<PAGE>
ANNUAL REPORT
August 20, 1997
Dear Shareholder,
We are pleased to present you with the annual report for PaineWebber RMA
Money Market Portfolio, PaineWebber RMA U.S. Government Portfolio and
PaineWebber RMA Tax-Free Fund, Inc. for the fiscal year ended June 30, 1997.
GENERAL MARKET OVERVIEW
- -------------------------------------------------------------------------------
Early in the period, uncertainty over the direction of interest rates
unsettled what was already a jittery bond market. By mid-summer 1996, a
moderating economy helped bolster the market for a short period of time, a
situation that was, however, only fleeting as renewed fears of an overheating
economy quickly re-emerged. This pattern would repeat itself throughout the
fall and into the new year.
The Federal Reserve's (the "Fed") decision to raise short-term interest
rates to 5.5% in March resulted in virtually every bond sector posting a
negative total return at the end of the first quarter of 1997. The high yield
sector was the exception, as gains in January and February more than offset the
softness following the Fed move. Then, on April 28, 1997, the report of the
Employment Cost Index (ECI)--considered to be the most comprehensive
wage-inflation indicator, and critical to Fed policy--indicated a very
positive inflation picture. This information, plus positive news on an agreed
upon framework by President Clinton and the Republicans to balance the budget
by 2002, and an atypical paydown in federal debt, turned market sentiment
extremely bullish. Bonds rallied strongly, sending the yield on the long bond
from 7.1% on March 31, 1997 to 6.8% on June 30, 1997. Furthermore, all fixed
income market sectors contributed positively to overall performance; however,
the high yield sector again outperformed others as investors" willingness to
accept higher credit risk produced higher returns.
PORTFOLIO REVIEW
Throughout the period, the portfolios maintained slightly higher average
weighted maturities than their peers, in response to economic data indicating
low inflation with slight economic growth.
- -------------------------------------------------------------------------------
PAINEWEBBER RMA MONEY MARKET PORTFOLIO
PaineWebber RMA Money Market Portfolio's net assets totalled $8.7 billion
as of June 30, 1997. The Portfolio's current yield for the seven-day period
ended June 30, 1997 was 5.03%. The Portfolio's weighted average maturity was
67 days as of June 30, 1997.
1
<PAGE>
ANNUAL REPORT
- -------------------------------------------------------------------------------
PAINEWEBBER RMA U.S. GOVERNMENT PORTFOLIO
PaineWebber RMA U.S. Government Portfolio's net assets totalled $1.1
billion as of June 30, 1997. The Portfolio's current yield for the seven-day
period ended June 30, 1997 was 4.93%. As of June 30, 1997, the Portfolio's
weighted average maturity was 70 days.
- -------------------------------------------------------------------------------
PAINEWEBBER RMA TAX-FREE FUND
PaineWebber RMA Tax-Free Fund's net assets totalled $2.1 billion as of
June 30, 1997. The Fund's current yield for the seven-day period ended June 30,
1997 was 3.42%. The Fund maintained a weighted average maturity of 45 days as of
June 30, 1997. In addition, the Fund did not invest in any securities subject to
the federal alternative minimum tax for individual taxpayers.
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. Although we plan to maintain the Portfolios' and the Fund's current
posture, every new economic number released will be closely scrutinized.
Inflation is always a concern and, as such, will be carefully monitored.
Investment decisions for the Fund and the Portfolios 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 our emphasis on
security, quality and liquidity.
2
<PAGE>
ANNUAL REPORT
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
Portfolios and 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.
3
<PAGE>
PAINEWEBBER RMA MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--9.27%
$ 30,000 United States Treasury
Bills ...................... 03/05/98 5.200%@ $ 28,929,666
30,000 Federal Farm Credit Bank ..... 07/01/97 5.550 30,000,000
317,550 Federal Home Loan Bank ....... 07/01/97 to 05/22/98 5.470 to 6.125 317,544,530
50,000 Federal Home Loan Mortgage ... 07/01/97 6.000 50,000,000
60,000 Federal National Mortgage
Association ................ 07/01/97 5.270* 59,977,415
209,900 Student Loan Marketing
Association ................ 09/12/97 to 04/07/98 5.630 to 6.000 209,901,761
107,300 Student Loan Marketing
Association ................ 07/01/97 5.240 to 5.270* 107,293,719
----------------
Total U.S. Government and Agency Obligations
(cost--$803,647,091)......................... 803,647,091
----------------
BANK NOTES--5.42%
DOMESTIC--5.19%
109,700 Bank of America National Trust
& Savings Association....... 07/24/97 to 05/05/98 5.520 to 6.150 109,691,696
20,100 Bankers Trust Company ........ 07/01/97 5.680* 20,101,730
50,000 Bank of America Illinois...... 12/29/97 5.660 49,990,497
30,000 Bank One, Columbus, N.A....... 07/01/97 5.690* 29,979,364
30,000 Comerica Bank N.A. Detroit.... 07/11/97 6.150 30,000,000
30,000 FCC National Bank............. 07/18/97 6.000 29,999,773
20,000 Fifth Third Bank.............. 08/05/97 5.720 20,000,192
75,000 Greenwood Trust Company....... 07/23/97 to 07/28/97 5.560 to 5.620 75,000,000
30,000 Key Bank N.A.................. 11/04/97 5.600 30,000,695
25,000 Old Kent Bank & Trust
Company..................... 11/05/97 5.600 24,994,955
30,000 Wachovia Bank of North
Carolina.................... 07/08/97 5.530 30,000,000
----------------
449,758,902
----------------
YANKEE--0.23%
20,000 National Bank of Canada....... 06/22/98 6.010 20,001,864
----------------
Total Bank Notes (cost--$469,760,766).......... 469,760,766
----------------
BANKERS ACCEPTANCES--0.16%
YANKEE--0.16%
14,000 ABN AMRO Bank N.V.
(cost--$13,956,911)......... 07/21/97 5.540 13,956,911
----------------
CERTIFICATES OF DEPOSIT--21.38%
DOMESTIC--6.69%
240,000 American Express Centurion
Bank ....................... 07/02/97 to 07/23/97 5.550 to 5.570 239,999,999
210,900 Bankers Trust Company ........ 12/10/97 to 06/02/98 5.500 to 6.280 210,843,645
110,000 Bankers Trust Company ........ 07/01/97 5.370 to 5.700* 109,979,556
20,000 Comerica Bank N.A. Detroit ... 03/27/98 6.000 19,984,901
----------------
580,808,101
----------------
YANKEE--14.69%
125,400 ABN AMRO Bank N.V............. 12/04/97 to 05/01/98 5.500 to 6.140 125,367,820
63,750 Canadian Imperial Bank of
Commerce ................... 07/21/97 to 02/27/98 5.580 to 5.760 63,726,336
25,000 Commerzbank AG ............... 07/14/97 5.550 25,000,082
98,400 Creditanstalt-Bankverein ..... 07/28/97 to 06/04/98 5.570 to 6.080 98,406,876
25,000 Den Danske Bank A/S .......... 09/02/97 5.670 25,000,000
112,000 Deutsche Bank AG ............. 07/11/97 to 07/21/97 5.500 to 6.110 111,996,013
35,000 National Westminster Bank
PLC ........................ 06/26/98 5.940 34,980,204
22,000 Rabobank Nederland ........... 03/20/98 5.980 21,996,981
64,800 Royal Bank of Canada ......... 03/03/98 to 03/10/98 5.650 to 5.875 64,744,349
330,000 Skandinaviska Enskilda
Banken ..................... 07/07/97 to 07/25/97 5.580 to 5.590 330,001,871
</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>
$ 372,650 Societe Generale ............. 07/11/97 to 06/16/98 5.470 to 6.350% $ 372,619,204
----------------
1,273,839,736
----------------
Total Certificates of Deposit
(cost--$1,854,647,837)....................... 1,854,647,837
----------------
COMMERCIAL [email protected]%
AGRICULTURE--0.86%
75,000 Cargill Incorporated ......... 07/10/97 to 07/25/97 5.500 74,782,292
----------------
ASSET-BACKED--7.08%
139,725 Asset Securitization
Cooperative Corporation .... 07/01/97 to 08/05/97 5.550 to 5.650 139,442,635
50,000 Delaware Funding
Corporation ................ 07/15/97 5.560 49,891,889
25,000 Eiger Capital Corporation .... 07/25/97 5.580 24,907,000
81,519 Enterprise Funding
Corporation ................ 07/03/97 to 07/22/97 5.550 to 5.590 81,410,015
126,565 Falcon Asset Securitization
Corporation ................ 07/14/97 to 07/25/97 5.550 to 5.570 126,226,897
100,000 New Center Asset Trust ....... 07/10/97 to 07/22/97 5.520 to 5.550 99,824,850
92,315 Triple-A One Funding
Corporation ................ 07/16/97 to 07/18/97 5.550 to 5.570 92,097,358
----------------
613,800,644
----------------
AUTO & TRUCK--5.05%
15,000 Daimler-Benz North America
Corporation ................ 08/18/97 5.670 14,886,600
200,000 Ford Motor Credit Company .... 07/07/97 to 07/21/97 5.540 to 5.550 199,599,333
100,000 General Motors Acceptance
Corporation ................ 07/01/97 6.250 100,000,000
90,000 Hertz Corporation ............ 07/09/97 to 07/14/97 5.530 89,847,925
33,500 PACCAR Financial
Corporation ................ 07/01/97 to 07/16/97 5.500 to 5.600 33,467,945
----------------
437,801,803
----------------
BANKING--9.16%
40,000 Abbey National North
