UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: | 811-06173 | ||||||||
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UBS Municipal Money Market Series | |||||||||
(Exact name of registrant as specified in charter) | |||||||||
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51 West 52nd Street, New York, New York |
| 10019-6114 | |||||||
(Address of principal executive offices) |
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Mark F. Kemper, Esq. UBS Global Asset Management 51 West 52nd Street New York, NY 10019-6114 | |||||||||
(Name and address of agent for service) | |||||||||
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Copy to: | |||||||||
Jack W. Murphy, Esq. Dechert LLP 1775 I Street, N.W. Washington, DC 20006-2401 | |||||||||
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Registrant’s telephone number, including area code: | 212-882 5000 |
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Date of fiscal year end: | June 30 |
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Date of reporting period: | December 31, 2006 |
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Item 1. Reports to Stockholders.
UBS RMA
Money Market Portfolio
U.S. Government Portfolio
Tax-Free Fund
California Municipal Money Fund
New York Municipal Money Fund
New Jersey Municipal Money Fund
Semiannual Report
December 31, 2006
UBS RMA
February 15, 2007
Dear Shareholder,
We present you with the semiannual report for UBS RMA Money Market Portfolio; UBS RMA U.S. Government Portfolio; UBS RMA Tax-Free Fund Inc.; UBS RMA California Municipal Money Fund; UBS RMA New York Municipal Money Fund; and UBS RMA New Jersey Municipal Money Fund, for the six months ended December 31, 2006.
Performance
Following the steady rise in short-term yields in conjunction with repeated Federal Reserve Board rate hikes in the first half of 2006, the yields available on money market securities moved slightly higher for the most part before leveling off during the reporting period. As of December 31, 2006, the Funds' seven-day current yields were: UBS RMA Money Market Portfolio: 4.76%; UBS RMA U.S. Government Portfolio: 4.45%; UBS RMA Tax-Free Fund Inc.: 3.26%; UBS RMA California Municipal Money Fund: 3.10%; UBS RMA New York Municipal Money Fund: 3.14%; and UBS RMA New Jersey Municipal Money Fund: 3.06%. (For more on the Funds' performance, refer to "Performance and portfolio characteristics at a glance" on pages 11 to 13.)
UBS RMA Money Market Portfolio, UBS RMA U.S. Government Portfolio Investment Goal (both Portfolios):
Maximum current income consistent with preservation of capital and liquidity.
Portfolio Managers (both Portfolios):
Michael H. Markowitz
Robert Sabatino
UBS Global Asset Management
(Americas) Inc.
Commencement (both Portfolios):
October 4, 1982
Dividend Payment (both Portfolios):
Monthly
UBS RMA Tax-Free Fund Inc., UBS RMA California Municipal Money Fund, UBS RMA New York Municipal Money Fund, UBS RMA New Jersey Municipal Money Fund
Investment Goal (all four Funds):
Maximum current income exempt from federal and/or a specific state's personal income taxes consistent with preservation of capital and liquidity.
Portfolio Managers (all four funds):
Elbridge T. Gerry III
Ryan Nugent
UBS Global Asset Management (Americas) Inc.
Commencement:
Tax-Free—October 4, 1982
California Municipal—November 7, 1988
New York Municipal—November 10, 1988
New Jersey Municipal—February 1, 1991
Dividend Payment (all four Funds):
Monthly
1
UBS RMA
An Interview with the Portfolio Managers
Q. Can you describe the economic environment during the reporting period?
A. The US economy appeared to gain strength over the period, as advance fourth quarter gross domestic product estimates (or GDP—the market value of all goods and services produced within a country in a given period of time), which came in at 3.5%, showed a significant pickup over the third quarter number of 2.0%. The upturn, largely attributable to a sharp increase in consumer spending, was viewed as surprising. In the prior six months, economic growth had been more moderate, owing in part to the delayed impact of rising short-term interest rates, high oil prices and the cooling of the once red-hot housing market. During the reporting period, the overall bond yield curve inverted significantly as investors anticipated interest rate cuts during the first half of 2007. (An inverted yield curve occurs when the yields of long-term bonds fall below those of short-term bonds.)
Q. How did the Federal Reserve Board (the "Fed") react in this economic environment?
A. The Fed met four times during the six-month period. After increasing the federal funds rate to 5.25% in June—its 17th consecutive rate hike—the Fed then held rates steady at its meetings in August, September, October and December. (The federal funds rate, or "fed funds" rate, is the rate that banks charge one another for funds borrowed on an overnight basis.) The Fed indicated that future rate movements would be data dependent as it attempts to keep economic growth at a reasonable pace and seeks to ward off inflation.
Q. How were the portfolios positioned during the semiannual period?
A. In the UBS RMA Money Market Portfolio, we selectively purchased securities with maturities of three to six months as the future direction of short-term interest rates became less certain. The shift in strategy allowed us to take advantage of the yield
2
UBS RMA
curve position and lock in higher yields for a period of time while protecting the portfolio from a possible decline for a period of time.
In the UBS RMA U.S. Government Portfolio, we continued to emphasize investments in repurchase agreements backed by Treasury obligations, which offered higher yields than direct investments in Treasury securities over the period. A repurchase agreement is a contract through which a party sells a security (in this case, to the Fund) and agrees to buy back the security at a predetermined time and price, or upon demand.
For the tax-exempt portfolios, we also maintained a short weighted average maturity position relative to our peers at times during the reporting period. This was due largely to a lack of attractive opportunities from longer-dated securities.
Q. What types of securities did you emphasize for the portfolios?
A. As in the past, quality, liquidity and yield remained paramount in our selection process for all six portfolios. In addition to the three- to six-month securities discussed above, in the UBS RMA Money Market Portfolio, we responded to the yield curve's flattening in September by purchasing more floating-rate securities. Rather than paying a fixed rate of interest, floating-rate securities offer interest payments that reset periodically, with rates tied to a representative interest rate index. We purchased floating-rate securities tied to the one month LIBOR, the prime rate, and the fed funds rate, especially at the beginning of the reporting period, as uncertainty over the Fed's intentions constrained yields across the curve. (LIBOR, or the London Interbank Offered Rate, is among the most common of benchmark interest rate indexes used to make adjustments to adjustable rate obligations.) Within UBS RMA U.S. Governme nt Portfolio, we increased exposure to repurchase agreements over the course of the period. As of December 31, 2006, repurchase agreements represented around 86% of the portfolio's net assets, which contributed to performance.
3
UBS RMA
Within the tax-exempt portfolios, we increased exposure to variable rate demand notes during the reporting period in response to the yield curve position, and in anticipation of a steady fed funds rate. Variable rate demand notes are purchased at par, and pay interest monthly or quarterly based on a floating rate that is reset daily or weekly based on an index of short-term municipal rates. We also found the yields offered by tax-exempt commercial paper (a short-term security often backed by a guarantee or a letter of credit from a bank or other entity) attractive at times during the period. In most of the tax-exempt portfolios, we increased our holdings in these securities early in the reporting period. Their short time horizons made them an attractive alternative to other types of securities in the flat yield curve environment. Late in the period, however, we decreased the amount of commercial paper held in these portfolios in order to purchase floating rate securities, whose yields had increased.
Q. What factors do you believe will affect the portfolios over the coming months?
A. We will continue to monitor a number of factors, including inflation and the overall strength of the economy, both of which will likely be primary factors in the Fed's future decisions on interest rates. As the employment picture is healthy at the time of this report, we believe that it is likely that the economy will recover to trend-like growth, and do not believe that the cooling housing market will likely cause a recession. On a macroeconomic level, the economy appears to be on fairly solid footing, and we will continue to rely on our research teams to interpret developing macroeconomic events and to identify market-specific opportunities as they arise.
4
UBS RMA
We thank you for your continued support and welcome any comments or questions you may have. For additional information on the UBS family of funds,* please contact your financial advisor or visit us at www.ubs.com/globalam-us.
Kai R. Sotorp President UBS RMA Money Fund Inc. (UBS RMA Money Market Portfolio and UBS RMA U.S. Government Portfolio) UBS RMA Tax-Free Fund Inc. UBS Managed Municipal Trust (UBS RMA California Municipal Money Fund and UBS RMA New York Municipal Money Fund) UBS Municipal Money Market Series (UBS RMA New Jersey Municipal Money Fund) Head of the Americas UBS Global Asset Management (Americas) Inc. | Elbridge T. Gerry III Portfolio Manager UBS RMA Tax-Free Fund Inc. UBS RMA California Municipal Money Fund UBS RMA New York Municipal Money Fund UBS RMA New Jersey Municipal Money Fund Managing Director UBS Global Asset Management (Americas) Inc. | ||||||
Michael H. Markowitz
Portfolio Manager
UBS RMA Money Market Portfolio
UBS RMA U.S. Government Portfolio
Managing Director
UBS Global Asset Management (Americas) Inc.
5
UBS RMA
Ryan Nugent Portfolio Manager UBS RMA Tax-Free Fund Inc. UBS RMA California Municipal Money Fund UBS RMA New York Municipal Money Fund UBS RMA New Jersey Municipal Money Fund Director UBS Global Asset Management (Americas) Inc. | Robert Sabatino Portfolio Manager UBS RMA Money Market Portfolio UBS RMA U.S. Government Portfolio Director UBS Global Asset Management (Americas) Inc. | ||||||
This letter is intended to assist shareholders in understanding how the Funds performed during the six months ended December 31, 2006. The views and opinions in the letter were current as of February 15, 2007. They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and we reserve the right to change our views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Funds' future investment intent.
We encourage you to consult your financial advisor regarding your personal investment program.
* Mutual funds are sold by prospectus only. You should read it carefully and consider a fund's investment objectives, risks, charges, expenses and other important information contained in the prospectus before investing. Prospectuses for most of our funds can be obtained from your financial advisor, by calling UBS Funds at 800-647 1568 or by visiting our Web site at www.ubs.com/globalam-us.
6
UBS RMA
Understanding your funds' expenses (unaudited)
As a shareholder of the Funds*, you incur ongoing costs, including management fees, service fees (12b-1 or non-12b-1 fees) and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in each Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples below are based on an investment of $1,000 invested at the beginning of the period and held for the entire period, July 1, 2006 to December 31, 2006.
Actual expenses
The first line in the following table for each Fund provides information about its actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over a period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for each respective Fund under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second line in the following table for each Fund provides information about hypothetical account values and hypothetical expenses based on that Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not that Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a Fund and other funds.
* Collectively refers to UBS RMA Money Market Portfolio, UBS RMA U.S. Government Portfolio, UBS RMA Tax-Free Fund Inc., UBS RMA California Municipal Money Fund, UBS RMA New York Municipal Money Fund and UBS RMA New Jersey Municipal Money Fund.
7
UBS RMA
Understanding your funds' expenses (unaudited) (continued)
To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second line of the table for each Fund is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds, if those funds impose transactional costs—for example, exchange fees. In addition, if those transactional costs were included, your costs for those other funds would have been higher.
The example does not reflect Resource Management Account® (RMA®) Program or Business Services Account BSA® Program fees as these are external to the Funds and relate to those programs.
UBS RMA Money Market Portfolio
Beginning account value July 1, 2006 | Ending account value December 31, 2006 | Expenses paid during period* 07/01/06 to 12/31/06 | |||||||||||||
Actual | $ | 1,000.00 | $ | 1,024.20 | $ | 2.96 | |||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,022.28 | 2.96 |
* Expenses are equal to the Fund's annualized net expense ratio of 0.58%, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period).
UBS RMA U.S. Government Portfolio
Beginning account value July 1, 2006 | Ending account value December 31, 2006 | Expenses paid during period* 07/01/06 to 12/31/06 | |||||||||||||
Actual | $ | 1,000.00 | $ | 1,023.30 | $ | 3.26 | |||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,021.98 | 3.26 |
* Expenses are equal to the Fund's annualized expense ratio of 0.64%, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period).
8
UBS RMA
Understanding your funds' expenses (unaudited) (continued)
UBS RMA Tax-Free Fund Inc.
Beginning account value July 1, 2006 | Ending account value December 31, 2006 | Expenses paid during period* 07/01/06 to 12/31/06 | |||||||||||||
Actual | $ | 1,000.00 | $ | 1,015.00 | $ | 3.00 | |||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,022.23 | 3.01 |
* Expenses are equal to the Fund's annualized expense ratio of 0.59%, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period).
UBS RMA California Municipal Money Fund
Beginning account value July 1, 2006 | Ending account value December 31, 2006 | Expenses paid during period* 07/01/06 to 12/31/06 | |||||||||||||
Actual | $ | 1,000.00 | $ | 1,014.30 | $ | 3.15 | |||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,022.08 | 3.16 |
* Expenses are equal to the Fund's annualized expense ratio of 0.62%, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period).
