....................... 06/30/99 4.250 4,526,595
8,000 Pottsville Hospital Authority
Hospital Revenue
(Charity Obligation Group
Series F)................... A 3.400 8,000,000
----------------
83,126,595
----------------
</TABLE>
28
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
RHODE ISLAND--0.26%
$ 6,000 East Providence Rhode Island
Tax Anticipation Notes...... 07/07/98 4.100% $ 6,000,389
----------------
SOUTH CAROLINA--0.97%
6,200 Greenville County Industrial
Revenue
(Edgcomb Metals Company
Project).................... A 3.500 6,200,000
13,800 South Carolina Jobs Economic
Development Authority
Hospital Facilities Revenue
(Baptist Healthcare
Systems).................... A 3.450 13,800,000
2,000 South Carolina Public Service
Authority
Tax-Exempt Commercial
Paper....................... 09/16/98 3.550 2,000,000
----------------
22,000,000
----------------
TENNESSEE--3.57%
8,000 Clarksville Public Building
Authority Revenue C......... A 3.600 8,000,000
2,200 Tennessee State Series........ 06/01/99 5.950 2,245,757
4,400 Clarksville Public Building
Authority Revenue........... A 3.400 4,400,000
8,000 Metropolitan Nashville &
Davidson Health & Education
(Vanderbilt University)..... A 3.750 8,000,000
4,500 Metropolitan Nashville &
Davidson Health & Education
Facility Board Revenue
(Vanderbilt University
Series B)................... 07/24/98 3.700 4,500,000
8,600 Metropolitan Nashville &
Davidson Industrial
(Timberlake)................ A 3.500 8,600,000
4,000 Metropolitan Nashville Airport
Authority................... A 3.550 4,000,000
22,000 Shelby County 1997 Series A... 09/14/98 to 10/14/98 3.600 to 3.750 22,000,000
2,900 Shelby County Health
Educational and Housing
Facilities
Board Revenue
(Lebonheur Childrens Medical
Center C)
(Pre-refunded with U.S.
Government Securities to
09/15/98 @ 102)............. 08/15/98 7.600 2,970,958
12,000 Tennessee Local Development
Authority Revenue
Bond Anticipation Notes
Series A.................... A 3.400 12,000,000
4,400 Tennessee State
Tax-Exempt Commercial
Paper....................... 07/17/98 3.700 4,400,000
----------------
81,116,715
----------------
TEXAS--10.02%
4,500 Bexar Metropolitan Water...... 08/10/98 3.500 to 3.550 4,500,000
7,260 Bexar County Health Facilities
Development
(Army Retirement
Foundation)................. A 3.500 7,260,000
5,600 Brownsville Utilities
Tax-Exempt Commercial
Paper....................... 09/15/98 3.650 5,600,000
16,925 City of Austin Combined
Utilities System
Tax-Exempt Commercial
Paper....................... 08/12/98 to 09/24/98 3.550 to 3.700 16,925,000
9,000 City of Houston
Tax-Exempt Commercial
Paper....................... 08/17/98 to 09/25/98 3.500 to 3.750 9,000,000
25,500 City of Houston Water & Sewer
Authority
Tax-Exempt Commercial
Paper....................... 08/17/98 to 10/08/98 3.650 to 3.700 25,500,000
4,500 Dallas Area Rapid
Transportation Authority
Revenue Series A
Tax-Exempt Commercial
Paper....................... 08/21/98 3.600 4,500,000
</TABLE>
29
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
</TABLE>
TEXAS (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 4,500 Denton Independent School
District Series B........... 08/14/98 3.900% $ 4,500,000
12,800 Georgetown Higher Education
Finance Corp.
