<PAGE>
PAINEWEBBER RETIREMENT MONEY FUND
STATEMENT OF NET ASSETS DECEMBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- --------------- --------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY
OBLIGATIONS--7.25%
$106,505 FEDERAL HOME LOAN BANK.. 01/28/98 TO 12/30/98 5.735 TO 6.000% $ 106,493,763
20,000 FEDERAL HOME LOAN
MORTGAGE CORPORATION... 01/30/98 5.740 19,907,522
10,000 FEDERAL NATIONAL
MORTGAGE ASSOCIATION... 01/06/98 5.894* 9,996,520
53,650 STUDENT LOAN MARKETING
ASSOCIATION............ 01/08/98 TO 11/20/98 5.750 TO 5.850 53,650,000
100,000 STUDENT LOAN MARKETING
ASSOCIATION............ 01/06/98 5.639 TO 5.899* 100,000,000
--------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (COST--$290,047,805)... 290,047,805
--------------
BANK NOTES--2.74%
DOMESTIC--2.74%
15,000 BANK ONE WISCONSIN...... 01/06/98 5.480* 14,990,531
10,000 FCC NATIONAL BANK....... 01/02/98 5.610* 9,997,215
20,000 KEYBANK N.A. ........... 01/02/98 6.120* 19,990,760
5,000 KEYBANK N.A. ........... 03/11/98 5.850 4,999,620
14,500 OLD KENT BANK........... 04/15/98 6.875 14,524,886
25,000 PNC BANK, N.A. ......... 01/02/98 5.600* 24,987,732
10,000 SUNTRUST BANKS
INCORPORATED........... 07/14/98 5.830 9,996,651
10,000 WACHOVIA BANK OF NORTH
CAROLINA............... 10/08/98 5.810 9,997,438
--------------
TOTAL BANK NOTES (COST--
$109,484,833)...................... 109,484,833
--------------
BANKERS ACCEPTANCES--0.25%
DOMESTIC--0.25%
10,000 SUNTRUST BANKS
INCORPORATED (COST--
$9,976,917)............ 01/16/98 5.540 9,976,917
--------------
CERTIFICATES OF DEPOSIT--19.79%
DOMESTIC--3.30%
41,000 BANKERS TRUST NEW YORK
CORPORATION............ 01/02/98 5.640 TO 5.700* 40,992,474
90,900 BANKERS TRUST NEW YORK
CORPORATION............ 03/24/98 TO 12/10/98 5.950 TO 6.280 90,888,135
--------------
131,880,609
--------------
EURO-DOLLAR--1.23%
14,000 ABN-AMRO BANK N.V. ..... 01/05/98 5.880 13,999,960
25,000 BARCLAYS BANK PLC....... 01/09/98 5.600 25,000,055
10,000 WESTDEUTSCHE LANDESBANK
GIROZENTRALE........... 08/03/98 5.820 10,000,561
--------------
49,000,576
--------------
YANKEE--15.26%
16,000 BARCLAYS BANK PLC....... 06/25/98 5.940 15,995,604
35,000 CANADIAN IMPERIAL BANK
OF COMMERCE............ 02/09/98 TO 10/21/98 5.685 TO 5.940 34,990,750
55,700 CREDIT AGRICOLE INDOSUEZ
....................... 09/30/98 TO 12/09/98 5.830 TO 6.000 55,692,428
30,000 CREDIT SUISSE FIRST
BOSTON................. 01/06/98 5.849* 30,000,000
35,000 DEUTSCHE BANK AG........ 01/16/98 5.640 34,999,724
40,000 NATIONAL BANK OF CANADA. 02/06/98 TO 08/10/98 5.700 TO 5.870 40,001,375
16,000 NATIONAL WESTMINSTER
BANK PLC............... 07/30/98 5.790 15,999,118
70,000 ROYAL BANK OF CANADA.... 03/03/98 TO 10/01/98 5.650 TO 6.300 70,008,405
20,100 SOCIETE GENERALE........ 01/02/98 6.180* 20,096,857
164,750 SOCIETE GENERALE........ 01/06/98 TO 10/09/98 5.720 TO 6.200 164,732,209
30,000 SVENSKA HANDELSBANKEN... 01/05/98 TO 09/18/98 5.860 TO 5.900 30,000,017
98,000 SWISS BANK CORPORATION.. 02/18/98 TO 12/18/98 5.740 TO 5.980 97,994,235
--------------
610,510,722
--------------
TOTAL CERTIFICATES OF DEPOSIT
(COST-- $791,391,907).............. 791,391,907
--------------
</TABLE>
3
<PAGE>
PAINEWEBBER RETIREMENT MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- -------------- --------------
<C> <S> <C> <C> <C>
COMMERCIAL [email protected]%
ASSET-BACKED--10.46%
$ 30,000 ASSET SECURITIZATION