UBS RMA New York Municipal Money Fund
Beginning account value July 1, 2006 | Ending account value December 31, 2006 | Expenses paid during period* 07/01/06 to 12/31/06 | |||||||||||||
Actual | $ | 1,000.00 | $ | 1,014.50 | $ | 3.45 | |||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,021.78 | 3.47 |
* Expenses are equal to the Fund's annualized expense ratio of 0.68%, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period).
9
UBS RMA
Understanding your funds' expenses (unaudited)
(concluded)
UBS RMA New Jersey Municipal Money Fund
Beginning account value July 1, 2006 | Ending account value December 31, 2006 | Expenses paid during period* 07/01/06 to 12/31/06 | |||||||||||||
Actual | $ | 1,000.00 | $ | 1,013.90 | $ | 3.81 | |||||||||
Hypothetical (5% annual return before expenses) | 1,000.00 | 1,021.42 | 3.82 |
* Expenses are equal to the Fund's annualized expense ratio of 0.75%, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period).
10
UBS RMA
Performance and portfolio characteristics at a glance
(unaudited)
UBS RMA Money Market Portfolio
Yields and characteristics | 12/31/06 | 06/30/06 | 12/31/05 | ||||||||||||
Seven-day current yield* | 4.76 | % | 4.60 | % | 3.73 | % | |||||||||
Seven-day effective yield* | 4.88 | 4.70 | 3.80 | ||||||||||||
Weighted average maturity** | 49 days | 45 days | 43 days | ||||||||||||
Net assets (bn) | $ | 12.5 | $ | 10.6 | $ | 10.4 | |||||||||
Portfolio composition*** | 12/31/06 | 06/30/06 | 12/31/05 | ||||||||||||
Commercial paper | 58.8 | % | 51.9 | % | 53.7 | % | |||||||||
Certificates of deposit | 21.3 | 21.7 | 20.1 | ||||||||||||
Short-term corporate obligations | 13.1 | 14.9 | 17.6 | ||||||||||||
US government agency obligations | 3.6 | 5.9 | 7.2 | ||||||||||||
Bank notes | 1.5 | 3.3 | 1.0 | ||||||||||||
Repurchase agreements | 1.4 | 0.3 | 0.0 | † | |||||||||||
Money market funds | 0.0 | † | 0.6 | 0.3 | |||||||||||
Time deposit | — | 1.1 | — | ||||||||||||
Other assets less liabilities | 0.3 | 0.3 | 0.1 | ||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % |
UBS RMA U.S. Government Portfolio
Yields and characteristics | 12/31/06 | 06/30/06 | 12/31/05 | ||||||||||||
Seven-day current yield* | 4.45 | % | 4.21 | % | 3.33 | % | |||||||||
Seven-day effective yield* | 4.54 | 4.30 | 3.38 | ||||||||||||
Weighted average maturity** | 19 days | 23 days | 43 days | ||||||||||||
Net assets (bn) | $ | 1.0 | $ | 0.8 | $ | 1.1 | |||||||||
Portfolio composition*** | 12/31/06 | 06/30/06 | 12/31/05 | ||||||||||||
Repurchase agreements | 85.5 | % | 65.1 | % | 64.0 | % | |||||||||
US government obligations | 14.6 | 40.9 | 34.0 | ||||||||||||
Money market funds | 0.0 | † | 0.0 | † | 0.5 | ||||||||||
Other assets less liabilities | (0.1 | ) | (6.0 | ) | 1.5 | ||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % |
* Yields will fluctuate and may reflect fee waivers and/or expense reimbursements. Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder could pay on distributions. The return of an investment will fluctuate. Performance results assume reinvestment of all dividends and capital gain distributions (if any) at net asset value on the payable dates. Current performance may be higher or lower than the performance data quoted.
** The Portfolios are actively managed and their weighted average maturities will differ over time.
*** Weightings represent percentages of net assets as of the dates indicated. The Portfolios are actively managed and their compositions will vary over time.
† Weighting represents less than 0.05% of net assets as of the date indicated.
An investment in an RMA fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although each RMA fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in an RMA fund.
11
UBS RMA
Performance and portfolio characteristics at a glance
(unaudited) (continued)
UBS RMA Tax-Free Fund Inc.
Yields and characteristics | 12/31/06 | 06/30/06 | 12/31/05 | ||||||||||||
Seven-day current yield* | 3.26 | % | 3.21 | % | 2.78 | % | |||||||||
Seven-day effective yield* | 3.31 | 3.26 | 2.82 | ||||||||||||
Weighted average maturity** | 15 days | 14 days | 19 days | ||||||||||||
Net assets (bn) | $ | 4.4 | $ | 3.6 | $ | 3.4 | |||||||||
Portfolio composition*** | 12/31/06 | 06/30/06 | 12/31/05 | ||||||||||||
Municipal bonds and notes | 92.1 | % | 90.4 | % | 95.0 | % | |||||||||
Tax-exempt commercial paper | 10.8 | 10.6 | 7.6 | ||||||||||||
Money market fund | — | — | 0.0 | † | |||||||||||
Other assets less liabilities | (2.9 | ) | (1.0 | ) | (2.6 | ) | |||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % |
UBS RMA California Municipal Money Fund
Yields and characteristics | 12/31/06 | 06/30/06 | 12/31/05 | ||||||||||||
Seven-day current yield* | 3.10 | % | 3.14 | % | 2.67 | % | |||||||||
Seven-day effective yield* | 3.15 | 3.18 | 2.70 | ||||||||||||
Weighted average maturity** | 15 days | 15 days | 18 days | ||||||||||||
Net assets (bn) | $ | 1.1 | $ | 0.9 | $ | 0.9 | |||||||||
Portfolio composition*** | 12/31/06 | 06/30/06 | 12/31/05 | ||||||||||||
Municipal bonds and notes | 91.6 | % | 92.0 | % | 89.3 | % | |||||||||
Tax-exempt commercial paper | 9.0 | 11.0 | 10.4 | ||||||||||||
Other assets less liabilities | (0.6 | ) | (3.0 | ) | 0.3 | ||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % |
* Yields will fluctuate and may reflect fee waivers and/or expense reimbursements. Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder could pay on distributions. The return of an investment will fluctuate. Performance results assume reinvestment of all dividends and capital gain distributions (if any) at net asset value on the payable dates. Current performance may be higher or lower than the performance data quoted.
** The Funds are actively managed and their weighted average maturities will differ over time.
*** Weightings represent percentages of net assets as of the dates indicated. The Funds are actively managed and their compositions will vary over time.
† Weighting represents less than 0.05% of net assets as of the date indicated.
An investment in an RMA fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although each RMA fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in an RMA fund.
12
UBS RMA
Performance and portfolio characteristics at a glance
(unaudited) (concluded)
UBS RMA New York Municipal Money Fund
Yields and characteristics | 12/31/06 | 06/30/06 | 12/31/05 | ||||||||||||
Seven-day current yield* | 3.14 | % | 3.13 | % | 2.70 | % | |||||||||
Seven-day effective yield* | 3.19 | 3.18 | 2.73 | ||||||||||||
Weighted average maturity** | 16 days | 12 days | 17 days | ||||||||||||
Net assets (mm) | $ | 698.7 | $ | 612.7 | $ | 626.2 | |||||||||
Portfolio composition*** | 12/31/06 | 06/30/06 | 12/31/05 | ||||||||||||
Municipal bonds and notes | 90.8 | % | 92.4 | % | 94.0 | % | |||||||||
Tax-exempt commercial paper | 11.1 | 10.9 | 7.6 | ||||||||||||
Other assets less liabilities | (1.9 | ) | (3.3 | ) | (1.6 | ) | |||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % |
UBS RMA New Jersey Municipal Money Fund
Yields and characteristics | 12/31/06 | 06/30/06 | 12/31/05 | ||||||||||||
Seven-day current yield* | 3.06 | % | 2.92 | % | 2.52 | % | |||||||||
Seven-day effective yield* | 3.11 | 2.96 | 2.55 | ||||||||||||
Weighted average maturity** | 18 days | 20 days | 29 days | ||||||||||||
Net assets (mm) | $ | 172.8 | $ | 134.6 | $ | 151.9 | |||||||||
Portfolio composition*** | 12/31/06 | 06/30/06 | 12/31/05 | ||||||||||||
Municipal bonds and notes | 96.1 | % | 96.7 | % | 97.5 | % | |||||||||
Tax-exempt commercial paper | 3.5 | 3.1 | — | ||||||||||||
Money market fund | — | — | 1.7 | ||||||||||||
Other assets less liabilities | 0.4 | 0.2 | 0.8 | ||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % |
* Yields will fluctuate and may reflect fee waivers and/or expense reimbursements. Past performance does not predict future performance, and the performance information provided does not reflect the deduction of taxes that a shareholder could pay on distributions. The return of an investment will fluctuate. Performance results assume reinvestment of all dividends and capital gain distributions (if any) at net asset value on the payable dates. Current performance may be higher or lower than the performance data quoted.
** The Funds are actively managed and their weighted average maturities will differ over time.
*** Weightings represent percentages of net assets as of the dates indicated. The Funds are actively managed and their compositions will vary over time.
An investment in an RMA fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although each RMA fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in an RMA fund.