(Southwestern University)... A 3.450 12,800,000
8,000 Harris County Health
Facilities
(Baylor College of Medical
Project).................... A 3.600 8,000,000
5,900 Harris County Health
Facilities
(Memorial Hospital Systems
Project Series B)........... A 3.400 5,900,000
23,100 Harris County Toll Roads...... A 3.500 23,100,000
9,200 Port of Corpus Christi
Authority Texas
(Koch Industries)
Tax-Exempt Commercial
Paper....................... A 2.850 9,200,000
7,000 San Antonio Texas Electric and
Gas Series A
Tax Exempt Commercial
Paper....................... 07/31/98 to 08/19/98 3.750 7,000,000
10,500 Texas State
Tax-Exempt Commercial
Paper....................... 08/12/98 3.500 10,500,000
14,400 Texas A&M University
Tax-Exempt Commercial
Paper....................... 07/30/98 to 08/13/98 3.500 to 3.700 14,400,000
37,000 Texas State Tax and Revenue
Anticipation Notes.......... 08/31/98 4.750 37,058,885
18,000 Travis County Health
Facilities Development
Corporation
Hospital Revenue
(Charity Obligation Group
Series E)................... A 3.400 18,000,000
4,000 University of Texas
(Permanent University Fund)
Tax-Exempt Commercial
Paper....................... 08/13/98 3.750 4,000,000
----------------
227,743,885
----------------
UTAH--1.87%
2,000 Davis County Utah
Tax and Revenue Anticipation
Notes....................... 12/31/98 4.250 2,004,873
10,000 Intermountain Power Agency
Series B 1
Tax-Exempt Commercial
Paper....................... 07/17/98 3.550 10,000,000
7,500 Salt Lake County Utah
Tax and Revenue Anticipation
Notes....................... 12/31/98 4.000 7,515,300
23,000 State of Utah General
Obligation Series 97A
Tax-Exempt Commercial
Paper....................... 09/30/98 3.600 to 3.800 23,000,000
----------------
42,520,173
----------------
VIRGINIA--1.96%
3,900 Commonwealth of Virginia
General Obligation.......... 08/28/98 3.700 3,900,000
40,725 Louisa Industrial Development
Authority Pollution Control
Revenue
(Virginia Electric And
Power)...................... 07/10/98 to 08/28/98 3.600 to 3.750 40,725,000
----------------
44,625,000
----------------
WASHINGTON--1.07%
7,600 Seattle Municipal Light and
Power Revenue
Tax-Exempt Commercial
Paper....................... A 3.400 7,600,000
2,000 Seattle Municipal Light and
Power Revenue
Tax-Exempt Commercial
Paper....................... 10/09/98 3.625 2,000,000
</TABLE>
30
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
</TABLE>
WASHINGTON (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
14,800 Snohomish Public Utility
District.................... A 3.400% $ 14,800,000
----------------
24,400,000
----------------
WISCONSIN--2.27%
6,100 City of Oak Creek Pollution
Control Revenue
(Wisconsin Electric Power
Company).................... A 3.550 6,100,000
3,475 Milwaukee County Wisconsin
Series A.................... 12/01/98 5.600 3,501,229
14,800 Racine Unified School District
Tax and Revenue Anticipation
Promissory Notes............ 08/24/98 4.250 14,807,894
18,970 Wisconsin State............... 08/27/98 to 06/15/99 3.600 to 4.500 19,040,960
8,000 Wisconsin Student Loan
Revenue..................... 08/11/98 3.700 8,000,000
----------------
51,450,083
----------------
WYOMING--0.31%
3,000 Lincoln County Pollution
Control Revenue
(Pacificorp Project)........ 08/18/98 3.700 3,000,000
4,000 Uinta County Pollution Control
Revenue
(Amoco)..................... A 3.850 4,000,000
----------------
7,000,000
----------------
Total Investments (cost--$2,348,087,555 which
approximates cost for federal income tax
purposes)--103.35%........................... 2,348,087,555
Liabilities in excess of other
assets--(3.35)%................................ (76,118,652)
----------------
Net Assets (applicable to 2,273,028,695 shares
of Common Stock outstanding at $1.00 per
share)--100.00%.............................. $ 2,271,968,903
----------------
----------------
</TABLE>
- -----------------
A -- Variable Rate Demand Notes and Variable Rate Certificates of Participation
are payable on demand. The interest rates shown are the current rates as of June
30, 1998 and reset periodically.
Weighted average maturity--40 days
See accompanying notes to financial statements
31
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED
JUNE 30, 1998
-------------
<S> <C>
INVESTMENT INCOME:
Interest............................................................................................................ $83,972,177
-------------
EXPENSES:
Investment advisory and administration.............................................................................. 10,111,111
Distribution fees................................................................................................... 2,249,750
Transfer agency and service fees.................................................................................... 483,874
Custody and accounting.............................................................................................. 230,864
Federal and state registration...................................................................................... 124,485
Reports and notices to shareholders................................................................................. 92,069
Legal and audit..................................................................................................... 82,472
Insurance........................................................................................................... 35,500
Directors' fees..................................................................................................... 10,500
Other expenses...................................................................................................... 6,736
-------------
13,427,361
-------------
NET INVESTMENT INCOME............................................................................................... 70,544,816
NET REALIZED GAIN FROM INVESTMENT TRANSACTIONS...................................................................... 83,532
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................................ $70,628,348
-------------
-------------
</TABLE>
See accompanying notes to financial statements
32
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,
------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income............................................................................ $ 70,544,816 $ 62,719,828
Net realized gains from investment transactions.................................................. 83,532 185,637
-------------- --------------
Net increase in net assets resulting from operations............................................. 70,628,348 62,905,465
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income............................................................................ (70,544,816) (62,719,828)
-------------- --------------
NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS....................................... 205,965,855 52,285,794
-------------- --------------
Net increase in net assets....................................................................... 206,049,387 52,471,431
NET ASSETS:
Beginning of period.............................................................................. 2,065,919,516 2,013,448,085
-------------- --------------
End of period.................................................................................... $2,271,968,903 $2,065,919,516
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to financial statements
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber RMA Tax-Free Fund, Inc. (the "Fund") was organized under the laws
of Maryland on July 2, 1982 and is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, as an open-end
diversified management investment company.