COOPERATIVE
CORPORATION............ 01/07/98 6.200% $ 29,969,000
55,000 ATLANTIS ONE FUNDING
CORPORATION............ 01/27/98 TO 01/30/98 5.630 TO 6.100 54,753,803
45,497 DELAWARE FUNDING
CORPORATION............ 01/06/98 TO 01/16/98 5.630 TO 6.000 45,404,017
57,633 ENTERPRISE FUNDING
CORPORATION............ 01/05/98 TO 02/06/98 5.730 TO 5.800 57,483,780
75,000 FALCON ASSET
SECURITIZATION
CORPORATION............ 01/05/98 TO 01/15/98 5.650 TO 6.500 74,918,083
22,000 NEW CENTER ASSET TRUST.. 01/02/98 6.750 21,995,875
64,600 PREFERRED RECEIVABLES
FUNDING CORPORATION.... 01/06/98 TO 02/11/98 5.580 TO 5.900 64,385,710
69,377 TRIPLE-A ONE FUNDING
CORPORATION............ 01/07/98 TO 02/04/98 5.630 TO 6.120 69,224,175
--------------
418,134,443
--------------
AUTO & TRUCK--0.37%
15,000 DAIMLER-BENZ NORTH
AMERICA CORPORATION.... 01/21/98 5.720 14,952,333
--------------
BANKING--12.95%
15,000 ABBEY NATIONAL NORTH
AMERICA................ 02/25/98 5.540 14,873,042
9,420 BANKERS TRUST NEW YORK
CORPORATION............ 03/30/98 5.580 9,291,511
20,000 BANQUE ET CAISSE
D'EPARGNE DE L'ETAT.... 01/20/98 5.710 19,939,728
45,000 BCI FUNDING CORPORATION. 02/06/98 TO 03/02/98 5.690 TO 5.800 44,636,533
20,000 CITICORP................ 05/05/98 5.540 19,618,356
33,770 CREDIT AGRICOLE
INDOSUEZ............... 01/14/98 TO 01/16/98 5.590 TO 5.700 33,695,416
53,000 CREGEM NORTH AMERICA
INCORPORATED........... 02/04/98 TO 02/17/98 5.590 TO 5.700 52,645,295
20,000 DEN DANSKE CORPORATION.. 01/21/98 5.590 19,937,889
35,000 GENERALE BANK
INCORPORATED........... 02/13/98 5.680 34,762,544
83,800 NORDBANKEN NORTH AMERICA
INCORPORATED........... 01/08/98 TO 03/16/98 5.500 TO 5.840 83,380,865
50,000 SAN PAOLO U.S. FINANCIAL
COMPANY................ 01/05/98 TO 01/20/98 5.580 TO 5.610 49,910,479
30,000 SUNTRUST BANKS
INCORPORATED........... 01/16/98 5.860 29,926,750
90,000 UNIFUNDING INCORPORATED. 01/02/98 TO 04/20/98 5.510 TO 5.830 89,656,353
15,910 WESTPAC CAPITAL
CORPORATION............ 03/05/98 5.650 15,752,690
--------------
518,027,451
--------------
BROKER-DEALER--6.85%
15,000 GOLDMAN SACHS GROUP
L.P.................... 09/25/98 5.580 14,379,225
135,000 LEHMAN BROTHERS HOLDINGS
INCORPORATED........... 01/09/98 TO 06/30/98 5.600 TO 6.700 134,302,736
15,510 MERRILL LYNCH & COMPANY
INCORPORATED........... 01/13/98 TO 02/17/98 5.550 TO 5.620 15,478,633
110,000 MORGAN STANLEY, DEAN
WITTER, DISCOVER &
COMPANY................ 01/12/98 TO 01/28/98 5.510 TO 5.900 109,647,937
--------------
273,808,531
--------------
BUSINESS SERVICES--1.09%
14,000 BLOCK FINANCIAL
CORPORATION............ 03/06/98 5.750 13,856,889
30,000 PHH CORPORATION......... 01/21/98 5.950 29,900,833
--------------
43,757,722
--------------
BUILDING MATERIALS--0.13%
5,000 SHERWIN-WILLIAMS
COMPANY................ 01/05/98 5.855 4,996,750
--------------
CHEMICALS--1.73%
20,000 DUPONT (E. I.) DE
NEMOURS & COMPANY...... 01/22/98 5.750 19,932,917
49,500 MONSANTO COMPANY........ 01/05/98 TO 04/07/98 5.520 TO 5.950 49,204,090
--------------
69,137,007
--------------
DRUGS, HEALTHCARE--1.58%
10,000 BAYER CORPORATION....... 01/21/98 5.590 9,968,944
16,000 GLAXO WELLCOME PLC...... 03/03/98 5.720 15,844,925
17,575 NOVARTIS FINANCE
CORPORATION............ 01/07/98 TO 01/12/98 5.820 TO 5.900 17,554,319
20,000 PFIZER INCORPORATED..... 01/20/98 5.750 19,939,306
--------------
63,307,494
--------------
ELECTRONICS--0.20%
8,000 VERMONT AMERICAN
