<PAGE>
SEMIANNUAL REPORT
February 17, 1998
Dear Shareholder,
We are pleased to present you with the semiannual report for PaineWebber
RMA Money Market Portfolio, PaineWebber RMA U.S. Government Portfolio, and
PaineWebber RMA Tax-Free Fund, Inc., for the six-month period ended December
31, 1997.
GENERAL MARKET OVERVIEW
- --------------------------------------------------------------------------------
Throughout this period, the U.S. economy, in its seventh year of
expansion, continued to demonstrate renewed vigor, with consecutive quarterly
Gross Domestic Product growth reminiscent of 1994. Further preemptive
tightening by the Federal Reserve was widely anticipated, though not
realized, as domestic demand remained strong amidst a historically low, and
declining, unemployment rate. Short-term interest rates remained at 5.5%
throughout this period. However, Asia's currency and financial crisis sent a
disinflationary impulse through the global economy late in the year,
resulting in a change in sentiment in the U.S. Treasury market. As a result,
the Federal Reserve appears to have adopted a "wait and see" stance,
dampening any potential rally in the short end of the market. In the fourth
quarter of 1997, the two-year Treasury yield dropped to 5.64% from 5.78% in
the prior quarter, and the yield on the 30-Year Treasury ended 1997 at 5.92%,
from 6.04% in the prior quarter. The bottom line was that the yield curve
flattened with a yield spread of less than 30 basis points.
The bond market, as measured by the Lehman Brothers Aggregate Index,
posted a healthy 9.7% return by the end of the year, fueled in part by
foreign investment in U.S. government debt. Corporate bonds underperformed
Treasurys and mortgage-backed securities on a duration-adjusted basis
(corporate bond spreads had widened due to technical weakness caused by
concerns over the Asian economic crisis). U.S. government securities
performed well in this environment. Longer maturity issues outperformed
shorter-term issues as the yield curve flattened significantly.
Mortgage-backed securities also posted a strong performance for the year,
outperforming the major bond markets on a duration-adjusted basis by a fairly
wide margin. High-yield securities, which had disappointing performance late
in the year, significantly outperformed high-grades for the full year.
1
<PAGE>
SEMIANNUAL REPORT
PORTFOLIO REVIEW
- --------------------------------------------------------------------------------
Throughout the period, the Funds maintained slightly higher average
weighted maturities than their peers, in response to economic data indicating
low inflation with vigorous economic growth.
- --------------------------------------------------------------------------------
PAINEWEBBER RMA MONEY MARKET PORTFOLIO
PaineWebber RMA Money Market Portfolio's net assets totaled $9.6 billion as
of December 31, 1997. The Portfolio's current yield for the seven-day period
ended December 31, 1997 was 5.24%. The Portfolio's weighted average maturity
was 74 days as of December 31, 1997.
- --------------------------------------------------------------------------------
PAINEWEBBER RMA U.S. GOVERNMENT PORTFOLIO
PaineWebber RMA U.S. Government Portfolio's net assets totaled $1.1 billion
as of December 31, 1997. The Portfolio's current yield for the seven-day
period ended December 31, 1997 was 5.06%. The Portfolio's weighted average
maturity was 69 days as of December 31, 1997.
- --------------------------------------------------------------------------------
PAINEWEBBER RMA TAX-FREE FUND, INC.
PaineWebber RMA Tax-Free Fund's net assets totaled $2.2 billion as of
December 31, 1997. The Fund's current yield for the seven-day period ended
December 31, 1997 was 3.34%. The Fund's weighted average maturity was 54
days as of December 31, 1997. In addition, the Fund did not invest in any
securities subject to the federal alternative minimum tax for individual
taxpayers.
2
<PAGE>
SEMIANNUAL REPORT
OUTLOOK
- --------------------------------------------------------------------------------
In 1998, we expect the economy will continue to grow at a satisfactory
pace with subdued inflation. We expect the Fed to remain on hold until the
shockwaves of the Asian crisis filter down. As of January 2, 1998, the
federal funds rate remained at 5.5%, while commercial paper was at
approximately a 5.55% discount level for the one-month product, with a yield
ranging from 5.70% to 5.75% for the one-year product.
Given our view that the current economic environment will not change
dramatically, we plan to maintain the Portfolios' and the Fund's current
positions. Although we are interested in maintaining higher yields, we will
not do so by sacrificing the Portfolios' and the Fund's emphasis on security,
quality and liquidity.
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.
Sincerely,
/s/ MARGO N. ALEXANDER /s/ DENNIS L. McCAULEY
MARGO N. ALEXANDER DENNIS L. McCAULEY
President, Managing Director and Chief
Mitchell Hutchins Asset Investment Officer--Fixed Income,
Management Inc. Mitchell Hutchins Asset
Management Inc.
This letter is intended to assist shareholders in understanding how the Funds
performed during the six-month period ended December 31, 1997, 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.
3
<PAGE>
PAINEWEBBER RMA MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS DECEMBER 31, 1997(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- --------------------- --------------------- ---------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--8.32%
$ 80,000 U.S. Treasury Bills........... 10/15/98 to 11/12/98 4.910 to 5.190%@ $ 76,617,756
258,005 Federal Home Loan Bank........ 01/28/98 to 11/19/98 5.750 to 5.900 258,005,000
35,000 Federal Home Loan Bank........ 01/06/98 5.899* 34,991,782
30,000 Federal National Mortgage
Association................. 01/02/98 5.543* 29,991,808
168,850 Student Loan Marketing
Association................. 01/08/98 to 11/20/98 5.700 to 5.850* 168,850,000
230,000 Student Loan Marketing
Association................. 01/06/98 5.639 to 5.949* 229,997,552
---------------
Total U.S. Government and Agency
Obligations (cost--$798,453,898)........ 798,453,898
---------------
BANK NOTES--5.61%
DOMESTIC--4.80%
45,000 Bank of America National Trust
& Savings Association....... 05/05/98 6.130 to 6.150 44,998,311
30,000 Bank One, Columbus N.A........ 01/06/98 5.570* 29,991,193
37,000 Comerica Bank N.A., Detroit... 01/06/98 5.969* 36,988,416
25,000 FCC National Bank............. 01/02/98 5.610* 24,993,038
50,000 Fifth Third Bank of
Northwestern Ohio, NA....... 01/16/98 5.860 50,000,000
80,000 Greenwood Trust Company....... 01/12/98 to 01/15/98 5.660 to 5.800 80,000,000
14,800 Huntington National Bank...... 10/02/98 5.870 14,796,280
30,000 KeyBank N.A................... 01/02/98 6.120* 29,986,140
79,000 PNC Bank, N.A................. 01/02/98 5.490 to 5.600 78,964,682
21,800 SunTrust Bank................. 07/14/98 5.830 21,792,700
48,000 Wachovia Bank of North
Carolina.................... 10/08/98 5.810 47,987,704
---------------
460,498,464
---------------
YANKEE--0.81%
40,000 ABN AMRO Bank N.V............. 05/01/98 6.140 39,997,358
18,000 National Australia Bank
Limited..................... 10/05/98 5.850 17,985,950
20,000 National Bank of Canada....... 06/22/98 6.010 20,000,900
---------------
77,984,208
---------------
Total Bank Notes (cost--$538,482,672)..... 538,482,672
---------------
CERTIFICATES OF DEPOSIT--18.04%
DOMESTIC--4.22%
80,000 American Express Centurion
Bank........................ 01/07/98 to 01/21/98 5.900 to 5.910 80,000,000
259,900 Bankers Trust Company......... 03/24/98 to 08/28/98 5.970 to 6.280 259,885,013
45,000 Bankers Trust Company......... 01/02/98 5.650 to 5.700* 44,992,181
20,000 Comerica Bank N.A., Detroit... 03/27/98 6.000 19,995,229
---------------
404,872,423
---------------
YANKEE--13.82%
40,000 Barclays Bank PLC............. 10/22/98 5.895 39,985,860
15,500 Bayerische Vereinsbank AG..... 10/06/98 5.710 15,465,701
65,750 Canadian Imperial Bank of
Commerce.................... 02/27/98 to 06/29/98 5.760 to 5.950 65,738,076
52,000 Credit Agricole Indosuez...... 09/30/98 to 10/26/98 5.830 to 5.900 51,988,450