13
UBS RMA Money Market Portfolio
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
US government agency obligations—3.55% | |||||||||||||||||||
$ | 325,000 | Federal Home Loan Bank | 01/08/07 to 01/10/07 | 5.208 to 5.210%1 | $ | 324,847,145 | |||||||||||||
120,000 | Federal Home Loan Bank | 12/28/07 | 5.350 | 120,000,000 | |||||||||||||||
Total US government agency obligations (cost—$444,847,145) | 444,847,145 | ||||||||||||||||||
Bank notes1—1.51% | |||||||||||||||||||
Banking-US—1.51% | |||||||||||||||||||
47,275 | American Express Centurion Bank | 01/10/07 | 5.320 | 47,275,152 | |||||||||||||||
142,000 | Bank of America N.A. | 01/02/07 | 5.315 to 5.320 | 142,000,000 | |||||||||||||||
Total bank notes (cost—$189,275,152) | 189,275,152 | ||||||||||||||||||
Certificates of deposit—21.34% | |||||||||||||||||||
Banking-non-US—13.17% | |||||||||||||||||||
94,000 | ABN AMRO Bank NV (Chicago) | 01/24/07 | 4.850 | 94,000,000 | |||||||||||||||
100,000 | Bank of Tokyo-Mitsubishi UFJ Ltd. | 01/11/07 | 5.320 | 100,000,000 | |||||||||||||||
100,000 | Barclays Bank PLC | 01/02/07 | 5.310 | 1 | 100,000,000 | ||||||||||||||
231,250 | BNP Paribas | 03/20/07 to 06/08/07 | 5.260 to 5.320 | 231,250,000 | |||||||||||||||
85,000 | Credit Suisse First Boston | 01/12/07 | 5.342 | 1 | 84,999,296 | ||||||||||||||
114,000 | Deutsche Bank AG | 03/06/07 | 5.090 | 114,000,000 | |||||||||||||||
140,500 | Fortis Bank NV-SA | 02/06/07 | 4.930 | 140,500,000 | |||||||||||||||
108,000 | HSBC Bank USA | 01/29/07 | 5.380 | 1 | 108,022,266 | ||||||||||||||
198,500 | Natexis Banque Populaires | 01/02/07 | 5.350 to 5.4631 | 198,500,000 | |||||||||||||||
124,700 | Natexis Banque Populaires | 06/29/07 | 5.275 | 124,700,000 | |||||||||||||||
210,000 | Norinchukin Bank Ltd. | 03/22/07 to 06/05/07 | 5.285 to 5.400 | 210,000,000 | |||||||||||||||
100,000 | Royal Bank of Canada | 09/28/07 | 5.325 | 100,000,000 | |||||||||||||||
45,000 | Royal Bank of Scotland PLC | 01/23/07 | 5.290 | 1 | 44,998,201 | ||||||||||||||
1,650,969,763 |
14
UBS RMA Money Market Portfolio
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Certificates of deposit—(concluded) | |||||||||||||||||||
Banking-US—8.17% | |||||||||||||||||||
$ | 86,250 | American Express Centurion Bank | 06/18/07 | 5.340 | % | $ | 86,250,000 | ||||||||||||
125,000 | American Express, Federal Savings Bank | 01/04/07 | 5.290 | 125,000,000 | |||||||||||||||
123,000 | Bank of America N.A. | 01/02/07 | 5.310 | 1 | 123,000,000 | ||||||||||||||
90,000 | SunTrust Bank | 01/29/07 | 5.320 | 1 | 90,005,459 | ||||||||||||||
167,750 | US Bank N.A. | 01/30/07 | 5.320 | 1 | 167,766,602 | ||||||||||||||
120,000 | Wachovia Bank N.A. (Charlotte) | 03/30/07 | 5.324 | 1 | 119,995,257 | ||||||||||||||
311,300 | Washington Mutual Bank FA | 02/16/07 to 03/20/07 | 5.320 to 5.330 | 311,300,000 | |||||||||||||||
1,023,317,318 | |||||||||||||||||||
Total certificates of deposit (cost—$2,674,287,081) | 2,674,287,081 | ||||||||||||||||||
Commercial paper2—58.83% | |||||||||||||||||||
Asset backed-banking—1.10% | |||||||||||||||||||
139,627 | Atlantis One Funding | 01/08/07 to 05/09/07 | 5.190 to 5.250 | 138,201,896 | |||||||||||||||
Asset backed-miscellaneous—23.38% | |||||||||||||||||||
165,000 | Amsterdam Funding Corp. | 01/18/07 to 03/08/07 | 5.230 to 5.320 | 164,223,031 | |||||||||||||||
134,468 | Atlantic Asset Securitization LLC | 01/12/07 to 02/15/07 | 5.300 | 134,079,977 | |||||||||||||||
357,000 | Barton Capital LLC | 01/03/07 to 01/19/07 | 5.260 to 5.320 | 356,531,071 | |||||||||||||||
290,744 | Bryant Park Funding LLC | 01/11/07 to 01/25/07 | 5.290 to 5.330 | 289,908,571 | |||||||||||||||
243,566 | Chariot Funding LLC | 01/08/07 to 01/24/07 | 5.280 to 5.320 | 243,195,664 | |||||||||||||||
225,681 | Falcon Asset Securitization Corp. | 01/03/07 to 01/26/07 | 5.280 to 5.320 | 225,303,170 | |||||||||||||||
39,666 | Jupiter Securitization Co. LLC | 01/10/07 | 5.255 | 39,613,889 |
15
UBS RMA Money Market Portfolio
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Commercial paper2—(continued) | |||||||||||||||||||
Asset backed-miscellaneous—(concluded) | |||||||||||||||||||
$ | 191,237 | Kitty Hawk Funding Corp. | 01/10/07 to 01/31/07 | 5.280 to 5.310% | $ | 190,768,109 | |||||||||||||
160,417 | Old Line Funding Corp. | 01/04/07 to 02/14/07 | 5.280 to 5.290 | 159,684,289 | |||||||||||||||
321,000 | Ranger Funding Co. LLC | 01/11/07 to 02/22/07 | 5.260 to 5.290 | 320,086,744 | |||||||||||||||
247,231 | Regency Markets No. 1 LLC | 01/05/07 to 01/22/07 | 5.300 to 5.330 | 246,667,862 | |||||||||||||||
52,000 | Thunderbay Funding | 01/12/07 | 5.290 | 51,915,948 | |||||||||||||||
31,000 | Variable Funding Capital Corp. | 01/08/07 | 5.300 | 1 | 30,999,379 | ||||||||||||||
235,000 | Variable Funding Capital Corp. | 01/08/07 to 01/19/07 | 5.290 to 5.330 | 234,660,093 | |||||||||||||||
205,000 | Windmill Funding Corp. | 02/05/07 to 05/03/07 | 5.145 to 5.210 | 202,113,493 | |||||||||||||||
40,948 | Yorktown Capital LLC | 01/10/07 | 5.265 | 40,894,102 | |||||||||||||||
2,930,645,392 | |||||||||||||||||||
Asset backed-securities—10.74% | |||||||||||||||||||
55,000 | Beta Finance, Inc. | 01/30/07 | 5.245 | 54,767,617 | |||||||||||||||
243,447 | Cancara Asset Securitization LLC | 01/11/07 to 01/18/07 | 5.285 to 5.320 | 242,967,798 | |||||||||||||||
100,000 | Clipper Receivables Co. LLC | 01/22/07 | 5.290 | 99,691,417 | |||||||||||||||
25,000 | Dorada Finance, Inc. | 01/12/07 | 5.270 | 24,959,743 | |||||||||||||||
364,500 | Grampian Funding LLC | 02/02/07 to 05/21/07 | 5.155 to 5.250 | 360,219,675 | |||||||||||||||
350,476 | Scaldis Capital LLC | 01/25/07 to 04/20/07 | 5.160 to 5.320 | 347,553,696 | |||||||||||||||
216,583 | Solitaire Funding LLC | 01/17/07 to 02/28/07 | 5.250 to 5.310 | 215,595,343 | |||||||||||||||
1,345,755,289 | |||||||||||||||||||
Automobile OEM—0.71% | |||||||||||||||||||
89,700 | BMW US Capital LLC | 01/02/07 | 5.300 | 89,686,794 |
16
UBS RMA Money Market Portfolio
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Commercial paper2—(continued) | |||||||||||||||||||
Banking-non-US—3.28% | |||||||||||||||||||
$ | 96,970 | Alliance & Leicester PLC | 04/04/07 | 5.190 | % | $ | 95,669,875 | ||||||||||||
272,500 | Nationwide Building Society | 01/19/07 to 03/16/07 | 5.255 to 5.260 | 270,899,227 | |||||||||||||||
44,900 | Northern Rock PLC | 02/07/07 | 5.250 | 44,657,727 | |||||||||||||||
411,226,829 | |||||||||||||||||||
Banking-US—7.53% | |||||||||||||||||||
70,000 | BNP Paribas Finance | 05/07/07 | 5.200 | 68,726,000 | |||||||||||||||
130,000 | Calyon N.A., Inc. | 04/23/07 to 05/17/07 | 5.185 to 5.190 | 127,746,555 | |||||||||||||||
100,500 | Danske Corp. | 05/24/07 | 5.170 | 98,436,093 | |||||||||||||||
258,500 | ING (US) Funding LLC | 01/24/07 to 09/07/07 | 5.050 to 5.250 | 255,120,738 | |||||||||||||||
36,500 | KFW International Finance, Inc. | 04/24/07 | 5.140 | 35,911,113 | |||||||||||||||
140,450 | Nordea N.A., Inc. | 01/29/07 to 02/26/07 | 5.115 to 5.280 | 139,465,118 | |||||||||||||||
125,750 | Societe Generale N.A., Inc. | 05/31/07 | 5.110 | 123,072,573 | |||||||||||||||
96,500 | Stadshypotek Del, Inc. | 01/22/07 to 03/14/07 | 5.230 to 5.245 | 95,860,631 | |||||||||||||||
944,338,821 | |||||||||||||||||||
Brokerage—5.15% | |||||||||||||||||||
309,000 | Bear Stearns Cos., Inc. | 01/03/07 to 01/31/07 | 5.250 to 5.330 | 308,412,139 | |||||||||||||||
49,162 | Greenwich Capital Holdings, Inc. | 01/08/07 | 5.230 | 49,112,005 | |||||||||||||||
40,000 | Greenwich Capital Holdings, Inc. | 01/16/07 | 5.310 | 1 | 40,000,000 | ||||||||||||||
207,250 | Morgan Stanley | 01/02/07 | 5.310 to 5.3631 | 207,250,000 | |||||||||||||||
41,250 | Morgan Stanley | 06/14/07 | 5.170 | 40,278,471 | |||||||||||||||
645,052,615 | |||||||||||||||||||
Consumer products-nondurables—1.59% | |||||||||||||||||||
200,000 | Procter & Gamble International Funding SCA | 01/26/07 | 5.275 | 199,267,361 |
17
UBS RMA Money Market Portfolio
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Commercial paper2—(concluded) | |||||||||||||||||||
Diversified manufacturing—0.80% | |||||||||||||||||||
$ | 100,000 | United Technologies Corp. | 01/02/07 | 5.250 | % | $ | 99,985,416 | ||||||||||||
Energy-integrated—0.80% | |||||||||||||||||||
100,000 | BP Capital Markets PLC | 01/02/07 | 5.270 | 99,985,361 | |||||||||||||||
Finance-captive automotive—1.14% | |||||||||||||||||||
145,275 | Toyota Motor Credit Corp. | 02/15/07 to 06/14/07 | 5.170 to 5.225 | 143,130,024 | |||||||||||||||
Finance-noncaptive diversified—1.73% | |||||||||||||||||||
42,000 | CIT Group, Inc. | 03/22/07 | 5.260 | 41,509,067 | |||||||||||||||
178,000 | General Electric Capital Corp. | 01/05/07 to 07/24/07 | 5.030 to 5.110 | 175,174,331 | |||||||||||||||
216,683,398 | |||||||||||||||||||
Insurance-life—0.88% | |||||||||||||||||||
110,300 | Prudential PLC | 01/31/07 | 5.255 | 109,816,978 | |||||||||||||||
Total commercial paper (cost—$7,373,776,174) | 7,373,776,174 | ||||||||||||||||||
Short-term corporate obligations—13.09% | |||||||||||||||||||
Asset backed-securities—7.98% | |||||||||||||||||||
265,000 | Beta Finance, Inc.3 | 01/02/07 to 02/26/07 | 5.310 to 5.3401 | 264,988,066 | |||||||||||||||
120,000 | CC (USA), Inc. (Centauri)3 | 01/02/07 | 5.310 to 5.3251 | 119,996,135 | |||||||||||||||
120,000 | CC (USA), Inc. (Centauri)3 | 04/25/07 | 5.315 | 119,998,110 | |||||||||||||||
80,000 | Dorada Finance, Inc.3 | 02/26/07 | 5.335 | 1 | 79,995,657 | ||||||||||||||
185,000 | K2 (USA) LLC3 | 01/02/07 | 5.315 to 5.3251 | 184,988,273 | |||||||||||||||
171,500 | Links Finance LLC3 | 01/11/07 to 01/16/07 | 5.325 to 5.3301 | 171,499,278 | |||||||||||||||
58,500 | Links Finance LLC3 | 02/13/07 | 5.000 | 58,500,000 | |||||||||||||||
999,965,519 | |||||||||||||||||||
Banking-non-US—3.13% | |||||||||||||||||||
100,000 | ANZ National International Ltd.3 | 01/08/07 | 5.350 | 1 | 100,000,000 | ||||||||||||||
173,000 | HBOS Treasury Services PLC3 | 01/02/07 | 5.399 | 1 | 173,000,000 |
18
UBS RMA Money Market Portfolio
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Short-term corporate obligations—(concluded) | |||||||||||||||||||
Banking-non-US—(concluded) | |||||||||||||||||||
$ | 120,000 | Westpac Banking Corp.3 | 01/08/07 | 5.330 | %1 | $ | 120,000,000 | ||||||||||||
393,000,000 | |||||||||||||||||||
Finance-captive automotive—0.86% | |||||||||||||||||||
108,100 | Toyota Motor Credit Corp. | 01/02/07 | 5.300 | 1 | 108,100,000 | ||||||||||||||
Finance-noncaptive consumer—0.80% | |||||||||||||||||||
100,000 | HSBC Finance Corp. | 03/01/07 | 5.409 | 1 | 100,024,582 | ||||||||||||||
Finance-noncaptive diversified—0.32% | |||||||||||||||||||
40,000 | General Electric Capital Corp. | 01/09/07 | 5.475 | 1 | 40,000,000 | ||||||||||||||
Total short-term corporate obligations (cost—$1,641,090,101) | 1,641,090,101 | ||||||||||||||||||
Repurchase agreements—1.44% | |||||||||||||||||||
179,000 | Repurchase agreement dated 12/29/06 with Goldman Sachs & Co., collateralized by $40,000,000 Federal Home Loan Bank obligations, 4.020% to 5.250% due 06/10/08 to 07/28/15, $56,571,000 Federal Home Loan M ortgage Corp. obligations, 4.300% to 5.750% due 09/17/08 to 10/06/11 and $86,884,000 Federal National Mortgage Association obligations, 3.620% to 5.760% due 07/30/08 to 07/28/23; (value—$182,580,274); proceeds: $179,104,417 | 01/02/07 | 5.250 | 179,000,000 | |||||||||||||||
945 | Repurchase agreement dated 12/29/06 with State Street Bank & Trust Co., collateralized by $819,613 US Treasury Bonds, 6.250% due 08/15/23 and $4,379 US Treasury Notes, 6.125% due 08/15/07; (value—$964,583); proceeds: $945,467 | 01/02/07 | 4.450 | 945,000 | |||||||||||||||
Total repurchase agreements (cost—$179,945,000) | 179,945,000 |
19
UBS RMA Money Market Portfolio
Statement of net assets—December 31, 2006
(unaudited)
Number of shares | Interest rate | Value | |||||||||||||||||
Money market fund4,5—0.00% | |||||||||||||||||||
332,678 | UBS Private Money Market Fund LLC (cost—$332,678) | 5.213 | % | $ | 332,678 | ||||||||||||||
Total investments (cost—$12,503,553,331 which approximates cost for federal income tax purposes)—99.76% | 12,503,553,331 | ||||||||||||||||||
Other assets in excess of liabilities—0.24% | 29,462,999 | ||||||||||||||||||
Net assets (applicable to 12,534,066,319 shares of common stock outstanding equivalent to $1.00 per share)—100.00% | $ | 12,533,016,330 |
1 Variable rate securities. The maturity dates reflect earlier of reset dates or stated maturity dates. The interest rates shown are the current rates as of December 31, 2006 and reset periodically.