CORPORATION............ 01/29/98 5.780 7,964,036
--------------
ENERGY--3.75%
150,000 KOCH INDUSTRIES
INCORPORATED........... 01/02/98 6.700 149,972,083
--------------
</TABLE>
4
<PAGE>
PAINEWEBBER RETIREMENT MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- -------------- --------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER@--(CONCLUDED)
ENTERTAINMENT--0.87%
$ 35,000 WALT DISNEY COMPANY..... 01/08/98 TO 01/15/98 5.700 TO 6.100% $ 34,948,181
--------------
FINANCE--CONDUIT--1.38%
30,000 COMMERZBANK U.S. FINANCE
INCORPORATED........... 01/28/98 5.890 29,867,475
25,371 SVENSKA HANDELSBANKEN
INCORPORATED........... 01/20/98 5.520 25,297,086
--------------
55,164,561
--------------
FINANCE--CONSUMER--0.62%
25,000 TRANSAMERICA FINANCE
CORPORATION............ 01/21/98 5.700 24,920,833
--------------
FINANCE--SUBSIDIARY--1.62%
25,000 CREDITANSTALT FINANCE
INCORPORATED........... 03/05/98 5.715 24,749,969
40,000 DEUTSCHE BANK FINANCIAL
INCORPORATED........... 01/06/98 TO 01/07/98 5.500 39,967,153
--------------
64,717,122
--------------
FOOD, BEVERAGE & TOBACCO--2.04%
14,585 FORTUNE BRANDS,
INCORPORATED........... 01/14/98 5.850 14,554,189
18,300 GRAND METROPOLITAN
CAPITAL CORPORATION.... 01/07/98 5.880 18,282,066
27,300 HEINZ (H.J.) COMPANY.... 01/26/98 5.950 27,187,198
21,625 SARA LEE CORPORATION.... 01/06/98 6.100 21,606,679
--------------
81,630,132
--------------
INSURANCE--0.37%
15,000 PRUDENTIAL FUNDING
CORPORATION............ 04/01/98 5.720 14,785,500
--------------
MACHINERY--0.45%
18,300 CATERPILLAR FINANCIAL
SERVICES CORPORATION... 04/28/98 5.520 17,971,698
--------------
MANUFACTURING--DIVERSIFIED--1.29%
40,000 BTR DUNLOP FINANCE
INCORPORATED........... 01/07/98 TO 02/18/98 5.510 TO 5.680 39,863,442
11,900 MINNESOTA MINING &
MANUFACTURING COMPANY.. 04/24/98 5.590 11,691,198
--------------
51,554,640
--------------
MISCELLANEOUS--0.99%
40,000 BETA FINANCE
INCORPORATED........... 02/13/98 TO 05/18/98 5.500 TO 5.690 39,521,954
--------------
PRINTING & PUBLISHING--0.84%
19,400 E.W. SCRIPPS COMPANY.... 01/12/98 5.700 19,366,212
14,500 MCGRAW-HILL COMPANIES
INCORPORATED (THE)..... 06/03/98 5.550 14,157,981
--------------
33,524,193
--------------
TELECOMMUNICATIONS--1.97%
7,581 BELL ATLANTIC FINANCIAL
SERVICES INCORPORATION. 01/15/98 TO 01/16/98 5.900 7,562,739
56,237 LUCENT TECHNOLOGIES
INCORPORATED........... 01/08/98 TO 01/09/98 5.800 TO 5.850 56,167,078
15,000 SBC COMMUNICATIONS
INCORPORATED........... 01/22/98 5.500 14,951,875
--------------
78,681,692
--------------
UTILITY--ELECTRIC--1.64%
65,620 SOUTHERN CALIFORNIA
EDISON................. 01/05/98 6.500 65,572,608
--------------
TOTAL COMMERCIAL PAPER (COST--
$2,127,050,964).................... 2,127,050,964
--------------
SHORT-TERM CORPORATE OBLIGATIONS--
15.56%
AUTO & TRUCK--0.42%
16,600 FORD MOTOR CREDIT
COMPANY................ 02/05/98 TO 02/26/98 6.250 TO 6.450 16,609,666
--------------
BANKING--0.37%
5,000 CHASE MANHATTAN
CORPORATION (THE)...... 01/15/98 6.625 5,001,551
4,000 FIRST CHICAGO FINANCIAL
CORPORATION............ 06/01/98 8.500 4,041,944
5,850 NATIONSBANK CORPORATION. 01/15/98 6.625 5,851,883
--------------
14,895,378
--------------
</TABLE>
5
<PAGE>
PAINEWEBBER RETIREMENT MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- -------------- --------------
<C> <S> <C> <C> <C>
SHORT-TERM CORPORATE OBLIGATIONS--
(CONCLUDED)
BROKER-DEALER--7.36%