The preparation of financial statements in accordance with generally accepted
accounting principles requires Fund management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates. Following is a summary of
significant accounting policies:
VALUATION AND ACCOUNTING FOR INVESTMENTS AND INVESTMENT INCOME--Investments
are valued at amortized cost which approximates market value. Investment
transactions are recorded on trade date. Realized gains and losses from
investment transactions are calculated using the identified cost method.
Interest income is recorded on the accrual basis. Premiums are amortized and
discounts are accreted as adjustments to interest income and the identified cost
of investments.
DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions 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.
CONCENTRATION OF RISK
The ability of the issuers of the debt securities held by the Fund to meet
their obligations may be affected by economic developments, including those
particular to a specific industry or region.
ACQUISITION
Effective November 26, 1996, the Fund acquired all the net assets of
PaineWebber RMA Connecticut Municipal Money Fund ("RMA Connecticut") pursuant to
a plan of reorganization approved by RMA Connecticut shareholders on November
25, 1996. The acquisition was accomplished by a tax-free exchange of 19,670,455
shares of the Fund for 19,670,455 shares of RMA Connecticut outstanding on
November 26, 1996. RMA Connecticut's net assets at that date, valued at
$19,671,259, were combined with those of the Fund.
INVESTMENT ADVISER AND ADMINISTRATOR
The Fund's Board of Directors has approved an Investment Advisory and
Administration Contract ("Advisory Contract") with PaineWebber Incorporated
("PaineWebber"), under which PaineWebber serves as investment adviser and
administrator of the Fund. In accordance with the Advisory Contract, the Fund
pays PaineWebber an investment advisory and administration fee, which is accrued
daily and paid monthly, in accordance with the following schedule:
<TABLE>
<CAPTION>
ANNUAL
AVERAGE DAILY NET ASSETS RATE
- ---------------------------------------------------------------------------------------------------------------- -----------
<S> <C>
Up to $1.0 billion.............................................................................................. 0.50%
In excess of $1.0 billion up to $1.5 billion.................................................................... 0.44
Over $1.5 billion............................................................................................... 0.36
</TABLE>
At June 30, 1998, the Fund owed PaineWebber $835,974 for investment advisory and
administration fees.
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"), a wholly-owned
asset management subsidiary of PaineWebber, serves as sub-adviser and
sub-administrator of the Fund pursuant to a Sub-Advisory and Sub-Administration
Contract between PaineWebber and Mitchell Hutchins. In accordance with that
contract, PaineWebber (not the Fund) pays Mitchell Hutchins a fee, computed
daily and paid monthly, at an annual rate of 20% of the fee paid by the Fund to
PaineWebber under the Advisory Contract.
DISTRIBUTION PLAN
PaineWebber is the distributor of the Fund's shares. Under the plan of
distribution, the Fund is authorized to pay PaineWebber a monthly service fee at
the annual rate of up to 0.15% of its average daily net assets for providing
certain shareholder services. PaineWebber was compensated for providing such
services at the annual rate of 0.08% of the Fund's average daily net assets
until February 11, 1998. Effective February 12, 1998, upon Board of Director
approval, this fee became payable at the annual rate of 0.125% of average daily
net assets. At June 30, 1998, the Fund owed PaineWebber $238,899 for such
service fees.
TRANSFER AGENCY SERVICE FEES
Prior to August 1, 1997, the Fund paid PaineWebber an annual fee of $4.00 per
active shareholder account, plus certain out-of-pocket expenses, for certain
services not provided by the Fund's transfer agent. For these services for the
month ended July 31, 1997, PaineWebber earned $20,345 in service fees from the
Fund.
Subsequent to July 31, 1997, PaineWebber provides transfer agency related
services to the Fund pursuant to a delegation of authority from PFPC, Inc., the
Fund's transfer agent, and is compensated for these services by PFPC, Inc., not
the Fund. For the eleven months ended June 30, 1998, PaineWebber received from
PFPC, Inc., not the Fund, approximately 50% of the total transfer agency and
related service fees collected by PFPC, Inc. from the Fund.
