<PAGE>
PaineWebber
--------------------------------------------------------------------------
RETIREMENT
MONEY FUND
JUNE 30, 1997
ANNUAL REPORT
<PAGE>
ANNUAL REPORT
OUTLOOK
================================================================================
As we enter the second half of 1997, the emerging view on the economy has
been for a slowdown in growth rates. While bond market participants have, over
the period, acquired a greater confidence in the Fed's management of monetary
policy, more critically abetting the market's run-up has been a widening
perception that the Greenspan Fed is likely to be pragmatic--and not driven
strictly by classical resource utilization-based economic thought that currently
argues for aggressive monetary tightening. This, in fact, appears to be the
case, as evidenced by the Federal Reserve's decision not to move on interest
rates at the Federal Open Market Committee meeting on August 19, 1997.
Going forward, every economic number released will be closely scrutinized.
Inflation is always a concern and, as such, will be carefully monitored.
Investment decisions for the Fund will continue to be dominated by credit,
quality and liquidity. Although we are interested in maintaining higher yields,
we will not do so by sacrificing the Fund's 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 Alexander /s/ Dennis L. McCauley
MARGO 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 Fund
performed during the fiscal year ended June 30, 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.
2
<PAGE>
PAINEWEBBER RETIREMENT MONEY FUND
STATEMENT OF NET ASSETS JUNE 30, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- --------------- --------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS--6.23%
$120,980 FEDERAL HOME LOAN BANK.. 10/16/97 TO 06/25/98 5.625 TO 6.110% $ 120,980,000
10,000 FEDERAL NATIONAL
MORTGAGE ASSOCIATION... 07/01/97 5.270* 9,998,193
51,000 STUDENT LOAN MARKETING
ASSOCIATION............ 01/08/98 TO 06/02/98 5.750 TO 6.117 51,000,000
62,500 STUDENT LOAN MARKETING
ASSOCIATION............ 07/01/97 5.240 TO 5.260* 62,496,703
--------------
TOTAL U.S. GOVERNMENT AND AGENCY
OBLIGATIONS (COST--$244,474,896)... 244,474,896
--------------
BANK NOTES--6.37%
DOMESTIC--6.37%
33,000 BANK OF AMERICA
ILLINOIS............... 09/26/97 TO 12/29/97 5.660 TO 5.850 32,998,833
20,000 BANK OF AMERICA NATIONAL
TRUST & SAVINGS
ASSOCIATION............ 07/24/97 5.550 20,000,000
45,000 COMERICA BANK, N.A.
DETROIT................ 07/11/97 TO 08/13/97 5.770 TO 6.150 44,999,976
15,000 F.C.C. NATIONAL BANK.... 07/18/97 6.000 14,999,886
25,000 FIFTH THIRD BANK........ 07/29/97 5.570 25,000,000
50,000 GREENWOOD TRUST COMPANY. 07/09/97 TO 07/29/97 5.570 50,000,000
10,000 HUNTINGTON NATIONAL
BANK................... 12/11/97 5.500 9,992,790
17,300 KEYBANK, N.A............ 11/04/97 5.600 17,300,401
20,000 NATIONSBANK OF
CAROLINAS, N.A. ....... 07/15/97 5.540 20,000,000
14,500 OLD KENT BANK & TRUST