50,000 Credit Suisse First Boston.... 01/06/98 5.949 50,000,000
48,800 Creditanstalt-Bankverein...... 06/04/98 6.080 48,802,964
55,000 Deutsche Bank AG.............. 01/16/98 5.640 54,999,652
117,000 National Bank of Canada....... 02/06/98 to 11/20/98 5.700 to 5.920 117,006,805
74,800 National Westminster Bank
PLC......................... 06/26/98 to 07/30/98 5.790 to 5.940 74,788,129
</TABLE>
4
<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>
$ 22,000 Rabobank Nederland............ 03/20/98 5.980% $ 21,999,101
139,800 Royal Bank of Canada.......... 01/14/98 to 10/01/98 5.650 to 5.875 139,764,318
120,000 Skandinaviska Enskilda
Banken...................... 01/02/98 to 01/06/98 5.900 to 5.910 120,000,102
435,300 Societe Generale.............. 01/06/98 to 12/17/98 5.720 to 6.350 435,225,035
65,000 Svenska Handelsbanken......... 01/05/98 to 04/17/98 5.750 to 5.900 65,007,752
26,000 Swiss Bank Corporation........ 11/20/98 5.880 25,993,397
---------------
1,326,765,342
---------------
Total Certificates of Deposit
(cost--$1,731,637,765).................. 1,731,637,765
---------------
COMMERCIAL [email protected]%
ASSET-BACKED--15.17%
88,000 Asset Securitization
Cooperative Corporation..... 01/07/98 to 02/18/98 5.750 to 6.200 87,789,667
100,000 Atlantis One Funding
Corporation................. 01/27/98 to 02/13/98 5.820 to 6.100 99,432,139
80,000 Delaware Funding
Corporation................. 01/09/98 to 01/30/98 5.640 to 5.880 79,783,489
147,500 Eiger Capital Corporation..... 01/12/98 to 02/20/98 5.730 to 5.840 146,400,163
93,946 Enterprise Funding
Corporation................. 01/05/98 to 01/21/98 5.730 to 5.850 93,730,859
145,075 Falcon Asset Securitization
Corporation................. 01/05/98 to 02/20/98 5.650 to 5.870 144,462,465
416,000 New Center Asset Trust........ 01/02/98 to 03/17/98 5.520 to 6.750 414,453,073
272,218 Preferred Receivables Funding
Corporation................. 01/06/98 to 02/11/98 5.580 to 5.900 271,181,205
119,005 Triple-A One Funding
Corporation................. 01/06/98 to 01/15/98 5.620 to 6.000 118,818,189
---------------
1,456,051,249
---------------
AUTO & TRUCK--1.48%
100,000 Ford Motor Credit
Corporation................. 01/05/98 6.200 99,931,111
42,000 PACCAR Financial
Corporation................. 01/21/98 5.800 41,864,667
---------------
141,795,778
---------------
BANKING--7.96%
9,900 Bankers Trust New York
Corporation................. 03/30/98 5.580 9,764,964
105,000 Banque et Caisse d'Epargne de
L'Etat...................... 01/21/98 to 03/03/98 5.680 to 5.760 104,255,478
160,000 BBL North America
Incorporated................ 01/02/98 to 02/13/98 5.670 to 6.800 159,725,539
18,000 BCI Funding Corporation....... 02/06/98 5.850 17,894,700
50,000 Canadian Imperial Bank of
Commerce.................... 03/18/98 5.720 49,396,222
54,450 Credit Agricole Indosuez North
America Incorporated........ 01/16/98 5.700 to 5.720 54,320,436
25,000 Credito Italiano (Delaware)
Incorporated................ 01/12/98 5.800 24,955,694
75,000 Cregem North America
Incorporated................ 01/23/98 to 03/09/98 5.590 to 5.700 74,488,403
75,000 Den Danske Corporation........ 01/06/98 to 01/08/98 5.860 74,930,819
57,500 Nordbanken North America
Incorporated................ 01/12/98 to 02/17/98 5.520 to 5.840 57,312,794
13,000 San Paolo U.S. Financial
Company..................... 01/05/98 5.580 12,991,940
105,000 Unifunding Incorporated....... 01/09/98 to 04/20/98 5.510 to 5.830 104,239,739
20,000 Westpac Capital Corporation... 01/27/98 5.700 19,917,667
---------------
764,194,395
---------------
BROKER-DEALER--6.35%
99,500 Goldman Sachs Group L.P....... 09/25/98 5.580 95,382,192
158,750 Lehman Brothers Holdings
Incorporated................ 01/08/98 to 03/27/98 5.800 to 6.700 157,940,740
73,525 Merrill Lynch & Company,
Incorporated................ 01/13/98 to 03/26/98 5.550 to 5.575 72,847,521
</TABLE>
5
<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>
$ 284,700 Morgan Stanley Group
Incorporated................ 01/14/98 to 04/06/98 5.480 to 5.850% $ 283,298,181
---------------
609,468,634
---------------
BUSINESS SERVICES--0.98%
44,000 Block Financial Corporation... 01/23/98 to 03/06/98 5.520 to 5.750 43,755,689
50,000 PHH Corporation............... 01/21/98 5.950 49,834,722
---------------
93,590,411
---------------
CHEMICALS--0.51%
49,500 Monsanto Company.............. 01/08/98 to 01/15/98 5.820 49,410,598
---------------
CONSUMER PRODUCTS--0.69%
66,300 Procter & Gamble Company...... 02/11/98 5.630 65,874,888
---------------
DRUGS, HEALTH CARE--3.60%
50,000 Abbott Laboratories........... 01/08/98 6.100 49,940,694
30,000 AC Acquisition Holding
Company..................... 01/21/98 5.600 29,906,667
95,000 Bayer Corporation............. 01/13/98 to 02/20/98 5.510 to 5.760 94,578,111
28,000 Novartis Finance
Corporation................. 01/14/98 5.870 27,940,648
44,340 Pfizer Incorporated........... 01/20/98 to 01/23/98 5.750 to 5.790 44,193,183
99,300 Warner Lambert Company........ 01/05/98 6.050 99,233,248
---------------
345,792,551
---------------
ELECTRONICS--0.67%
40,000 Emerson Electric Company...... 01/29/98 5.700 39,822,667
25,000 Siemens Corporation........... 02/20/98 5.690 24,802,430
---------------
64,625,097
---------------
ENERGY--0.21%
20,000 Exxon Asset Management........ 01/05/98 5.980 19,986,711
---------------
ENTERTAINMENT--1.19%
114,200 The Walt Disney Company....... 01/02/98 to 01/15/98 5.700 to 6.600 114,128,230
---------------
FINANCE-CONDUIT--1.42%
50,000 Commerzbank U.S. Finance
Incorporated................ 01/28/98 5.890 49,779,125
12,013 Compagnie Bancaire USA Funding
Corporation................. 01/20/98 5.600 11,977,495
40,000 MetLife Funding
Incorporated................ 01/28/98 5.730 39,828,100
34,300 Svenska Handelsbanken......... 01/12/98 5.520 34,242,147
---------------
135,826,867
---------------
FINANCE-CONSUMER--0.83%
80,000 Transamerica Finance
Corporation................. 01/08/98 to 01/16/98 5.620 to 6.000 79,871,417
---------------
FINANCE-DIVERSIFIED--0.78%
75,000 Barclays U.S. Funding......... 01/05/98 to 01/20/98 5.690 to 5.830 74,833,653
---------------
FINANCE-INDEPENDENT--0.83%
81,500 National Rural Utilities
Cooperative Finance
Corporation................. 02/06/98 to 05/15/98 5.530 to 5.580 79,997,142
---------------
</TABLE>
6
<PAGE>
PAINEWEBBER RMA MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- --------------------- --------------------- ---------------
<C> <S> <C> <C> <C>
</TABLE>
COMMERCIAL PAPER@ (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
FINANCE-SUBSIDIARY--2.01%
$ 120,000 Dresdner U.S. Finance
Incorporated................ 01/08/98 to 02/02/98 5.740 to 5.770% $ 119,662,401
74,000 National Australia Funding
(Delaware) Incorporated..... 01/16/98 to 02/17/98 5.740 to 5.790 73,572,487
---------------
193,234,888
---------------
FOOD, BEVERAGE & TOBACCO--2.71%
30,000 Coca-Cola Company............. 01/13/98 5.700 29,943,000
85,000 Grand Metropolitan Capital
Corporation................. 01/20/98 to 03/04/98 5.550 to 5.720 84,538,692
38,000 Heinz (H.J.) Company.......... 02/20/98 5.740 37,697,055
108,650 McDonald's Corporation........ 01/09/98 to 01/22/98 5.750 to 5.950 108,389,767
---------------
260,568,514
---------------
MANUFACTURING-DIVERSIFIED--0.78%
75,000 BTR Dunlop Finance
Incorporated................ 01/29/98 to 02/18/98 5.680 to 5.900 74,581,222
---------------
METALS & MINING--0.31%
30,000 Rio Tinto America
Incorporated................ 02/12/98 5.680 29,801,200
---------------
MISCELLANEOUS--0.31%
30,000 Beta Finance.................. 02/19/98 5.700 29,767,250
---------------
RETAIL-MERCHANDISE--1.04%
50,000 Penney (J.C.) Funding
Corporation................. 01/14/98 5.800 49,895,278
50,000 Sears Roebuck Acceptance
Corporation................. 01/14/98 5.900 49,893,472
---------------
99,788,750
---------------
TELECOMMUNICATIONS--4.46%
294,350 Bell Atlantic Financial
Services Incorporated....... 01/06/98 to 01/28/98 5.700 to 6.150 293,651,385
134,500 BellSouth Capital Funding
Corporation................. 01/15/98 to 01/22/98 5.790 to 5.830 134,112,343
---------------
427,763,728
---------------
UTILITY-ELECTRIC--0.59%
57,000 Southern Company.............. 02/27/98 to 03/10/98 5.720 to 5.730 56,448,229
---------------
UTILITY-GAS--0.26%
