<PAGE>
PAINEWEBBER
-------------------------------------------------------
RETIREMENT
MONEY FUND
JUNE 30, 1996
ANNUAL REPORT
<PAGE>
Annual Report--August 15, 1996
----------------------------------------------------------------
Dear Shareholder,
We are pleased to present you with the Annual
Report for PaineWebber Retirement Money Fund for
the year ended June 30, 1996. Moderate economic
growth, low inflation and strong corporate
earnings growth helped propel the stock market
to record-breaking levels during 1995. The bond
market also rallied during 1995, providing
investors with their third-best year since the
1920s.
By the end of 1995, most investors were
convinced that the Federal Reserve Board had
achieved a "soft landing" for the economy, which
led to a general consensus that the Fed would
act again to cut short-term interest rates.
Sentiment changed in early March, however, in
response to government reports showing higher-
than-expected economic growth; there was a sharp
drop in bond prices which caused volatility in
the stock market.
After exceptional performance during most of
1995, the first half of 1996 has been much more
difficult for fixed income investors.
Accelerating economic growth, reflected in
strong employment, retail sales and investment
spending numbers, as well as a surprisingly
robust housing sector, combined to change bond
market expectations from the Fed easing to the
Fed tightening. The 30-year U.S. Treasury bond,
a benchmark of bond market performance, was
yielding 5.95% on December 29, 1995 and 6.87% on
June 28, 1996. Generally, when bond yields
increase prices decrease. Meanwhile, the Federal
Reserve's Open Market Committee decided to keep
monetary policy unchanged at the March, May and
July 1996 meetings. The Fed's decision to hold
rates steady suggested that officials did not
foresee a recession or accelerating inflation.
<PAGE>
PORTFOLIO REVIEW
PaineWebber Retirement Money Fund's net assets
totalled $3.5 billion as of June 30, 1996. The
Fund's current yield for the seven-day period
ended June 30, 1996 was 4.68%. During the first
half of 1996, short-term interest rates began to
decrease, steepening the short end of the yield
curve. The discounted rate for 30-day commercial
paper also decreased. It now appears that the
Federal Reserve Board will leave rates unchanged
until after the 1996 presidential election. In
anticipation of a possible rising interest rate
environment, the Fund's weighted average
maturity was decreased during the second half of
1995. However, during the second half of the
Fund's fiscal year, the weighted average
maturity was increased slightly to accommodate a
stable to lower interest rate environment.
Going forward, the Fund expects to maintain
its current position until further economic data
is released. At this writing, second quarter
economic data was not as strong as first,
leading to a general consensus that the Fed will
not raise short-term rates in the near future.
Although we are interested in maintaining higher
yields, we will not do so by sacrificing the
Fund's emphasis on security, quality and
liquidity.
2
<PAGE>
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 Alexander /s/ Dennis L. McCauley
MARGO ALEXANDER DENNIS L. MCCAULEY
President, Managing Director and Chief
Mitchell Hutchins Asset Investment Officer--Fixed
Management Inc. Income,
Mitchell Hutchins Asset
Management Inc.
/s/ Susan P. Messina /s/ Kimberly S. Brown
SUSAN P. MESSINA KIMBERLY S. BROWN
Senior Vice President, Portfolio Manager,
Taxable Money Funds PaineWebber Retirement
Mitchell Hutchins Asset Money Fund
Management Inc.