COMPANY................ 04/15/98 6.875 14,568,916
--------------
TOTAL BANK NOTES (COST--
$249,860,802)...................... 249,860,802
--------------
BANKERS ACCEPTANCES--0.16%
DOMESTIC--0.16%
6,400 CHASE MANHATTAN
CORPORATION (COST--
$6,378,372)............ 07/23/97 5.530 6,378,372
--------------
CERTIFICATES OF DEPOSIT--20.55%
DOMESTIC--6.57%
110,000 AMERICAN EXPRESS
CENTURION BANK......... 07/03/97 TO 07/23/97 5.550 TO 5.570 110,000,000
65,900 BANKERS TRUST COMPANY... 03/24/98 TO 06/02/98 6.000 TO 6.280 65,881,850
72,000 BANKERS TRUST COMPANY... 07/01/97 5.370 TO 5.700* 71,980,915
10,000 SUNTRUST BANK, ATLANTA.. 07/07/97 5.550 10,000,000
--------------
257,862,765
--------------
YANKEE--13.98%
31,000 ABN-AMRO BANK N.V....... 12/04/97 TO 12/23/97 5.500 TO 5.650 30,982,719
16,000 BARCLAYS BANK PLC....... 06/25/98 5.940 15,990,983
20,000 BAYERISCHE LANDESBANK
GIROZENTRALE........... 07/09/97 5.550 20,000,044
15,000 BAYERISCHE VEREINSBANK
AG..................... 12/04/97 5.500 14,988,714
15,000 CAISSE NATIONALE DE
CREDIT AGRICOLE........ 06/18/98 6.170 15,000,000
45,903 CANADIAN IMPERIAL BANK
OF COMMERCE............ 07/07/97 TO 08/01/97 5.580 TO 5.700 45,903,227
103,500 DEUTSCHE BANK AG........ 07/07/97 TO 10/24/97 5.500 TO 5.830 103,497,089
20,000 ROYAL BANK OF CANADA.... 03/03/98 TO 06/08/98 5.650 TO 6.050 19,986,102
104,000 SKANDINAVISKA ENSKILDA
BANKEN................. 07/07/97 TO 07/25/97 5.580 TO 5.590 104,000,357
143,000 SOCIETE GENERALE........ 07/11/97 TO 06/09/98 5.470 TO 6.200 142,994,620
25,000 SVENSKA HANDELSBANKEN... 09/09/97 5.700 25,001,394
10,000 SWISS BANK CORPORATION.. 03/19/98 5.980 9,998,633
--------------
548,343,882
--------------
TOTAL CERTIFICATES OF DEPOSIT
(COST--$806,206,647)............... 806,206,647
--------------
COMMERCIAL [email protected]%
AGRICULTURE--0.51%
20,000 CARGILL INCORPORATED.... 07/07/97 5.500 19,981,667
--------------
ASSET-BACKED--9.76%
50,000 ASSET SECURITIZATION
COOPERATIVE
CORPORATION............ 07/09/97 TO 08/07/97 5.550 TO 5.650 49,855,508
94,984 EIGER CAPITAL
CORPORATION............ 07/09/97 TO 07/24/97 5.540 TO 5.560 94,806,842
66,286 ENTERPRISE FUNDING
CORPORATION............ 07/11/97 TO 07/31/97 5.540 TO 5.630 66,140,696
80,408 FALCON ASSET
SECURITIZATION
CORPORATION............ 07/09/97 TO 07/25/97 5.550 TO 5.570 80,188,108
20,000 NEW CENTER ASSET TRUST.. 07/10/97 5.520 19,972,400
15,300 PREFERRED RECEIVABLES
FUNDING CORPORATION.... 07/01/97 5.530 15,300,000
56,705 TRIPLE-A ONE FUNDING
CORPORATION............ 07/02/97 TO 07/23/97 5.550 TO 5.590 56,658,560
--------------
382,922,114
--------------
</TABLE>
3
<PAGE>
PAINEWEBBER RETIREMENT MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- -------------- --------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER@--(CONTINUED)
AUTO & TRUCK--2.67%
$ 15,000 DAIMLER-BENZ NORTH
AMERICA CORPORATION.... 08/18/97 5.670% $ 14,886,600
10,000 FORD MOTOR CREDIT
COMPANY................ 07/08/97 5.530 9,989,247