2 Interest rates shown are the discount rates at date of purchase.
3 Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities, which represent 11.11% of net assets as of December 31,2006, are considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers.
4 Interest rate shown reflects yield at December 31, 2006.
5 The table below details the Portfolio's transaction activity in an affiliated issuer for the six months ended December 31, 2006:
Security description | Value at 06/30/06 | Purchases during the six months ended 12/31/06 | Sales during the six months ended 12/31/06 | Value at 12/31/06 | Net income earned from affiliate for the six months ended 12/31/06 | ||||||||||||||||||
UBS Private Money Market Fund LLC | $ | — | $ | 2,257,216 | $ | 1,924,538 | $ | 332,678 | $ | 62 |
OEM Original Equipment Manufacturer
20
UBS RMA Money Market Portfolio
Statement of net assets—December 31, 2006
(unaudited)
Issuer breakdown by country of origin |
Percentage of total investments | |||||||
United States | 75.2 | % | |||||
United Kingdom | 9.1 | ||||||
Japan | 4.5 | ||||||
France | 4.4 | ||||||
Germany | 1.6 | ||||||
Belgium | 1.1 | ||||||
Australia | 1.0 | ||||||
Canada | 0.8 | ||||||
New Zealand | 0.8 | ||||||
Netherlands | 0.8 | ||||||
Switzerland | 0.7 | ||||||
Total | 100.0 | % |
Weighted average maturity—49 days
See accompanying notes to financial statements
21
UBS RMA U.S. Government Portfolio
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
US government obligations1,2—14.59% | |||||||||||||||||||
$ | 150,000 | US Treasury Bills (cost—$147,893,472) | 03/22/07 to 05/31/07 | 4.865 to 4.922% | $147,893,472 | ||||||||||||||
Repurchase agreements—85.55% | |||||||||||||||||||
210,000 | Repurchase agreement dated 12/29/06 with Bear Stearns & Co., collateralized by $141,360,000 US Treasury Inflation Index Bonds, 3.625% due 04/15/28; (value—$214,407,221); proceeds: $210,109,667 | 01/02/07 | 4.700 | 210,000,000 | |||||||||||||||
97,100 | Repurchase agreement dated 12/29/06 with Goldman Sachs & Co., collateralized by $99,384,000 US Treasury Notes, 3.125% due 05/15/07; (value—$99,042,948); proceeds: $97,150,708 | 01/02/07 | 4.700 | 97,100,000 | |||||||||||||||
210,000 | Repurchase agreement dated 12/29/06 with Lehman Brothers Inc., collateralized by $146,824,000 US Treasury Bonds, 7.250% to 10.375% due 11/15/12 to 08/15/17 and $26,065,000 US Treasury Inflation Index Not es, 3.000% due 07/15/12; (value—$214,136,458); proceeds $210,109,667 | 01/02/07 | 4.700 | 210,000,000 |
22
UBS RMA U.S. Government Portfolio
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Repurchase agreements—(concluded) | |||||||||||||||||||
$ | 140,000 | Repurchase agreement dated 12/29/06 with Merrill Lynch & Co., collateralized by $104,055,000 US Treasury Bonds, 8.875% due 08/15/17; (value—$142,806,005); proceeds: $140,073,111 | 01/02/07 | 4.700 | % | $ | 140,000,000 | ||||||||||||
210,000 | Repurchase agreement dated 12/29/06 with Morgan Stanley, collateralized by $157,262,000 US Treasury Bonds, 8.000% to 8.125% due 08/15/21 to 11/15/21; (value—$214,200,833); proceeds: $210,113,167 | 01/02/07 | 4.850 | 210,000,000 | |||||||||||||||
79 | Repurchase agreement dated 12/29/06 with State Street Bank & Trust Co., collateralized by $68,518 US Treasury Bonds, 6.250% due 08/15/23 and $366 US Treasury Notes, 6.125% due 08/15/07; (value—$80, 637); proceeds: $79,039 | 01/02/07 | 4.450 | 79,000 | |||||||||||||||
Total repurchase agreements (cost—$867,179,000) | 867,179,000 |
23
UBS RMA U.S. Government Portfolio
Statement of net assets—December 31, 2006
(unaudited)
Number of shares | Interest rates | Value | |||||||||||||||||
Investments of cash collateral from securities loaned—0.00% | |||||||||||||||||||
Money market funds3—0.00% | |||||||||||||||||||
1,422 | AIM Treasury Portfolio | 4.766 | % | $ | 1,422 | ||||||||||||||
100 | Federated Treasury Obligation Fund | 4.729 | 100 | ||||||||||||||||
82 | Provident Treasury Trust | 4.680 | 82 | ||||||||||||||||
Total money market funds (cost—$1,604) | 1,604 | ||||||||||||||||||
Total investments (cost—$1,015,074,076 which approximates cost for federal income tax purposes)—100.14% | 1,015,074,076 | ||||||||||||||||||
Liabilities in excess of other assets—(0.14)% | (1,394,131 | ) | |||||||||||||||||
Net Assets (applicable to 1,014,154,010 shares of common stock outstanding equivalent to $1.00 per share)—100.00% | $ | 1,013,679,945 |
1 Interest rates shown are the discount rates at date of purchase.
2 Security, or portion thereof, was on loan at December 31, 2006.
3 Rates shown reflect yields at December 31, 2006.
Weighted average maturity—19 days
See accompanying notes to financial statements
24
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—92.09% | |||||||||||||||||||
Alabama—1.71% | |||||||||||||||||||
$ | 27,800 | Alabama Special Care Facilities Financing Authority of Mobile (Ascension Health Credit Group), Series B | A | 3.880 | % | $ | 27,800,000 | ||||||||||||
12,175 | Birmingham Refunding, Series A (AMBAC Insured) | A | 3.900 | 12,175,000 | |||||||||||||||
10,900 | Jefferson County Limited Obligation School Warrants, Series B (AMBAC Insured) | A | 3.430 | 10,900,000 | |||||||||||||||
11,265 | Mobile Industrial Development Board, Dock and Wharf Revenue Refunding (Holnam, Inc. Project), Series A | A | 3.890 | 11,265,000 | |||||||||||||||
12,700 | Port City Medical Clinic Board Revenue (Infirmary Health Systems), Series A (AMBAC Insured) | A | 3.890 | 12,700,000 | |||||||||||||||
74,840,000 | |||||||||||||||||||
Alaska—2.76% | |||||||||||||||||||
27,695 | Alaska Housing Finance Corp., Series A | A | 3.980 | 27,695,000 | |||||||||||||||
15,740 | Valdez Marine Terminal Revenue Refunding (BP Pipelines, Inc. Project) | A | 3.970 | 15,740,000 | |||||||||||||||
38,375 | Valdez Marine Terminal Revenue Refunding (BP Pipelines, Inc. Project), Series B | A | 3.970 | 38,375,000 | |||||||||||||||
39,000 | Valdez Marine Terminal Revenue Refunding (BP Pipelines, Inc. Project), Series C | A | 3.970 | 39,000,000 | |||||||||||||||
120,810,000 |
25
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Arizona—3.64% | |||||||||||||||||||
$ | 11,200 | Apache County Industrial Development Authority (Tucson Electric Power Co. - Springerville Project), Series B | A | 3.930 | % | $ | 11,200,000 | ||||||||||||
35,000 | Apache County Industrial Development Authority (Tucson Electric Power Co. - Springerville Project), Series C | A | 3.900 | 35,000,000 | |||||||||||||||
25,550 | Arizona Health Facilities Authority Revenue (Banner Health), Series A (MBIA Insured) | A | 3.890 | 25,550,000 | |||||||||||||||
29,985 | Arizona Health Facilities Authority Revenue (Banner Health), Series B (FGIC Insured) | A | 3.890 | 29,985,000 | |||||||||||||||
23,000 | Arizona Health Facilities Authority Revenue (Catholic Healthcare West), Series B | A | 3.930 | 23,000,000 | |||||||||||||||
12,700 | McAllister Academic Village LLC Revenue (Arizona State University Project), Series B (AMBAC Insured) | A | 3.970 | 12,700,000 | |||||||||||||||
13,505 | Mesa Utility System Revenue (PUTTERs), Series 1638 (FGIC Insured)1 | A | 3.970 | 13,505,000 | |||||||||||||||
8,200 | Pima County Industrial Development Authority (Tucson Electric Power Co. - Irvington Project), Series A | A | 3.930 | 8,200,000 | |||||||||||||||
159,140,000 |
26
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Colorado—2.52% | |||||||||||||||||||
$ | 2,000 | Colorado Educational and Cultural Facilities Authority Revenue (National Jewish Federation Board Program), Series A-9 | A | 4.000 | % | $ | 2,000,000 | ||||||||||||
3,050 | Colorado Educational and Cultural Facilities Authority Revenue (National Jewish Federation Board Program), Series C-2 | A | 4.000 | 3,050,000 | |||||||||||||||
12,085 | Colorado Educational and Cultural Facilities Authority Revenue Refunding (National Jewish Federation Board Program), Series A-8 | A | 4.000 | 12,085,000 | |||||||||||||||
12,620 | Colorado Educational and Cultural Facilities Authority Revenue Refunding (National Jewish Federation Board Program), Series B-1 | A | 4.000 | 12,620,000 | |||||||||||||||
9,300 | Colorado Educational and Cultural Facilities Authority Revenue Refunding (National Jewish Federation Board Program), Series C-1 | A | 4.000 | 9,300,000 | |||||||||||||||
6,955 | Colorado Springs Revenue (Colorado College Project) | A | 4.000 | 6,955,000 | |||||||||||||||
24,985 | Denver City & County Certificates of Participation Refunding (Wellington E Web Project), Series C-1 (AMBAC Insured) | A | 3.930 | 24,985,000 | |||||||||||||||
10,395 | El Paso County Revenue (YMCA Pikes Peak Region Project) | A | 3.910 | 10,395,000 |
27
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Colorado—(concluded) | |||||||||||||||||||
$ | 29,060 | University of Colorado Hospital Authority Revenue, Series A (FSA Insured) | A | 3.890 | % | $ | 29,060,000 | ||||||||||||
110,450,000 | |||||||||||||||||||
Delaware—1.02% | |||||||||||||||||||
30,000 | Delaware State Economic Development Authority Revenue (Hospital Billing and Collection), Series A | A | 3.930 | 30,000,000 | |||||||||||||||
14,520 | University of Delaware Revenue, Series A | A | 3.920 | 14,520,000 | |||||||||||||||
44,520,000 | |||||||||||||||||||
District of Columbia—1.33% | |||||||||||||||||||
25,000 | District of Columbia Revenue (George Washington University), Series B (MBIA Insured) | A | 3.950 | 25,000,000 | |||||||||||||||
8,700 | District of Columbia Revenue (Hillel: The Foundation for Jewish Campus Life) | A | 3.920 | 8,700,000 | |||||||||||||||
15,485 | District of Columbia Revenue (Pooled Loan Program), Series A | A | 3.900 | 15,485,000 | |||||||||||||||
9,100 | District of Columbia, Series D-1 (FSA Insured) | A | 3.890 | 9,100,000 | |||||||||||||||
58,285,000 | |||||||||||||||||||
Florida—5.53% | |||||||||||||||||||
11,800 | Alachua County Health Facilities Authority Revenue (Shands Teaching Hospital), Series A | A | 3.990 | 11,800,000 | |||||||||||||||
14,290 | Collier County Water & Sewer (ABN AMRO MuniTops Certificates of Trust Series 2006-82) (MBIA Insured)1 | A | 3.950 | 14,290,000 |
28
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Florida—(concluded) | |||||||||||||||||||
$60,660 | Dade County Water & Sewer System Revenue (FGIC Insured) | A | 3.630 to 3.890% | $ | 60,660,000 | ||||||||||||||