25,000 Consolidated Natural Gas
Company..................... 01/06/98 6.200 24,978,472
---------------
Total Commercial Paper
(cost--$5,292,379,874).................. 5,292,379,874
---------------
SHORT-TERM CORPORATE OBLIGATIONS--10.51%
AUTO & TRUCK--0.26%
25,000 Ford Motor Credit
Corporation................. 02/26/98 6.250 25,014,686
---------------
BROKER-DEALER--7.23%
84,850 Bear Stearns Companies,
Incorporated................ 01/14/98 to 07/14/98 5.830 to 6.000 84,850,000
337,600 Bear Stearns Companies,
Incorporated................ 01/02/98 to 01/26/98 5.670 to 6.111* 337,655,532
90,000 Lehman Brothers Holdings
Incorporated................ 01/13/98 to 01/27/98 5.969 to 6.280* 90,066,623
55,000 Merrill Lynch & Company,
Incorporated................ 06/10/98 to 10/09/98 5.960 to 6.080 55,000,000
43,800 Merrill Lynch & Company,
Incorporated................ 01/02/98 to 01/06/98 5.590 to 5.680* 43,799,596
57,800 Morgan Stanley Group
Incorporated................ 01/02/98 to 02/13/98 5.825 to 6.230* 57,800,000
</TABLE>
7
<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>
$ 25,000 Morgan Stanley, Dean Witter &
Discover Company............ 01/02/98 5.580%* $ 25,001,320
---------------
694,173,071
---------------
COMPUTERS--0.52%
49,400 IBM Credit Corporation........ 01/06/98 to 03/19/98 5.756 to 6.029* 49,386,464
---------------
FINANCE SUBSIDIARY--0.21%
19,800 Deutsche Bank AG.............. 11/17/98 5.920 19,800,000
---------------
INSURANCE--0.52%
50,000 Prudential Funding
Corporation................. 01/06/98 5.660 50,000,000
---------------
MISCELLANEOUS--1.77%
170,000 Beta Finance Incorporated..... 01/13/98 to 08/17/98 5.800 to 6.120 170,006,819
---------------
Total Short-Term Corporate Obligations
(cost--$1,008,381,040).................. 1,008,381,040
---------------
REPURCHASE AGREEMENTS--1.87%
29,278 Repurchase Agreement dated
12/31/97 with Citicorp
Securities Incorporated,
collateralized by
$29,030,000 U.S. Treasury
Bonds, 6.125% due 11/15/27
(value-$29,864,613);
proceeds: $29,288,329....... 01/02/98 6.350 29,278,000
26,735 Repurchase Agreement dated
12/31/97 with J.P. Morgan
Securities Incorporated,
collateralized by
$26,285,000 U.S. Treasury
Notes, 8.875% due 11/15/98
(value-$27,270,688);
proceeds: $26,743,540....... 01/02/98 5.750 26,735,000
32,941 Repurchase Agreement dated
12/31/97 with J.P. Morgan
Securities Incorporated,
collateralized by
$33,600,000 U.S. Treasury
Notes, 4.750% due 10/31/98
(value-$33,600,000);
proceeds: $32,951,523....... 01/02/98 5.750 32,941,000
40,447 Repurchase Agreement dated
12/31/97 with J.P. Morgan
Securities Incorporated,
collateralized by
$41,000,000 U.S. Treasury
Notes, 6.000% due 05/31/98
(value-$41,256,250);
proceeds: $40,459,921....... 01/02/98 5.750 40,447,000
49,877 Repurchase Agreement dated
12/31/97 with J.P. Morgan
Securities Incorporated,
collateralized by
$50,000,000 U.S. Treasury
Notes, 6.000% due 09/30/98
(value-$50,875,000);
proceeds: $49,892,933....... 01/02/98 5.750 49,877,000
---------------
Total Repurchase Agreements
(cost--$179,278,000).................... 179,278,000
---------------
Total Investments (cost--$9,548,613,249,
which approximates cost for federal
income tax purposes)--99.49%............ 9,548,613,249
48,861,090
Other assets in excess of
liabilities--0.51%........................
---------------
Net Assets (applicable to 9,601,636,104
shares of common stock outstanding at
$1.00 per share)--100.00%............... $ 9,597,474,339
---------------
---------------
</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
December 31, 1997.
@ Interest rates shown are discount rates at date of purchase.
Weighted average maturity--74 days
See accompanying notes to financial statements
8
<PAGE>
PAINEWEBBER RMA U.S. GOVERNMENT PORTFOLIO
STATEMENT OF NET ASSETS DECEMBER 31, 1997(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- ------------------- ----------------------- --------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--54.64%
$ 55,000 U.S. Treasury Bills....................................... 01/22/98 5.165 to 5.180%@ $ 54,834,115
01/15/98 to
555,000 U.S. Treasury Notes....................................... 11/30/98 4.750 to 8.250 555,361,863
--------------
Total U.S. Government Obligations (cost--$610,195,978)............... 610,195,978
--------------
REPURCHASE AGREEMENTS--44.84%
45,000 Repurchase Agreement dated 12/31/97 with Citicorp
Securities Incorporated, collateralized by $46,135,000
U.S. Treasury Notes, 5.125% due 12/31/98
(value-$45,904,325); proceeds: $45,015,875.............. 01/02/98 6.350 45,000,000
45,000 Repurchase Agreement dated 12/31/97 with Dean Witter
Reynolds Incorporated, collateralized by $42,909,000
U.S. Treasury Notes, 7.500% due 11/15/01
(value-$45,912,630); proceeds: $45,016,000.............. 01/02/98 6.400 45,000,000
45,000 Repurchase Agreement dated 12/31/97 with Dresdner
Kleinwort Benson N.A. LLC, collateralized by $28,656,000
U.S. Treasury Bonds, 11.250% due 02/15/15
(value-$45,901,181); proceeds: $45,015,000.............. 01/02/98 6.000 45,000,000
45,000 Repurchase Agreement dated 12/31/97 with First Chicago
Capital Markets Incorporated, collateralized by
$45,340,000 U.S. Treasury Notes, 6.125% due 12/31/01
(value-$45,906,750); proceeds: $45,016,500.............. 01/02/98 6.600 45,000,000
45,000 Repurchase Agreement dated 12/31/97 with Goldman Sachs &
Company, collateralized by $37,100,000 U.S. Treasury
Bonds, 10.750% due 05/15/03 (value-$45,929,800);
proceeds: $45,015,875................................... 01/02/98 6.350 45,000,000
30,000 Repurchase Agreement dated 12/31/97 with HSBC Securities
Incorporated, collateralized by $24,024,000 U.S.
Treasury Bonds, 8.125% due 08/15/19 (value-$30,600,570);
proceeds: $30,010,417................................... 01/02/98 6.250 30,000,000
45,000 Repurchase Agreement dated 12/31/97 with J.P. Morgan
Securities Incorporated, collateralized by $44,295,000
U.S. Treasury Notes, 6.375% due 01/15/99
(value-$45,900,694); proceeds: $45,015,000.............. 01/02/98 6.000 45,000,000
45,000 Repurchase Agreement dated 12/31/97 with Salomon Brothers
Incorporated, collateralized by $33,590,000 U.S.
Treasury Bonds, 8.875% due 02/15/19 (value-$45,934,325);
proceeds: $45,016,500................................... 01/02/98 6.600 45,000,000
17,103 Repurchase Agreement dated 12/31/97 with Societe Generale
Securities Corporation, collateralized by $17,124,000
U.S. Treasury Notes, 6.375% due 04/30/99
(value-$17,466,480); proceeds: $17,109,271.............. 01/02/98 6.600 17,103,000
27,897 Repurchase Agreement dated 12/31/97 with Societe Generale
Securites Corporation, collateralized by $28,000,000
U.S. Treasury Notes, 5.500% due 11/15/98
(value-$28,490,000); proceeds: $27,907,229.............. 01/02/98 6.600 27,897,000
</TABLE>
9
<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>
$ 20,684 Repurchase Agreement dated 12/31/97 with State Street Bank
and Trust Company, collateralized by $19,225,000 U.S.
Treasury Bonds, 7.875% due 11/15/07 (value-$21,099,438);
proceeds: $20,690,320................................... 01/02/98 5.500% $ 20,684,000
45,000 Repurchase Agreement dated 12/31/97 with UBS Securities
LLC, collateralized by $39,231,000 U.S. Treasury Bonds,
7.500% due 11/15/16 (value-$45,900,270); proceeds:
$45,016,250............................................. 01/02/98 6.500 45,000,000
45,000 Repurchase Agreement dated 12/31/97 with Zions First
National Bank, collateralized by $44,735,000 U.S.
Treasury Notes, 6.250% due 10/31/01 (value-$45,929,425);
proceeds: $45,016,250................................... 01/02/98 6.500 45,000,000
--------------
Total Repurchase Agreements (cost--$500,684,000)..................... 500,684,000
--------------
1,110,879,978
Total Investments (cost--$1,110,879,978, which approximates cost for
federal income tax purposes)--99.48%...............................
5,847,289
Other assets in excess of liabilities--0.52%.........................
--------------
$1,116,727,267
Net Assets (applicable to 1,117,142,347 shares of common stock
outstanding at $1.00 per share)--100.00%...........................
--------------
--------------
</TABLE>
- -----------------
@ Interest rates shown are discount rates at date of purchase.