America .................... 08/12/97 to 10/14/97 5.620 to 5.740 39,534,033
145,000 BBL North America
Incorporated ............... 07/02/97 to 07/28/97 5.520 to 5.650 144,775,940
53,600 BCI Funding Corporation ...... 07/07/97 to 08/22/97 5.550 to 5.610 53,475,438
45,000 BEX America Finance
Incorporated ............... 07/09/97 5.560 to 5.570 44,944,344
75,000 BHF Finance (DE)
Incorporated ............... 07/02/97 to 07/11/97 5.530 to 5.540 74,933,170
20,000 Cariplo Finance
Incorporated ............... 07/02/97 5.550 19,996,917
150,000 Cregem North America
Incorporated ............... 07/11/97 to 09/04/97 5.600 to 5.620 149,024,243
45,000 Den Danske Corporation ....... 07/23/97 5.560 44,847,100
37,000 Nordbanken North America
Incorporated ............... 07/01/97 to 07/07/97 5.440 to 5.640 36,982,773
112,000 Unifunding Incorporated ...... 07/03/97 to 12/15/97 5.400 to 5.600 111,375,974
74,500 Vereinsbank Finance (Delaware)
Incorporated ............... 07/09/97 to 09/02/97 5.400 to 5.600 74,202,150
----------------
794,092,082
----------------
BROKER - DEALER--4.70%
55,000 Bear Stearns Companies
Incorporated ............... 07/07/97 to 07/28/97 5.280 to 5.570 54,857,992
75,000 Goldman Sachs Group L.P. ..... 07/02/97 to 07/08/97 5.550 to 5.625 74,964,948
25,000 Lehman Brothers Holdings
Incorporated ............... 10/31/97 5.450 24,538,264
110,000 Merrill Lynch & Company,
Incorporated ............... 07/07/97 to 12/01/97 5.350 to 5.650 109,063,875
145,000 Morgan Stanley Group
Incorporated ............... 07/01/97 to 08/04/97 5.550 to 6.150 144,675,430
----------------
408,100,509
----------------
BUILDING MATERIALS--0.13%
11,000 Sherwin Williams Company ..... 07/28/97 5.550 10,954,213
----------------
</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)
<TABLE>
<C> <S> <C> <C> <C>
BUSINESS PRODUCTS & SERVICES--1.73%
$ 50,000 Block Financial
Corporation ................ 07/23/97 5.600% $ 49,828,889
50,000 Xerox Corporation ............ 07/29/97 5.520 49,785,333
50,335 Xerox Credit Corporation ..... 07/22/97 to 07/23/97 5.520 to 5.560 50,168,453
----------------
149,782,675
----------------
CHEMICALS--0.92%
70,000 Dupont (E. I.) de Nemours &
Company .................... 07/14/97 to 07/15/97 5.520 69,852,800
10,000 Great Lakes Chemical
Corporation ................ 07/21/97 5.530 9,969,278
----------------
79,822,078
----------------
COMPUTERS--0.57%
50,000 IBM Credit Corporation ....... 07/24/97 5.530% 49,823,347
----------------
CONSUMER PRODUCTS--0.57%
25,000 Clorox Company ............... 07/23/97 5.530 24,915,514
25,000 Gillette Company ............. 07/03/97 5.530 24,992,319
----------------
49,907,833
----------------
DRUGS, HEALTH CARE--5.86%
141,000 Abbott Laboratories .......... 07/17/97 to 07/30/97 5.490 to 5.510 140,533,064
30,000 Bayer Corporation ............ 07/08/97 to 09/02/97 5.580 to 5.590 29,836,988
40,000 Lilly (Eli) & Company ........ 07/03/97 5.350 39,988,111
47,400 Novartis Finance
Corporation ................ 07/02/97 to 07/07/97 5.520 to 5.530 47,375,060
151,000 Pfizer Incorporated .......... 07/08/97 to 08/01/97 5.500 150,515,771
100,000 Warner Lambert Company ....... 07/15/97 to 07/17/97 5.500 to 5.510 99,770,611
----------------
508,019,605
----------------
ELECTRONICS--0.98%
62,000 Siemens Corporation .......... 07/18/97 to 07/24/97 5.500 61,827,972
22,922 Vermont American
Corporation ................ 07/14/97 5.500 22,876,475
----------------
84,704,447
----------------
ENERGY--2.28%
16,982 Exxon Imperial U.S.
Incorporated ............... 07/07/97 5.500 16,966,433
150,000 Koch Industries,
Incorporated ............... 07/03/97 to 07/16/97 5.500 to 5.510 149,854,653
31,000 Mobil Australia Finance
Company .................... 07/18/97 5.550 30,918,754
----------------
197,739,840
----------------
FINANCE - CONDUIT--1.17%
16,653 MetLife Funding
Incorporated ............... 07/09/97 5.500 16,632,647
35,000 SBNSW (Delaware)
Incorporated ............... 09/18/97 5.570 34,572,193
50,000 UBS Finance (Delaware)
Incorporated ............... 07/14/97 5.540 49,899,972
----------------
101,104,812
----------------
FINANCE - CONSUMER--0.57%
50,000 American General Finance
Corporation ................ 07/25/97 5.520 49,816,000
----------------
FINANCE - DIVERSIFIED--0.57%
50,000 Associates Corporation of
North America .............. 07/17/97 5.530 49,877,111
----------------
</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--2.58%
$ 25,000 Credit Suisse Financial
Services Incorporated ...... 08/25/97 5.600% $ 24,786,111
50,000 Dresdner U.S. Finance
Incorporated ............... 07/10/97 5.490 49,931,375
149,329 National Australia Funding
(Delaware) Incorporated .... 07/09/97 to 07/25/97 5.510 to 5.520 149,020,298
----------------
223,737,784
----------------
FOOD, BEVERAGE & TOBACCO--2.65%
39,900 B.A.T. Capital Corporation ... 07/11/97 5.540 39,838,598
120,000 Campbell Soup Company ........ 07/17/97 to 08/21/97 5.260 to 5.520 119,452,532
40,572 Philip Morris Companies,
Incorporated ............... 07/01/97 to 07/02/97 5.520 to 5.550 40,567,772
30,000 Sara Lee Corporation ......... 07/03/97 5.700 29,990,500
----------------
229,849,402
----------------
INSURANCE - PROPERTY/CASUALTY--0.58%
50,000 AIG Funding Incorporated ..... 07/10/97 5.500 49,931,250
----------------
MANUFACTURING - DIVERSIFIED--0.92%
80,000 BTR Dunlop Finance
Incorporated ............... 07/09/97 to 07/17/97 5.520 to 5.540 79,864,800
----------------
METALS & MINING--0.17%
15,000 RTZ America Incorporated ..... 08/11/97 5.650 14,903,479
----------------
MISCELLANEOUS--0.26%
23,400 Beta Finance Incorporated .... 08/04/97 to 10/10/97 5.450 to 5.680 23,134,991
----------------
RETAIL - MERCHANDISE--0.58%
50,000 Sears Roebuck Acceptance
Corporation ................ 07/10/97 5.540 49,930,750
----------------
TELECOMMUNICATIONS--4.39%
45,048 Ameritech Capital Funding
Corporation ................ 07/24/97 5.520 44,889,131
95,000 Ameritech Corporation ........ 07/22/97 to 07/30/97 5.500 to 5.535 94,638,940
25,000 AT & T Capital Corporation ... 07/01/97 5.520 25,000,000
25,000 Bell Atlantic Financial
Services Incorporated ...... 07/25/97 5.580 24,907,000
33,000 Bellsouth Capital Funding
Corporation ................ 07/28/97 5.500 32,863,875
25,000 PacTel Capital Resources ..... 07/10/97 5.500 24,965,625
134,000 SBC Communications Capital
Corporation ................ 07/07/97 to 08/27/97 5.490 to 5.550 133,489,634
----------------
380,754,205
----------------
Total Commercial Paper
(cost--$4,712,235,952)....................... 4,712,235,952
----------------
SHORT-TERM CORPORATE OBLIGATIONS--8.74%
AUTO & TRUCK--0.29%
25,000 Ford Motor Credit Company .... 02/26/98 6.250 25,062,938
----------------
BANKING--0.34%
30,000 Bankers Trust Company ........ 07/01/97 5.680* 30,000,000
----------------
BROKER - DEALER--4.59%
96,350 Bear Stearns Companies
Incorporated ............... 07/03/97 to 06/22/98 5.820 to 6.000 96,350,000
174,300 Bear Stearns Companies
Incorporated ............... 07/01/97 to 07/28/97 5.400 to 5.730* 174,300,000
25,000 Merrill Lynch & Company,
Incorporated ............... 06/10/98 6.080 25,000,000
</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>
$ 77,900 Merrill Lynch & Company,
Incorporated ............... 07/01/97 5.400 to 5.680%* $ 77,896,222
25,000 Morgan Stanley Group
Incorporated ............... 08/14/97 5.763* 25,000,000
----------------
398,546,222
----------------
FINANCE - DIVERSIFIED--0.38%
32,800 CIT Group Holdings
Incorporated ............... 07/01/97 5.580* 32,789,682
----------------
FOOD, BEVERAGE & TOBACCO--0.08%
7,000 Heinz (H.J.) Company ......... 09/15/97 5.500 6,998,310
----------------
INSURANCE--0.58%
50,000 Prudential Funding
Corporation ................ 01/06/98 5.660 50,000,000
----------------
MISCELLANEOUS--2.48%
190,000 Beta Finance Incorporated .... 08/15/97 to 06/10/98 5.550 to 6.120 190,043,579
25,000 Beta Finance Incorporated .... 07/01/97 5.350* 25,000,000
----------------
215,043,579
----------------
Total Short-Term Corporate Obligations
(cost--$758,440,731)......................... 758,440,731
----------------
REPURCHASE AGREEMENT--0.27%
23,386 Repurchase agreement dated
06/30/97 with Citicorp
Securities Incorporated,
collateralized by
$23,560,000 U.S. Treasury
Notes, 6.375% due 05/15/00;
proceeds: $23,389,898
(cost-- $23,386,000) ....... 07/01/97 6.000 23,386,000
----------------
Total Investments (cost--$8,636,075,288 which
approximates cost for federal income tax
purposes)--99.57%............................ 8,636,075,288
Other assets in excess of liabilities--0.43%... 36,979,765
----------------
Net Assets (applicable to 8,676,871,011 shares
of common stock outstanding at $1.00 per
share)--100.00%.............................. $ 8,673,055,053
----------------
----------------
</TABLE>
- -----------------
* Variable rate securities--maturity date reflects earlier of reset date or
stated maturity date. The interest rates shown are the current rates as of
June 30, 1997.