12,700 | Florida Department of Environmental Protection Preservation Revenue (Everglades Restoration), Series A (AMBAC Insured) | A | 3.890 | 12,700,000 | |||||||||||||||
38,400 | Florida Keys Aqueduct Authority Water Revenue Refunding (CIFG Insured) | A | 3.900 | 38,400,000 | |||||||||||||||
16,000 | Highlands County Health Facilities Authority Revenue (Adventist Health Hospital), Series A | A | 3.950 | 16,000,000 | |||||||||||||||
8,555 | Indian River County School Board Certificates Partnership (PUTTERs), Series 1498 (MBIA Insured)1 | A | 3.970 | 8,555,000 | |||||||||||||||
12,275 | Lakeland Educational Facilities Revenue (Florida Southern College of Lakeland Project) | A | 3.910 | 12,275,000 | |||||||||||||||
12,900 | Nassau County Pollution Control Revenue (ITT Rayonier, Inc. Project) | A | 3.900 | 12,900,000 | |||||||||||||||
6,500 | Pinellas County Health Facility Authority Revenue Refunding (Hospital Facilities-Bayfront Project) | A | 3.990 | 6,500,000 | |||||||||||||||
47,800 | Sunshine State Governmental Financing Commission Revenue (AMBAC Insured) | A | 3.970 | 47,800,000 | |||||||||||||||
241,880,000 |
29
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Georgia—1.47% | |||||||||||||||||||
$ | 8,910 | Burke County Development Authority, Pollution Control Revenue (Oglethorpe Power Corp.), Series A (FGIC Insured) | A | 3.930 | % | $ | 8,910,000 | ||||||||||||
10,000 | Fulton County Development Authority Revenue (Boys & Girls Club of America) | A | 3.920 | 10,000,000 | |||||||||||||||
15,600 | Hapeville Development Authority Industrial Development Revenue (Hapeville Hotel Ltd.) | A | 3.880 | 15,600,000 | |||||||||||||||
17,800 | Macon-Bibb County Hospital Authority Revenue Anticipation Certificates (Central Georgia Health) | A | 3.990 | 17,800,000 | |||||||||||||||
12,080 | Metropolitan Atlanta Rapid Transit Authority Sales Tax Revenue, Series A | A | 3.960 | 12,080,000 | |||||||||||||||
64,390,000 | |||||||||||||||||||
Illinois—10.44% | |||||||||||||||||||
10,225 | Chicago Board of Education, Series C-1 (FSA Insured) | A | 3.970 | 10,225,000 | |||||||||||||||
22,745 | Chicago (Neighborhoods Alive 21 Program), Series B (MBIA Insured) | A | 3.950 | 22,745,000 | |||||||||||||||
40,000 | Chicago Metropolitan Water Reclamation District Greater Chicago (Capital Improvement), Series E | A | 3.900 to 3.930 | 40,000,000 | |||||||||||||||
53,050 | Chicago O'Hare International Airport Revenue, Second Lien Series C | A | 3.900 | 53,050,000 |
30
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Illinois—(continued) | |||||||||||||||||||
$ | 52,900 | Chicago O'Hare International Airport Revenue, Third Lien Series C (CIFG Insured) | A | 3.900 | % | $ | 52,900,000 | ||||||||||||
7,900 | Chicago Project, Series B-1 (FSA Insured) | A | 3.930 | 7,900,000 | |||||||||||||||
10,000 | Chicago Refunding Project, Series D (FSA Insured) | A | 3.910 | 10,000,000 | |||||||||||||||
16,020 | Illinois Development Finance Authority, Multi-Family Housing Revenue Refunding (Orleans-Illinois Project) (FSA Insured) | A | 4.000 | 16,020,000 | |||||||||||||||
11,400 | Illinois Development Finance Authority Revenue (Chicago Symphony Orchestra) | A | 3.900 | 11,400,000 | |||||||||||||||
14,100 | Illinois Development Finance Authority Revenue (Francis W. Parker School Project) | A | 3.900 | 14,100,000 | |||||||||||||||
14,960 | Illinois Development Finance Authority Revenue (St. Vincent De Paul Project), Series A | A | 3.880 | 14,960,000 | |||||||||||||||
10,000 | Illinois Educational Facilities Authority Revenue (ACI/Cultural Pooled Financing) | A | 3.970 | 10,000,000 | |||||||||||||||
25,100 | Illinois Finance Authority Revenue (Chicago Historical Society) | A | 3.950 | 25,100,000 | |||||||||||||||
7,400 | Illinois Finance Authority Revenue (Proctor Hospital), Series B | A | 3.950 | 7,400,000 |
31
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Illinois—(concluded) | |||||||||||||||||||
$ | 25,400 | Illinois Health Facilities Authority Revenue Refunding (Advocate Health Care), Series B | A | 3.910 | % | $ | 25,400,000 | ||||||||||||
7,100 | Illinois Health Facilities Authority Revenue (University of Chicago Hospitals Project), Series C (MBIA Insured) | A | 3.890 | 7,100,000 | |||||||||||||||
53,475 | Illinois Toll & Highway Authority Priority Refunding, Series B (MBIA Insured) | A | 3.890 | 53,475,000 | |||||||||||||||
12,800 | Illinois Toll & Highway Authority Revenue (PUTTERs), Series 1014 (FSA Insured)1 | A | 3.970 | 12,800,000 | |||||||||||||||
11,300 | Illinois Toll & Highway Authority Revenue (PUTTERs), Series 1355 (FSA Insured)1 | A | 3.970 | 11,300,000 | |||||||||||||||
29,010 | Lemont Township High School District (ABN AMRO MuniTops Certificates of Trust Series 2006-26) (MBIA Insured)1 | A | 3.960 | 29,010,000 | |||||||||||||||
11,700 | University of Illinois, University Revenue Refunding (UIC South Campus Project), Series A (FGIC Insured) | A | 3.930 | 11,700,000 | |||||||||||||||
10,500 | Western Springs Special Assesment (Timber Trails Project) | A | 3.940 | 10,500,000 | |||||||||||||||
457,085,000 |
32
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Indiana—2.22% | |||||||||||||||||||
$ | 10,000 | Indiana Finance Authority, Environmental Improvement Revenue Refunding (Ispat Inland, Inc.) | A | 3.900 | % | $ | 10,000,000 | ||||||||||||
15,000 | Indiana Health & Educational Facilities Financing Authority Revenue Refunding (St. Francis Health Systems), Series A (MBIA Insured) | A | 3.900 | 15,000,000 | |||||||||||||||
12,815 | Indiana Health Facility Financing Authority, Hospital Revenue (Aces Rehabilitation Hospital) | A | 3.930 | 12,815,000 | |||||||||||||||
22,695 | Indianapolis Local Public Improvement Bond Bank Refunding (Waterworks Project), Series G-1 (MBIA Insured) | A | 3.890 | 22,695,000 | |||||||||||||||
12,150 | Purdue University Revenue (Student Facilities System), Series A | A | 3.970 | 12,150,000 | |||||||||||||||
24,515 | Purdue University Revenue (Student Fee), Series V | A | 3.970 | 24,515,000 | |||||||||||||||
97,175,000 | |||||||||||||||||||
Iowa—0.84% | |||||||||||||||||||
16,900 | Iowa Higher Education Loan Authority Revenue (ACES Education Loan Private College) (MBIA Insured) | A | 3.970 | 16,900,000 | |||||||||||||||
20,000 | Iowa Tax & Revenue Anticipation Notes | 06/29/07 | 4.250 | 20,069,384 | |||||||||||||||
36,969,384 |
33
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Kentucky—1.29% | |||||||||||||||||||
$ | 22,700 | Kenton County Airport Board, Special Facilities Revenue Refunding, Series B | A | 3.980 | % | $ | 22,700,000 | ||||||||||||
30,100 | Kentucky Public Energy Authority Gas Supply Revenue, Series A | A | 4.000 | 30,100,000 | |||||||||||||||
3,575 | Louisville & Jefferson County Visitors & Convention Community Refunding (Kentucky International Convention), Series B (FSA Insured) | A | 3.970 | 3,575,000 | |||||||||||||||
56,375,000 | |||||||||||||||||||
Louisiana—1.55% | |||||||||||||||||||
3,150 | Louisiana Citizens Property Insurance Corp. Assessment Revenue (PUTTERs), Series 1349 (AMBAC Insured)1 | A | 3.970 | 3,150,000 | |||||||||||||||
10,340 | Louisiana Gas & Fuels Tax Revenue (PUTTERs), Series 1598T (FSA Insured)1 | A | 3.970 | 10,340,000 | |||||||||||||||
18,600 | Louisiana Public Facilities Authority Revenue (Christus Health), Subseries C-2 (AMBAC Insured) | A | 3.890 | 18,600,000 | |||||||||||||||
11,905 | Louisiana Public Facilities Authority Revenue (College and University Equipment and Capital), Series A (FGIC Insured) | A | 4.000 | 11,905,000 | |||||||||||||||
7,800 | Louisiana Public Facilities Authority Revenue (Diocese Houma- Thibodaux Project) | A | 3.940 | 7,800,000 |
34
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Louisiana—(concluded) | |||||||||||||||||||
$ | 16,100 | South Louisiana Port Commission Marine Terminal Facilities Revenue Refunding (Occidental Petroleum) | A | 3.930 | % | $ | 16,100,000 | ||||||||||||
67,895,000 | |||||||||||||||||||
Maryland— 2.90% | |||||||||||||||||||
13,770 | Baltimore County Revenue (Oak Crest Village, Inc. Project), Series A | A | 3.920 | 13,770,000 | |||||||||||||||
19,700 | Baltimore Industrial Development Authority Revenue (Baltimore Capital Acquisition) | A | 3.900 | 19,700,000 | |||||||||||||||
28,900 | Maryland Health & Higher Educational Facilities Authority Revenue (Pooled Loan Program), Series A | A | 3.900 | 28,900,000 | |||||||||||||||
43,575 | Maryland Health & Higher Educational Facilities Authority Revenue (Pooled Loan Program), Series B | A | 3.890 | 43,575,000 | |||||||||||||||
11,146 | Maryland Health & Higher Educational Facilities Authority Revenue (Pooled Loan Program), Series D | A | 3.900 | 11,146,000 | |||||||||||||||
10,000 | Maryland Health & Higher Educational Facilities Authority Revenue (University of Maryland Medical Systems), Series E (FGIC Insured) | A | 3.950 | 10,000,000 | |||||||||||||||
127,091,000 |
35
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Massachusetts— 9.46% | |||||||||||||||||||
$ | 14,600 | Massachusetts Health & Educational Facilities Authority Revenue (Capital Asset Program), Series E | A | 3.890 | % | $ | 14,600,000 | ||||||||||||
3,280 | Massachusetts Health & Educational Facilities Authority Revenue (Children's Hospital), Series L-2 (AMBAC Insured) | A | 3.950 | 3,280,000 | |||||||||||||||
21,000 | Massachusetts Health & Educational Facilities Authority Revenue (Harvard University), Series GG-1 | A | 3.900 | 21,000,000 | |||||||||||||||
37,150 | Massachusetts Health & Educational Facilities Authority Revenue (Harvard University), Series R | A | 3.950 | 37,150,000 | |||||||||||||||
21,510 | Massachusetts Health & Educational Facilities Authority Revenue (Partners Healthcare System), Series P-1 (FSA Insured) | A | 3.880 | 21,510,000 | |||||||||||||||
14,650 | Massachusetts Health & Educational Facilities Authority Revenue (Partners Healthcare System), Series P-2 (FSA Insured) | A | 3.920 | 14,650,000 | |||||||||||||||
98,160 | Massachusetts State Refunding, Series A | A | 3.900 | 98,160,000 | |||||||||||||||
30,000 | Massachusetts State Refunding, Series B | A | 3.960 | 30,000,000 |
36
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Massachusetts—(concluded) | |||||||||||||||||||