Weighted average maturity--69 days
See accompanying notes to financial statements
10
<PAGE>
PAINEWEBBER RMA MONEY FUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
DECEMBER 31, 1997
(UNAUDITED)
--------------------------------
MONEY MARKET U.S. GOVERNMENT
PORTFOLIO PORTFOLIO
--------------- ---------------
<S> <C> <C>
INVESTMENT INCOME:
Interest........................................................................................ $ 271,546,536 $ 31,327,122
--------------- ---------------
EXPENSES:
Investment advisory and administration.......................................................... 23,836,972 2,430,600
Transfer agency and service fees................................................................ 2,932,547 142,173
Custody and accounting.......................................................................... 473,912 56,132
Federal and state registration.................................................................. 435,339 49,806
Reports and notices to shareholders............................................................. 248,516 36,009
Insurance....................................................................................... 140,927 19,877
Legal and audit................................................................................. 128,059 46,621
Directors' fees................................................................................. 5,250 5,250
Distribution fees............................................................................... -- 452,754
Other expenses.................................................................................. 56,629 8,363
--------------- ---------------
28,258,151 3,247,585
--------------- ---------------
NET INVESTMENT INCOME........................................................................... 243,288,385 28,079,537
NET REALIZED GAIN (LOSS) FROM INVESTMENT TRANSACTIONS........................................... (345,807) 3,611
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................ $ 242,942,578 $ 28,083,148
--------------- ---------------
--------------- ---------------
</TABLE>
See accompanying notes to financial statements
11
<PAGE>
PAINEWEBBER RMA MONEY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
DECEMBER 31, 1997 FOR THE YEAR ENDED
(UNAUDITED) JUNE 30, 1997
---------------------------------- ----------------------------------
MONEY MARKET U.S. GOVERNMENT MONEY MARKET U.S. GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income................................. $ 243,288,385 $ 28,079,537 $ 404,764,048 $ 55,146,698
Net realized gain (loss) from investment
transactions........................................ (345,807) 3,611 347,934 10,458
---------------- ---------------- ---------------- ----------------
Net increase in net assets resulting from
operations.......................................... 242,942,578 28,083,148 405,111,982 55,157,156
---------------- ---------------- ---------------- ----------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income................................. (243,288,385) (28,079,537) (404,764,048) (55,146,698)
---------------- ---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS.................................. 924,765,093 32,857,226 1,150,094,848 (53,654,514)
---------------- ---------------- ---------------- ----------------
Net increase (decrease) in net assets................. 924,419,286 32,860,837 1,150,442,782 (53,644,056)
NET ASSETS:
Beginning of period................................... 8,673,055,053 1,083,866,430 7,522,612,271 1,137,510,486
---------------- ---------------- ---------------- ----------------
End of period......................................... $ 9,597,474,339 $ 1,116,727,267 $ 8,673,055,053 $ 1,083,866,430
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
</TABLE>
See accompanying notes to financial statements
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS(UNAUDITED)
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 an 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
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS(UNAUDITED)
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 December 31, 1997, the Money Market Portfolio and the U.S. Government
Portfolio owed PaineWebber $4,191,403, and $417,667 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, 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 December 31,
1997, the U.S. Government Portfolio owed PaineWebber $78,093 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 five months ended December 31, 1997, PaineWebber received
from PFPC, Inc., not the Funds, approximately 54% and 52% of the total transfer
agency and related service fees collected by PFPC, Inc. from the Money Market
Portfolio and the U.S. Government Portfolio, respectively.
OTHER LIABILITIES
At December 31, 1997, the Money Market Portfolio and the U.S. Government
Portfolio, had dividends payable aggregating $19,766,119 and $2,208,386,
respectively.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS(UNAUDITED)
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, 1997, Money Market Portfolio and U.S. Government Portfolio had net
capital loss carryforwards of $2,878,851, and $23,802, respectively. These loss
carryforwards are available as reductions, to the extent provided in the
regulations, of future net realized capital gains, and will expire between June
30, 1998 and June 30, 2003 for Money Market Portfolio and between June 30, 2003
and June 30, 2005 for U.S. Government 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 SIX MONTHS ENDED FOR THE YEAR ENDED
DECEMBER 31, 1997 JUNE 30, 1997
-------------------------------- --------------------------------
MONEY MARKET U.S. GOVERNMENT MONEY MARKET U.S. GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold....................................... 29,967,913,290 2,790,286,414 46,081,179,686 5,743,052,232
Shares repurchased................................ (29,275,684,205) (2,784,611,689) (45,323,952,320) (5,850,657,192)
Dividends reinvested.............................. 232,536,008 27,182,501 392,867,482 53,950,446
--------------- --------------- --------------- ---------------
Net increase (decrease) in shares outstanding..... 924,765,093 32,857,226 1,150,094,848 (53,654,514)
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
</TABLE>
15
<PAGE>
PAINEWEBBER RMA MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS
Selected data for a share of common stock outstanding throughout each period is
presented below:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS
ENDED FOR THE YEARS ENDED JUNE 30,
DECEMBER 31, 1997 -------------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
----------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ----------- ----------- ----------- ----------- -----------
Net investment income.............. 0.026 0.049 0.051 0.049 0.030 0.029
Dividends from net investment
income............................ (0.026) (0.049) (0.051) (0.049) (0.030) (0.029)
------ ----------- ----------- ----------- ----------- -----------
Net asset value, end of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ----------- ----------- ----------- ----------- -----------
------ ----------- ----------- ----------- ----------- -----------
Total investment return(1)......... 2.60% 5.04% 5.25% 5.00% 2.95% 2.98%
------ ----------- ----------- ----------- ----------- -----------
------ ----------- ----------- ----------- ----------- -----------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's)........................... $9,597,474 $8,673,055 $7,522,612 $5,398,146 $4,337,009 $4,031,398
Expenses to average net assets..... 0.59%* 0.59% 0.60%(2) 0.59% 0.59% 0.59%
Net investment income to average
net assets........................ 5.10%* 4.94% 5.14%(2) 4.91% 2.98% 2.95%
</TABLE>
- -----------------
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period 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 period reported. Total investment return
for period of less than one year has not been annualized.
(2) These ratios include non-recurring acquisition expenses of 0.01%.
16
<PAGE>
PAINEWEBBER RMA U.S. GOVERNMENT PORTFOLIO
FINANCIAL HIGHLIGHTS
Selected data for a share of common stock outstanding throughout each period is
presented below:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED FOR THE YEARS ENDED JUNE 30,
DECEMBER 31, 1997 ------------------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
------------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
Net investment income.............. 0.025 0.048 0.049 0.046 0.027 0.028
Dividends from net investment
income........................... (0.025) (0.048) (0.049) (0.046) (0.027) (0.028)
------ ------ ------ ------ ------ ------
Net asset value, end of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
Total investment return(1)......... 2.53% 4.88% 5.04% 4.67% 2.74% 2.83%
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
RATIOS/SUPPLEMENT DATA:
Net assets, end of period
(000's)........................... $1,116,727 $1,083,866 $1,137,510 $815,781 $854,928 $880,834
Expenses to average net assets..... 0.57%* 0.62% 0.65%(2) 0.63% 0.62% 0.61%
Net investment income to average
net assets....................... 4.96%* 4.78% 4.91%(2) 4.55% 2.75% 2.80%
</TABLE>
- -----------------
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period 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 period reported. Total investment return
for period of less than one year has not been annualized.
(2) These ratios include non-recurring acquisition expenses of 0.02%.
17
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
STATEMENT OF NET ASSETS DECEMBER 31, 1997(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
ALABAMA--1.05%
$ 4,835 Birmingham Alabama Refunding
Series A.................... A 3.650% $ 4,835,000
6,800 Birmingham Alabama Medical
Clinic Board Revenue
(U.A.H.S.F.)................ A 3.700 6,800,000
5,000 Port City Medical Clinic
Series 1992 A............... A 3.800 5,000,000
6,000 St. Clair County Industrial
Development Board
(National Cement Company
Inc. Project)............... A 4.250 6,000,000
----------------
22,635,000
----------------
ALASKA--0.23%
5,000 Valdez Marine Terminal Revenue
(Exxon Pipeline Company
Project).................... A 5.000 5,000,000
----------------
ARIZONA--3.31%
11,200 Apache County Industrial
Development Authority
(Tucson Electric Power
Company Project Series B)... A 3.800 11,200,000
5,000 Apache County Industrial
Development Authority
(Tucson Electric Power
Springerville Project)...... A 3.750 5,000,000
7,500 City of Mesa Municipal
Development Special Tax..... 01/26/98 3.700 7,500,000
10,000 Maricopa County Pollution
Control
(Arizona Public Service
Company).................... A 3.700 10,000,000
4,200 Phoenix Multi-Family Housing
Authority
(Del Mar Terrace Apartments
Project).................... A 4.100 4,200,000
8,400 Phoenix Multi-Family Housing
Authority
(Southwest Villages
Project).................... A 4.200 8,400,000
3,400 Salt River Agricultural
Improvement & Power Project
District Electric Systems
Revenue Series A
(Pre-refunded with U.S.