@ Interest rates shown are discount rates at date of purchase.
Weighted average maturity--67 days
See accompanying notes to financial statements
8
<PAGE>
PAINEWEBBER RMA U.S. GOVERNMENT PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- --------- -------------------- ------------------ ---------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--55.46%
$ 25,000 U.S. Treasury Bills ..................................... 08/21/97 to 02/05/98 5.160 to 5.315%@ $ 24,692,458
576,000 U.S. Treasury Notes ..................................... 07/31/97 to 05/15/98 5.000 to 8.750 576,446,575
---------------
Total U.S. Government Obligations (cost--$601,139,033)............... 601,139,033
---------------
REPURCHASE AGREEMENTS--43.90%
45,000 Repurchase Agreement dated 06/30/97 with Citicorp
Securities Incorporated, collateralized by $30,575,000
U.S. Treasury Bonds, 11.250% due 02/15/15; proceeds:
$45,007,500............................................ 07/01/97 6.000 45,000,000
45,000 Repurchase Agreement dated 06/30/97 with Daiwa Securities
America Incorporated, collateralized by $36,757,000
U.S. Treasury Bonds, 11.625% due 11/15/02; proceeds:
$45,007,375............................................ 07/01/97 5.900 45,000,000
45,000 Repurchase Agreement dated 06/30/97 with Deutsche Morgan
Financial Incorporated, collateralized by $31,931,000
U.S. Treasury Bonds, 10.625% due 08/15/15; proceeds:
$45,007,375............................................ 07/01/97 5.900 45,000,000
25,797 Repurchase Agreement dated 06/30/97 with Dresdner
Kleinwort Benson N.A. LLC, collateralized by
$22,656,000 U.S. Treasury Bonds, 8.125% due 05/15/21;
proceeds: $25,801,156.................................. 07/01/97 5.800 25,797,000
45,000 Repurchase Agreement dated 06/30/97 with First Chicago
Capital Markets Incorporated, collateralized by
$45,790,000 U.S. Treasury Notes, 5.000% due 02/15/99;
proceeds: $45,007,438.................................. 07/01/97 5.950 45,000,000
45,000 Repurchase Agreement dated 06/30/97 with Fuji Securities
Incorporated, collateralized by $47,046,000 U.S.
Treasury Notes, 5.500% due 12/31/00; proceeds:
$45,007,413............................................ 07/01/97 5.930 45,000,000
45,000 Repurchase Agreement dated 06/30/97 with Nationsbank
Corporation, collateralized by $37,300,000 U.S.
Treasury Bonds, 8.750% due 05/15/20; proceeds:
$45,007,500............................................ 07/01/97 6.000 45,000,000
45,000 Repurchase Agreement dated 06/30/97 with Nomura
Securities International, collateralized by $31,495,000
U.S. Treasury Bonds, 12.000% due 08/15/13; proceeds:
$45,007,438............................................ 07/01/97 5.950 45,000,000
45,000 Repurchase Agreement dated 06/30/97 with Salomon Brothers
Incorporated, collateralized by $45,334,000 U.S.
Treasury Notes, 6.375% due 05/15/99; proceeds:
$45,007,500............................................ 07/01/97 6.000 45,000,000
45,000 Repurchase Agreement dated 06/30/97 with Smith Barney
Incorporated, collateralized by $45,345,000 U.S.
Treasury Notes, 5.000% due 01/31/99; proceeds:
$45,007,375............................................ 07/01/97 5.900 45,000,000
45,000 Repurchase Agreement dated 06/30/97 with UBS Securities
LLC, collateralized by $45,111,000 U.S. Treasury Notes,
6.375% due 09/30/01; proceeds: $45,007,375............. 07/01/97 5.900 45,000,000
---------------
Total Repurchase Agreements (cost--$475,797,000)..................... 475,797,000
---------------
Total Investments (cost--$1,076,936,033 which approximates cost for
federal income tax purposes)--99.36%............................... 1,076,936,033
Other assets in excess of liabilities 0.64%.......................... 6,930,397
---------------
Net Assets (applicable to 1,084,285,121 shares of common stock
outstanding at $1.00 per share)--100.00%........................... $ 1,083,866,430
---------------
---------------
</TABLE>
- -----------------
@ Interest rates shown are discount rates at date of purchase.
Weighted average maturity--70 days
See accompanying notes to financial statements
9
<PAGE>
PAINEWEBBER RMA MONEY FUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
JUNE 30, 1997
------------------------------
MONEY MARKET U.S. GOVERNMENT
PORTFOLIO PORTFOLIO
------------- ---------------
<S> <C> <C>
INVESTMENT INCOME:
Interest................................ $453,430,756 $ 62,309,483
------------- ---------------
EXPENSES:
Investment advisory and
administration........................ 40,972,909 4,931,890
Transfer agency and service fees........ 4,585,624 512,139
Federal and state registration.......... 1,393,582 310,504
Custody and accounting.................. 821,472 115,786
Reports and notices to shareholders..... 465,724 128,445
Legal and audit......................... 218,531 111,894
Insurance............................... 112,423 21,758
Directors' fees......................... 12,250 12,250
Distribution fees....................... -- 922,763
Other expenses.......................... 84,193 95,356
------------- ---------------
48,666,708 7,162,785
------------- ---------------
NET INVESTMENT INCOME................... 404,764,048 55,146,698
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS.......................... 347,934 10,458
------------- ---------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $405,111,982 $ 55,157,156
------------- ---------------
------------- ---------------
</TABLE>
See accompanying notes to financial statements
10
<PAGE>
PAINEWEBBER RMA MONEY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,
--------------------------------------------------------------
1997 1996
------------------------------ ------------------------------
U.S. U.S.
MONEY MARKET GOVERNMENT MONEY MARKET GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income................... $ 404,764,048 $ 55,146,698 $ 336,992,881 $ 50,112,918
Net realized gains (losses) from
investment transactions............... 347,934 10,458 338,176 (16,273)
-------------- -------------- -------------- --------------
Net increase in net assets resulting
from operations....................... 405,111,982 55,157,156 337,331,057 50,096,645
-------------- -------------- -------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income................... (404,764,048) (55,146,698) (337,693,601) (50,288,868)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS....... 1,150,094,848 (53,654,514) 2,124,829,044 321,921,848
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets... 1,150,442,782 (53,644,056) 2,124,466,500 321,729,625
NET ASSETS:
Beginning of year....................... 7,522,612,271 1,137,510,486 5,398,145,771 815,780,861
-------------- -------------- -------------- --------------
End of year............................. $8,673,055,053 $1,083,866,430 $7,522,612,271 $1,137,510,486
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
See accompanying notes to financial statements
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber RMA Money Fund, Inc. ("Corporation") was organized under the laws
of Maryland on July 2, 1982 and is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, as an open-end
diversified management investment company. The Corporation is a series mutual
fund with three portfolios: 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.
ACQUISITIONS
Effective November 20, 1995, the U.S. Government Portfolio acquired all the
net assets of PaineWebber/Kidder, Peabody Government Money Fund, Inc. ("PW/KP
Government Money Fund") pursuant to a plan of reorganization approved by PW/KP
Government Money Fund shareholders on November 10, 1995. The acquisition was
accomplished by a tax-free exchange of 236,411,466 shares of the U.S. Government
Portfolio for the 236,411,466 shares of PW/KP Government Money Fund outstanding
on November 20, 1995. PW/KP Government Money Fund's net assets at that date,
valued at $236,258,548, including accumulated net realized losses of $952 were
combined with those of the U.S. Government Portfolio.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Effective February 20, 1996, the Money Market Portfolio acquired all the net
assets of PaineWebber/Kidder, Peabody Cash Reserve Fund, Inc. ("PW/KP Cash
Reserve Fund") and PaineWebber/Kidder, Peabody Premium Account Fund ("PW/ KP
Premium Account Fund") pursuant to a plan of reorganization approved by PW/KP
Cash Reserve Fund and PW/KP Premium Account Fund shareholders on February 13,
1996. The acquisition was accomplished by a taxable exchange of 881,401,323
shares of Money Market Portfolio for 881,401,323 shares of PW/KP Cash Reserve
Fund and a tax-free exchange of 528,420,026 shares of Money Market Portfolio for
528,420,026 shares of PW/KP Premium Account Fund outstanding on February 20,
1996. PW/KP Cash Reserve Fund's and PW/KP Premium Account Fund's net assets at
that date, valued at $881,308,148 and $528,254,921, respectively, were combined
with those of the Money Market Portfolio.
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
Advisory Contract, each Fund pays PaineWebber an investment advisory and
administration fee, which is accrued daily and paid monthly, in accordance with
the following schedule:
<TABLE>
<CAPTION>
ANNUAL
AVERAGE DAILY NET ASSETS RATE
- -------------------------------------------------------------------------------------- -----------
<S> <C>
MONEY MARKET PORTFOLIO:
All................................................................................... 0.50%
U.S. GOVERNMENT PORTFOLIO:
Up to $300 million.................................................................... 0.50
In excess of $300 million up to $750 million.......................................... 0.44
Over $750 million..................................................................... 0.36
</TABLE>
At June 30, 1997, the Money Market Portfolio and the U.S. Government Portfolio
owed PaineWebber $3,534,719, and $394,917 respectively, for 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 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
shareholder services and maintaining shareholder accounts. Currently,
PaineWebber is compensated for providing such services at the annual rate of
0.08% of the U.S. Government Portfolio's average daily net assets. No such fees
are charged by PaineWebber for the similar services it provides for the Money
Market Portfolio. At June 30, 1997, the U.S. Government Portfolio owed
PaineWebber $73,513 for such service fees.