20,000 GENERAL MOTORS
ACCEPTANCE CORPORATION. 07/01/97 6.250 20,000,000
45,000 HERTZ CORPORATION....... 07/10/97 TO 07/16/97 5.530 44,914,746
15,000 PACCAR FINANCIAL
CORPORATION............ 07/02/97 5.510 14,997,704
--------------
104,788,297
--------------
BANKING--10.06%
30,000 ABBEY NATIONAL NORTH
AMERICA................ 08/21/97 TO 10/14/97 5.280 TO 5.740 29,636,675
55,000 BBL NORTH AMERICA
INCORPORATED........... 07/02/97 TO 07/28/97 5.530 TO 5.650 54,946,872
40,000 BCI FUNDING CORPORATION. 08/22/97 TO 09/05/97 5.610 TO 5.630 39,609,683
26,000 BEX AMERICA FINANCE
INCORPORATED........... 07/09/97 5.570 25,967,818
20,000 CANADIAN IMPERIAL
HOLDINGS INCORPORATED.. 07/01/97 5.530 20,000,000
20,000 CARIPLO FINANCE
INCORPORATED........... 07/02/97 5.550 19,996,917
33,000 CREGEM NORTH AMERICA
INCORPORATED........... 08/21/97 TO 08/29/97 5.600 TO 5.610 32,715,505
25,000 DEN DANSKE INCORPORATED. 07/17/97 TO 07/23/97 5.370 TO 5.560 24,930,222
19,229 KFW INTERNATIONAL
FINANCE INCORPORATED... 07/18/97 TO 07/24/97 5.510 TO 5.550 19,174,032
60,000 NORDBANKEN NORTH AMERICA
INCORPORATED........... 07/01/97 TO 12/15/97 5.400 TO 5.640 59,530,092
68,100 UNIFUNDING INCORPORATED. 07/03/97 TO 07/23/97 5.400 TO 5.540 67,996,692
--------------
394,504,508
--------------
BROKER-DEALER--3.63%
10,000 BEAR STEARNS COMPANIES
INCORPORATED........... 07/07/97 5.650 9,990,583
15,000 GOLDMAN SACHS GROUP
L.P.................... 07/08/97 5.625 14,983,594
68,000 LEHMAN BROTHERS HOLDINGS
INCORPORATED........... 07/28/97 TO 09/16/97 5.340 TO 5.630 67,584,829
25,000 MERRILL LYNCH & COMPANY
INCORPORATED........... 07/23/97 5.560 24,915,056
25,000 MORGAN STANLEY GROUP
INCORPORATED........... 07/08/97 5.600 TO 5.630 24,972,719
--------------
142,446,781
--------------
BUILDING MATERIALS--0.97%
38,000 SHERWIN-WILLIAMS
COMPANY................ 07/09/97 TO 07/25/97 5.520 TO 5.600 37,908,329
--------------
BUSINESS SERVICES--1.90%
35,000 BLOCK FINANCIAL
CORPORATION............ 07/18/97 TO 07/23/97 5.600 34,895,778
40,000 PHH CORPORATION......... 07/15/97 TO 09/16/97 5.590 TO 5.600 39,668,424
--------------
74,564,202
--------------
CHEMICALS--0.94%
15,450 DUPONT (E. I.) DE
NEMOURS & COMPANY...... 07/08/97 5.530 15,433,387
10,000 GREAT LAKES CHEMICAL
CORPORATION............ 07/09/97 5.530 9,987,711
11,500 HENKEL CORPORATION...... 07/08/97 5.550 11,487,590
--------------
36,908,688
--------------
COMPUTERS--1.35%
33,125 IBM CREDIT CORPORATION.. 07/21/97 TO 07/28/97 5.530 TO 5.540 32,996,163
20,000 INTERNATIONAL BUSINESS
MACHINES CORPORATION... 07/16/97 5.530 19,953,917
--------------
52,950,080
--------------
CONSUMER PRODUCTS--0.38%
15,000 RUBBERMAID INCORPORATED. 07/10/97 5.530 14,979,262
--------------
DRUGS, HEALTHCARE--1.36%
43,300 NOVARTIS FINANCE
CORPORATION............ 07/01/97 TO 07/02/97 5.520 43,295,400
10,000 PFIZER INCORPORATED..... 07/15/97 5.500 9,978,611
--------------
53,274,011
--------------
ENERGY--1.05%
15,700 EXXON IMPERIAL U.S.