3
<PAGE>
PaineWebber Retirement Money Fund
- --------------------------------------------------------------------------------
Statement of Net Assets
June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- -------------- -----------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS--9.09%
$35,000 U.S. Treasury Bills..... 08/22/96 to 05/29/97 4.840 to 5.300%@ $34,127,011
10,000 U.S. Treasury Notes..... 02/28/97 6.875 10,116,189
55,000 Federal Farm Credit
Bank.................... 08/01/96 to 03/03/97 4.950 to 5.875 54,970,524
15,000 Federal Farm Credit
Bank.................... 07/01/96 5.345* 14,996,668
50,000 Federal Home Loan Bank.. 07/01/96 to 07/02/97 5.400 to 6.060 49,992,385
13,400 Federal Home Loan Bank.. 06/20/97 6.000* 13,400,000
20,000 Federal Home Loan
Mortgage Corporation.... 08/15/96 5.645 19,994,221
40,000 Federal National
Mortgage Association.... 10/07/96 to 02/14/97 4.780 to 5.680 39,990,669
15,000 Student Loan Marketing
Association............. 07/03/97 6.070 15,000,000
65,500 Student Loan Marketing
Association............. 07/02/96 5.350 to 5.410* 65,494,335
-----------
Total U.S. Government and Agency
Obligations
(cost--$318,082,002).............. 318,082,002
-----------
BANK NOTES--8.99%
DOMESTIC-8.99%
20,000 Bank of Hawaii.......... 01/03/97 5.500 20,013,671
67,000 FCC National Bank....... 07/05/96 to 11/01/96 5.330 to 5.650 66,999,939
18,000 FCC National Bank....... 07/01/96 5.360* 18,000,000
15,000 Huntington National
Bank.................... 07/01/96 5.520* 14,999,444
5,000 Morgan Guaranty Trust
Company................. 01/15/97 5.250 5,002,421
40,000 NationsBank of Texas,
N.A. ................... 11/08/96 5.550 39,991,558
18,000 Old Kent Bank & Trust
Company................. 12/04/96 5.530 17,997,047
74,850 PNC Bank, N.A. ......... 07/01/96 to 07/03/96 5.320 to 5.515* 74,822,753
20,000 Seattle-First National
Bank.................... 10/24/96 5.730 19,995,777
15,000 Society National Bank... 07/11/96 5.386* 14,993,515
7,000 Wachovia Bank & Trust
Company................. 07/09/96 5.320 6,999,982
15,000 Wachovia Bank & Trust
Company................. 07/02/96 5.340* 14,991,451
-----------
Total Bank Notes (cost--
$314,807,558)..................... 314,807,558
-----------
BANKERS [email protected]%
YANKEE-1.46%
12,100 Dai-Ichi Kangyo Bank
Limited................. 07/15/96 5.420 12,074,496
13,000 Fuji Bank Limited....... 07/24/96 to 07/26/96 5.460 to 5.500 12,952,238
15,000 Industrial Bank of Japan
Limited................. 07/11/96 5.420 14,977,417
11,000 Sanwa Bank Limited...... 07/17/96 5.380 10,973,698
-----------
Total Bankers Acceptance (cost--
$50,977,849)...................... 50,977,849
-----------
CERTIFICATES OF DEPOSIT--17.23%
DOMESTIC-0.43%
15,000 Union Bank of
California.............. 07/12/96 5.400 15,000,000
-----------
EURODOLLAR-0.86%
15,000 Bank of Tokyo-Mitsubishi
Limited................. 08/07/96 5.480 15,000,152
15,000 Sanwa Bank Limited...... 08/19/96 5.460 15,000,204
-----------
30,000,356
-----------
</TABLE>
4
<PAGE>
PaineWebber Retirement Money Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- -------------- -------------
<S> <C> <C> <C>
CERTIFICATES OF DEPOSIT--(concluded)
YANKEE-15.94%
$ 20,000 ABN AMRO Bank N.V. ..... 03/18/97 5.530% $ 20,000,000
45,000 Bank of Tokyo-Mitsubishi
Limited................. 07/10/96 to 09/04/96 5.450 to 5.490 45,000,469
20,000 Bayerische Vereinsbank.. 04/29/97 5.800 20,000,000
10,000 Dai-Ichi Kangyo Bank
Limited................. 07/18/96 5.500 10,000,020
105,000 Fuji Bank Limited....... 07/02/96 to 07/29/96 5.460 to 5.540 105,000,254
15,000 Industrial Bank of Japan
Limited................. 07/19/96 5.450 15,000,143
107,000 Sanwa Bank Limited...... 07/03/96 to 10/08/96 5.420 to 5.640 107,000,016
78,000 Societe Generale........ 07/15/96 to 06/13/97 5.350 to 6.090 78,019,094
123,000 Sumitomo Bank Limited... 07/03/96 to 08/02/96 5.430 to 5.560 123,000,260
35,000 Westpac Banking
Corporation............. 02/26/97 to 03/19/97 5.080 to 5.610 34,994,564