TRANSFER AGENCY SERVICE FEES
Each Fund pays PaineWebber an annual fee of $4.00 per active PaineWebber
shareholder account, plus certain out-of-pocket expenses, for services not
provided by the Funds' transfer agent. For these services for the year ended
June 30,
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1997, PaineWebber earned $1,736,778 and $148,113 from the Money Market Portfolio
and the U.S. Government Portfolio, respectively. At June 30, 1997, the Money
Market Portfolio and the U.S. Government Portfolio owed PaineWebber
approximately $151,051 and $11,863, respectively, for such shareholder service
fees and reimbursement of out-of-pocket expenses.
OTHER LIABILITIES
At June 30, 1997, the Money Market Portfolio and the U.S. Government
Portfolio, had dividends payable aggregating $14,337,136 and $1,785,011,
respectively.
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, RMA Money Market Portfolio and RMA 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 RMA Money Market Portfolio and between June
30, 2003 and June 30, 2005 for RMA 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 20 billion $0.001 par value authorized shares of common stock
relating to the Money Market Portfolio and the U.S. Government Portfolio.
Transactions in capital shares, at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,
------------------------------------------------------------------
1997 1996
-------------------------------- --------------------------------
MONEY MARKET U.S. GOVERNMENT MONEY MARKET U.S. GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold....................................... 46,081,179,686 5,743,052,232 36,981,794,128 5,529,576,191
Shares issued in connection with the acquisition
of:
PW/KP Cash Reserve Fund......................... -- -- 881,401,323 --
PW/KP Government Money Fund..................... -- -- -- 236,411,466
PW/KP Premium Account Fund...................... -- -- 528,420,026 --
Shares repurchased................................ (45,323,952,320) (5,850,657,192) (36,593,662,079) (5,492,802,034)
Dividends reinvested.............................. 392,867,482 53,950,446 326,875,646 48,736,225
--------------- --------------- --------------- ---------------
Net increase (decrease) in shares outstanding..... 1,150,094,848 (53,654,514) 2,124,829,044 321,921,848
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
</TABLE>
14
<PAGE>
PAINEWEBBER RMA MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH YEAR IS
PRESENTED BELOW:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,
---------------------------------------------------------------------------
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................... 0.049 0.051 0.049 0.030 0.029
Dividends from net investment income.... (0.049) (0.051) (0.049) (0.030) (0.029)
------ --------- --------- --------- ------
Net asset value, end of year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ --------- --------- --------- ------
------ --------- --------- --------- ------
Total investment return(1).............. 5.04% 5.25% 5.00% 2.95% 2.98%
------ --------- --------- --------- ------
------ --------- --------- --------- ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's)......... $8,673,055 $7,522,612 $5,398,146 $4,337,009 $4,031,398
Expenses to average net assets.......... 0.59% 0.60%(2) 0.59% 0.59% 0.59%
Net investment income to average net
assets................................. 4.94% 5.14%(2) 4.91% 2.98% 2.95%
</TABLE>
- -----------------
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each year reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each year reported.
(2) These ratios include non-recurring acquisition expenses of 0.01%.
15
<PAGE>
PAINEWEBBER RMA U.S. GOVERNMENT PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH YEAR IS
PRESENTED BELOW:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,
---------------------------------------------------------------------------
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 0.049 0.046 0.027 0.028
Dividends from net investment income.... (0.048) (0.049) (0.046) (0.027) (0.028)
------ --------- --------- --------- ------
Net asset value, end of year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ --------- --------- --------- ------
------ --------- --------- --------- ------
Total investment return(1).............. 4.88% 5.04% 4.67% 2.74% 2.83%
------ --------- --------- --------- ------
------ --------- --------- --------- ------
RATIOS/SUPPLEMENT DATA:
Net assets, end of year (000's)......... $1,083,866 $1,137,510 $815,781 $854,928 $880,834
Expenses to average net assets.......... 0.62% 0.65%(2) 0.63% 0.62% 0.61%
Net investment income to average net
assets................................ 4.78% 4.91%(2) 4.55% 2.75% 2.80%
</TABLE>
- -----------------
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each year reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each year reported.
(2) These ratios include non-recurring acquisition expenses of 0.02%.
16
<PAGE>
PAINEWEBBER RMA MONEY FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors and Shareholders
PaineWebber RMA Money Fund, Inc.
We have audited the accompanying statements of net assets of the Money Market
Portfolio and the U.S. Government Portfolio (two of the portfolios comprising
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 indicated therein. These financial statements
and financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
investments owned at June 30, 1997 by correspondence with the custodian and
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Money Market Portfolio and the U.S. Government Portfolio at June 30, 1997, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated periods, in conformity with generally
accepted accounting principles.
[ERNST & YOUNG SIGNATURE]
New York, New York
August 18, 1997
17
<PAGE>
PAINEWEBBER RMA MONEY FUND, INC.
TAX INFORMATION--(UNAUDITED)
We are required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within sixty days of the Fund's fiscal year end (June 30,
1997) as to the federal tax status of distributions received by shareholders
during such fiscal year from each portfolio. Accordingly, we are advising you
that all of the distributions paid during the fiscal year were derived from net
investment income of the Money Market Portfolio and the U.S. Government
Portfolio. These amounts are taxable as ordinary income, none of which qualifies
for the dividend received deduction available to corporate shareholders.
Dividends received by tax-exempt recipients (e.g., IRAs and Keoghs) need not
be reported as taxable income. Some retirement trusts (e.g., corporate, Keogh
and 403(b)(7) plans) may need this information for their annual information
reporting.
Because the Funds' fiscal year is not the calendar year, another notification
will be sent in respect of calendar 1997. The second notification, which will
reflect the amount used by calendar year taxpayers on their federal income tax
returns, will be made in conjunction with Form 1099 DIV and will be mailed in
January 1998. Shareholders are advised to consult their own tax advisers with
respect to the tax consequences of their investment in the Funds.
18
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
STATEMENT OF NET ASSETS JUNE 30, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
ALABAMA--0.29%
$ 6,000 St. Clair County Industrial
Development Board
(National Cement Company
Inc. Project)............... A 4.250% $ 6,000,000
----------------
ALASKA--0.77%
3,600 Alaska Industrial Development
& Export Authority
(Alaska Hotel Property
Inc.)....................... A 4.100 3,600,000
5,000 Anchorage Alaska
Tax Anticipation Notes...... 12/17/97 4.000 5,010,493
7,300 Valdez Marine Terminal Revenue
(Exxon Pipeline Company
Project).................... A 4.000 7,300,000
----------------
15,910,493
----------------
ARIZONA--3.16%
11,200 Apache County Industrial
Development Authority
(Tucson Electric Power
Company Project Series B)... A 4.200 11,200,000
5,000 Apache County Industrial
Development Authority
(Tucson Electric Power
Springerville Project)...... A 4.150 5,000,000
11,600 Maricopa County Pollution
Control
(Arizona Public Service
Company).................... A 4.100 to 4.250 11,600,000
4,200 Phoenix Multi-Family Housing
Authority
(Del Mar Terrace Apartments
Project).................... A 4.100 4,200,000
7,900 Phoenix Multi-Family Housing
Authority
(Southwest Villages
Project).................... A 4.150 7,900,000
8,000 Pima County Industrial
Development Authority
(Tucson Electric Power
Company).................... A 4.200 8,000,000
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 3,534,667
13,900 Salt River Agricultural
Improvement & Power Project
Tax-Exempt Commercial
Paper....................... 08/22/97 to 09/19/97 3.650 to 3.700 13,900,000
----------------
65,334,667
----------------
CALIFORNIA--5.12%
6,000 California Community College
Financing
Tax and Revenue Anticipation
Bonds....................... 07/02/97 4.750 6,000,142
7,500 California Higher Education
Loan Authority
(Student Loans)............. A 3.950 to 4.000 7,500,385
4,500 California Higher Education
Loan Authority
(Student Loans)............. A 3.950 4,500,000
6,100 California Statewide
Communities Development
Authority
Tax and Revenue Anticipation
Notes....................... 06/30/98 4.500 6,141,419
6,100 Fresno County
Tax and Revenue Anticipation
Notes....................... 06/30/98 4.250 6,126,230
11,800 Irvine Improvement Bond Act
1915 Assessment District.... A 3.900 11,800,000
4,000 Los Angeles County
Tax and Revenue Anticipation
Notes....................... 06/30/98 4.500 4,024,880
12,100 Los Angeles County Pension