Government Securities to
01/01/98 @ 102)............. 01/01/98 7.875 3,468,000
19,000 Salt River Agricultural
Improvement & Power Project
Tax-Exempt Commercial
Paper....................... 02/12/98 to 02/17/98 3.700 19,000,000
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 2,833,702
----------------
71,601,702
----------------
CALIFORNIA--3.01%
5,500 California Higher Education
Loan Authority
(Student Loans)
Adjustable Rate Bonds....... 07/01/98 4.000 5,500,192
4,500 California Higher Education
Loan Authority
(Student Loans)
Adjustable Rate Bonds....... 05/01/98 3.950 4,500,000
300 California Pollution Control
Financing Authority
(Pacific Gas & Electric
Company).................... A 4.750 300,000
6,100 California Statewide
Communities Development
Authority
Tax and Revenue Anticipation
Notes....................... 06/30/98 4.500 6,120,538
6,100 Fresno County
Tax and Revenue Anticipation
Notes....................... 06/30/98 4.250 6,113,007
7,100 Los Angeles County Pension
Obligation Series C......... A 3.350 7,100,000
7,000 Los Angeles Regional Airports
Improvement Corporation
Lease Revenue............... A 5.000 7,000,000
</TABLE>
18
<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>
$ 5,000 Riverside County
Tax and Revenue Anticipation
Notes Series A.............. 06/30/98 4.500% $ 5,013,030
4,000 Santa Barbara County Schools
Financing Authority
Tax and Revenue Anticipation
Notes....................... 06/30/98 4.250 4,008,529
19,500 South Coast California Local
Education Agency Note
Partners
Tax and Revenue Anticipation
Notes Series A.............. 06/30/98 4.500 19,564,800
----------------
65,220,096
----------------
COLORADO--1.46%
11,100 Colorado Health Facilities
Authority
(Kaiser Permanente Series
A).......................... A 3.750 11,100,000
10,000 Colorado Housing Finance
Authority
Multi-Family Housing Revenue
Project
(Grant Plaza Project)....... A 4.275 10,000,000
10,500 Moffat County Pollution
Control Revenue
(Colorado-Ule Electric)..... A 4.150 10,500,000
----------------
31,600,000
----------------
CONNECTICUT--0.67%
14,500 Connecticut Development
Authority Pollution Control
Revenue
(Connecticut Light & Power
Company Project)............ A 3.650 14,500,000
----------------
DELAWARE--1.00%
21,600 Delaware Economic Development
Authority
(Hospital Billing &
Collection Service, Ltd.)... A 3.650 21,600,000
----------------
DISTRICT OF COLUMBIA--0.99%
8,500 District of Columbia
Tax And Revenue Anticipation
Notes Series B.............. 09/30/98 4.500 8,539,397
6,600 District of Columbia Revenue
(Georgetown University
Series C)................... A 3.800 6,600,000
6,300 District of Columbia General
Obligation.................. A 4.350 6,300,000
----------------
21,439,397
----------------
FLORIDA--4.63%
10,000 Broward County School District
Revenue Anticipation Notes
Series C.................... 04/22/98 4.500 10,016,821
9,730 Dade County Aviation
Revenue..................... A 3.700 9,730,000
22,000 Dade County Water And Sewer
Systems Revenue............. A 3.650 22,000,000
13,330 Florida Local Government
Finance Commission Series A
Tax-Exempt Commercial
Paper....................... 02/12/98 to 03/11/98 3.800 to 3.850 13,330,000
7,543 Gainesville Utilities Systems
Revenue
Tax-Exempt Commercial
Paper....................... 02/06/98 3.650 7,543,000
4,450 Orange County Health
Facilities Authority
(Adventist Health
Systems).................... A 4.150 4,450,000
6,000 Orange County Health
Facilities Authority
(Mayflower Retirement
Center)..................... A 4.100 6,000,000
5,000 Orange County Health
Facilities Authority
(Pooled Hospital Loan
Program).................... 02/13/98 3.700 5,000,000
</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>
FLORIDA (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 4,500 Putnam County Development
Authority Pollution Control
Revenue
(Seminole Electric H-4)
Adjustable Rate Bonds....... 03/15/98 3.700% $ 4,500,000
8,750 Sarasota County Public
Hospital
Tax-Exempt Commercial
Paper....................... 04/10/98 3.800 8,750,000
3,980 Sunshine State Government
Finance Commission
Tax-Exempt Commercial
Paper....................... 04/09/98 3.800 3,980,000
5,000 University of North Florida
Foundation Incorporated..... A 4.200 5,000,000
----------------
100,299,821
----------------
GEORGIA--5.10%
35,500 Burke County Development
Authority Pollution Control
(Oglethorpe Power Corp.).... A 3.650 to 3.800 35,500,000
10,000 Cobb County Housing Authority
Multi-Family Housing Revenue
(Greenhouse Frey Apartment
Project).................... A 4.150 10,000,000
18,435 Georgia Municipal Electric
Authority
Tax-Exempt Commercial
Paper....................... A 3.650 to 3.850 18,435,000
26,300 Georgia Municipal Gas
Authority
(Transco Portfolio I Project
B).......................... A 3.650 26,300,000
3,775 Georgia Municipal Gas
Authority
(Agency Project Series A)... A 3.650 3,775,000
3,500 Georgia State Series B........ 03/01/98 6.750 3,516,681
12,860 Glynn Brunswick Memorial
Hospital Variable
Anticipation Certificates
(Southeast Georgia
Project).................... A 3.650 12,860,000
----------------
110,386,681
----------------
IDAHO--0.48%
10,500 Power County Pollution Control
Revenue
(FMC Corporation Project)... A 5.100 10,500,000
----------------
ILLINOIS--9.62%
3,250 Chicago Multi Family Housing
Revenue
(Waveland Associates Project
B).......................... A 3.800 3,250,000
32,600 Chicago O'Hare International
Airport Revenue
(General Airport)........... A 3.650 32,600,000
3,000 Chicago Park District
Tax and Revenue Anticipation
Warrants.................... 09/21/98 4.750 3,018,430
2,500 Chicago Public Building
Commerce Building Revenue
Series A.................... 12/01/98 4.500 2,515,547
27,800 Cook County Illinois.......... A 3.650 27,800,000
4,000 Illinois Development Finance
Authority
(Chicago Symphony
Orchestra).................. A 3.650 4,000,000
16,200 Illinois Development Finance
Authority Pollution Control
Revenue
(Commonwealth Edison)....... A 3.700 16,200,000
5,000 Illinois Educational
Facilities Authority Revenue
(Field Museum).............. 06/17/98 3.800 5,000,000
11,500 Illinois Educational
Facilities Authority Revenue
(Pooled Loan)............... 02/23/98 to 04/20/98 3.750 to 3.850 11,500,000
6,000 Illinois Educational
Facilities Authority Revenue
(Shad Aquarium)............. 06/23/98 3.850 6,000,000
</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>
ILLINOIS (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 4,895 Illinois Educational
Facilities Authority Revenue
(Northwestern University)... A 3.850% $ 4,895,000
200 Illinois Health Facilities
Authority Revenue
(Central Dupage
Healthcorp)................. A 5.100 200,000
22,170 Illinois Health Facilities
Authority Revenue
(Central Health and
Northwest Community)........ A 4.000 22,170,000
100 Illinois Health Facilities
Authority Revenue
(Elmhurst Memorial
Hospital)................... A 5.150 100,000
5,000 Illinois Health Facilities
Authority Revenue
(Evanston Hospital)
Tax-Exempt Commercial
Paper....................... 05/15/98 4.000 5,000,000
20,000 Illinois Health Facilities
Authority Revenue
(Evanston Hospital)......... 03/31/98 to 10/15/98 3.800 to 3.900 20,000,000
15,400 Illinois Health Facilities
Authority Revenue
(Loyola University Health
Systems B).................. A 3.650 15,400,000
15,000 Illinois Health Facilities
Authority Revenue
(Victory Hospital)
Tax-Exempt Commercial
Paper....................... 01/29/98 3.700 15,000,000
5,835 Illinois Health Facilities
Authority Revenue
(Rush Presbyterian
Hospital)................... 03/18/98 3.800 5,835,000
8,000 Illinois Health Facilities
Authority Revenue Series C
(Pooled Loan)............... A 3.800 8,000,000
----------------
208,483,977
----------------
INDIANA--2.63%
12,500 City of Indianapolis Gas
Utility System
Tax-Exempt Commercial
Paper....................... 01/22/98 to 04/08/98 3.700 to 3.800 12,500,000
11,500 Hoosier City of Sullivan
Pollution Control Revenue
(Hoosier Energy)
Tax-Exempt Commercial
Paper....................... 03/05/98 3.700 11,500,000
2,750 Indianapolis Local Public
Improvement Bond
Bank Notes Series E......... 07/09/98 4.250 2,756,273
4,000 Indianapolis Local Public
Improvement Bond
Bank Notes Series H......... 07/09/98 4.250 4,009,124
8,000 Mount Vernon Pollution Control
Revenue
(Southern Indiana Gas)...... A 4.050 8,000,000