INCORPORATED........... 07/16/97 5.520 15,663,890
25,752 MOBIL AUSTRALIA FINANCE
COMPANY................ 07/18/97 5.550 25,684,508
--------------
41,348,398
--------------
FINANCE--AIRCRAFT--0.89%
35,000 INTERNATIONAL LEASE
FINANCE CORPORATION.... 07/22/97 TO 08/19/97 5.640 TO 5.670 34,862,713
--------------
</TABLE>
4
<PAGE>
PAINEWEBBER RETIREMENT MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- --------------- --------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER@--(CONCLUDED)
FINANCE--CONDUIT--3.20%
$ 81,000 COMPAGNIE BANCAIRE USA
FINANCE CORPORATION.... 07/02/97 TO 09/22/97 5.560 TO 5.600% $ 80,465,126
20,000 METLIFE FUNDING
INCORPORATED........... 07/15/97 5.500 19,957,222
10,000 SVENSKA HANDELSBANKEN
INCORPORATED........... 07/21/97 5.400 9,970,000
15,000 TORONTO-DOMINION
HOLDINGS U.S.A.
INCORPORATED........... 07/16/97 5.500 14,965,625
--------------
125,357,973
--------------
FINANCE--CONSUMER--0.38%
15,000 AMERICAN GENERAL FINANCE
CORPORATION............ 07/29/97 5.540 14,935,367
--------------
FINANCE--INDEPENDENT--0.44%
17,330 NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE
CORPORATION............ 07/09/97 5.500 17,308,819
--------------
FINANCE--RETAIL--0.51%
20,000 AMERICAN EXPRESS CREDIT
CORPORATION............ 07/28/97 5.540 19,916,900
--------------
FINANCE--SUBSIDIARY--3.43%
70,000 CREDITANSTALT FINANCE
INCORPORATED........... 07/23/97 TO 07/28/97 5.540 TO 5.580 69,727,336
45,000 DRESDNER U.S. FINANCE
INCORPORATED........... 07/01/97 5.530 TO 5.540 45,000,000
20,000 NATIONAL AUSTRALIA
FUNDING (DE)
INCORPORATED........... 07/09/97 5.520 19,975,467
--------------
134,702,803
--------------
FOOD, BEVERAGE & TOBACCO--4.81%
95,875 B.A.T. CAPITAL
CORPORATION............ 07/07/97 TO 07/22/97 5.540 TO 5.550 95,696,315
15,700 PHILIP MORRIS CAPITAL
CORPORATION............ 07/17/97 5.550 15,661,273
27,239 PHILIP MORRIS COMPANIES
INCORPORATED........... 07/02/97 5.530 27,234,816
50,000 PEPSICO INCORPORATED.... 07/01/97 6.000 50,000,000
--------------
188,592,404
--------------
MANUFACTURING--DIVERSIFIED--1.01%
40,000 BTR DUNLOP FINANCE
INCORPORATED........... 07/21/97 TO 09/23/97 5.520 TO 5.570 39,728,383
--------------
MISCELLANEOUS--1.43%
56,500 BETA FINANCE
INCORPORATED........... 07/22/97 TO 10/10/97 5.290 TO 5.700 55,976,395
--------------
RETAIL MERCHANDISE--0.38%
15,000 SEARS ROEBUCK ACCEPTANCE
CORPORATION............ 07/14/97 5.570 14,969,829
--------------
TELECOMMUNICATIONS--2.13%
35,000 AT & T CAPITAL
CORPORATION............ 07/01/97 5.530 35,000,000
7,000 BELLSOUTH
TELECOMMUNICATIONS
INCORPORATED........... 07/11/97 5.520 6,989,267
27,000 MCI COMMUNICATIONS
CORPORATION............ 09/08/97 TO 10/20/97 5.570 TO 5.650 26,637,500
15,000 SBC COMMUNICATIONS
CAPITAL CORPORATION.... 08/27/97 5.550 14,868,187
--------------
83,494,954