-------------
558,014,820
-------------
Total Certificates of Deposit
(cost--$603,015,176).............. 603,015,176
-------------
COMMERCIAL [email protected]%
AEROSPACE-DEFENSE-0.29%
10,000 Raytheon Company........ 07/08/96 5.360 9,989,578
-------------
ASSET-BACKED-9.35%
14,607 Asset Securitization
Cooperative Corporation. 08/12/96 5.390 14,515,146
51,172 Delaware Funding
Corporation............. 07/11/96 to 07/25/96 5.320 to 5.380 51,033,529
102,149 Eiger Capital
Corporation............. 07/12/96 to 07/22/96 5.320 to 5.400 101,898,000
50,000 Falcon Asset
Securitization
Corporation............. 07/16/96 5.300 to 5.390 49,888,604
15,975 Preferred Receivables
Funding Corporation..... 07/16/96 5.350 15,939,389
94,169 Triple-A One Funding
Corporation............. 07/10/96 to 07/22/96 5.300 to 5.430 93,962,011
-------------
327,236,679
-------------
AUTO-TRUCK-0.85%
19,805 Ford Motor Credit
Company................. 07/12/96 5.310 19,772,866
10,000 PACCAR Financial
Corporation............. 07/16/96 5.360 9,977,667
-------------
29,750,533
-------------
BANKING-10.59%
20,000 ABN-AMRO N.A. Finance
Incorporated ........... 08/26/96 4.975 19,845,222
65,000 Bankers Trust New York
Corporation............. 07/03/96 to 11/18/96 5.260 to 5.360 64,549,450
35,000 BCI Funding Corporation. 07/15/96 to 08/06/96 5.300 to 5.320 34,878,978
30,000 BEX America Finance
Incorporated............ 07/03/96 to 07/09/96 5.310 to 5.450 29,977,758
18,000 Credito Italiano (DE)
Incorporated............ 08/08/96 to 09/12/96 5.310 to 5.440 17,855,701
39,000 Cregem North America
Incorporated............ 07/01/96 to 08/12/96 5.290 to 5.310 38,861,972
89,000 MPS U.S. Commercial
Paper Corporation....... 07/29/96 to 08/22/96 5.300 to 5.310 88,526,003
15,000 Societe Generale N.A.
Incorporated............ 07/19/96 5.150 14,961,375
61,500 Unifunding Incorporated. 07/08/96 to 08/14/96 4.880 to 5.450 61,314,527
-------------
370,770,986
-------------
</TABLE>
5
<PAGE>
PaineWebber Retirement Money Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- -------------- -------------
<S> <C> <C> <C>
COMMERCIAL PAPER--(continued)
BROKER-DEALER-5.41%
$ 5,000 Bear Stearns Companies
Incorporated............ 07/16/96 5.400% $ 4,988,750
25,000 Merrill Lynch & Company
Incorporated............ 10/28/96 4.950 24,590,938
127,900 Morgan Stanley Group
Incorporated............ 07/01/96 to 08/23/96 4.900 to 5.600 127,473,247
32,300 Nomura Holding America
Incorporated............ 07/01/96 5.550 32,300,000
-------------
189,352,935
-------------
BUSINESS SERVICES-1.60%
36,000 Electronic Data Systems
Corporation............. 07/09/96 to 07/31/96 5.310 to 5.380 35,884,379
20,000 PHH Corporation......... 07/18/96 5.310 19,949,850
-------------
55,834,229
-------------
CHEMICALS-0.71%
25,000 Dupont (E.I.) de Nemours
& Company............... 07/18/96 to 07/19/96 5.320 to 5.500 24,933,628
-------------
COMPUTERS-0.29%
10,000 IBM Credit Corporation.. 07/10/96 5.370 9,986,575
-------------
CONGLOMERATE-0.28%
10,000 BTR Dunlop Finance
Incorporated............ 07/30/96 5.350 9,956,903
-------------
CONSUMER PRODUCTS-0.23%
8,000 Unilever Capital
Corporation............. 07/30/96 5.350 7,965,522
-------------
DRUGS, HEALTH CARE-3.99%
5,000 Abbott Laboratories..... 07/18/96 5.290 4,987,510
35,000 Bayer Corporation....... 07/02/96 to 09/04/96 5.290 to 5.400 34,830,431
40,000 Lilly (Eli) & Company... 07/01/96 to 08/20/96 4.830 to 5.350 39,798,750
36,605 Pfizer Incorporated..... 07/17/96 to 08/09/96 5.300 to 5.350 36,496,052
10,700 Sandoz Corporation...... 07/24/96 5.350 10,663,427
13,000 Zeneca Wilmington
Incorporated............ 08/12/96 5.300 12,919,616
-------------
139,695,786
-------------
ELECTRONICS-1.00%
20,000 Sony Capital
Corporation............. 07/02/96 to 07/08/96 5.340 19,988,133
15,000 Toshiba America
Incorporated............ 07/26/96 5.370 14,944,063
-------------
34,932,196
-------------
ENERGY-0.95%
13,080 Exxon Imperial U.S.