Obligation Series C......... A 3.900 12,100,000
7,100 Los Angeles Regional Airports
Improvement Corporation
Lease Revenue............... A 4.100 7,100,000
5,000 Riverside County
Tax and Revenue Anticipation
Notes Series A.............. 06/30/98 4.500 5,026,350
8,000 San Bernardino County
Tax and Revenue Anticipation
Notes Series A.............. 06/30/98 4.500 8,049,920
</TABLE>
19
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
</TABLE>
CALIFORNIA--(CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 4,000 Santa Barbara County Schools
Financing Authority
Tax and Revenue Anticipation
Notes....................... 06/30/98 4.250% $ 4,017,200
19,500 South Coast California Local
Education Agency Note
Partners
Tax and Revenue Anticipation
Notes Series A.............. 06/30/98 4.500 19,631,040
3,700 Water and Power of Los
Angeles..................... 10/14/97 3.900 3,700,000
----------------
105,717,566
----------------
COLORADO--1.02%
11,100 Colorado Health Facilities
Authority
(Kaiser Permanente Series
A).......................... A 4.100 11,100,000
10,000 Colorado Housing Finance
Authority
Multi-Family Housing Revenue
Bonds
(Grant Plaza Project)....... A 4.250 10,000,000
----------------
21,100,000
----------------
CONNECTICUT--0.73%
14,500 Connecticut Development
Authority Pollution Control
Revenue
(Connecticut Light & Power
Company Project)............ A 4.050 14,500,000
500 Groton City Connecticut
Bond Anticipation Notes..... 07/10/97 4.000 500,052
----------------
15,000,052
----------------
DELAWARE--1.48%
30,600 Delaware Economic Development
Authority
(Hospital Billing &
Collection Service, Ltd.)... A 4.250 30,600,000
----------------
DISTRICT OF COLUMBIA--0.95%
6,600 District of Columbia Revenue
(Georgetown University
Series C)................... A 4.150 6,600,000
7,000 District of Columbia
Revenue..................... A 4.300 7,000,000
6,000 District of Columbia Revenue
Tax and Revenue Anticipation
Notes Series A.............. 09/30/97 4.500 6,007,644
----------------
19,607,644
----------------
FLORIDA--5.79%
10,000 Broward County School District
Revenue Anticipation Notes
Series C.................... 04/22/98 4.500 10,044,704
10,160 Dade County Aviation
Revenue..................... A 4.150 10,160,000
4,705 Dade County School District... 08/01/97 7.000 4,718,561
5,000 Dade County Water And Sewer
Systems Revenue............. A 4.150 5,000,000
30,795 Florida Local Government
Finance Commission
Tax-Exempt Commercial
Paper....................... 07/31/97 to 09/05/97 3.700 to 3.850 30,795,000
13,090 Florida Municipal Power Agency
Series A
Tax-Exempt Commercial
Paper....................... 08/18/97 to 09/29/97 3.600 to 3.800 13,090,000
4,650 Orange County Health
Facilities Authority
(Adventist Health
Systems).................... A 4.100 4,650,000
6,000 Orange County Health
Facilities Authority
(Mayflower Retirement
Center)..................... A 4.250 6,000,000
5,000 Orange County Health
Facilities Authority
(Pooled Hospital Loan
Program).................... 08/20/97 3.750 5,000,000
1,500 Pinellas County Health
Facilities Authority
Tax-Exempt Commercial
Paper....................... 08/08/97 3.700 1,500,000
</TABLE>
20
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
</TABLE>
FLORIDA--(CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 1,400 Pinellas County Health
Facilities Authority
Tax-Exempt Commercial
Paper....................... A 4.000% $ 1,400,000
7,000 Putnam County Development
Authority Pollution Control
Revenue
(Seminole Electric H-4)
Adjustable Rate Bonds....... 09/15/97 3.550 7,000,000
9,500 Sarasota County Florida Public
Hospital
Tax-Exempt Commercial
Paper....................... 09/04/97 to 09/18/97 3.600 to 3.800 9,500,000
5,650 Sunshine State Government
Finance Commission
Tax-Exempt Commercial
Paper....................... 08/12/97 3.600 5,650,000
5,000 University of North Florida
Foundation Incorporated..... A 4.150 5,000,000
----------------
119,508,265
----------------
GEORGIA--5.18%
26,000 Burke County Development
Authority Pollution Control
(Oglethorpe Power Corp.).... A 4.150 26,000,000
1,045 Clayton County Housing
Authority Multi-Family
Housing Revenue
(Rivers Edge Development)... A 4.200 1,045,000
10,000 Cobb County Housing Authority
Multi-Family Housing Revenue
(Greenhouse Frey Apartment
Project).................... A 4.250 10,000,000
6,500 De Kalb County
Tax Anticipation Notes...... 12/31/97 4.000 6,514,209
10,000 Georgia Municipal Electric
Authority
Tax-Exempt Commercial
Paper....................... A 4.150 10,000,000
4,200 Georgia Municipal Gas
Authority
(Southern Portfolio I
Project D).................. 09/08/97 3.750 4,200,000
32,300 Georgia Municipal Gas
Authority
(Transco Portfolio I Project
B)
Tax-Exempt Commercial
Paper....................... A 4.050 32,300,000
3,500 Georgia State Series B........ 03/01/98 6.750 3,568,702
13,400 Glynn Brunswick Memorial
Hospital
Variable Anticipation
Certificates
(Southeast Georgia
Project).................... A 4.150 13,400,000
----------------
107,027,911
----------------
IDAHO--0.45%
9,200 Power County Pollution Control
Revenue
(FMC Corporation Project)... A 4.050 9,200,000
----------------
ILLINOIS--9.56%
1,600 Chicago Illinois Tender Notes
Series C.................... 10/31/97 4.300 1,602,823
19,200 Chicago O'Hare International
Airport Revenue............. A 4.100 19,200,000
6,700 Chicago Park District
Tax and Revenue Anticipation
Warrants.................... 09/30/97 4.700 6,716,762
17,800 Cook County Illinois.......... A 4.150 17,800,000
4,000 Illinois Development Finance
Authority
(Chicago Symphony
Orchestra).................. A 4.150 4,000,000
16,200 Illinois Development Finance
Authority Pollution Control
Revenue
(Commonwealth Edison)....... A 4.150 16,200,000
16,300 Illinois Educational
Facilities Authority Revenue
Pooled Loan
Tax-Exempt Commercial
Paper....................... 08/11/97 to 09/26/97 3.550 to 3.800 16,300,000
</TABLE>
21
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
</TABLE>
ILLINOIS--(CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 6,000 Illinois Educational
Facilities Authority Revenue
(Shedd Aquarium Society B)
Adjustable Rate Bonds....... 11/20/97 3.850% $ 6,000,000
5,000 Illinois Educational
Facilities Authority Revenue
(Field Museum of Natural
History)
Adjustable Rate Bonds....... 11/19/97 3.900 5,000,000
12,895 Illinois Educational
Facilities Authority Revenue
(Northwestern University)... A 3.750 to 4.300 12,895,000
22,670 Illinois Health Facilities
Authority Revenue
(Central Health and
Northwest Community)........ A 4.175 22,670,000
24,915 Illinois Health Facilities
Authority Revenue
(Elmhurst Memorial
Hospital)................... A 4.200 24,915,000
12,000 Illinois Health Facilities
Authority Revenue
(Evanston Hospital)
Adjustable Rate Bonds....... 04/30/98 to 05/15/98 3.950 to 4.000 12,000,000
17,000 Illinois Health Facilities
Authority Revenue
(Evanston Hospital)
Tax-Exempt Commercial
Paper....................... 10/15/97 to 10/31/97 3.650 to 3.850 17,000,000
7,300 Illinois Health Facilities
Authority Revenue
(Franciscan Sisters)........ A 4.200 7,300,000
8,000 Illinois Health Facilities
Authority Revenue Series C
Pooled Loan................. A 4.150 8,000,000
----------------
197,599,585
----------------
INDIANA--3.08%
27,500 City of Indianapolis Gas
Utility System
Tax-Exempt Commercial
Paper....................... 07/17/97 to 09/29/97 3.600 to 3.800 27,500,000
5,400 Hoosier City of Sullivan
(National Rural Utilities)
Tax-Exempt Commercial Paper 09/16/97 3.700 5,400,000
5,200 Indiana Health Facility
Financing Authority Revenue
(Capital Access)............ A 4.250 5,200,000
5,000 Indianapolis Local Public
Improvement Bond
Bank Notes Series H......... 07/10/97 4.125 5,000,718
1,000 Indianapolis Resource Recovery
Revenue
(Refunding Ogden Martin
Systems Incorporated
Project).................... 12/01/97 6.000 1,009,371
8,000 Mount Vernon Pollution Control
Revenue
(Southern Indiana Gas)...... A 3.950 8,000,000
11,500 Petersburg Pollution Control
Revenue
(Indianapolis Power and
Light Company)
Tax-Exempt Commercial
Paper....................... 08/13/97 to 08/18/97 3.750 to 3.800 11,500,000
----------------
63,610,089
----------------
IOWA--0.86%
17,800 Iowa Finance Authority
(Village Court Project)..... A 4.125 17,800,000
----------------
KANSAS--0.62%
12,900 Burlington Pollution Control
Revenue
(National Rural Utilities)
Tax-Exempt Commercial
Paper....................... 07/21/97 to 08/14/97 3.650 to 3.700 12,900,000
----------------
</TABLE>
22
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
KENTUCKY--2.00%
$ 2,950 Jefferson County Pollution
Control Revenue Bonds
(Louisville Gas & Electric
Company)
Tax-Exempt Commercial
Paper....................... 08/01/97 3.700% $ 2,950,000
8,000 Kentucky Economic Development
Finance Authority
Hospital Facilities Revenue
(Baptist Healthcare Systems
Obligation)................. A 4.100 8,000,000
7,715 Pendleton Multi-County Lease
Revenue
(Kentucky Associates Leasing
Program)
Tax-Exempt Commercial
Paper....................... 08/06/97 to 07/01/98 3.750 to 3.950 7,715,000
22,750 Trimble County Pollution
Control
(Louisville Gas & Electric
Company)
Tax-Exempt Commercial
Paper....................... 07/29/97 to 11/05/97 3.750 to 3.850 22,750,000
----------------
41,415,000
----------------
LOUISIANA--2.83%
9,700..... Calcasieu Parish Industrial
Development Board
Pollution Control Revenue
(Citgo Petrol Corp.)........ A 4.150 9,700,000
4,540 Calcasieu Parish Sales Tax
(Road Improvement).......... A 4.150 4,540,000
11,500 Jefferson Parish Hospital
Service District Hospital
Revenue..................... A 4.150 11,500,000
1,715 Lake Charles Harbor and
Terminal District Revenue
(Reynolds Metals Company)