7,900 Petersburg Pollution Control
Revenue
(Indianapolis Power & Light
Company)
Tax-Exempt Commercial
Paper....................... 02/11/98 3.700 to 3.800 7,900,000
10,300 Rockport Pollution Control
Revenue
(AEP Generating Company
Project).................... A 5.100 10,300,000
----------------
56,965,397
----------------
IOWA--0.83%
18,000 Iowa Finance Authority
(Village Court Project)..... A 3.625 to 4.150 18,000,000
----------------
KANSAS--1.20%
8,900 Burlington Pollution Control
Revenue
(Kansas Electric Power
Company).................... 02/09/98 3.650 8,900,000
</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>
KANSAS (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 1,600 Burlington Pollution Control
Revenue
(Kansas Power & Light
Company)
Tax-Exempt Commercial
Paper....................... 03/06/98 3.750% $ 1,600,000
6,000 Topeka Notes Series B......... 03/04/98 4.250 6,004,434
9,500 Wichita Kansas Temporary Notes
Series 192.................. 02/26/98 4.500 9,509,905
----------------
26,014,339
----------------
KENTUCKY--1.38%
8,000 Kentucky Economic Development
Finance Authority
Hospital Facilities Revenue
(Baptist Healthcare Systems
Obligation)................. A 4.050 8,000,000
8,295 Mason County Pollution Control
Revenue
(East Kentucky Power
National Rural)............. A 3.850 8,295,000
3,380 Pendleton Multi-County Lease
Revenue
(Kentucky Associates Leasing
Program)
Adjustable Rate Bonds....... 07/01/98 3.950 3,380,000
10,250 Trimble County Pollution
Control
(Louisville Gas & Electric
Company)
Tax-Exempt Commercial
Paper....................... 02/06/98 to 02/10/98 3.800 to 3.850 10,250,000
----------------
29,925,000
----------------
LOUISIANA--2.45%
9,700 Calcasieu Parish Industrial
Development Board
Pollution Control Revenue
(Citgo Petroleum
Corporation)................ A 3.700 9,700,000
11,500 Jefferson Parish Hospital
Service District Hospital
Revenue..................... A 3.800 11,500,000
3,000 Louisiana Offshore Terminal
Authorty Revenue
(Loop Incorporated First
Stage Series A)............. A 3.650 3,000,000
12,000 Louisiana Public Facilities
Authority Pollution Control
Revenue
(Ciba Geigy)................ A 3.650 12,000,000
8,000 Louisiana Public Facilities
Authority Revenue
(College and University
Equipment and Capital Series
A).......................... A 3.800 8,000,000
3,000 Plaquemines Port Harbor and
Terminal District
Marine Terminal Facilities
Revenue Electro Coal
Transfer Series A
(Tampa Electric) Tax-Exempt
Commercial Paper............ 02/06/98 3.750 3,000,000
5,900 South Louisiana Port
Commission Marine Terminal
Facilities Revenue
(Occidental Petroleum)...... A 3.650 5,900,000
----------------
53,100,000
----------------
MARYLAND--3.01%
6,000 Baltimore County Consolidated
Public Improvement
Tax-Exempt Commercial
Paper....................... 02/02/98 3.650 6,000,000
16,000 Howard County Series B
Tax-Exempt Commercial
Paper....................... 01/21/98 to 08/15/98 3.650 16,000,000
2,500 Howard County General
Obligation.................. 08/15/98 5.500 2,526,404
</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>
MARYLAND (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 17,716 Maryland Health & Higher
Education Facilities Revenue
Series C
(John Hopkins)
Tax-Exempt Commercial
Paper....................... 02/13/98 to 02/27/98 3.700 to 3.850% $ 17,716,000
13,750 Montgomery County Series B
(Consolidated Public
Improvement)................ 02/05/98 to 10/01/98 3.650 to 6.800 13,831,756
9,200 University of Maryland
Equipment Tender Notes...... A 3.800 9,200,000
----------------
65,274,160
----------------
MASSACHUSETTS--2.33%
11,600 Boston Water and Sewer
Commission Revenue Series
A........................... A 3.700 11,600,000
10,000 Massachusetts Health &
Educational Facilities
Authority
(Capital Asset Program)..... A 3.850 10,000,000
5,400 Massachusetts Health &
Education
(Boston University)
Tax-Exempt Commercial
Paper....................... 01/21/98 3.800 5,400,000
6,700 Massachusetts Industrial
Finance Agency Resources
Recovery Revenue
(Refunding Ogden Haverhill
Project A).................. A 3.500 6,700,000
4,000 Massachusetts Municipal
Wholesale Electric Company
Power Supply Systems
Revenue..................... A 3.500 4,000,000
8,700 Massachusetts Water Resources
Authority
Tax-Exempt Commercial
Paper....................... 01/20/98 3.800 8,700,000
4,100 Whitman Hanson Regional School
District
Bond Anticipation Notes..... 07/15/98 4.250 4,106,564
----------------
50,506,564
----------------
MICHIGAN--2.61%
9,500 Michigan Municipal Bond
Authority Revenue........... 07/02/98 to 09/18/98 4.500 9,531,257
9,000 Michigan State Building
Authority Revenue Series 1
Tax-Exempt Commercial
Paper....................... 03/02/98 3.750 9,000,000
4,000 Michigan State Housing
Development Authority
(Shoal Creek)............... A 3.650 4,000,000
16,000 Michigan State Notes.......... 09/30/98 4.500 16,084,536
6,200 Michigan Strategic Fund
(Dow Chemical Company)...... A 5.100 6,200,000
6,300 Michigan Strategic Fund
(Dow Chemical Company)
Tax-Exempt Commercial
Paper....................... 01/21/98 to 01/26/98 3.700 6,300,000
5,400 Northville Township Economic
Development Corporation
Limited Obligation Revenue
(Thrifty Northville
Incorporated Project)....... A 4.275 5,400,000
----------------
56,515,793
----------------
MINNESOTA--0.25%
5,400 Rochester Health Care
Facilities Revenue
(Mayo Foundation)........... 04/08/98 to 04/09/98 3.650 5,400,000
----------------
</TABLE>
23
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
MISSISSIPI--1.50%
$ 2,000 Claiborne County Pollution
Control Revenue
(Southern Mississippi
Electric)
Tax-Exempt Commercial
Paper....................... 05/08/98 3.800% $ 2,000,000
24,100 Harrison County Pollution
Control Revenue
(DuPont).................... A 5.100 24,100,000
6,500 Perry County Pollution Control
Revenue
(Leaf River Forest)......... A 4.250 6,500,000
----------------
32,600,000
----------------
MISSOURI--1.90%
3,000 Independence Water Utility
Revenue
Tax-Exempt Commercial
Paper....................... 02/05/98 3.700 3,000,000
5,000 Missouri Environmental
Improvement & Energy
Resource Authority
Pollution Control Revenue
(Union Electric)
Adjustable Rate Bonds....... A 3.950 5,000,000
12,400 Missouri Health & Education
Facilities Authority
(SSM Healthcare)............ A 3.700 12,400,000
16,650 Missouri Health & Education
Facilities Authority
(SSM Healthcare)
Tax-Exempt Commercial
Paper....................... 03/23/98 to 06/01/98 3.750 to 7.750 16,782,878
4,000 Missouri State Health &
Educational Facilities
Authority
(Mehlville School District
Series H)................... 09/14/98 4.500 4,016,122
----------------
41,199,000
----------------
MONTANA--0.31%
6,800 Forsyth Pollution Control
Revenue
(Portland General Electric
Series C)................... A 4.150 6,800,000
----------------
NEBRASKA--1.51%
11,100 Lancaster County Hospital
Revenue
(Bryan Memorial Hospital
Project).................... A 3.650 11,100,000
15,100 Nebraska Higher Education Loan
Authority................... A 3.650 15,100,000
6,460 Omaha Public Power District
Electric
Tax-Exempt Commercial
Paper....................... 03/11/98 3.750 6,460,000
----------------
32,660,000
----------------
NEVADA--1.28%
27,644 Clark County Airport
Improvement Revenue......... A 3.650 27,644,000
----------------
NEW HAMPSHIRE--1.18%
6,000 New Hampshire Higher Education
Authority Revenue
(Dartmouth College)
Adjustable Rate Bonds....... 06/01/98 3.950 6,000,000
19,525 New Hampshire Housing Finance
Authority Multi-Family
Revenue
(EQR Bond Partnership
Project).................... A 4.150 19,525,000
----------------
25,525,000
----------------
</TABLE>
24
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
NEW JERSEY--1.44%
$ 10,000 Essex County Bond Anticipation
Notes
Series A.................... 08/07/98 4.250% $ 10,019,530
5,000 Jersey City Bond Anticipation
Notes....................... 09/18/98 4.375 5,016,605
8,000 New Jersey State Series 1998A
Tax-Exempt Commercial
Paper....................... 01/21/98 to 03/09/98 3.750 8,000,000
2,200 Pleasantville School District
Temporary Notes............. 08/28/98 4.250 2,206,035
6,000 South Plainfield
Bond Anticipation Notes..... 07/22/98 4.250 6,007,325
----------------
31,249,495
----------------
NEW MEXICO--1.98%
13,000 Albuquerque Airport Revenue... A 3.650 13,000,000
10,550 Albuquerque Gross Receipts