--------------
UTILITY--ELECTRIC--0.51%
20,000 SOUTHERN COMPANY........ 07/18/97 5.520 19,947,867
--------------
TOTAL COMMERCIAL PAPER (COST--
$2,106,370,744).................... 2,106,370,744
--------------
SHORT-TERM CORPORATE OBLIGATIONS--
12.12%
AUTO & TRUCK--0.42%
16,600 FORD MOTOR CREDIT
COMPANY................ 02/05/98 TO 02/26/98 6.250 TO 6.450 16,643,862
--------------
BANKING--0.92%
20,000 BANKERS TRUST NEW YORK
CORPORATION............ 07/01/97 5.680* 20,000,000
10,000 CHASE MANHATTAN
CORPORATION............ 12/01/97 TO 01/15/98 6.625 TO 7.500 10,057,019
5,850 NATIONSBANK CORPORATION. 01/15/98 6.625 5,876,627
--------------
35,933,646
--------------
BROKER-DEALER--5.85%
79,430 BEAR STEARNS COMPANIES
INCORPORATED........... 07/03/97 TO 06/22/98 5.820 TO 9.125 79,639,144
75,000 BEAR STEARNS COMPANIES
INCORPORATED........... 07/01/97 TO 07/22/97 5.400 TO 5.730* 75,000,000
15,000 MERRILL LYNCH & COMPANY
INCORPORATED........... 03/16/98 5.655 14,998,989
45,000 MERRILL LYNCH & COMPANY
INCORPORATED........... 07/01/97 5.400 TO 5.680* 44,997,826
14,800 MORGAN STANLEY GROUP
INCORPORATED........... 08/14/97 5.763* 14,800,000
--------------
229,435,959
--------------
</TABLE>
5
<PAGE>
PAINEWEBBER RETIREMENT MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- -------------- --------------
<C> <S> <C> <C> <C>
SHORT-TERM CORPORATE OBLIGATIONS--
(CONCLUDED)
COMPUTER--0.51%
$10,000 IBM CREDIT CORPORATION.. 10/07/97 5.800% $ 9,999,919
10,000 IBM CORPORATION......... 01/22/98 5.650 9,997,370
--------------
19,997,289
--------------
FINANCE--CONSUMER--0.71%
23,560 AMERICAN GENERAL FINANCE
CORPORATION............ 03/01/98 7.250 23,787,184
4,100 HOUSEHOLD FINANCE
CORPORATION............ 07/01/97 5.370* 4,099,912
--------------
27,887,096
--------------
FINANCE--DIVERSIFIED--0.60%
13,550 ASSOCIATES CORPORATION
OF NORTH AMERICA....... 07/15/97 TO 03/15/98 6.710 TO 7.300 13,576,461
10,000 CIT GROUP HOLDINGS
INCORPORATED........... 07/01/97 5.580* 9,996,854
--------------
23,573,315
--------------
FOOD, BEVERAGE & TOBACCO--0.24%
9,400 PHILIP MORRIS COMPANIES
INCORPORATED........... 12/01/97 9.250 9,535,152
--------------
INSURANCE--0.51%
20,000 PRUDENTIAL FUNDING
CORPORATION............ 01/06/98 5.660 20,000,000
--------------
MISCELLANEOUS--2.23%
72,000 BETA FINANCE
INCORPORATED........... 08/15/97 TO 06/10/98 5.550 TO 6.120 71,999,927
15,550 BETA FINANCE
INCORPORATED........... 07/01/97 5.350* 15,550,000
--------------
87,549,927
--------------
TELECOMMUNICATIONS--0.13%
5,000 MCI COMMUNICATIONS
CORPORATION............ 02/23/98 6.150 5,003,097
--------------
TOTAL SHORT-TERM CORPORATE
OBLIGATIONS (COST--$475,559,343)... 475,559,343
--------------
REPURCHASE AGREEMENT--0.41%
15,902 REPURCHASE AGREEMENT
DATED 6/30/97 WITH
DAIWA SECURITIES
AMERICA, INC.,
COLLATERALIZED BY
$15,375,000 U.S.