$135,000 BEAR STEARNS COMPANIES
INCORPORATED........... 01/02/98 TO 01/22/98 5.670 TO 6.029*% $ 135,000,000
54,430 BEAR STEARNS COMPANIES
INCORPORATED........... 01/14/98 TO 06/22/98 5.830 TO 9.125 54,505,524
35,000 LEHMAN BROTHERS HOLDINGS
INCORPORATED........... 01/09/98 TO 01/20/98 5.969 TO 6.011* 35,000,000
6,268 LEHMAN BROTHERS HOLDINGS
INCORPORATED........... 11/01/98 TO 11/10/98 6.590 TO 8.875 6,325,156
10,000 MERRILL LYNCH & COMPANY
INCORPORATED........... 01/02/98 5.680* 9,999,775
30,000 MERRILL LYNCH & COMPANY
INCORPORATED........... 03/16/98 TO 10/09/98 5.655 TO 9.000 30,050,523
14,800 MORGAN STANLEY, DEAN
WITTER, DISCOVER &
COMPANY................ 02/13/98 5.825* 14,800,000
8,575 MORGAN STANLEY, DEAN
WITTER, DISCOVER &
COMPANY................ 03/01/98 9.250 8,621,427
--------------
294,302,405
--------------
BUSINESS SERVICES--0.30%
12,000 FIRST DATA CORPORATION.. 08/07/98 6.190 12,023,312
--------------
COMPUTERS--1.54%
11,500 INTERNATIONAL BUSINESS
MACHINES CORPORATION... 01/22/98 TO 01/28/98 5.650 TO 5.670 11,499,544
40,000 IBM CREDIT CORPORATION.. 01/06/98 TO 03/19/98 5.756 TO 6.029* 39,991,780
10,000 IBM CREDIT CORPORATION.. 05/11/98 6.375 10,019,250
--------------
61,510,574
--------------
FINANCE--AIRCRAFT--0.20%
8,000 INTERNATIONAL LEASE
FINANCE CORPORATION.... 06/15/98 6.250 8,017,351
--------------
FINANCE--CONSUMER--0.59%
23,560 AMERICAN GENERAL FINANCE
CORPORATION............ 03/01/98 7.250 23,615,160
--------------
FINANCE--DIVERSIFIED--0.06%
2,200 ASSOCIATES CORPORATION
OF NORTH AMERICA....... 03/15/98 7.300 2,204,511
--------------
FINANCE--INDEPENDENT--0.37%
15,000 NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE
CORPORATION............ 07/10/98 5.980 15,000,000
--------------
FINANCE--SUBSIDIARY--1.30%
18,000 DEUTSCHE BANK FINANCIAL
INCORPORATED........... 11/17/98 5.920 18,000,000
32,970 NATIONAL AUSTRALIA BANK
LIMITED................ 10/15/98 9.700 33,917,222
--------------
51,917,222
--------------
INSURANCE--1.13%
35,000 PRUDENTIAL FUNDING
CORPORATION............ 01/06/98 TO 10/14/98 5.660 TO 5.840 34,990,111
10,200 USAA CAPITAL
CORPORATION............ 01/09/98 TO 09/18/98 5.800 TO 6.320 10,205,062
--------------
45,195,173
--------------
MISCELLANEOUS--1.80%
72,000 BETA FINANCE
INCORPORATED........... 01/13/98 TO 11/16/98 5.800 TO 6.120 72,000,000
--------------
TELECOMMUNICATIONS--0.12%
5,000 MCI COMMUNICATIONS
CORPORATION............ 02/23/98 6.150 5,000,692
--------------
TOTAL SHORT-TERM CORPORATE
OBLIGATIONS (COST--$622,291,444).. 622,291,444
--------------
REPURCHASE AGREEMENT--0.64%
25,491 REPURCHASE AGREEMENT
DATED 12/31/97 WITH
HONG KONG SHANGHAI
BANKING CORPORATION,
COLLATERALIZED BY
$17,191,000 U.S.
TREASURY BONDS, 12.00%
DUE 08/15/13 (VALUE
$26,001,388); PROCEEDS:
$25,500,205 (COST -
$25,491,000)........... 01/02/98 6.500 25,491,000
--------------
TOTAL INVESTMENTS (COST--
$3,975,734,870 WHICH APPROXIMATES
COST FOR FEDERAL INCOME TAX
PURPOSES)--99.42%................. 3,975,734,870
OTHER ASSETS IN EXCESS OF
LIABILITIES--0.58%................ 23,303,124
--------------
NET ASSETS (APPLICABLE TO
4,000,983,476 SHARES OF COMMON
STOCK
OUTSTANDING AT $1.00 PER SHARE)--
100.00%........................... $3,999,037,994
==============
</TABLE>
- --------
* VARIABLE RATE SECURITIES--MATURITY DATES REFLECT EARLIER OF RESET DATES OR
MATURITY DATES. THE INTEREST RATES SHOWN ARE THE CURRENT RATES AS OF