$ | 24,850 | Massachusetts Water Resources Authority Refunding (General Multi-Modal), Subordinated Series B | A | 3.880 | % | $ | 24,850,000 | ||||||||||||
43,800 | Massachusetts Water Resources Authority Refunding (General Multi-Modal), Subordinated Series C | A | 3.880 | 43,800,000 | |||||||||||||||
25,000 | Massachusetts Water Resources Authority Refunding (General Multi-Modal), Subordinated Series D | A | 3.880 | 25,000,000 | |||||||||||||||
24,380 | Massachusetts Water Resources Authority, Series A | A | 3.890 | 24,380,000 | |||||||||||||||
37,800 | Route 3 North Transport Improvements Association, Lease Revenue (Demand Obligation Bond), Series B (AMBAC Insured) | A | 3.890 | 37,800,000 | |||||||||||||||
17,920 | University of Massachusetts Building Authority Project Revenue Refunding, Series 1 (AMBAC Insured) | A | 3.900 | 17,920,000 | |||||||||||||||
414,100,000 | |||||||||||||||||||
Michigan—1.26% | |||||||||||||||||||
30,000 | Kent Hospital Finance Authority Revenue Refunding (Spectrum Health), Series A (FGIC Insured) | A | 3.890 | 30,000,000 | |||||||||||||||
11,700 | Michigan Hospital Finance Authority Revenue (Ascension), Series B3 | A | 3.880 | 11,700,000 |
37
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Michigan—(concluded) | |||||||||||||||||||
$ | 13,365 | Michigan Housing Development Authority, Rental Housing Revenue, Series B (MBIA Insured) | A | 3.900 | % | $ | 13,365,000 | ||||||||||||
55,065,000 | |||||||||||||||||||
Minnesota—1.08% | |||||||||||||||||||
16,830 | Minneapolis Health Care System Revenue Refunding (Fairview Health Services), Series A (AMBAC Insured) | A | 3.900 | 16,830,000 | |||||||||||||||
30,320 | Minneapolis Health Care System Revenue Refunding (Fairview Health Services), Series C (MBIA Insured) | A | 3.900 | 30,320,000 | |||||||||||||||
47,150,000 | |||||||||||||||||||
Missouri—2.38% | |||||||||||||||||||
34,415 | Kansas City Industrial Development Authority Student Housing Facilities Revenue (Oak Street West Student) | A | 3.910 | 34,415,000 | |||||||||||||||
10,400 | Missouri Health & Educational Facilities Authority Revenue (Assemblies of God College) | A | 3.900 | 10,400,000 | |||||||||||||||
11,477 | Missouri Health & Educational Facilities Authority Revenue (Barnes Hospital Project), Series B | A | 3.950 | 11,477,000 |
38
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Missouri—(concluded) | |||||||||||||||||||
$ | 19,300 | Missouri Health & Educational Facilities Authority Revenue (SSM Health Care), Series C-4 (FSA Insured) | A | 3.900 | % | $ | 19,300,000 | ||||||||||||
15,700 | Missouri Health & Educational Facilities Authority Revenue (St. Louis University), Series A (MBIA Insured) | A | 3.950 | 15,700,000 | |||||||||||||||
3,675 | Missouri Health & Educational Facilities Authority Revenue (Washington University), Series A | A | 3.980 | 3,675,000 | |||||||||||||||
9,200 | Missouri Health & Educational Facilities Authority Revenue (Washington University), Series B | A | 3.890 | 9,200,000 | |||||||||||||||
104,167,000 | |||||||||||||||||||
Nebraska—0.44% | |||||||||||||||||||
11,100 | NEBHELP, Inc. Revenue (Multiple-Mode), Series E (MBIA Insured) | A | 4.000 | 11,100,000 | |||||||||||||||
8,330 | Nebraska Public Power District Revenue (PUTTERs), Series 1563 (FGIC Insured) | A | 3.970 | 8,330,000 | |||||||||||||||
19,430,000 | |||||||||||||||||||
Nevada—2.38% | |||||||||||||||||||
33,700 | Clark County Airport Revenue, Sub Lien, Series C (FGIC Insured) | A | 3.900 | 33,700,000 | |||||||||||||||
44,000 | Clark County Airport Revenue, Sub Lien, Series D-1 (FGIC Insured) | A | 3.900 | 44,000,000 |
39
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Nevada—(concluded) | |||||||||||||||||||
$ | 26,650 | Clark County School District (PUTTERs), Series 1653 (AMBAC Insured)1 | A | 3.950 | % | $ | 26,650,000 | ||||||||||||
104,350,000 | |||||||||||||||||||
New Hampshire—0.32% | |||||||||||||||||||
13,800 | New Hampshire Business Finance Authority Resource Recovery Revenue Refunding (Wheelabrator Technologies Inc.), Series A | A | 3.900 | 13,800,000 | |||||||||||||||
New Mexico—0.39% | |||||||||||||||||||
17,170 | New Mexico Hospital Equipment Loan Council Hospital Revenue (Presbyterian Healthcare), Series A (FSA Insured) | A | 3.910 | 17,170,000 | |||||||||||||||
New York—0.08% | |||||||||||||||||||
3,600 | New York City Industrial Development Agency Revenue (Liberty, 1 Bryant Park LLC), Series B | A | 4.000 | 3,600,000 | |||||||||||||||
North Carolina—6.21% | |||||||||||||||||||
9,800 | Charlotte Certificates of Participation (Government Facilities Authority), Series F | A | 3.900 | 9,800,000 | |||||||||||||||
68,350 | Charlotte Water & Sewer System Revenue Refunding, Series C | A | 3.890 | 68,350,000 | |||||||||||||||
20,400 | Concord Utilities System Revenue Refunding, Series B (FSA Insured) | A | 3.890 | 20,400,000 | |||||||||||||||
10,300 | Fayetteville Public Works Commission Revenue Refunding, Series A (FSA Insured) | A | 3.900 | 10,300,000 |
40
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
North Carolina—(concluded) | |||||||||||||||||||
$ | 59,815 | Mecklenburg County Certificates of Participation | A | 3.890 | % | $ | 59,815,000 | ||||||||||||
11,760 | North Carolina Educational Facilities Finance Agency Revenue (Elon College) | A | 3.950 | 11,760,000 | |||||||||||||||
9,050 | North Carolina Medical Care Commission Health Care Facilities Revenue (Duke University Health Systems), Series B | A | 3.880 | 9,050,000 | |||||||||||||||
16,550 | North Carolina Medical Care Commission Hospital Revenue (Baptist Hospitals Project) | A | 3.890 | 16,550,000 | |||||||||||||||
9,975 | North Carolina Medical Care Commission Hospital Revenue (Duke University Hospital), Series B | A | 3.950 | 9,975,000 | |||||||||||||||
21,050 | North Carolina Refunding, Series C | A | 3.890 | 21,050,000 | |||||||||||||||
27,595 | Union County, Series A | A | 3.890 | 27,595,000 | |||||||||||||||
7,000 | Wake County (Public Improvement), Series C | A | 3.890 | 7,000,000 | |||||||||||||||
271,645,000 | |||||||||||||||||||
Ohio—3.54% | |||||||||||||||||||
10,000 | Butler County Capital Funding Revenue (CCAO Low Cost Capital), Series A | A | 3.930 | 10,000,000 | |||||||||||||||
10,200 | Columbus (Sanitation Sewer), Series 1 | A | 3.930 | 10,200,000 | |||||||||||||||
18,900 | Columbus Sewer Revenue Refunding | A | 3.900 | 18,900,000 | |||||||||||||||
29,415 | Franklin County Hospital Revenue Refunding and Improvement (US Health Corp.), Series A | A | 3.890 | 29,415,000 |
41
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Ohio—(concluded) | |||||||||||||||||||
$ | 9,800 | Franklin County Hospital Revenue Refunding Subordinated (OhioHealth Doctors Hospital), Series B | A | 3.890 | % | $ | 9,800,000 | ||||||||||||
14,200 | Ohio Air Quality Development Authority Revenue Refunding (Ohio Edison Project), Series A | A | 3.900 | 14,200,000 | |||||||||||||||
20,000 | Ohio Air Quality Development Authority Revenue Refunding Pollution Control (Firstenergy), Series A | A | 3.950 | 20,000,000 | |||||||||||||||
20,000 | Ohio Water Development Authority Pollution Control Facilities Revenue Refunding (Firstenergy Nuclear), Series B | A | 3.870 | 20,000,000 | |||||||||||||||
14,900 | Ohio Water Development Authority Revenue Refunding (Water Development - Pure Water Project) (MBIA Insured) | A | 3.880 | 14,900,000 | |||||||||||||||
7,495 | Olentangy Local School District (PUTTERs), Series 1560 (FSA Insured) | A | 3.970 | 7,495,000 | |||||||||||||||
154,910,000 | |||||||||||||||||||
Oklahoma—1.51% | |||||||||||||||||||
29,500 | Oklahoma Turnpike Authority Revenue Refunding, Second Senior Revenue, Series B (XLCA Insured) | A | 3.900 | 29,500,000 |
42
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Oklahoma—(concluded) | |||||||||||||||||||
$ | 11,600 | Oklahoma Turnpike Authority Revenue Refunding, Second Senior Revenue, Series D (XLCA Insured) | A | 3.950 | % | $ | 11,600,000 | ||||||||||||
25,000 | Oklahoma Turnpike Authority Revenue Refunding, Second Senior Revenue, Series E (XLCA Insured) | A | 3.950 | 25,000,000 | |||||||||||||||
66,100,000 | |||||||||||||||||||
Oregon—0.30% | |||||||||||||||||||
13,000 | Medford Hospital Facilities Authority Revenue (Cascade Manor Project) | A | 4.000 | 13,000,000 | |||||||||||||||
Pennsylvania—5.42% | |||||||||||||||||||
10,030 | Butler County General Authority Revenue Refunding (Conneaut School District Project), Series A | A | 3.950 | 10,030,000 | |||||||||||||||
10,490 | Cumberland County Municipal Authority Revenue Refunding (Lutheran Services Northeast/Tressler Lutheran Services Obligated Group Project), Series C | A | 3.920 | 10,490,000 | |||||||||||||||
13,775 | Delaware County Authority, Hospital Revenue (Crozer- Chester Medical Center) | A | 3.910 | 13,775,000 | |||||||||||||||
45,450 | Delaware Valley Regional Finance Authority (Local Government Revenue) | A | 3.910 | 45,450,000 |
43
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Pennsylvania—(concluded) | |||||||||||||||||||
$ | 16,200 | Delaware Valley Regional Finance Authority (Local Government Revenue), Series C | A | 3.910 | % | $ | 16,200,000 | ||||||||||||
7,000 | Franklin County Industrial Development Authority Revenue (Menno Haven, Inc. Project) | A | 3.940 | 7,000,000 | |||||||||||||||
25,435 | Lancaster County Hospital Authority Revenue (Health Center, Masonic Homes Project) (AMBAC Insured) | A | 3.920 | 25,435,000 | |||||||||||||||
9,000 | Philadelphia Authority for Industrial Development Revenue (Regional Performing Arts Center Project) | A | 3.900 | 9,000,000 | |||||||||||||||
15,260 | Philadelphia Water & Wastewater Revenue Refunding (FSA Insured) | A | 3.890 | 15,260,000 | |||||||||||||||
56,915 | Philadelphia Water & Wastewater Revenue Refunding, Series B (FSA Insured) | A | 3.890 | 56,915,000 | |||||||||||||||
14,200 | University of Pittsburgh of the Commonwealth Systems of Higher Education (University Capital Project), Series B | A | 3.970 | 14,200,000 | |||||||||||||||
13,720 | York General Authority Revenue (Pooled Financing Subordinated), Series B (AMBAC Insured) | A | 3.920 | 13,720,000 | |||||||||||||||
237,475,000 |
44
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
South Carolina—1.63% | |||||||||||||||||||