TREASURY BONDS, 7.125%
DUE 2/15/23; PROCEEDS:
$15,904,584 (COST--
$15,902,000)........... 07/01/97 5.850 15,902,000
--------------
TOTAL INVESTMENTS (COST--
$3,904,752,804 WHICH APPROXIMATES
COST FOR FEDERAL INCOME TAX
PURPOSES)--99.54%................. 3,904,752,804
OTHER ASSETS IN EXCESS OF
LIABILITIES--0.46%................ 18,000,303
--------------
NET ASSETS (APPLICABLE TO
3,924,541,941 SHARES OF COMMON
STOCK
OUTSTANDING AT $1.00 PER SHARE)--
100.00%........................... $3,922,753,107
==============
</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, 1997.
@ INTEREST RATES SHOWN ARE DISCOUNT RATES AT DATE OF PURCHASE.
WEIGHTED AVERAGE MATURITY--61 DAYS
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
PAINEWEBBER RETIREMENT MONEY FUND
STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
INTEREST........................................................... $206,272,423
------------
EXPENSES:
INVESTMENT ADVISORY AND ADMINISTRATION............................. 15,211,682
TRANSFER AGENCY AND SERVICE FEES................................... 6,775,941
DISTRIBUTION FEES.................................................. 2,980,373
REPORTS AND NOTICES TO SHAREHOLDERS................................ 1,464,058
FEDERAL AND STATE REGISTRATION..................................... 676,256
CUSTODY AND ACCOUNTING............................................. 374,614
LEGAL AND AUDIT.................................................... 170,341
INSURANCE EXPENSE.................................................. 120,562
DIRECTORS' FEES.................................................... 8,750
OTHER EXPENSES..................................................... 177,345
------------
27,959,922
------------
NET INVESTMENT INCOME.............................................. 178,312,501
NET REALIZED GAINS FROM INVESTMENT TRANSACTIONS.................... 52,049
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $178,364,550
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
JUNE 30, 1997 JUNE 30, 1996
-------------- --------------
<S> <C> <C>
FROM OPERATIONS:
NET INVESTMENT INCOME.......................... $ 178,312,501 $ 170,039,499
NET REALIZED GAINS FROM INVESTMENT TRANSAC-
TIONS......................................... 52,049 289,649
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPER-
ATIONS........................................ 178,364,550 170,329,148
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME.......................... (178,312,501) (170,039,499)
-------------- --------------
NET INCREASE IN NET ASSETS FROM CAPITAL STOCK
TRANSACTIONS.................................. 422,192,652 534,019,660
-------------- --------------
NET INCREASE IN NET ASSETS..................... 422,244,701 534,309,309
NET ASSETS:
BEGINNING OF YEAR.............................. 3,500,508,406 2,966,199,097
-------------- --------------
END OF YEAR.................................... $3,922,753,107 $3,500,508,406
============== ==============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
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 Ex-
change Commission under the Investment Company Act of 1940, as amended, as an
open-end, diversified management investment company. The Corporation is a se-
ries mutual fund with three funds: PaineWebber Retirement Money Fund (the
"Fund"), PaineWebber RMA Money Market Portfolio and PaineWebber RMA U.S. Gov-
ernment Portfolio. The financial statements of PaineWebber RMA Money Market
Portfolio and PaineWebber RMA U.S. Government Portfolio are not included here-
in.
The preparation of financial statements in accordance with generally accepted
accounting principles requires Fund management to make estimates and assump-
tions that affect the reported amounts and disclosures in the financial state-
ments. 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 trans-
actions are recorded on the trade date. Realized gains and losses from invest-
ment transactions are calculated using the identified cost method. Interest in-
come is recorded on an accrual basis. Premiums are amortized and discounts are
accreted as adjustments to interest income and the identified cost of invest-
ments.
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 ac-
crued interest, is at least equal to the repurchase price. In the event of de-
fault of the obligation to repurchase, the Fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under cer-
tain 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 differ-
ences 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 ad-
ministrator of the Corporation and each of its series. In accordance with the
Advisory Contract, the Fund pays PaineWebber an investment advisory and admin-
istration 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>
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
At June 30, 1997, the Fund owed PaineWebber $1,290,578 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.
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 au-
thorized 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 as-
sets. 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,
1997, the Fund owed PaineWebber $253,918 in distribution fees.