Incorporated............ 07/18/96 5.330 13,047,078
20,000 Shell Oil Company....... 07/12/96 5.290 19,967,672
-------------
33,014,750
-------------
ENTERTAINMENT-0.41%
15,000 Disney (Walt) Company... 03/14/97 5.230 14,442,133
-------------
FINANCE-CONDUIT-1.92%
67,750 Svenska Handelsbanken
Incorporated............ 07/11/96 to 08/29/96 4.920 to 5.350 67,294,157
-------------
</TABLE>
6
<PAGE>
PaineWebber Retirement Money Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- -------------- ------------
<S> <C> <C> <C>
COMMERCIAL PAPER--(continued)
FINANCE-CONSUMER-0.57%
$20,000 Household Finance
Corporation............. 07/09/96 5.290% $ 19,976,489
------------
FINANCE-CREDIT UNION-0.71%
25,000 U.S. Central Credit
Union................... 07/08/96 5.300 24,974,236
------------
FINANCE-EQUIPMENT-0.26%
9,000 AT&T Capital
Corporation............. 07/02/96 5.310 8,998,673
------------
FINANCE-INDEPENDENT-0.28%
10,000 National Rural Utilities
Cooperative Finance
Corporation............. 07/26/96 5.350 9,962,847
------------
FINANCE-SUBSIDIARY-0.88%
30,900 National Australia
Funding (DE)
Incorporated............ 07/17/96 to 07/22/96 5.300 to 5.345 30,815,209
------------
FOOD, BEVERAGE & TOBACCO-2.21%
24,400 B.A.T Capital
Corporation............. 07/09/96 to 07/18/96 5.290 to 5.350 24,356,067
40,000 Campbell Soup Company... 07/01/96 to 07/11/96 5.300 to 5.320 39,968,972
13,111 Kellogg Company......... 07/03/96 to 08/06/96 5.300 to 5.340 13,080,504
------------
77,405,543
------------
GENERAL TRADE-0.71%
25,000 Mitsubishi International
Corporation............. 07/15/96 to 07/24/96 5.290 to 5.340 24,928,537
------------
INSURANCE-0.79%
14,340 ITT Hartford Group
Incorporated............ 07/08/96 5.300 14,325,222
13,400 St. Paul Companies
Incorporated............ 07/10/96 5.320 13,382,178
------------
27,707,400
------------
INSURANCE-PROPERTY/CASUALTY-0.57%
10,000 A.I. Credit Corporation. 07/25/96 5.340 9,964,400
10,000 AIG Funding
Incorporated............ 07/15/96 5.320 9,979,311
------------
19,943,711
------------
MACHINE & MACHINE TOOLS-0.57%
20,000 Caterpillar Financial
Services Corporation.... 08/19/96 4.930 19,865,794
------------
METALS & MINING-0.34%
12,000 RTZ America
Incorporated............ 07/11/96 5.330 11,982,233
------------
MISCELLANEOUS-1.23%
43,250 Beta Finance
Incorporated............ 07/17/96 to 07/25/96 5.150 to 5.300 43,134,206
------------
OIL EQUIPMENT & SERVICES-0.80%
28,100 Colonial Pipeline
Company................. 07/18/96 to 08/02/96 5.350 to 5.370 27,995,080
------------
POLLUTION CONTROL-3.00%
106,400 WMX Technologies
Incorporated............ 08/23/96 to 11/08/96 4.760 to 5.300 104,988,501
------------
</TABLE>
7
<PAGE>
PaineWebber Retirement Money Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- -------------- -------------
<S> <C> <C> <C>
COMMERCIAL PAPER--(concluded)
PRINTING & PUBLISHING-0.84%
$ 14,500 McGraw-Hill Companies
Incorporated (The)...... 07/11/96 5.020% $ 14,479,781
15,000 Reed Elsevier
Incorporated............ 07/29/96 5.350 14,937,583