$ | 14,850 | Berkeley County Water & Sewer Revenue Refunding System, Series A (XLCA Insured) | A | 3.900 | % | $ | 14,850,000 | ||||||||||||
7,200 | Dorchester County Tax Anticipation Notes | 04/13/07 | 4.500 | 7,215,315 | |||||||||||||||
27,800 | Piedmont Municipal Power Agency, South Carolina Electric Revenue Refunding, Series A (MBIA Insured) | A | 4.000 | 27,800,000 | |||||||||||||||
10,000 | South Carolina Educational Facilities Authority for Private Nonprofit Institutions of Higher Learning Refunding and Improvement (Anderson College) | A | 3.900 | 10,000,000 | |||||||||||||||
11,325 | South Carolina Jobs- Economic Development Authority, Hospital Facilities Revenue (Regional Medical Center of Orangeburg) (AMBAC Insured) | A | 3.890 | 11,325,000 | |||||||||||||||
71,190,315 | |||||||||||||||||||
Tennessee—3.03% | |||||||||||||||||||
13,805 | Knox County Health Educational & Housing Facilities Board Revenue Refunding (Baptist Hospital Systems Project) | A | 3.930 | 13,805,000 | |||||||||||||||
11,000 | Metropolitan Government of Nashville & Davidson County, Industrial Development (David Lipscomb University Project) | A | 3.920 | 11,000,000 |
45
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Tennessee—(concluded) | |||||||||||||||||||
$ | 13,140 | Metropolitan Government of Nashville & Davidson County, Industrial Development Refunding (David Lipscomb University Project) | A | 3.920 | % | $ | 13,140,000 | ||||||||||||
16,000 | Montgomery County Public Building Authority Pooled Financing Revenue (Tennessee County Loan Pool) | A | 3.900 | 16,000,000 | |||||||||||||||
78,550 | Shelby County Public Improvement and School, Series B | A | 3.930 | 78,550,000 | |||||||||||||||
132,495,000 | |||||||||||||||||||
Texas—8.53% | |||||||||||||||||||
23,100 | Arlington Special Obligation (Special Tax- Dallas Cowboys), Series B (MBIA Insured) | A | 3.950 | 23,100,000 | |||||||||||||||
15,000 | Dallas North Tollway System Revenue, Series C (FGIC Insured) | A | 3.900 | 15,000,000 | |||||||||||||||
20,955 | Harris County Health Facilities Development Corp. Revenue (Christus Health), Series A-2 (AMBAC Insured) | A | 3.890 | 20,955,000 | |||||||||||||||
81,000 | Harris County Health Facilities Development Corp. Revenue (Methodist Hospital Systems), Series A | A | 3.990 | 81,000,000 | |||||||||||||||
29,800 | Harris County Health Facilities Development Corp. Revenue (St. Luke's Episcopal Hospital), Series B | A | 3.990 | 29,800,000 |
46
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Texas—(continued) | |||||||||||||||||||
$ | 5,000 | Hockley County Industrial Development Corp. Pollution Control Revenue (Amoco Project, Standard Oil Co.) | A | 3.650 | % | $ | 5,000,799 | ||||||||||||
13,615 | North Texas Municipal Water District Water Systems Revenue (PUTTERs), Series 1656 (FGIC Insured)1 | A | 3.970 | 13,615,000 | |||||||||||||||
21,380 | Pasadena Independent School District, ABN AMRO MuniTops Certificates of Trust Series 2006-57 (PSF-GTD)1 | A | 3.960 | 21,380,000 | |||||||||||||||
14,180 | San Antonio Water Revenue (PUTTERs), Series 1196 (MBIA Insured)1 | A | 3.970 | 14,180,000 | |||||||||||||||
7,825 | San Marcos Consolidated Independent School District (PUTTERs), Series 1506 (PSF-GTD) | A | 3.660 | 7,825,000 | |||||||||||||||
7,050 | Tarrant County Housing Finance Corp. Revenue Refunding (Multi-Family Housing Apartments Project) | A | 4.010 | 7,050,000 | |||||||||||||||
70,000 | Texas Tax and Revenue Anticipation Notes | 08/31/07 | 4.500 | 70,422,936 | |||||||||||||||
24,165 | Texas Turnpike Authority, Central Texas Turnpike System Revenue, First Tier, Series B (AMBAC Insured) | A | 3.890 | 24,165,000 | |||||||||||||||
15,000 | Waco Educational Finance Corp. Revenue (Baylor University) (XLCA Insured) | A | 3.970 | 15,000,000 |
47
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
Texas—(concluded) | |||||||||||||||||||
$ | 18,700 | Waco Educational Finance Corp. Revenue (Baylor University), Series A (XLCA Insured) | A | 3.970 | % | $ | 18,700,000 | ||||||||||||
6,230 | Williamson County (PUTTERs), Series 1511 (FSA Insured) | A | 3.970 | 6,230,000 | |||||||||||||||
373,423,735 | |||||||||||||||||||
Utah—0.16% | |||||||||||||||||||
7,000 | Utah Transit Authority Sales Tax Revenue, Subseries B | A | 3.880 | 7,000,000 | |||||||||||||||
Virginia—0.23% | |||||||||||||||||||
10,000 | Charlottesville Industrial Development Authority Educational Facilities Revenue (University of Virginia Foundation Projects), Series B | A | 3.900 | 10,000,000 | |||||||||||||||
Washington—3.69% | |||||||||||||||||||
23,000 | Energy Northwest Washington Electric Revenue Refunding (Project No. 3), Series D-3-1 (FSA Insured) | A | 3.890 | 23,000,000 | |||||||||||||||
23,195 | King County Sewer Revenue (Junior Lien), Series A | A | 3.920 | 23,195,000 | |||||||||||||||
22,200 | King County Sewer Revenue (Junior Lien), Series B | A | 4.000 | 22,200,000 | |||||||||||||||
35,370 | Snohomish County Public Utility District No. 001, Electric Revenue Refunding (Generation Systems), Series 2001A (FSA Insured) | A | 3.890 | 35,370,000 |
48
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(concluded) | |||||||||||||||||||
Washington—(concluded) | |||||||||||||||||||
$ | 10,000 | Tulalip Tribes of The Tulalip Reservation Special Revenue Refunding | A | 3.920 | % | $ | 10,000,000 | ||||||||||||
21,420 | Washington Public Power Supply Systems Nuclear Project No. 1 Revenue Refunding, Series 1A-2 | A | 3.900 | 21,420,000 | |||||||||||||||
26,395 | Washington Public Power Supply Systems Nuclear Project No. 3 Electric Revenue Refunding, Series 3A (MBIA Insured) | A | 3.900 | 26,395,000 | |||||||||||||||
161,580,000 | |||||||||||||||||||
Wisconsin—0.83% | |||||||||||||||||||
11,000 | Oconomowoc Area School District Tax & Revenue Anticipation Notes | 08/23/07 | 4.500 | 11,061,477 | |||||||||||||||
10,000 | Wisconsin Center District Tax Revenue, Series A | A | 3.900 | 10,000,000 | |||||||||||||||
15,200 | Wisconsin Health & Educational Facilities Authority Revenue (Wheaton Franciscan Services), Series B | A | 3.900 | 15,200,000 | |||||||||||||||
36,261,477 | |||||||||||||||||||
Total municipal bonds and notes (cost—$4,030,817,911) | 4,030,817,911 |
49
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Tax-exempt commercial paper—10.84% | |||||||||||||||||||
Arizona—0.33% | |||||||||||||||||||
$ | 14,500 | Salt River Agricultural Improvement & Power District | 02/06/07 to 02/08/07 | 3.570 to 3.600% | $ | 14,500,000 | |||||||||||||
District of Columbia—0.26% | |||||||||||||||||||
11,500 | District of Columbia (National Academy of Sciences) | 02/06/07 | 3.600 | 11,500,000 | |||||||||||||||
Florida—3.28% | |||||||||||||||||||
15,000 | City of Cape Coral | 02/01/07 | 3.590 | 15,000,000 | |||||||||||||||
22,016 | Florida Local Government Finance Commission Pooled Loan Program | 02/22/07 to 02/23/07 | 3.580 to 3.650 | 22,016,000 | |||||||||||||||
62,200 | Jacksonville Electric Authority | 01/23/07 to 03/13/07 | 3.550 to 3.630 | 62,200,000 | |||||||||||||||
25,000 | Jacksonville Electric Authority, Series 200-F | 01/16/07 to 01/17/07 | 3.550 to 3.580 | 25,000,000 | |||||||||||||||
10,000 | Jacksonville Electric Authority, Series C | 04/10/07 | 3.580 | 10,000,000 | |||||||||||||||
9,200 | Palm Beach County School District | 02/08/07 | 3.570 | 9,200,000 | |||||||||||||||
143,416,000 | |||||||||||||||||||
Illinois—1.14% | |||||||||||||||||||
40,000 | Evanston Hospital | 01/18/07 to 03/01/07 | 3.570 to 3.600 | 40,000,000 | |||||||||||||||
10,000 | Illinois Educational Facilities Authority Revenue | 02/14/07 | 3.580 | 10,000,000 | |||||||||||||||
50,000,000 |
50
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Tax-exempt commercial paper—(continued) | |||||||||||||||||||
Louisiana—0.32% | |||||||||||||||||||
$ | 13,970 | Louisiana Offshore Terminal Authority Deepwater Port Revenue Refunding (Loop, Inc. First Stage), Series A | 03/15/07 | 3.670 | % | $ | 13,970,000 | ||||||||||||
Massachusetts—0.34% | |||||||||||||||||||
15,000 | State of Massachusetts | 02/07/07 | 3.620 | 15,000,000 | |||||||||||||||
Minnesota—0.31% | |||||||||||||||||||
13,600 | City of Rochester (Mayo Clinic) | 02/08/07 to 03/14/07 | 3.550 to 3.600 | 13,600,000 | |||||||||||||||
North Carolina—0.54% | |||||||||||||||||||
23,726 | Wake County | 02/16/07 | 3.550 to 3.600 | 23,726,000 | |||||||||||||||
Tennessee—1.08% | |||||||||||||||||||
11,300 | State of Tennesee, Series A | 01/16/07 | 3.600 | 11,300,000 | |||||||||||||||
35,900 | Tennessee State School Bond Authority, Series 1997 | 02/13/07 to 03/12/07 | 3.580 to 3.630 | 35,900,000 | |||||||||||||||
47,200,000 | |||||||||||||||||||
Texas—3.24% | |||||||||||||||||||
3,871 | Austin Utility Systems Revenue | 03/02/07 | 3.600 | 3,871,000 | |||||||||||||||
30,600 | Houston Higher Education Finance Authority (Rice University) | 02/09/07 to 03/08/07 | 3.550 to 3.600 | 30,600,000 | |||||||||||||||
45,000 | San Antonio Electric and Gas, Series A | 02/09/07 to 03/12/07 | 3.550 to 3.580 | 45,000,000 | |||||||||||||||
16,700 | San Antonio Water and Sewer | 03/13/07 | 3.550 | 16,700,000 |
51
UBS RMA Tax-Free Fund Inc.
Statement of net assets—December 31, 2006
(unaudited)
Principal amount (000) | Maturity dates | Interest rate | Value | ||||||||||||||||
Tax-exempt commercial paper—(concluded) | |||||||||||||||||||
Texas—(concluded) | |||||||||||||||||||
$ | 45,500 | Texas Public Finance Authority | 01/18/07 to 02/13/07 | 3.580 | % | $ | 45,500,000 | ||||||||||||
141,671,000 | |||||||||||||||||||
Total tax-exempt commercial paper (cost—$474,583,000) | 474,583,000 | ||||||||||||||||||
Total investments (cost—$4,505,400,911) which approximates cost for federal income tax purposes—102.93% | 4,505,400,911 | ||||||||||||||||||
Liabilities in excess of other assets—(2.93)% | (128,107,413 | ) | |||||||||||||||||
Net assets (applicable to 4,378,029,257 shares of common stock outstanding equivalent to $1.00 per share)—100.00% | $ | 4,377,293,498 |
A Variable rate demand notes are payable on demand. The interest rates shown are the current rates as of December 31, 2006 and reset periodically.
1 Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities, which represent 4.08% of net assets as of December 31, 2006, are considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers.