TRANSFER AGENCY SERVICE FEES
The Fund paid PaineWebber an annual fee of $4.00 per active PaineWebber share-
holder account, plus certain out-of-pocket expenses, for certain services not
provided by the Fund's transfer agent. For the year ended June 30, 1997,
PaineWebber earned $2,692,218 in shareholder service fees. At June 30, 1997,
the Fund owed PaineWebber $215,984 for such transfer agency service fees and
reimbursement of out-of-pocket expenses.
OTHER LIABILITIES
At June 30, 1997, the dividends payable aggregated $6,333,635.
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 sub-
stantially 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 a net capital loss carryforward of $1,788,835
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 prob-
able 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, 1997 JUNE 30, 1996
--------------- ---------------
<S> <C> <C>
SHARES SOLD................................... 13,353,452,948 12,749,231,635
SHARES REPURCHASED............................ (13,105,386,823) (12,381,362,764)
DIVIDENDS REINVESTED.......................... 174,126,527 166,150,789
--------------- ---------------
NET INCREASE.................................. 422,192,652 534,019,660
=============== ===============
</TABLE>
9
<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,
--------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<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... 0.048 0.050 0.047 0.028 0.027
DIVIDENDS FROM NET
INVESTMENT INCOME...... (0.048) (0.050) (0.047) (0.028) (0.027)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
YEAR................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
TOTAL INVESTMENT
RETURN(1).............. 4.89 % 5.13 % 4.83 % 2.75 % 2.78 %
========== ========== ========== ========== ==========
RATIOS AND SUPPLEMENTAL
DATA:
NET ASSETS, END OF YEAR
(000'S)................ $3,922,753 $3,500,508 $2,966,199 $2,450,235 $2,280,840
EXPENSES TO AVERAGE NET
ASSETS................. 0.75 % 0.70 % 0.78 % 0.77 % 0.79 %
NET INVESTMENT INCOME TO
AVERAGE NET ASSETS..... 4.79 % 5.01 % 4.75 % 2.77 % 2.76 %
</TABLE>
- --------
(1) TOTAL INVESTMENT RETURN IS CALCULATED ASSUMING A $1,000 INVESTMENT ON THE
FIRST DAY OF EACH YEAR REPORTED, REINVESTMENT OF ALL DIVIDENDS AT NET ASSET
VALUE ON THE PAYABLE DATES AND A SALE AT NET ASSET VALUE ON THE LAST DAY OF
EACH YEAR REPORTED.
10
<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 Re-
tirement Money Fund (one of the portfolios of the PaineWebber RMA Money Fund,
Inc.) as of June 30, 1997, 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 in-
dicated 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 au-
dits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial high-
lights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned at June 30, 1997, 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 fi-
nancial 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, 1997, the results of its opera-
tions 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.
LOGO
New York, New York August 18, 1997
11
<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,
1997) as to the federal tax status of distributions received by shareholders
during such fiscal year. Accordingly, we are advising you that all of the dis-
tributions 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 re-
porting.
Because the Fund's fiscal year is not the calendar year, another notification
will be sent in respect of calendar year 1997. 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 1998. Shareholders are advised to consult their own tax ad-
visers with respect to the tax consequences of their investment in the Fund.
12
<PAGE>
================================================================================
DIRECTORS
E. Garrett Bewkes, Jr.
Chairman
Margo N. Alexander
Richard Q. Armstrong
Richard R. Burt
Mary C. Farrell
Meyer Feldberg
George W. Gowen
Frederic V. Malek
Carl W. Schafer
PRINCIPAL OFFICERS
Margo N. Alexander
President
Victoria E. Schonfeld
Vice President
Dianne E. O'Donnell
Vice President and Secretary
Paul H. Schubert
Vice President and Treasurer
Dennis L. McCauley
Vice President
Susan P. Ryan
Vice President
INVESTMENT ADVISER,
ADMINISTRATOR AND DISTRIBUTOR
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
SUB-ADVISER AND SUB-ADMINISTRATOR
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
This report is not to be used in connection with the offering of shares of the
Fund unless accompanied or preceded by an effective prospectus.
<PAGE>
PaineWebber
(C)1997 PaineWebber Incorporated
Member SIPC