-------------
29,417,364
-------------
TELECOMMUNICATIONS-0.48%
7,000 American Telephone &
Telegraph............... 08/09/96 5.370 6,959,277
10,000 Southwestern Bell
Telephone Company....... 07/29/96 5.350 9,958,389
-------------
16,917,666
-------------
TRANSPORTATION-0.52%
18,136 Norfolk Southern
Corporation............. 07/10/96 5.320 18,111,879
-------------
UTILITY-ELECTRIC-1.03%
11,025 Florida Power
Corporation............. 07/02/96 5.340 11,023,365
25,000 Southern Company........ 07/02/96 5.400 24,996,250
-------------
36,019,615
-------------
Total Commercial Paper (cost--
$1,878,301,573)................... 1,878,301,573
-------------
SHORT-TERM CORPORATE
OBLIGATIONS--10.28%
BANKING-1.15%
20,000 Bankers Trust New York
Corporation............. 07/01/96 5.480* 20,000,000
20,000 NationsBank Corporation. 02/15/97 7.500 20,274,561
-------------
40,274,561
-------------
BROKER-DEALER-7.02%
130,900 Bear Stearns Companies
Incorporated............ 07/17/96 to 06/05/97 5.160 to 6.050 130,906,178
25,000 Bear Stearns Companies
Incorporated............ 07/03/96 5.507* 25,000,000
10,000 Goldman Sachs Group
L.P. ................... 07/02/96 5.720* 9,999,711
35,000 Merrill Lynch & Company
Incorporated............ 09/03/96 to 05/12/97 5.560 to 5.900 35,000,000
35,000 Merrill Lynch & Company
Incorporated............ 07/01/96 to 07/02/96 5.420 to 5.650* 35,000,000
10,000 Morgan Stanley Group
Incorporated............ 02/03/97 7.790 10,157,988
-------------
246,063,877
-------------
BUSINESS SERVICES-1.25%
43,750 PHH Corporation......... 07/01/96 to 07/02/96 5.330 to 5.670* 43,745,295
-------------
FINANCE-DIVERSIFIED-0.43%
15,000 CIT Group Holdings
Incorporated............ 07/01/96 5.350* 14,988,706
-------------
MISCELLANEOUS-0.43%
15,000 Beta Finance
Incorporated............ 03/18/97 5.550 14,998,931
-------------
Total Short-Term Corporate
Obligations (cost--$360,071,370).. 360,071,370
-------------
</TABLE>
8
<PAGE>
PaineWebber Retirement Money Fund
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATE RATE VALUE
--------- -------- -------- --------------
<S> <C> <C> <C>
REPURCHASE AGREEMENT--0.41%
$ 14,338 Repurchase Agreement dated
06/28/96, with
Daiwa Securities America,
Inc., collateralized
by $13,117,000 U.S. Treasury
Bonds,
7.875% due 02/15/21; proceeds
$14,344,452
(cost--$14,338,000)........... 07/01/96 5.400% $ 14,338,000
--------------
Total Investments (cost--$3,539,593,528
which approximates cost for
federal income tax purposes)--101.12%.... 3,539,593,528
Liabilities in excess of other assets--
(1.12)%.................................. (39,085,122)
--------------
NET ASSETS (applicable to 3,502,349,290
shares of common stock outstanding
at $1.00 per share)--100.00%............. $3,500,508,406
==============
</TABLE>
- --------
* Variable rate securities--maturity dates reflect earlier of reset dates or
maturity dates. The interest rates shown are the current rates as of June
30, 1996.
@ Interest rates shown are discount rates at date of purchase.