DECEMBER 31, 1997.
@ INTEREST RATES SHOWN ARE DISCOUNT RATES AT DATE OF PURCHASE.
WEIGHTED AVERAGE MATURITY--67 DAYS
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
PAINEWEBBER RETIREMENT MONEY FUND
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
DECEMBER 31, 1997
(UNAUDITED)
-----------------
<S> <C>
INVESTMENT INCOME:
INTEREST...................................................... $116,501,805
------------
EXPENSES:
INVESTMENT ADVISORY AND ADMINISTRATION........................ 8,271,452
TRANSFER AGENCY AND SERVICE FEES.............................. 3,696,940
DISTRIBUTION FEES............................................. 1,636,456
REPORTS AND NOTICES TO SHAREHOLDERS........................... 782,574
FEDERAL AND STATE REGISTRATION................................ 382,270
CUSTODY AND ACCOUNTING........................................ 204,543
LEGAL AND AUDIT............................................... 102,396
INSURANCE EXPENSE............................................. 77,568
DIRECTORS' FEES............................................... 5,250
OTHER EXPENSES................................................ 178,276
------------
15,337,725
------------
NET INVESTMENT INCOME......................................... 101,164,080
NET REALIZED LOSS FROM INVESTMENT TRANSACTIONS................ (156,648)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......... $101,007,432
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE
DECEMBER 31, 1997 YEAR ENDED
(UNAUDITED) JUNE 30, 1997
----------------- --------------
<S> <C> <C>
FROM OPERATIONS:
NET INVESTMENT INCOME........................ $ 101,164,080 $ 178,312,501
NET REALIZED GAIN (LOSS) FROM INVESTMENT
TRANSACTIONS................................ (156,648) 52,049
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OP-
ERATIONS.................................... 101,007,432 178,364,550
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME........................ (101,164,080) (178,312,501)
-------------- --------------
NET INCREASE IN NET ASSETS FROM CAPITAL STOCK
TRANSACTIONS................................ 76,441,535 422,192,652
-------------- --------------
NET INCREASE IN NET ASSETS................... 76,284,887 422,244,701
NET ASSETS:
BEGINNING OF PERIOD.......................... 3,922,753,107 3,500,508,406
-------------- --------------
END OF PERIOD................................ $3,999,037,994 $3,922,753,107
============== ==============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber RMA Money Fund, Inc. (the "Corporation") was incorporated in the
state of Maryland on July 2, 1982 and is registered with the Securities and Ex-
change Commission under the Investment Company Act of 1940, as amended, as an
open-end, diversified management investment company. The Corporation is a se-
ries mutual fund with three funds: PaineWebber Retirement Money Fund (the
"Fund"), PaineWebber RMA Money Market Portfolio and PaineWebber RMA U.S. Gov-
ernment Portfolio. The financial statements of PaineWebber RMA Money Market
Portfolio and PaineWebber RMA U.S. Government Portfolio are not included here-
in.
The preparation of financial statements in accordance with generally accepted
accounting principles requires Fund management to make estimates and
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 the trade date. Realized gains and losses from