Adjustable Rate Bonds....... 12/01/97 3.750 1,715,346
8,200 Louisiana Offshore Terminal
Authority Revenue........... A 4.000 to 4.100 8,200,000
12,000 Louisiana Public Facilities
Authority
Pollution Control Revenue
(Ciba Geigy)................ A 4.150 12,000,000
3,000 Louisiana Public Facilities
Authority Health Care
Systems
(Sisters of Charity)
Tax-Exempt Commercial
Paper....................... 09/05/97 3.700 3,000,000
2,000 Plaquemines Port Harbor and
Terminal District
Marine Terminal Facilities
Revenue Electro Coal
Transfer Series A
(Tampa Electric)
Tax-Exempt Commercial
Paper....................... 10/07/97 3.800 2,000,000
5,900 South Louisiana Port
Commission Marine Terminal
Facilities Revenue
(Occidental Petroleum)...... A 4.150 5,900,000
----------------
58,555,346
----------------
MAINE--0.24%
5,000 Cumberland Maine
Tax Anticipation Notes...... 12/16/97 4.000 5,004,763
----------------
MARYLAND--1.69%
9,000 Howard County Series B
Tax-Exempt Commercial
Paper....................... 08/20/97 to 09/10/97 3.750 9,000,000
16,716 Maryland Health & Higher
Education Facilities Revenue
Series C (Johns Hopkins)
Tax-Exempt Commercial
Paper....................... 09/12/97 to 09/22/97 3.800 to 3.900 16,716,000
9,200 University of Maryland
Equipment Tender Notes...... A 4.100 9,200,000
----------------
34,916,000
----------------
</TABLE>
23
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
MASSACHUSETTS--3.16%
$ 11,800 Boston Massachusetts Water And
Sewer Commission Revenue
Series A.................... A 3.900% $ 11,800,000
3,750 Lowell Massachusetts Regional
Transit Authority
Revenue Anticipation
Notes....................... 07/18/97 4.400 3,750,419
5,000 Massachusetts Convention
Center Authority
(Refunding Hynes Convention
Center)..................... 09/01/97 5.700 5,015,649
10,000 Massachusetts Health and
Educational Facilities
Authority
(Capital Asset Program)..... A 3.800 10,000,000
5,400 Massachusetts Health &
Education
(Boston University)
Tax-Exempt Commercial
Paper....................... 08/19/97 3.850 5,400,000
9,000 Massachusetts Health &
Education
(Harvard University)
Tax-Exempt Commercial
Paper....................... 08/26/97 3.750 9,000,000
6,700 Massachusetts Industrial
Finance Agency Resources
Recovery Revenue
(Refunding Ogden Haverhill
Project A).................. A 4.100 6,700,000
5,000 Massachusetts Municipal
Wholesale Electric Company
Power Supply Systems
Revenue..................... A 4.100 5,000,000
8,700 Massachusetts Water Resources
Authority
Tax-Exempt Commercial
Paper....................... 09/15/97 3.650 8,700,000
----------------
65,366,068
----------------
MICHIGAN--3.22%
2,000 Farmington Hills Hospital
Finance Authority Revenue
(Botsford General Hospital
Series B)................... A 4.150 2,000,000
4,000 Michigan Housing Development
Authority
(Shoal Creek)............... A 4.100 4,000,000
7,500 Michigan Municipal Bond
Authority Revenue Series
B........................... 07/02/98 4.500 7,546,200
19,200 Michigan State Notes.......... 09/30/97 4.500 19,246,666
28,420 Michigan Strategic Fund
(Dow Chemical Company)...... A 4.050 28,420,000
5,400 Northville Township Economic
Development Corporation
Limited Obligation Revenue
(Various Thrifty Northville
Incorporated Project)....... A 4.250 5,400,000
----------------
66,612,866
----------------
MINNESOTA--0.29%
6,000 Rochester Health Care
Facilities Revenue
(Mayo Foundation/Mayo
Medical Center)
Tax-Exempt Commercial
Paper....................... 07/22/97 3.700 6,000,000
----------------
MISSISSIPPI--1.29%
4,600 Claiborne County Pollution
Control Revenue
(Southern Mississippi
Electric)
Tax-Exempt Commercial
Paper....................... 09/18/97 3.750 4,600,000
15,500 Harrison County Pollution
Control Revenue
(DuPont).................... A 4.050 15,500,000
6,500 Perry County Pollution Control
Revenue
(Leaf River Forest)......... A 4.250 6,500,000
----------------
26,600,000
----------------
</TABLE>
24
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
MISSOURI--2.20%
$ 2,500 Columbia Special Obligation... A 4.200% $ 2,500,000
12,645 Missouri Environmental
Improvement & Energy
Resource Authority Pollution
Control Revenue
(Union Electric) Adjustable
Rate Bonds.................. 07/01/97 to 07/29/97 3.700 to 3.950 12,645,000
12,400 Missouri Health & Education
Facilities Authority
(SSM Healthcare)............ A 4.150 12,400,000
4,000 Missouri Health & Education
Facilities Authority
(Mehlville School District
Series H)................... 09/08/97 4.500 4,004,371
13,900 Missouri Health & Education
Facilities Authority
(SSM Healthcare)
Tax-Exempt Commercial
Paper....................... 09/08/97 to 09/19/97 3.750 13,900,000
----------------
45,449,371
----------------
MONTANA--0.33%
6,800 Forsyth Pollution Control
Revenue
(Portland General Electric
Series C)................... A 4.150 6,800,000
----------------
NEBRASKA--2.25%
11,100 Lancaster County Hospital
Authority Revenue
(Bryan Memorial Hospital
Project).................... A 4.150 11,100,000
17,265 Nebraska Higher Education Loan
Authority................... A 4.200 17,265,000
18,200 Nebraska Public Power District
Revenue
Tax-Exempt Commercial
Paper....................... 07/28/97 to 08/28/97 3.650 to 3.800 18,200,000
----------------
46,565,000
----------------
NEVADA--1.35%
27,884 Clark County Airport
Improvement Revenue......... A 4.150 27,884,000
----------------
NEW HAMPSHIRE--1.44%
4,000 Carroll County
Tax Anticipation Notes...... 12/29/97 4.100 4,000,000
4,500 Durham Tax Anticipation
Notes....................... 12/30/97 4.250 4,508,825
6,000 New Hampshire Higher Education
Authority Revenue
(Dartmouth College)
Adjustable Rate Bonds....... 06/01/98 3.950 6,000,000
15,200 New Hampshire Housing Finance
Authority Multi-Family
Revenue
(EQR-Bond Partnership
Project).................... A 4.250 15,200,000
----------------
29,708,825
----------------
NEW JERSEY--0.14%
2,900 Mendham Township
Bond Anticipation Notes..... 10/07/97 4.500 2,905,473
----------------
NEW MEXICO--2.42%
13,400 Albuquerque Airport Revenue... A 4.150 13,400,000
10,550 Albuquerque Gross Receipts
Lodges Tax Revenue Series
A........................... A 4.200 10,550,000
14,500 Farmington Pollution Control
Revenue
(Public Service Company of
New Mexico)................. A 4.050 to 4.150 14,500,000
11,635 University of New Mexico
University Revenues......... A 4.150 11,635,000
----------------
50,085,000
----------------
</TABLE>
25
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
NEW YORK--6.97%
$ 4,000 Lindenhurst Union Free School
District
Tax Anticipation Notes...... 06/24/98 4.250% $ 4,008,670
6,500 Nassau County New York
Bond Anticipation Notes
Series D.................... 08/15/97 4.250 6,503,713
6,000 Nassau County New York
General Improvement Series
V........................... 11/01/97 5.125 6,028,603
6,000 Nassau County New York
Tax Anticipation Notes
Series C.................... 09/25/97 4.250 6,009,628
1,815 New York City
General Obligation Bond
Series...................... A 4.150 1,815,000
8,600 New York City
General Obligation Bond
Series
Tax-Exempt Commercial
Paper....................... 08/12/97 to 09/17/97 3.200 to 3.750 8,600,000
21,500 New York City Municipal Water
Finance Authority
Tax-Exempt Commercial
Paper....................... 07/31/97 to 10/24/97 3.650 to 3.800 21,500,000
5,000 New York State
Tax-Exempt Commercial
Paper....................... 08/13/97 3.750 5,000,000
1,000 New York State Energy Research
& Development Authority
Pollution Control Revenue
(Niagara Mohawk)............ A 5.450 1,000,000
2,000 New York State Energy Research
& Development Authority
Pollution Control Revenue
(NYS Electric and Gas)
Adjustable Rate Bonds....... 10/15/97 3.850 2,000,000
7,200 New York State Energy Research
& Development Authority
Pollution Control Revenue
(Orange and Rockland Project
A).......................... A 4.050 7,200,000
11,000 New York State Housing Finance
Agency
(Normandie Court I
Project).................... A 4.000 11,000,000
20,500 New York State Power Authority
Tax-Exempt Commercial
Paper....................... 07/24/97 to 08/19/97 3.650 20,500,000
12,000 Oyster Bay New York
Bond Anticipation Notes..... 10/03/97 4.250 12,014,494
12,500 Suffolk County New York
Tax Anticipation Notes RA
Series I.................... 08/14/97 4.000 12,506,255
8,500 Suffolk County New York
Tax Anticipation Notes RA
Series II................... 09/11/97 4.500 8,509,359
9,700 Suffolk County Water Authority
Bond Anticipation Notes..... A 4.100 9,700,000
----------------
143,895,722
----------------
NORTH CAROLINA--4.49%
15,350 Charlotte Airport Revenue..... A 4.150 15,350,000
10,500 Charlotte Mecklenberg Hospital
Authority
Health Care Systems Revenue
Series D.................... A 4.150 10,500,000
7,000 North Carolina Eastern
Municipal Power
Tax-Exempt Commercial
Paper....................... 07/23/97 3.700 7,000,000
21,300 North Carolina Education and
Medicare
(Duke University)........... A 4.075 21,300,000
2,000 North Carolina Educational
Facility
(Bowman Grey School Medical
Project).................... A 4.150 2,000,000
6,000 North Carolina Educational
Facility
(Duke University Project
Series A)................... A 4.075 6,000,000
</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>
NORTH CAROLINA--(CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 14,000 North Carolina Educational
Facility
(Duke University Project
Series B)................... A 4.075% $ 14,000,000
13,150 North Carolina Municipal Power
Series A
Tax-Exempt Commercial
Paper....................... 07/18/97 to 08/25/97 3.700 to 3.750 13,150,000
3,500 Union County Industrial
Facilities and Pollution
Control
Financing Authority
(Square D Company
Project).................... A 4.125 3,500,000