Weighted Average Maturity--66 Days
See accompanying notes to financial statements
9
<PAGE>
PaineWebber Retirement Money Fund
- --------------------------------------------------------------------------------
Statement of Operations
For the Year Ended June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest......................................................... $193,778,873
------------
EXPENSES:
Investment advisory and administration........................... 14,023,396
Transfer agency and service fees................................. 5,101,072
Distribution fees................................................ 2,716,309
Reports and notices to shareholders.............................. 672,181
Federal and state registration................................... 386,344
Custody and accounting........................................... 326,971
Legal and audit.................................................. 180,250
Insurance expense................................................ 110,296
Directors' fees.................................................. 8,750
Other expenses................................................... 213,805
------------
23,739,374
------------
NET INVESTMENT INCOME.............................................. 170,039,499
NET REALIZED GAINS FROM INVESTMENT TRANSACTIONS.................... 289,649
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $170,329,148
============
</TABLE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
-------------- --------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income........................ $ 170,039,499 $ 120,983,589
Net realized gains (losses) from investment
transactions................................ 289,649 (645,464)
-------------- --------------
Net increase in net assets resulting from
operations.................................. 170,329,148 120,338,125
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income........................ (170,039,499) (120,983,589)
-------------- --------------
NET INCREASE IN NET ASSETS FROM CAPITAL STOCK
TRANSACTIONS.................................. 534,019,660 516,609,725
-------------- --------------
Net increase in net assets................... 534,309,309 515,964,261
NET ASSETS:
Beginning of year............................ 2,966,199,097 2,450,234,836
-------------- --------------
End of year.................................. $3,500,508,406 $2,966,199,097
============== ==============
</TABLE>
See accompanying notes to financial statements
10
<PAGE>
PaineWebber Retirement Money Fund
- -------------------------------------------------------------------------------
Notes to Financial Statements
- -------------------------------------------------------------------------------
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber RMA Money Fund, Inc. (the "Corporation") was incorporated in the
state 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 Corporation is a
series mutual fund with three funds: PaineWebber Retirement Money Fund (the
"Fund"), PaineWebber RMA Money Market Portfolio and PaineWebber RMA U.S.
Government Portfolio. The financial statements of PaineWebber RMA Money Market
Portfolio and PaineWebber RMA U.S. Government Portfolio 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. 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 the trade date. Realized gains and losses from
investment transactions are calculated using the identified cost method.
Interest income is recorded on an accrual basis. Premiums are amortized and
discounts are accreted as adjustments to interest income and the identified
cost of investments.
Repurchase Agreements--The Fund's custodian takes possession of the collateral
pledged for investments in repurchase agreements. The underlying collateral is
valued daily on a 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, the Fund has the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligations.
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
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.
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
administrator of the Corporation and each of its series. In accordance with
the
11
<PAGE>
PaineWebber Retirement Money Fund
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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 billion.................................................. 0.50%
In excess of $1 billion up to $1.5 billion........................ 0.44%
Over $1.5 billion................................................. 0.36%
</TABLE>
At June 30, 1996, the Fund owed PaineWebber $1,196,956 in investment advisory
and administration fees.
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"), a wholly-owned
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 to PaineWebber under
the Advisory Contract.
In compliance with applicable state securities laws, PaineWebber will
reimburse the Fund if and to the extent that the aggregate operating expenses
in any fiscal year, exclusive of taxes, distribution fees, interest, brokerage
fees and extraordinary expenses, exceed limitations imposed by various state
regulations. Currently, the most restrictive limitation applicable to the Fund
is 2.5% of the first $30 million of average daily net assets, 2.0% of the next
$70 million and 1.5% of any excess over $100 million. For the year ended June
30, 1996, no reimbursements were required pursuant to the above limitation.
DISTRIBUTION PLAN
PaineWebber is the distributor of the Fund's shares and the exclusive dealer
for the sale of those shares. Under the plan of distribution, the Fund is
authorized to pay PaineWebber a distribution fee, which is accrued daily and
paid monthly, at an annual rate of up to 0.15% of the Fund's average daily net
assets. Currently, PaineWebber is compensated for its services as distributor
at an annual rate of 0.08% of the Fund's average daily net assets. At June 30,
1996, the Fund owed PaineWebber $233,203 in distribution fees.
TRANSFER AGENCY SERVICE FEES
The Fund pays 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 Fund's transfer agent. For the year ended June 30, 1996,
PaineWebber earned $2,559,302 in shareholder service fees. At June 30, 1996,
the Fund owed PaineWebber $215,295 for such transfer agency service fees and
reimbursement of out-of-pocket expenses.
OTHER LIABILITIES
At June 30, 1996, the amounts payable for investments purchased and dividends
payable were $50,000,171 and $4,963,757, respectively.
12
<PAGE>
PaineWebber Retirement Money Fund
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
FEDERAL TAX STATUS
The Fund intends to distribute substantially all of its taxable income and to
comply with the other requirements of the Internal Revenue Code applicable to
regulated investment companies. Accordingly, no provision for federal income
taxes is required. In addition, by distributing during each calendar year
substantially all of its net investment income, capital gains and certain
other amounts, if any, the Fund intends not to be subject to a federal excise
tax.