investment transactions are calculated using the identified cost method.
Interest income is recorded on an accrual basis. Premiums are amortized and
discounts are accreted as adjustments to interest income and the identified
cost of investments.
Repurchase Agreements--The Fund's custodian takes possession of the collateral
pledged for investments in repurchase agreements. The underlying collateral is
valued daily on a mark-to-market basis to ensure that the value, including
accrued interest, is at least equal to the repurchase price. In the event of
default of the obligation to repurchase, the Fund has the right to liquidate
the collateral and apply the proceeds in satisfaction of the 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 are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these differ-
ences are permanent in nature, such amounts are reclassified within the capital
accounts based on their federal tax-basis treatment; temporary differences do
not require reclassification.
CONCENTRATION OF RISK
The ability of the issuers of the debt securities held by the Fund to meet
their obligations may be affected by economic developments, including those
particular to a specific industry or region.
INVESTMENT ADVISER AND ADMINISTRATOR
The Corporation's board of directors has approved an Investment Advisory and
Administration Contract ("Advisory Contract") with PaineWebber Incorporated
("PaineWebber"), under which PaineWebber serves as investment adviser and ad-
ministrator of the Corporation and each of its series. In accordance with the
Advisory Contract, the Fund pays PaineWebber an investment advisory and admin-
istration fee, which is accrued daily and paid monthly, in accordance with the
following schedule:
<TABLE>
<CAPTION>
ANNUAL
AVERAGE DAILY NET ASSETS RATE
- ------------------------ ------
<S> <C>
UP TO $1.0 BILLION....................................................... 0.50%
IN EXCESS OF $1.0 BILLION UP TO $1.5 BILLION............................. 0.44
OVER $1.5 BILLION........................................................ 0.36
</TABLE>
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
At December 31, 1997, the Fund owed PaineWebber $1,372,741 in investment advi-
sory and administration fees.
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"), a wholly owned
asset management subsidiary of PaineWebber, serves as sub-adviser and sub-
administrator of the Fund pursuant to a Sub-Advisory and Sub-Administration
Contract between PaineWebber and Mitchell Hutchins. In accordance with that
contract, PaineWebber (not the Fund) pays Mitchell Hutchins a fee, computed
daily and paid monthly, at an annual rate of 20% of the fee paid by the Fund to
PaineWebber under the Advisory Contract.
DISTRIBUTION PLAN
PaineWebber is the distributor of the Fund's shares and the exclusive dealer
for the sale of those shares. Under the plan of distribution, the Fund is au-
thorized to pay PaineWebber a service fee, which is accrued daily and paid
monthly, at an annual rate of up to 0.15% of the Fund's average daily net as-
sets. Prior to February 12, 1998, PaineWebber was compensated for its services
under the plan at an annual rate of 0.08% of the Fund's average daily net as-
sets. Effective February 12, 1998, the board of directors approved an increase
in the annual rate of such fee to 0.125%. At December 31, 1997, the Fund owed
PaineWebber $271,081 in distribution fees.