OTHER LIABILITIES
At June 30, 1998, the amounts payable for investments purchased and dividends
payable aggregated $93,228,445 and $2,470,775, respectively.
FEDERAL TAX STATUS
The Fund intends to distribute all of its tax-exempt income and any 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 June 30, 1998, the Fund had net capital loss carryforward of $491,880. 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 June
30, 1999 and June 30, 2004. To the extent that the losses are used to offset
future net capital gains, the gains so offset will not be distributed.
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS
CAPITAL SHARE TRANSACTIONS
There are 20 billion $0.001 par value authorized shares of common stock.
Transactions in capital shares, at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
JUNE 30,
----------------------------------
1998 1997
----------------- ---------------
<S> <C> <C>
Shares sold........................................................................ 12,850,070,826 13,694,087,087
Share issued in connection with the acquisition of RMA Connecticut................. -- 19,670,455
Shares repurchased................................................................. (12,712,957,488) (13,722,257,996)
Dividends reinvested............................................................... 68,852,517 60,786,248
----------------- ---------------
Net increase in shares outstanding................................................. 205,965,855 52,285,794
----------------- ---------------
----------------- ---------------
</TABLE>
36
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
FINANCIAL HIGHLIGHTS
Selected data for a share of common stock outstanding throughout each year is
presented below:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,
------------------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
Net investment income.............. 0.031 0.029 0.030 0.030 0.019
Dividends from net investment
income........................... (0.031) (0.029) (0.030) (0.030) (0.019)
------ ------ ------ ------ ------
Net asset value, end of year....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total investment return(1)......... 3.10% 2.98% 3.09% 3.03% 1.88%
------ ------ ------ ------ ------
------ ------ ------ ------ ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's).... $2,271,969 $2,065,920 $2,013,448 $1,562,040 $1,427,724
Expenses to average net assets..... 0.58% 0.61% 0.61%(2) 0.63% 0.64%
Net investment income to average
net assets....................... 3.06% 2.94% 3.02%(2) 3.00% 1.90%
</TABLE>
- -----------------
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each year reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each year reported.
(2) These ratios include non-recurring acquisition expenses of 0.01%.
37
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors and Shareholders
PaineWebber RMA Tax-Free Fund, Inc.
We have audited the accompanying statement of net assets of PaineWebber RMA
Tax-Free Fund, Inc. as of June 30, 1998, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
investments owned at June 30, 1998 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
PaineWebber RMA Tax-Free Fund, Inc. at June 30, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
[ERNST & YOUNG SIGNATURE]
New York, New York
August 21, 1998
38
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
TAX INFORMATION--(UNAUDITED)
We are required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within 60 days of the Fund's fiscal year end (June 30,
1998) as to the federal tax status of distributions received by shareholders
during such fiscal year. Accordingly, we are advising you that all of the
distributions paid during the fiscal year were federally-exempt interest
dividends, none of which qualifies for the dividend received deduction available
to corporate shareholders. Since the Fund did not invest in any security which
paid interest subject to the federal alternative minimum tax for individual
taxpayers during its fiscal year, none of the dividends paid by the Fund were
subject to such tax.
Because the Fund's fiscal year is not the calendar year, another notification
will be sent in respect of calendar 1998. The second notification, which
reflects any amounts to be used by calendar year taxpayers on their federal
income tax returns, will be made in conjunction with Form 1099 DIV and will be
mailed in January 1999. Shareholders are advised to consult their own tax
advisers with respect to the tax consequences of their investment in the Fund.
39
<PAGE>
DIRECTORS
E. Garrett Bewkes, Jr.
CHAIRMAN
Margo N. Alexander
Richard Q. Armstrong
Richard R. Burt
Mary C. Farrell
Meyer Feldberg
George W. Gowen
Frederic V. Malek
Carl W. Schafer
PRINCIPAL OFFICERS
Margo N. Alexander
PRESIDENT
Victoria E. Schonfeld
VICE PRESIDENT
Dianne E. O'Donnell
VICE PRESIDENT AND SECRETARY
Paul H. Schubert
VICE PRESIDENT AND TREASURER
Dennis L. McCauley
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 A
FUND UNLESS ACCOMPANIED OR PRECEDED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
Annual Report
RMA Money Market Portfolio
RMA U.S. Government Portfolio
RMA Tax-Free Fund, Inc.
- -C-1998 PaineWebber Incorporated
Member SIPC
June 30, 1998