At June 30, 1996, the Fund had a net capital loss carryforward of $1,840,884
which is available as a reduction, to the extent provided in the regulations,
of any future net capital gains realized before the end of fiscal year 2003.
To the extent that the losses are used to offset future capital gains, it is
probable that the gains so offset will not be distributed.
CAPITAL STOCK
There are 10 billion shares of $0.001 par value common stock authorized.
Transactions in common stock, at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
--------------- --------------
<S> <C> <C>
Shares sold.................................... 12,749,231,635 9,662,868,008
Shares repurchased............................. (12,381,362,764) (9,264,795,651)
Dividends reinvested........................... 166,150,789 118,537,368
--------------- --------------
Net increase................................... 534,019,660 516,609,725
=============== ==============
</TABLE>
13
<PAGE>
PaineWebber Retirement Money Fund
- -------------------------------------------------------------------------------
Financial Highlights
- -------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR IS
PRESENTED BELOW:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,
--------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Net investment income.. 0.050 0.047 0.028 0.027 0.044
Dividends from net
investment income..... (0.050) (0.047) (0.028) (0.027) (0.044)
---------- ---------- ---------- ---------- ----------
Net asset value, end of
year.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total investment
return(1)............. 5.13 % 4.83 % 2.75 % 2.78 % 4.40 %
========== ========== ========== ========== ==========
Ratios and Supplemental
Data:
Net assets, end of year
(000's)............... $3,500,508 $2,966,199 $2,450,235 $2,280,840 $2,163,935
Expenses to average net
assets................ 0.70 % 0.78 % 0.77 % 0.79 % 0.79 %
Net investment income
to average net assets. 5.01 % 4.75 % 2.77 % 2.76 % 4.39 %
</TABLE>
- -------
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each year reported, reinvestment of all dividends and other
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each year reported.
14
<PAGE>
PaineWebber Retirement Money Fund
- -------------------------------------------------------------------------------
Report of Ernst & Young LLP,
Independent Auditors
- -------------------------------------------------------------------------------
Board of Directors and Shareholders PaineWebber RMA Money Fund, Inc.
We have audited the accompanying statement of net assets of PaineWebber
Retirement Money Fund (one of the portfolios of the PaineWebber RMA Money
Fund, Inc.) as of June 30, 1996, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
two years in the period then ended and the financial highlights for each of
the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at June 30, 1996, by correspondence with the custodian and brokers. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
PaineWebber Retirement Money Fund at June 30, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each
of the indicated periods, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
New York, New York
August 12, 1996
15
<PAGE>
PaineWebber Retirement Money Fund
- -------------------------------------------------------------------------------
Tax Information
- -------------------------------------------------------------------------------
We are required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within 60 days of the Fund's fiscal year end (June 30,
1996) as to the federal tax status of distributions received by shareholders
during such fiscal year. Accordingly, we are advising you that all of the
distributions paid during the fiscal year were derived from net investment
income. This entire amount is taxable as ordinary income, none of which
qualifies for the dividend received deduction available to corporate
shareholders.
Dividends received by tax-exempt recipients (e.g., IRAs and Keoghs) need not
be reported as taxable income. Some retirement trusts (e.g., corporate, Keogh
and 403(b)(7) plans) may need this information for their annual information
reporting.
Because the Fund's fiscal year is not the calendar year, another notification
will be sent in respect of calendar year 1996. The second notification, which
will reflect the amount to be used by calendar year taxpayers on their federal
income tax returns, will be made in conjunction with Form 1099 DIV and will be
mailed in January 1997. Shareholders are advised to consult their own tax
advisers with respect to the tax consequences of their investment in the Fund.
16
<PAGE>
PaineWebber Retirement Money Fund
- -------------------------------------------------------------------------------
Shareholder Information
- -------------------------------------------------------------------------------
A Special Meeting of Shareholders was held on May 1, 1996, at which the
following votes were cast on the proposals submitted to the Fund's
shareholders. Each series of the Corporation, including the Fund, voted
separately on all matters being considered by each of the three series, except
for the election of directors, as to which the shares of all series of the
Corporation voted together as a single class.