TRANSFER AGENCY SERVICE FEES
Prior to August 1, 1997, the Fund paid PaineWebber an annual fee of $4.00 per
active PaineWebber shareholder account, plus certain out-of-pocket expenses,
for certain services not provided by the Fund's transfer agent. For these serv-
ices for the month ended July 31, 1997, PaineWebber earned $251,757 in service
fees from the Fund.
Subsequent to July 31, 1997, PaineWebber provides transfer agency related
services to the Fund pursuant to a delegation of authority from PFPC, Inc., the
Funds transfer agent, and is compensated for these services by PFPC, Inc., not
the Fund. For the five months ended December 31, 1997, PaineWebber received ap-
proximately 52% of the total transfer agency service fees collected by PFPC,
Inc. from the Fund.
OTHER LIABILITIES
At December 31, 1997, dividends payable aggregated $7,571,745.
FEDERAL TAX STATUS
The Fund intends to distribute substantially all of its taxable income and to
comply with the other requirements of the Internal Revenue Code applicable to
regulated investment companies. Accordingly, no provision for federal income
taxes is required. In addition, by distributing during each calendar year sub-
stantially all of its net investment income, capital gains and certain other
amounts, if any, the Fund intends not to be subject to a federal excise tax.
At June 30, 1997, the Fund had a net capital loss carryforward of $1,788,835
which is available as a reduction, to the extent provided in the regulations,
of any future net capital gains realized before the end of fiscal year 2003. To
the extent that the losses are used to offset future capital gains, it is prob-
able that the gains so offset will not be distributed.
CAPITAL STOCK
There are 20 billion shares of $0.001 par value common stock authorized.
Transactions in common stock, at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
DECEMBER 31, 1997 JUNE 30, 1997
----------------- ---------------
<S> <C> <C>
SHARES SOLD.................................. 7,741,579,124 13,353,452,948
SHARES REPURCHASED........................... (7,763,454,911) (13,105,386,823)
DIVIDENDS REINVESTED......................... 98,317,322 174,126,527
-------------- ---------------
NET INCREASE................................. 76,441,535 422,192,652
============== ===============
</TABLE>
9
<PAGE>
PAINEWEBBER RETIREMENT MONEY FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
IS PRESENTED BELOW:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED JUNE 30,
DECEMBER 31, 1997 --------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
----------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ---------- ----------
NET INVESTMENT INCOME... 0.025 0.048 0.050 0.047 0.028 0.027
DIVIDENDS FROM NET
INVESTMENT INCOME...... (0.025) (0.048) (0.050) (0.047) (0.028) (0.027)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ========== ==========
TOTAL INVESTMENT
RETURN(1).............. 2.52 % 4.89 % 5.13 % 4.83 % 2.75 % 2.78 %
========== ========== ========== ========== ========== ==========
RATIOS/SUPPLEMENTAL
DATA:
NET ASSETS, END OF
PERIOD (000'S)......... $3,999,038 $3,922,753 $3,500,508 $2,966,199 $2,450,235 $2,280,840
EXPENSES TO AVERAGE NET
ASSETS................. 0.75 %* 0.75 % 0.70 % 0.78 % 0.77 % 0.79 %
NET INVESTMENT INCOME TO
AVERAGE NET ASSETS..... 4.95 %* 4.79 % 5.01 % 4.75 % 2.77 % 2.76 %
</TABLE>
- --------
* ANNUALIZED.
(1) TOTAL INVESTMENT RETURN IS CALCULATED ASSUMING A $1,000 INVESTMENT ON THE
FIRST DAY OF EACH PERIOD REPORTED, REINVESTMENT OF ALL DIVIDENDS AND
DISTRIBUTIONS AT NET ASSET VALUE ON THE PAYABLE DATES AND A SALE AT NET
ASSET VALUE ON THE LAST DAY OF EACH PERIOD REPORTED. TOTAL INVESTMENT
RETURN FOR PERIODS OF LESS THAN ONE YEAR HAS NOT BEEN ANNUALIZED.
10
