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PAINEWEBBER RMA U.S. GOVERNMENT PORTFOLIO
PAINEWEBBER RMA TAX-FREE FUND
PAINEWEBBER RMA CALIFORNIA MUNICIPAL MONEY FUND
PAINEWEBBER RMA NEW YORK MUNICIPAL MONEY FUND
February 12, 1998
Dear Investor,
This is a supplement to the Prospectus dated August 29, 1997 for the
PaineWebber Mutual Funds listed above ("Funds"). The purpose of this supplement
is to notify prospective investors that the board of directors or trustees of
each Fund has authorized an increase, effective February 12, 1998, in the 12b-1
service fees paid by that Fund from an annual rate of 0.08% to an annual rate of
0.125% and of the effect of that increase on each Fund's expenses.
The following replaces the information concerning each Fund under the
"Annual Fund Operating Expenses" caption on Prospectus page 5 and the
information concerning each Fund under "Example of Effect of Fund Expenses" on
Prospectus page 6:
ANNUAL FUND OPERATING EXPENSES*
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
California New York
U.S. Municipal Municipal
Government Tax- Money Money
Portfolio Free Fund Fund Fund
--------- --------- ---- ----
<S> <C> <C> <C> <C>
Management fees 0.43% 0.44% 0.47% 0.50%
12b-1 fees 0.13 0.13 0.13 0.13
Other expenses 0.11 0.09 0.07 0.19
---- ---- ---- ----
Total Operating Expenses 0.67% 0.66% 0.67% 0.82%
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</TABLE>
* See "Management" for additional information. The fees and expenses shown are
those actually incurred for each Fund's most recent fiscal year ended June 30,
1997, except as follows. The 12b-1 fees for U.S. Government Portfolio, Tax-Free
Fund, California Municipal Money Fund and New York Municipal Money Fund were
increased, effective February 12, 1998, to 0.125% (rounded to 0.13% for the
Table above) from the 0.08% that was in effect until that date, and "Total
Operating Expenses" for these Funds have been increased to reflect this change.
In addition, for New York Municipal Money Fund, "Management fees" are those that
would have been incurred by that Fund had PaineWebber not waived a portion of
its fees during the fiscal year. PaineWebber currently charges an annual $85
account charge for the RMA program including the Gold MasterCard'r' without the
Bank One Line of Credit. The fee for clients who
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choose the Line of Credit for their Gold MasterCard is $125. The annual account
charge for the BSA program, including the MasterCard BusinessCard'r' is $125
($165 with a MasterCard Line of Credit). The account charges are not included in
the table because certain non-RMA and non-BSA participants are permitted to
purchase shares of the Funds.
EXAMPLE OF EFFECT OF FUND EXPENSES
An investor would pay directly or indirectly the following expenses on a
$1,000 investment in each Fund, assuming a 5% annual return.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
U.S. Government Portfolio $ 7 $ 21 $ 37 $ 83
Tax-Free Fund $ 7 $ 21 $ 37 $ 82
California Municipal Money Fund $ 7 $ 21 $ 37 $ 83
New York Municipal Money Fund $ 8 $ 26 $ 46 $ 101
</TABLE>
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This Example assumes that all dividends are reinvested and that the
percentage amounts listed under Annual Fund Operating Expenses remain the same
in the years shown. The above tables and the assumption in the Example of a 5%
annual return are required by regulations of the SEC applicable to all mutual
funds; the assumed 5% annual return is not a prediction of, and does not
represent, any Fund's projected or actual performance.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND EACH FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
The actual expenses of each Fund will depend upon, among other things, the level
of average net assets and the extent to which each Fund incurs variable
expenses, such as transfer agency costs.
In addition, the first paragraph under "Management - Distribution
Arrangements" on Prospectus page 24, is replaced with the following:
DISTRIBUTION ARRANGEMENTS. PaineWebber is the distributor of each Fund's
shares and each Fund (other than Money Market Portfolio) has a separate plan of
distribution ("Plan"). Under their Plans, U.S. Government Portfolio, Tax-Free
Fund, California Municipal Money Fund and New York Municipal Money Fund each is
authorized to pay PaineWebber a 12b-1 service fee at the annual rate of up to
0.15% of the Fund's average daily net assets. Each of these Funds currently pays
PaineWebber a 12b-1 service fee at the annual rate of 0.125% of its average
daily net assets. Prior to February 12, 1998, these Funds paid 12b-1 service
fees to PaineWebber at the annual rate of 0.08% of their average daily net
assets. Any increase in this annual rate requires prior approval by the board
of the applicable Corporation or Trust.
STATEMENT OF DIFFERENCES
The registered trademark symbol shall be expressed as ...............'r'