----------------
92,800,000
----------------
NORTH DAKOTA--1.03%
11,200 Grand Forks Health Care
Facilities Revenue
(The United Hospital Group
Project).................... A 4.150 11,200,000
10,000 Oliver County Pollution
Control Revenue
(Square Butte Electric A)... A 4.100 10,000,000
----------------
21,200,000
----------------
OHIO--1.38%
5,800 Columbus Electric Systems
Revenue..................... A 3.600 5,800,000
12,700 Columbus Sewer Revenue........ A 4.050 12,700,000
10,000 Cuyahoga County Ohio Hospital
Revenue
(Cleveland Clinic Foundation
A).......................... A 4.050 10,000,000
----------------
28,500,000
----------------
OKLAHOMA--0.56%
8,050 Tulsa Industrial Authority
Hospital Revenue
(Hillcrest Medical Center
Project).................... A 4.150 8,050,000
3,575 Tulsa Parking Authority
Revenue
(Williams Center)
Adjustable Rate Bond........ 11/15/97 3.900 3,575,000
----------------
11,625,000
----------------
OREGON--2.19%
5,665 Oregon Housing and Community
Services Department Mortgage
Revenue Single Family
Mortgage Series C........... A 3.950 5,665,000
39,500 Oregon State General
Obligation
(Veterans Welfare).......... A 4.050 to 4.200 39,500,000
----------------
45,165,000
----------------
PENNSYLVANIA--3.86%
33,400 Alleghany County Pollution
Control Revenue
(U.S. Steel)
Tax-Exempt Commercial
Paper....................... 07/30/97 to 09/04/97 3.700 to 3.750 33,400,000
1,900 Beaver County Industrial
Development Authority
Pollution
Control Revenue
(Ohio Edison Company Series
A).......................... 10/01/97 4.300 1,903,251
7,400 Bucks County Industrial
Development Authority
Revenue
(Edgcomb Metals Company).... A 4.125 7,400,000
6,000 Delaware Valley Regional
Finance Authority
Local Government Revenue.... A 4.150 6,000,000
4,600 Delaware Valley Regional
Finance Authority
Local Government Revenue
Series A.................... A 4.150 4,600,000
</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>
PENNSYLVANIA--(CONCLUDED)
<TABLE>
<C> <S> <C> <C> <C>
$ 10,140 Northeastern Pennsylvania
Hospital Authority Revenue
Tax-Exempt Commercial
Paper....................... 09/18/97 3.750% $ 10,140,000
6,900 Northumberland County
Industrial Development
Authority
Pollution Control Revenue
(Merck and Company)......... A 3.850 6,900,000
5,300 Northumberland County
Industrial Development
Authority
Pollution Control Revenue
(Merck and Company Inc
Project Series A)........... A 4.375 5,300,000
4,000 Temple University of the
Commonwealth Systems Of
Higher Education
University Funding
Obligations................. 05/18/98 4.750 4,028,749
----------------
79,672,000
----------------
PUERTO RICO--1.45%
19,050 Puerto Rico Commonwealth
Tax and Revenue Anticipation
Notes....................... 07/30/97 4.000 19,057,551
10,790 Puerto Rico Commonwealth
Government Development Bank
Tax-Exempt Commercial
Paper....................... 08/08/97 to 08/21/97 3.750 to 3.800 10,790,000
----------------
29,847,551
----------------
SOUTH CAROLINA--1.50%
6,200 Greenville County Industrial
Revenue
(Edgcomb Metals Company
Project).................... A 4.125 6,200,000
1,900 Greenville County School
District Tax Anticipation
Notes....................... 03/01/98 4.100 1,903,620
14,200 South Carolina Jobs Economic
Development Authority
Hospital Facilities Revenue
(Baptist Healthcare
Systems).................... A 4.150 14,200,000
8,490 South Carolina Public Service
Authority Refunding Series
A........................... 01/01/98 5.400 to 6.000 8,570,725
----------------
30,874,345
----------------
TENNESSEE--1.82%
3,000 Chattanooga Industrial
Development Board
(Seaboard Project).......... A 3.500 3,000,000
8,000 Metropolitan Nashville &
Davidson Health & Education
(Vanderbilt University)..... 01/15/98 3.650 8,000,000
2,000 Metropolitan Nashville &
Davidson Health & Education
Facility Board Revenue
(Vanderbilt University
Series B)................... 05/01/98 3.950 2,000,000
4,000 Metropolitan Nashville Airport
Authority................... A 4.200 4,000,000
8,600 Metropolitan Nashville &
Davidson Industrial
(Timberlake)................ A 4.200 8,600,000
12,000 Tennessee Local Development
Authority Revenue
Bond Anticipation Notes
Series A.................... A 4.250 12,000,000
----------------
37,600,000
----------------
TEXAS--8.32%
7,260 Bexar County Health Facilities
Development
(Army Retirement
Foundation)................. A 4.125 7,260,000
6,000 Brazos River Harbor Navigation
District
(Dow Chemical)
Tax-Exempt Commercial
Paper....................... 09/11/97 3.800 6,000,000
7,700 Brownsville Utilities
Tax-Exempt Commercial
Paper....................... 08/20/97 3.850 7,700,000
9,550 City of Austin Combined
Utilities System
Tax-Exempt Commercial
Paper....................... 08/19/97 to 10/10/97 3.700 to 3.750 9,550,000
</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>
$ 4,000 City of Houston Water & Sewer
Authority
Tax-Exempt Commercial
Paper....................... 07/21/97 3.600% $ 4,000,000
13,000 Dallas Area Rapid
Transportation Authority
Revenue
Tax-Exempt Commercial
Paper....................... 09/09/97 to 09/12/97 3.700 to 3.750 13,000,000
5,000 Dallas Fort Worth Texas
Regional Airport Revenue
Dallas Fort Worth
International Airport....... 11/01/97 4.000 5,006,607
12,800 Georgetown Higher Education
Finance Corp.
(Southwestern University)... A 4.250 12,800,000
6,300 Gulf Coast Pollution Control
Revenue
(Refunding Exxon Project)
Tax-Exempt Commercial
Paper....................... 07/31/97 3.650 6,300,000
8,000 Harris County Health
Facilities
(Baylor College of Medicine
Project).................... A 4.150 8,000,000
26,100 Harris County Toll Roads...... A 4.050 26,100,000
2,600 Houston Texas General
Obligation
Tax-Exempt Commercial
Paper....................... 11/14/97 3.750 2,600,000
2,200 Port of Corpus Christi
Authority
(Koch Industries)
Tax-Exempt Commercial
Paper....................... 09/10/97 3.850 2,200,000
5,000 Texas A&M University
Tax-Exempt Commercial
Paper....................... 07/24/97 3.850 5,000,000
3,300 Texas Municipal Power Agency
Tax-Exempt Commercial
Paper....................... 09/19/97 3.800 3,300,000
2,240 Texas Public Properties
Finance Corporation
Revenue Refunding Mental
Health and Retardation...... 09/01/97 4.300 2,241,526
24,500 Texas State Tax and Revenue
Anticipation Notes.......... 08/29/97 4.750 24,534,697
2,000 Tom Green County Health
Facilities Development
Corporation
Universal Health Services
San Angelo.................. A 4.100 2,000,000
14,305 University of Texas
(Permanent University
Fund)....................... 08/13/97 to 08/28/97 3.600 to 3.700 14,305,000
10,000 University of Texas Board of
Regents
Tax-Exempt Commercial
Paper....................... 09/23/97 3.800 10,000,000
----------------
171,897,830
----------------
UTAH--0.73%
2,100 Intermountain Power Agency
Series E
Adjustable Rate Bonds....... 09/15/97 3.500 2,100,000
4,400 Intermountain Power Agency
Series 85E
Tax-Exempt Commercial
Paper....................... 09/19/97 3.750 4,400,000
8,500 Salt Lake County Pollution
Control Revenue
(Service Station Holdings
Project British
Petroleum).................. A 4.100 8,500,000
----------------
15,000,000
----------------
VERMONT--0.22%
4,600 Vermont Educational & Health
Buildings Agency
(Norwich University Project
Series A)................... A 4.250 4,600,000
----------------
</TABLE>
29
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATES INTEREST RATES VALUE
- ------------- -------------------- -------------------- ----------------
<C> <S> <C> <C> <C>
WASHINGTON--2.23%
$ 10,000 King County Sewer Revenue
Series A
Tax-Exempt Commercial
Paper....................... 09/10/97 3.800% $ 10,000,000
3,900 Seattle Washington Municipal
Light And Power Revenue
Tax-Exempt Commercial
Paper....................... A 4.150 3,900,000
14,800 Snohomish Public Utility
District.................... A 4.150 14,800,000
5,445 Washington Health Care
Facilities Authority Revenue
(Fred Hutchinson Cancer
Center)..................... A 4.100 5,445,000
11,895 Washington Public Power Supply
Systems Nuclear............. A 4.000 to 4.100 11,895,000
----------------
46,040,000
----------------
WEST VIRGINIA--0.29%
6,000 Marshall County Pollution
Control Revenue
(Mountaineer Carbon Company
British Petroleum).......... A 4.150 6,000,000
----------------
WISCONSIN--1.33%
6,100 City of Oak Creek Pollution
Control Revenue
(Wisconsin Electric Power
Company).................... A 4.150 6,100,000
3,175 Greenfield Refunding Series
A........................... 02/01/98 4.500 3,186,298
14,000 Milwaukee Revenue
School Order Notes Series
B........................... 08/21/97 4.250 14,013,874
4,201 Wisconsin Student Loan
Revenue..................... 09/12/97 3.750 4,201,000
----------------
27,501,172
----------------
WYOMING--0.60%
4,900 Lincoln County Pollution
Control Revenue
(Exxon)..................... A 4.100 4,900,000
3,500 Lincoln County Pollution
Control Revenue
(Pacificorp Project)........ 09/09/97 3.750 3,500,000
4,000 Uinta County Pollution Control
Revenue
(Amoco)
Adjustable Rate Bonds....... 12/01/97 3.900 4,004,893
----------------
12,404,893
----------------
Total Investments
(cost--$2,125,407,497)--102.88%.............. 2,125,407,497
Liabilities in excess of other
assets--(2.88)%................................ (59,487,981)
----------------
Net Assets (applicable to 2,067,062,840 shares
of common stock outstanding at $1.00 per
share)--100.00%.............................. $ 2,065,919,516
----------------
----------------
</TABLE>
- -----------------
A-- Variable Rate Demand Notes and Variable Rate Certificates of Participation
are payable on demand. The interest rates shown are the current rates as of
June 30, 1997 and reset periodically.