Lodges Tax Revenue Series
A........................... A 3.700 10,550,000
1,390 Gallup Pollution Control
Revenue
(Plains Electric
Generation)................. 08/15/98 5.500 1,403,638
17,935 University of New Mexico
University Revenues......... A 3.650 17,935,000
----------------
42,888,638
----------------
NEW YORK--3.83%
5,000 Dover Union Free School
District
Bond Anticipation Notes..... 09/11/98 4.250 5,010,658
4,000 Lindenhurst Union Free School
District
Tax Anticipation Notes...... 06/24/98 4.250 4,004,214
2,000 Municipal Assistance
Corporation for New York
City........................ A 3.550 2,000,000
1,500 Municipal Assistance
Corporation for New York
City
Tax-Exempt Commercial
Paper....................... 04/07/98 3.650 1,500,000
7,500 Nassau County New York
Revenue Anticipation Notes
Series A.................... 03/10/98 4.250 7,505,443
4,200 New York City
Tax-Exempt Commercial
Paper....................... 03/13/98 3.800 4,200,000
9,000 New York City Municipal Water
Finance Authority
Tax-Exempt Commercial
Paper....................... 02/18/98 3.800 9,000,000
3,400 New York State Energy Research
& Development Authority
Pollution Control Revenue
(Orange and Rockland Project
A).......................... A 3.550 3,400,000
7,000 New York State Housing Finance
Agency
(Normandie Court I
Project).................... A 4.000 7,000,000
10,000 New York State Power Authority
Tax-Exempt Commercial
Paper....................... 02/25/98 3.700 10,000,000
4,500 Smithtown Central School
District
Tax Anticipation Notes...... 06/29/98 4.500 4,512,748
21,800 Suffolk County Water Authority
Bond Anticipation Notes..... A 3.550 21,800,000
3,000 Triborough Bridge and Tunnel
Authority................... A 3.650 3,000,000
----------------
82,933,063
----------------
NORTH CAROLINA--5.32%
25,280 Charlotte Airport Revenue..... A 3.550 25,280,000
</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>
NORTH CAROLINA (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 10,400 Charlotte Mecklenberg Hospital
Authority
Health Care Systems Revenue
Series D.................... A 4.150% $ 10,400,000
21,300 North Carolina Education and
Medicare
(Duke University
Hospital)................... A 4.100 21,300,000
22,000 North Carolina Educational
Facility
(Bowman Grey School Medical
Project).................... A 4.050 22,000,000
20,000 North Carolina Educational
Facility
(Duke University Project)... A 4.100 20,000,000
9,815 North Carolina Educational
Facility
(Elon College).............. A 3.700 9,815,000
3,000 North Carolina Municipal Power
Series A
Tax-Exempt Commercial
Paper....................... 01/22/98 3.800 3,000,000
3,500 Union County Industrial
Facilities and Pollution
Control
Financing Authority
(Square D Company
Project).................... A 4.150 3,500,000
----------------
115,295,000
----------------
NORTH DAKOTA--0.96%
10,850 Grand Forks Health Care
Facilities Revenue
(The United Hospital Group
Project).................... A 5.100 10,850,000
10,000 Oliver County Pollution
Control Revenue
(Square Butte Electric A)... A 3.650 10,000,000
----------------
20,850,000
----------------
OHIO--1.93%
5,600 Columbus Electric Systems
Revenue..................... A 3.700 5,600,000
12,700 Columbus Sewer Revenue........ A 4.100 12,700,000
10,000 Cuyahoga County Hospital
Revenue
(Cleveland Clinic Foundation
A).......................... A 3.600 10,000,000
5,000 Montgomery County Hospital
Revenue
(Miami Valley Hospital
Series C)
Tax-Exempt Commercial
Paper....................... 01/30/98 3.800 5,000,000
8,400 Ohio State Water Development
Authority Series 1988
(Cleveland Electric)
Tax-Exempt Commercial
Paper....................... 02/04/98 3.650 8,400,000
----------------
41,700,000
----------------
OKLAHOMA--0.74%
12,350 Tulsa Industrial Authority
Hospital Revenue
(University of Tulsa Series
B).......................... A 3.800 12,350,000
3,575 Tulsa Parking Authority
Revenue
(Williams Center)
Adjustable Rate Bond........ 05/15/98 3.800 3,575,000
----------------
15,925,000
----------------
OREGON--2.08%
5,665 Oregon Housing and Community
Services Department Mortgage
Revenue Single Family
Mortgage Series C
Adjustable Rate Bonds....... 05/14/98 3.950 5,665,000
</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>
OREGON (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 29,500 Oregon State General
Obligation
(Veterans Welfare).......... A 3.650 to 3.700% $ 29,500,000
10,000 Oregon State Series 73 H...... A 3.650 10,000,000
----------------
45,165,000
----------------
PENNSYLVANIA--3.14%
4,000 Alleghany County Pollution
Control Revenue
(U.S. Steel)
Tax-Exempt Commercial
Paper....................... 02/12/98 3.700 4,000,000
7,400 Bucks County Industrial
Development Authority
Revenue
(Edgcomb Metals Company).... A 3.950 7,400,000
17,400 Delaware Valley Regional
Finance Authority
Local Government Revenue.... A 3.650 17,400,000
8,000 Northeastern Pennsylvania
Hospital Authority Revenue
Tax-Exempt Commercial
Paper....................... 01/28/98 to 03/06/98 3.700 8,000,000
12,200 Northumberland County
Industrial Development
Authority
Pollution Control Revenue
(Merck and Company Inc.).... A 3.850 to 4.400 12,200,000
5,000 Philadelphia Gas Works
Tax-Exempt Commercial
Paper....................... 02/25/98 3.700 5,000,000
2,000 Philadelphia Tax and Revenue
Anticipation Notes Series
A........................... 06/30/98 4.500 2,004,740
8,000 Pottsville Hospital Authority
Hospital Revenue
(Charity Obligation Group
Series F)................... A 3.650 8,000,000
4,000 Temple University of the
Commonwealth Systems of
Higher Education
University Funding
Obligations................. 05/18/98 4.750 4,012,270
----------------
68,017,010
----------------
SOUTH CAROLINA--1.40%
6,200 Greenville County Industrial
Revenue
(Edgcomb Metals Company
Project).................... A 4.150 6,200,000
1,900 Greenville County School
District
Tax Anticipation Notes...... 03/01/98 4.100 1,900,879
13,800 South Carolina Jobs Economic
Development Authority
Hospital Facilities Revenue
(Baptist Healthcare
Systems).................... A 3.650 13,800,000
8,490 South Carolina Public Service
Authority Refunding Series
A........................... A 5.400 to 6.000 8,490,000
----------------
30,390,879
----------------
TENNESSEE--3.20%
4,400 Clarksville Public Building
Authority Revenue........... A 3.650 4,400,000
10,000 Metropolitan Nashville &
Davidson Health & Education
(Vanderbilt University)
Adjustable Rate Bonds....... A 3.800 to 3.950 10,000,000
8,600 Metropolitan Nashville &
Davidson Industrial
(Timberlake)................ A 4.000 8,600,000
4,000 Metropolitan Nashville Airport
Authority................... A 3.750 4,000,000
10,000 Shelby County 1997 Series A... 02/20/98 3.700 10,000,000
3,000 Shelby County 1997 Series B... 01/27/98 3.700 3,000,000
</TABLE>
27
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
</TABLE>
TENNESSEE (CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 2,900 Shelby County Health
Educational & Housing
Facilities
Board Revenue
(Lebonheur Childrens Medical
Center C)
(Pre-refunded with U.S.
Government Securities to
8/15/98 @ 102).............. 08/15/98 7.600% $ 3,023,075
12,000 Tennessee Local Development
Authority Revenue
Bond Anticipation Notes
Series A.................... A 3.600 12,000,000
14,300 Tennessee State
Tax-Exempt Commercial
Paper....................... 03/20/98 to 03/24/98 3.800 14,300,000
----------------
69,323,075
----------------
TEXAS--12.32%
7,260 Bexar County Health Facilities
Development
(Army Retirement
Foundation)................. A 4.150 7,260,000
10,000 Brazos River Harbor Navigation
District
(Dow Chemical)
Tax-Exempt Commercial
Paper....................... 02/02/98 to 03/09/98 3.700 to 3.800 10,000,000
4,100 Brownsville Utilities
Tax-Exempt Commercial
Paper....................... 02/17/98 3.750 4,100,000
10,585 City of Austin Combined
Utilities System
Tax-Exempt Commercial
Paper....................... 02/09/98 to 03/09/98 3.700 to 3.750 10,585,000
4,000 City of Houston Water & Sewer
Authority
Tax-Exempt Commercial
Paper....................... 01/20/98 3.800 4,000,000
18,000 Dallas Area Rapid
Transportation Authority
Revenue
Tax-Exempt Commercial
Paper....................... 03/17/98 to 03/27/98 3.750 to 3.800 18,000,000
4,500 Denton Independent School
District
Variable Series B........... 08/14/98 3.900 4,500,000
12,800 Georgetown Higher Education
Finance Corp.