PROPOSAL 1
To elect ten members of its Board of Directors:
<TABLE>
<CAPTION>
FUNDS VOTING TOGETHER
-------------------------
SHARES
SHARES VOTED WITHHOLD
FOR AUTHORITY
------------- -----------
<S> <C> <C>
Margo N. Alexander.................................. 5,023,415,796 570,368,509
Richard Q. Armstrong................................ 5,023,233,669 570,550,636
E. Garrett Bewkes, Jr. ............................. 5,022,087,121 571,697,183
Richard Burt........................................ 5,023,063,892 570,720,413
Mary C. Farrell..................................... 5,023,602,022 570,182,283
Meyer Feldberg...................................... 5,022,953,937 570,830,368
George W. Gowen..................................... 5,022,305,900 571,478,405
Frederic V. Malek................................... 5,022,403,509 571,380,796
Carl W. Schafer..................................... 5,023,142,720 570,641,585
John R. Torell III.................................. 5,023,317,476 570,466,829
</TABLE>
PROPOSAL 2
To vote for or against the ratification of the selection of Ernst & Young LLP
as the independent auditors for the Fund's fiscal year ended June 30, 1996:
SHARES VOTED SHARES VOTED
FOR AGAINST SHARES ABSTAIN
------------- ------------ --------------
1,573,144,210 16,327,874 188,167,270
PROPOSAL 3
To vote for or against the following changes to the Fund's fundamental
investment restrictions and policies:
SHARES VOTED SHARES VOTED
FOR AGAINST SHARES ABSTAIN
------------- ------------ --------------
Modification of fundamental
restriction on portfolio
diversification for
diversified funds: 1,537,664,271 39,633,153 200,341,930
Modification of fundamental
restriction on concentration: 1,537,631,849 39,665,575 200,341,930
17
<PAGE>
PaineWebber Retirement Money Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHARES VOTED SHARES VOTED
FOR AGAINST SHARES ABSTAIN
------------- ------------ --------------
Modification of fundamental
restriction on senior securities
and borrowing: 1,535,911,708 41,383,715 200,343,931
Modification of fundamental
restriction on making loans: 1,536,838,263 40,459,161 200,341,930
Modification of fundamental
restriction on underwriting
securities: 1,537,601,888 39,695,536 200,341,930
Modification of fundamental
restriction on real estate
investments: 1,537,530,628 39,766,796 200,341,930
Modification of fundamental
restriction on investing in
commodities: 1,533,980,817 43,316,608 200,341,929
Elimination of fundamental
restriction on pledging portfolio
securities: 1,536,929,560 40,367,864 200,341,930
Elimination of fundamental
restriction on margin
transactions: 1,535,361,892 41,935,532 200,341,930
Elimination of fundamental
restriction on short sales: 1,535,517,629 41,779,795 200,341,930
Elimination of fundamental
restriction on investments in
oil, gas and mineral leases and
programs: 1,536,336,388 40,961,036 200,341,930
Elimination of fundamental
restriction on investments in
other investment companies: 1,537,173,585 40,123,839 200,341,930
PROPOSAL 4
To vote for or against the approval of Amended and Restated Articles of
Incorporation:
SHARES VOTED SHARES VOTED
FOR AGAINST SHARES ABSTAIN
------------- ------------ --------------
4,861,894,257 102,920,459 628,969,589
(Broker non-votes and abstentions are included within the "Shares Withhold
Authority" and "Shares Abstain" totals.)
18
<PAGE>
- -----------------------------------------
BOARD OF DIRECTORS
E. Garrett Bewkes, Jr.
Chairman Margo N. Alexander
Richard Q. Armstrong
Richard Burt
Mary C. Farrell
Meyer Feldberg
George W. Gowen
Frederic V. Malek
Carl W. Schafer
John R. Torell III
- -----------------------------------------
PRINCIPAL OFFICERS
Margo N. Alexander
President
Victoria E. Schonfeld
Vice President
Dianne E. O'Donnell
Vice President and Secretary
Julian F. Sluyters
Vice President and Treasurer
- -----------------------------------------
INVESTMENT ADVISER,
ADMINISTRATOR AND
DISTRIBUTOR
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
- -----------------------------------------
SUB-ADVISER AND
SUB-ADMINISTRATOR
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
- -----------------------------------------
This report is not to be used in
connection with the offering of shares
of the Fund unless accompanied or
preceded by an effective prospectus.
(C)1996 PaineWebber Incorporated
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