Weighted average maturity--45 days
See accompanying notes to financial statements
30
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED
JUNE 30, 1997
------------------
<S> <C>
INVESTMENT INCOME:
Interest.............................. $75,638,132
------------------
EXPENSES:
Investment advisory and
administration...................... 9,479,630
Distribution fees..................... 1,706,584
Transfer agency and service fees...... 671,051
Reports and notices to shareholders... 234,678
Custody and accounting................ 222,586
Federal and state registration........ 198,168
Legal and audit....................... 175,482
Insurance............................. 58,698
Directors' fees....................... 12,250
Other expenses........................ 159,177
------------------
12,918,304
------------------
NET INVESTMENT INCOME................. 62,719,828
NET REALIZED GAINS FROM INVESTMENT
TRANSACTIONS........................ 185,637
------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS..................... $62,905,465
------------------
------------------
</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 YEARS ENDED JUNE 30,
---------------------------------
1997 1996
-------------- -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income................. $ 62,719,828 $ 60,455,403
Net realized gains from investment
transactions........................ 185,637 7,684
-------------- -----------------
Net increase in net assets resulting
from operations..................... 62,905,465 60,463,087
-------------- -----------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income................. (62,719,828) (60,678,153)
-------------- -----------------
NET INCREASE IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS.......... 52,285,794 451,622,833
-------------- -----------------
Net increase in net assets............ 52,471,431 451,407,767
NET ASSETS:
Beginning of year..................... 2,013,448,085 1,562,040,318
-------------- -----------------
End of year........................... $2,065,919,516 $2,013,448,085
-------------- -----------------
-------------- -----------------
</TABLE>
See accompanying notes to financial statements
32
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber RMA Tax-Free Fund, Inc. (the "Fund") was organized under the laws
of Maryland on July 2, 1982 and is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, as an open-end
diversified management investment company.
The preparation of financial statements in accordance with generally accepted
accounting principles requires Fund management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates. Following is a summary of
significant accounting policies:
VALUATION AND ACCOUNTING FOR INVESTMENTS AND INVESTMENT INCOME--Investments
are valued at amortized cost which approximates market value. Investment
transactions are recorded on trade date. Realized gains and losses from
investment transactions are calculated using the identified cost method.
Interest income is recorded on 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 20, 1995, the Fund acquired all the net assets of
PaineWebber/Kidder, Peabody Tax-Exempt Money Fund, Inc. ("PW/KP Tax-Exempt Money
Fund") pursuant to a plan of reorganization approved by PW/KP Tax-Exempt Money
Fund shareholders on November 10, 1995. The acquisition was accomplished by a
tax-free exchange of 395,167,695 shares of the Fund for 395,167,695 shares of
PW/KP Tax-Exempt Money Fund outstanding on November 20, 1995. PW/KP Tax-Exempt
Money Fund's net assets at that date, valued at $395,038,835, including
accumulated net realized losses of $2,135, were combined with those of the Fund.
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.
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS
INVESTMENT ADVISER AND ADMINISTRATOR
The Fund's Board of Directors has approved an Investment Advisory and
Administration Contract ("Advisory Contract") with PaineWebber Incorporated
("PaineWebber"), under which PaineWebber serves as investment adviser and
administrator of the Fund. In accordance with the Advisory Contract, the Fund
pays PaineWebber an investment advisory and administration fee, which is accrued
daily and paid monthly, in accordance with the following schedule:
<TABLE>
<CAPTION>
ANNUAL
AVERAGE DAILY NET ASSETS RATE
- ---------------------------------------------------------------------------------------------------------------- -----------
<S> <C>
Up to $1.0 billion.............................................................................................. 0.50%
In excess of $1.0 billion up to $1.5 billion.................................................................... 0.44
Over $1.5 billion............................................................................................... 0.36
</TABLE>
At June 30, 1997, the Fund owed PaineWebber $765,083 for 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 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
shareholder services and maintaining shareholder accounts. Currently,
PaineWebber is compensated for providing such services at the annual rate of
0.08% of the Fund's average daily net assets. At June 30, 1997, the Fund owed
PaineWebber $137,142 for such service 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 services not
provided by the Fund's transfer agent. For these services for the year ended
June 30, 1997, PaineWebber earned $247,472. At June 30, 1997, the Fund owed
PaineWebber $20,127 for such shareholder service fees and reimbursement of
out-of-pocket expenses.
OTHER LIABILITIES
At June 30, 1997, the amounts payable for investments purchased and dividends
payable aggregated $74,447,643 and $2,327,594, 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.
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS
At June 30, 1997, the Fund had net capital loss carryforward of $631,340. The
capital loss carryforward includes capital loss carryforwards acquired by the
Fund pursuant to its acquisition of PW/KP Tax Exempt Money Fund in the amount of
$2,135. 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.
CAPITAL SHARE TRANSACTIONS
There are 20 billion $0.001 par value authorized shares of common stock.
Transactions in capital shares, at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,
----------------------------------
1997 1996
---------------- ----------------
<S> <C> <C>
Shares sold......................................................................... 13,694,087,087 10,951,139,261
Share issued in connection with the acquisition of RMA Connecticut.................. 19,670,455 --
Shares issued in connection with the acquisition of PW/KP Tax Exempt Money Fund..... -- 395,167,695
Shares repurchased.................................................................. (13,722,257,996) (10,953,673,355)
Dividends reinvested................................................................ 60,786,248 58,989,232
---------------- ----------------
Net increase in shares outstanding.................................................. 52,285,794 451,622,833
---------------- ----------------
---------------- ----------------
</TABLE>
35
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH YEAR IS
PRESENTED BELOW:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,
---------------------------------------------------------------------------
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................... 0.029 0.030 0.030 0.019 0.021
Dividends from net investment income.... (0.029) (0.030) (0.030) (0.019) (0.021)
------ --------- --------- --------- ------
Net asset value, end of year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ --------- --------- --------- ------
------ --------- --------- --------- ------
Total investment return(1).............. 2.98% 3.09% 3.03% 1.88% 2.07%
------ --------- --------- --------- ------
------ --------- --------- --------- ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)....... $2,065,920 $2,013,448 $1,562,040 $1,427,724 $1,248,702
Expenses to average net assets.......... 0.61% 0.61%(2) 0.63% 0.64% 0.65%
Net investment income to average net
assets................................. 2.94% 3.02%(2) 3.00% 1.90% 2.06%
</TABLE>
- -----------------
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each year reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each year reported.
(2) These ratios include non-recurring acquisition expenses of 0.01%.
36
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors and Shareholders
PaineWebber RMA Tax-Free Fund, Inc.
We have audited the accompanying statement of net assets of PaineWebber RMA
Tax-Free Fund, Inc. as of June 30, 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 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 and financial highlights. Our procedures included confirmation of
investments 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
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
PaineWebber RMA Tax-Free Fund, Inc. at June 30, 1997, 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 SIGNATURE]
New York, New York
August 18, 1997
37
<PAGE>
PAINEWEBBER RMA TAX-FREE FUND, INC.
TAX INFORMATION--(UNAUDITED)
We are required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within 60 days of the Fund's fiscal year end (June 30,
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
distributions paid during the fiscal year were federally-exempt interest
dividends, none of which qualifies for the dividend received deduction available
to corporate shareholders. Since the Fund did not invest in any security which
paid interest subject to the federal alternative minimum tax for individual
taxpayers during its fiscal year, none of the dividends paid by the Fund were
subject to such tax.
Because the Fund's fiscal year is not the calendar year, another notification
will be sent in respect of calendar 1997. The second notification, which
reflects any amounts to be used by calendar year taxpayers on their federal
income tax returns, will be made in conjunction with Form 1099 DIV and will be
mailed in January 1998. Shareholders are advised to consult their own tax
advisers with respect to the tax consequences of their investment in the Fund.
38
<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
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-1997 PaineWebber Incorporated
Member SIPC
June 30, 1997
ANNUAL REPORT