(Southwestern University)... A 3.750 12,800,000
8,000 Harris County Health
Facilities
(Baylor College of Medical
Project).................... A 3.700 8,000,000
6,000 Harris County Health
Facilities
(Memorial Hospital Systems
Project Series B)........... A 3.650 6,000,000
23,100 Harris County Toll Roads...... A 3.800 23,100,000
39,100 Houston General Obligation
Tax-Exempt Commercial
Paper....................... 01/29/98 to 04/24/98 3.700 to 3.800 39,100,000
4,000 Lower Colorado River Authority
Series B
Tax-Exempt Commercial
Paper....................... 02/05/98 3.700 4,000,000
8,000 Port of Corpus Christi
Authority Texas
(Koch Industries)
Tax-Exempt Commercial
Paper....................... A 3.700 8,000,000
7,800 Texas A&M University
Tax-Exempt Commercial
Paper....................... 02/11/98 to 03/16/98 3.700 to 3.750 7,800,000
8,700 Texas Municipal Power Agency
Tax-Exempt Commercial
Paper....................... 01/23/98 3.700 8,700,000
10,000 Texas State
Tax-Exempt Commercial
Paper....................... 02/19/98 to 02/24/98 3.700 10,000,000
74,600 Texas State Tax and Revenue
Anticipation Notes.......... 08/31/98 4.750 75,039,573
</TABLE>
28
<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>
$ 6,000 Travis County Health
Facilities Development
Corporation
Hospital Revenue
(Charity Obligation Group
Series E)................... A 3.500% $ 6,000,000
----------------
266,984,573
----------------
UTAH--0.90%
1,600 Intermountain Power Agency
Series B 1
Tax-Exempt Commercial
Paper....................... 02/26/98 3.750 1,600,000
11,900 Salt Lake City
(Pooled Hospital)
Tax-Exempt Commercial
Paper....................... 02/09/98 to 02/10/98 3.800 to 3.850 11,900,000
6,100 State of Utah Highway Series
97A
Tax-Exempt Commercial
Paper....................... 02/19/98 3.750 6,100,000
----------------
19,600,000
----------------
VERMONT--0.21%
4,600 Vermont Educational & Health
Buildings Agency
(Norwich University Project
Series A)................... A 4.150 4,600,000
----------------
VIRGINIA--1.25%
6,330 Chesterfield County Industrial
Development Authority
Pollution Control Revenue
(Virginia Electric Power)... 01/30/98 3.750 6,330,000
4,500 Industrial Development
Authority of Norfolk
(Sentara Hospital)
Tax-Exempt Commercial
Paper....................... 03/19/98 3.800 4,500,000
16,225 Town of Louisa Industrial
Development Authority
(Virginia Electric Power
Company).................... 01/27/98 to 03/30/98 3.800 to 3.900 16,225,000
----------------
27,055,000
----------------
WASHINGTON--2.07%
12,600 King County Sewer Revenue
Series A
Tax-Exempt Commercial
Paper....................... 02/24/98 3.750 12,600,000
7,600 Seattle Municipal Light and
Power Revenue
Tax-Exempt Commercial
Paper....................... 01/07/98 3.650 7,600,000
14,800 Snohomish Public Utility
District.................... A 3.650 14,800,000
9,785 Washington Public Power Supply
Systems Nuclear............. A 3.750 9,785,000
----------------
44,785,000
----------------
WISCONSIN--1.64%
6,100 City of Oak Creek Pollution
Control Revenue
(Wisconsin Electric Power
Company).................... A 4.100 6,100,000
3,175 Greenfield Refunding Series
A........................... 02/01/98 4.500 3,176,629
14,800 Racine Unified School District
Tax and Revenue Anticipation
Promissory Notes............ 08/24/98 4.250 14,834,352
9,310 Wisconsin State............... 02/18/98 to 02/23/98 3.700 to 3.750 9,310,000
2,035 Wisconsin State Series A...... 05/01/98 6.800 to 7.100 2,055,849
----------------
35,476,830
----------------
</TABLE>
29
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
WYOMING--0.69%
$ 4,300 Carbon County Pollution
Control Revenue
(Amoco)..................... A 3.750% $ 4,300,000
6,675 Lincoln County Pollution
Control Revenue
(Amoco Project Standard
Oil)........................ 04/01/98 3.750 6,675,000
4,000 Uinta County Pollution Control
Revenue
(Amoco)..................... A 3.850 4,000,000
----------------
14,975,000
----------------
Total Investments (cost--$2,188,609,490, which
approximates cost for federal
income tax purposes)--101.02%................
2,188,609,490
Liabilities in excess of other
assets--(1.02)%................................ (22,005,867)
----------------
Net Assets (applicable to 2,167,739,142 shares
of common stock outstanding at $1.00 per
share)--100.00%.............................. $ 2,166,603,623
----------------
----------------
</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
December 31, 1997 and reset periodically.
Weighted average maturity--54 days
See accompanying notes to financial statements
30
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
DECEMBER 31, 1997
(UNAUDITED)
-----------------
<S> <C>
INVESTMENT INCOME:
Interest....................................................................................................... $ 42,085,371
-----------------
EXPENSES:
Investment advisory and administration......................................................................... 5,012,681
Distribution fees.............................................................................................. 912,284
Transfer agency and service fees............................................................................... 292,384
Custody and accounting......................................................................................... 114,715
Reports and notices to shareholders............................................................................ 73,118
Legal and audit................................................................................................ 63,346
Federal and state registration................................................................................. 62,909
Insurance...................................................................................................... 24,500
Directors' fees................................................................................................ 5,250
Other expenses................................................................................................. 14,864
-----------------
6,576,051
-----------------
NET INVESTMENT INCOME.......................................................................................... 35,509,320
NET REALIZED GAIN FROM INVESTMENT TRANSACTIONS................................................................. 7,805
-----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................................................... $ 35,517,125
-----------------
-----------------
</TABLE>
See accompanying notes to financial statements
31
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
DECEMBER 31, 1997 ENDED
(UNAUDITED) JUNE 30, 1997
----------------- --------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income......................................................................... $ 35,509,320 $ 62,719,828
Net realized gain from investment transactions................................................ 7,805 185,637
----------------- --------------
Net increase in net assets resulting from operations.......................................... 35,517,125 62,905,465
----------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income......................................................................... (35,509,320) (62,719,828)
----------------- --------------
NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS.................................... 100,676,302 52,285,794
----------------- --------------
Net increase in net assets.................................................................... 100,684,107 52,471,431
NET ASSETS:
Beginning of period........................................................................... 2,065,919,516 2,013,448,085
----------------- --------------
End of period................................................................................. $ 2,166,603,623 $2,065,919,516
----------------- --------------
----------------- --------------
</TABLE>
See accompanying notes to financial statements
32
<PAGE>
NOTES TO FINANCIAL STATEMENTS(UNAUDITED)
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 an 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.
ACQUISITIONS
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 December 31, 1997, the Fund owed PaineWebber $859,037 for investment advisory
and administration fees.
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS(UNAUDITED)
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, this fee became payable at
the annual rate of 0.125% of average daily net assets. At December 31, 1997, the
Fund owed PaineWebber $156,924 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 five months ended December 31, 1997, PaineWebber received from
PFPC, Inc., not the Fund, approximately 51% of the total transfer agency and
related service fees collected by PFPC, Inc. from the Fund.
OTHER LIABILITIES
At December 31, 1997, the amounts payable for investments purchased and
dividends payable aggregated $37,600,000 and $2,908,086, 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, 1997, the Fund had net capital loss carryforward of $631,340. 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, 1998 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.
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS(UNAUDITED)
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 SIX FOR THE YEAR
MONTHS ENDED ENDED
DECEMBER 31, 1997 JUNE 30, 1997
----------------- ----------------
<S> <C> <C>
Shares sold....................................................................... 6,183,834,026 13,694,087,087
Share issued in connection with the acquisition of RMA Connecticut................ -- 19,670,455
Shares repurchased................................................................ (6,117,387,061) (13,722,257,996)
Dividends reinvested.............................................................. 34,229,337 60,786,248
----------------- ----------------
Net increase in shares outstanding................................................ 100,676,302 52,285,794
----------------- ----------------
----------------- ----------------
</TABLE>
35
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
FINANCIAL HIGHLIGHTS
Selected data for a share of Common Stock outstanding throughout each period is
presented below:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED JUNE 30,
DECEMBER 31, 1997 ------------------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
------------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
Net investment income.............. 0.016 0.029 0.030 0.030 0.019 0.021
Dividends from net investment
income........................... (0.016) (0.029) (0.030) (0.030) (0.019) (0.021)
------ ------ ------ ------ ------ ------
Net asset value, end of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
Total investment return(1)......... 1.58% 2.98% 3.09% 3.03% 1.88% 2.07%
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's).......................... $2,166,604 $2,065,920 $2,013,448 $1,562,040 $1,427,724 $1,248,702
Expenses to average net assets..... 0.58%* 0.61% 0.61%(2) 0.63% 0.64% 0.65%
Net investment income to average
net assets....................... 3.11%* 2.94% 3.02%(2) 3.00% 1.90% 2.06%
</TABLE>
- -----------------
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period 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 period reported. Total investment return
for period less than one year has not been annualized.
(2) These ratios include non-recurring acquisition expenses of 0.01%.
36
<PAGE>
- --------------------------------------------------------------------------------
DIRECTORS
E. Garrett Bewkes, Jr. Mary C. Farrell
CHAIRMAN Meyer Feldberg
Margo N. Alexander George W. Gowen
Richard Q. Armstrong Frederic V. Malek
Richard R. Burt Carl W. Schafer
PRINCIPAL OFFICERS
Margo N. Alexander Paul H. Schubert
PRESIDENT VICE PRESIDENT AND TREASURER
Victoria E. Schonfeld Dennis L. McCauley
VICE PRESIDENT VICE PRESIDENT
Dianne E. O'Donnell
VICE PRESIDENT AND SECRETARY
INVESTMENT ADVISER,
ADMINISTRATOR AND DISTRIBUTOR
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
SUB-ADVISER AND SUB-ADMINISTRATOR
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
THE FINANCIAL INFORMATION INCLUDED HEREIN IS TAKEN FROM THE RECORDS OF THE
FUNDS WITHOUT EXAMINATION BY INDEPENDENT ACCOUNTANTS WHO DO NOT EXPRESS AN
OPINION THEREON.
THIS REPORT IS NOT TO BE USED IN CONNECTION WITH THE OFFERING OF SHARES OF A
FUND UNLESS ACCOMPANIED OR PRECEDED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
PAINEWEBBER
RMA MONEY MARKET
PORTFOLIO
RMA U.S. GOVERNMENT
PORTFOLIO
RMA TAX-FREE FUND, INC.
PAINEWEBBER
- -C- 1998 PaineWebber Incorporated
Member SIPC
DECEMBER 31, 1997
SEMIANNUAL REPORT