ACES Adjustable Convertible Extendable Securities
ACI Associated Colleges of Illinois
AMBAC American Municipal Bond Assurance Corporation
CCAO County Commissioners Association of Ohio
CIFG CDC IXIS Financial Guaranty
FGIC Financial Guaranty Insurance Company
FSA Financial Security Assurance
GTD Guaranteed
MBIA Municipal Bond Investors Assurance
PSF Permanent School Fund
PUTTERs Puttable tax-exempt receipts
XLCA XL Capital Assurance
Weighted average maturity—15 days
See accompanying notes to financial statements
52
UBS RMA California Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—91.58% | |||||||||||||||||||
$ | 600 | California, Daily Kindergarten Universal, Series A-1 | A | 3.780 | % | $ | 600,000 | ||||||||||||
14,000 | California, Daily Kindergarten Universal, Series B-2 | A | 3.750 | 14,000,000 | |||||||||||||||
10,000 | California Department of Water Resources Power Supply Revenue (PUTTERs), Series 344 (AMBAC Insured)1 | A | 3.910 | 10,000,000 | |||||||||||||||
14,725 | California Department of Water Resources Power Supply Revenue, Series A (MBIA Insured) | 05/01/07 | 5.250 | 14,810,539 | |||||||||||||||
18,060 | California Department of Water Resources Power Supply Revenue, Series C-4 | A | 3.840 | 18,060,000 | |||||||||||||||
10,500 | California Department of Water Resources Power Supply Revenue, Subseries G-14 (FGIC Insured) | A | 3.840 | 10,500,000 | |||||||||||||||
12,000 | California Educational Facilities Authority Revenue (California Institute of Technology), Series B | A | 3.830 | 12,000,000 | |||||||||||||||
10,100 | California Educational Facilities Authority Revenue Refunding (Carnegie Institution of Washington), Series A | A | 3.840 | 10,100,000 | |||||||||||||||
25,250 | California Educational Facilities Authority Revenue (Stanford University), Series S-4 | A | 3.880 | 25,250,000 |
53
UBS RMA California Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 10,000 | California Health Facilities Financing Authority (Catholic Health Facilities), Series J | A | 3.730 | % | $ | 10,000,000 | ||||||||||||
6,504 | California Health Facilities Financing Authority (Floating Pooled Loan Program), Series B (FGIC Insured) | A | 3.840 | 6,504,000 | |||||||||||||||
8,000 | California Health Facilities Financing Authority Revenue (Adventist Health Systems), Series A | A | 3.870 | 8,000,000 | |||||||||||||||
21,100 | California Health Facilities Financing Authority (Kaiser Permanente), Series C | A | 3.770 | 21,100,000 | |||||||||||||||
2,400 | California Infrastructure & Economic Development Revenue (Asian Art Museum Foundation) (MBIA Insured) | A | 3.920 | 2,400,000 | |||||||||||||||
15,500 | California Infrastructure & Economic Development Revenue (Buck Institute for Age Research) | A | 3.800 | 15,500,000 | |||||||||||||||
8,100 | California Infrastructure & Economic Development Revenue (Independent Systems Operation Corp. Project), Series B (MBIA Insured) | A | 3.770 | 8,100,000 | |||||||||||||||
7,300 | California Pollution Control Financing Authority Pollution Control Revenue Refunding (Pacific Gas & Electric Corp.) | A | 3.920 | 7,300,000 | |||||||||||||||
2,300 | California Pollution Control Financing Authority Pollution Control Revenue Refunding (Pacific Gas & Electric Corp.), Series F | A | 3.920 | 2,300,000 |
54
UBS RMA California Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 6,000 | California, Series B, Subseries B-1 | A | 3.730 | % | $ | 6,000,000 | ||||||||||||
8,000 | California, Series B, Subseries B-5 | A | 3.780 | 8,000,000 | |||||||||||||||
5,000 | California, Series B-1 | A | 3.800 | 5,000,000 | |||||||||||||||
6,985 | California Statewide Communities Development Authority Revenue (Cathedral High School Project) | A | 3.700 | 6,985,000 | |||||||||||||||
1,700 | California Statewide Communities Development Authority Revenue (Concordia University Irvine Project), Series A | A | 3.920 | 1,700,000 | |||||||||||||||
10,000 | California Statewide Communities Development Authority Revenue (Kaiser Permanente), Series B | A | 3.770 | 10,000,000 | |||||||||||||||
3,400 | California Statewide Communities Development Authority Revenue (Kaiser Permanente), Series M | A | 3.770 | 3,400,000 | |||||||||||||||
8,420 | California Statewide Communities Development Authority Revenue (North Peninsula Jewish Campus) | A | 3.920 | 8,420,000 | |||||||||||||||
18,020 | California Transit Financing Authority (FSA Insured) | A | 3.840 | 18,020,000 | |||||||||||||||
4,200 | Association of Bay Area Governments Finance Authority for Nonprofit Corps. Revenue (Jewish Community Center Project) | A | 3.920 | 4,200,000 | |||||||||||||||
5,225 | Association of Bay Area Governments Finance Authority for Nonprofit Corps. Revenue (Jewish Home San Francisco) | A | 3.920 | 5,225,000 |
55
UBS RMA California Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 9,520 | Association of Bay Area Governments Finance Authority for Nonprofit Corps. Certificates of Participation (Lucile Salter Packard Project) (AMBAC Insured) | A | 3.800 | % | $ | 9,520,000 | ||||||||||||
5,525 | Bay Area Toll Authority Toll Bridge Revenue (San Francisco Bay Area), Series B (AMBAC Insured) | A | 3.690 | 5,525,000 | |||||||||||||||
8,000 | Bay Area Toll Authority Toll Bridge Revenue (San Francisco Bay Area), Series B-2 (XLCA Insured) | A | 3.690 | 8,000,000 | |||||||||||||||
8,000 | Bay Area Toll Authority Toll Bridge Revenue (San Francisco Bay Area), Series C (AMBAC Insured) | A | 3.730 | 8,000,000 | |||||||||||||||
22,000 | Desert Sands California Unified School District (ABN AMRO MuniTops Certificate Trust, Series 2006-41) (AMBAC Insured)1 | A | 3.940 | 22,000,000 | |||||||||||||||
1,700 | Dublin San Ramon Services District Sewer Revenue Certificates of Participation (MBIA Insured) | A | 3.830 | 1,700,000 | |||||||||||||||
10,525 | East Bay Municipal Utility District Wastewater Systems Revenue Refunding, Subseries 1 (XLCA Insured) | A | 3.720 | 10,525,000 | |||||||||||||||
7,465 | East Bay Municipal Utility District Water Systems Revenue Refunding, Subseries A (FSA Insured) | A | 3.710 | 7,465,000 |
56
UBS RMA California Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 6,000 | East Bay Municipal Utility District Water Systems Revenue Refunding, Subseries B (XLCA Insured) | A | 3.700 | % | $ | 6,000,000 | ||||||||||||
10,600 | East Bay Municipal Utility District Water Systems Revenue Refunding, Subseries B-1 (XLCA Insured) | A | 3.720 | 10,600,000 | |||||||||||||||
9,935 | East Bay Municipal Utility District Water Systems Revenue Refunding, Subseries B-3 (XLCA Insured) | A | 3.840 | 9,935,000 | |||||||||||||||
2,490 | Greenfield Redevelopment Agency (PUTTERs), Series 1595 (AMBAC Insured)1 | A | 3.910 | 2,490,000 | |||||||||||||||
13,745 | Irvine Improvement Bond Act 1915 Limited Obligation (Assessment District 85-7-1) (FSA Insured) | A | 3.820 | 13,745,000 | |||||||||||||||
4,800 | Lodi Electric Systems Revenue Certificates of Participation, Series A (MBIA Insured) | A | 3.720 | 4,800,000 | |||||||||||||||
14,755 | Los Angeles County Tax and Revenue Anticipation Notes, Series A | 06/29/07 | 4.500 | 14,826,404 | |||||||||||||||
7,800 | Los Angeles County Transport Commission Sales Tax and Revenue, Series A (FGIC Insured) | A | 3.710 | 7,800,000 |
57
UBS RMA California Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 12,200 | Los Angeles Multi-Family Housing Revenue (Museum Terrace Apartments), Series H | A | 3.730 | % | $ | 12,200,000 | ||||||||||||
6,490 | Los Angeles Unified School District, Series 109 (FGIC Insured) | A | 3.920 | 6,490,000 | |||||||||||||||
3,500 | Los Angeles Unified School District (PUTTERs), Series 1442 (AMBAC Insured)1 | A | 3.910 | 3,500,000 | |||||||||||||||
14,000 | Los Angeles Unified School District (PUTTERs), Series 1558 (FGIC Insured) | A | 3.910 | 14,000,000 | |||||||||||||||
35,000 | Los Angeles Wastewater Systems Revenue Refunding, Subseries A (XLCA Insured) | A | 3.840 | 35,000,000 | |||||||||||||||
6,000 | Los Angeles Wastewater Systems Revenue Refunding, Subseries, B-1 (XLCA Insured) | A | 3.700 | 6,000,000 | |||||||||||||||
6,600 | Los Angeles Water and Power Revenue, Subseries A-3 | A | 3.730 | 6,600,000 | |||||||||||||||
5,000 | Los Angeles Water and Power Revenue, Subseries A-4 | A | 3.730 | 5,000,000 | |||||||||||||||
9,900 | Los Angeles Water and Power Revenue, Subseries A-5 | A | 3.750 | 9,900,000 | |||||||||||||||
10,000 | Los Angeles Water and Power Revenue, Subseries B-2 | A | 3.750 | 10,000,000 | |||||||||||||||
15,000 | Metropolitan Water District Southern California Waterworks Revenue Refunding, Series A-2 | A | 3.750 | 15,000,000 |
58
UBS RMA California Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 9,900 | Metropolitan Water District Southern California Waterworks Revenue Refunding, Series B-1 | A | 3.750 | % | $ | 9,900,000 | ||||||||||||
20,000 | Metropolitan Water District Southern California Waterworks Revenue Refunding, Series B-2 | A | 3.750 to 3.840 | 20,000,000 | |||||||||||||||
7,200 | Metropolitan Water District Southern California Waterworks Revenue Refunding, Series C | A | 3.750 | 7,200,000 | |||||||||||||||
10,460 | Metropolitan Water District Southern California Waterworks Revenue Refunding, Series C-2 | A | 3.750 | 10,460,000 | |||||||||||||||
2,900 | Newport Beach Revenue (Hoag Memorial Hospital), Series B | A | 3.880 | 2,900,000 | |||||||||||||||
5,545 | Newport Beach Revenue (Hoag Memorial Hospital), Series C | A | 3.880 | 5,545,000 | |||||||||||||||
16,100 | Northern California Power Agency Revenue Refunding (Hydroelectric No. 1-A) (MBIA Insured) | A | 3.720 | 16,100,000 | |||||||||||||||
7,005 | Northern California Transmission Agency Revenue Refunding (California-Oregon Transmission), Series A (FSA Insured) | A | 3.750 | 7,005,000 | |||||||||||||||
25,513 | Oakland Alameda County Coliseum Authority Lease Revenue | A | 3.870 | 25,513,000 | |||||||||||||||
15,000 | Oakland Alameda County Coliseum Authority Lease Revenue (Coliseum Project), Series C-2 | A | 3.750 | 15,000,000 |
59
UBS RMA California Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 6,490 | Orange County Apartment Development Revenue (Niguel Village), Series AA | A | 3.800 | % | $ | 6,490,000 | ||||||||||||
13,200 | Orange County Apartment Development Revenue (Seaside Meadow Partners), Series C (FHLMC Insured) | A | 3.720 | 13,200,000 | |||||||||||||||
3,100 | Orange County Sanitation District Certificates of Participation | A | 3.750 | 3,100,000 | |||||||||||||||
40,000 | Orange County Water District Revenue Certificates of Participation, Series A | A | 3.710 | 40,000,000 | |||||||||||||||
20,000 | Pittsburg Redevelopment Agency Tax Allocation (Los Medanos Community), Subordinated Series A (AMBAC Insured) | A | 3.850 | 20,000,000 | |||||||||||||||
4,700 | Riverside County Certificates of Participation (ACES Riverside County Public Facility), Series A | A | 3.800 | 4,700,000 | |||||||||||||||
5,430 | Sacramento County Certificates of Participation (Administration Center and Courthouse Project) | A | 3.840 | 5,430,000 | |||||||||||||||
5,500 | Sacramento County Sanitation District Financing Authority Revenue Subordinated Lien (Sacramento Regional County Sanitation District), Series C | A | 3.800 | 5,500,000 | |||||||||||||||
12,300 | Sacramento Unified School District Certificates of Participation (FSA Insured) | A | 3.820 | 12,300,000 |
60
UBS RMA California Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 10,000 | San Bernardino County Certificates of Participation (County Center Refinancing Project) | A | 3.730 | % | $ | 10,000,000 | ||||||||||||
10,000 | San Diego County Certificates of Participation | A | 3.730 | 10,000,000 | |||||||||||||||
7,060 | San Diego Unified School District, Series 110 (FSA Insured) | A | 3.920 | 7,060,000 | |||||||||||||||
4,350 | San Francisco City and County Airports Community International Airport Revenue Refunding, Second Series 33I (XLCA Insured) | A | 3.770 | 4,350,000 | |||||||||||||||
18,200 | San Francisco City and County Airports Community International Airport Revenue Refunding, Second Series 33J (XLCA Insured) | A | 3.700 | 18,200,000 | |||||||||||||||
4,000 | San Francisco City and County Redevelopment Agency Revenue (Community Facilities District No. 4) | A | 3.790 | 4,000,000 | |||||||||||||||
8,600 | San Jose Redevelopment Agency Revenue (Merged Area Redevelopment Project), Series B | A | 3.700 | 8,600,000 | |||||||||||||||
4,530 | San Jose Redevelopment Agency Tax Allocation (PUTTERs), Series 1620 (MBIA Insured)1 | A | 3.910 | 4,530,000 | |||||||||||||||
5,900 | San Jose Redevelopment Agency Tax Allocation (PUTTERs), Series 1621 (MBIA Insured)1 | A | 3.910 | 5,900,000 |
61
UBS RMA California Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 3,300 | San Pablo Redevelopment Agency Revenue, Subordinated Tax Allocation (10th TWP Project) (AMBAC Insured) | A | 3.850 | % | $ | 3,300,000 | ||||||||||||
5,100 | Santa Ana Health Facililies Revenue (Multi Modal Town and Country) | A | 3.920 | 5,100,000 | |||||||||||||||
8,800 | Santa Clara Unified School District Tax and Revenue Anticipation Notes | 07/02/07 | 4.500 | 8,841,536 | |||||||||||||||
4,680 | Santa Clara Valley Transmission Authority Sales Tax Revenue Refunding, Series B (AMBAC Insured) | A | 3.720 | 4,680,000 | |||||||||||||||
15,050 | Simi Valley Multi-Family Housing Revenue Refunding (Lincoln Wood Ranch) (FHLMC Insured) | A | 3.750 | 15,050,000 | |||||||||||||||
5,300 | South Placer Wastewater Authority California Wastewater Revenue, Series B (FGIC Insured) | A | 3.830 | 5,300,000 | |||||||||||||||
12,800 | Southern California Public Power Authority Transmission Project Revenue, Subordinated Refunding (Southern Transmission Project) (AMBAC Insured) | A | 3.720 | 12,800,000 | |||||||||||||||
5,450 | Turlock Irrigation District Certificates of Participation (Capital Improvement and Refunding Project) | A | 3.920 | 5,450,000 | |||||||||||||||
12,400 | Vernon Natural Gas Financing Authority Revenue (Vernon Gas Project), Series B (MBIA Insured) | A | 3.720 | 12,400,000 |
62
UBS RMA California Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(concluded) | |||||||||||||||||||
$ | 23,990 | Vernon Natural Gas Financing Authority Revenue (Vernon Gas Project), Series C (MBIA Insured) | A | 3.720 | % | $ | 23,990,000 | ||||||||||||
24,135 | Western Placer Unified School Certificates of Participation (School Facilities Project), Series A (FSA Insured) | A | 3.730 | 24,135,000 | |||||||||||||||
Total municipal bonds and notes (cost—$964,125,479) | 964,125,479 | ||||||||||||||||||
Tax-exempt commercial paper—9.02% | |||||||||||||||||||
17,500 | California Educational Facilities Authority (Carnegie Institute of Washington) | 01/08/07 | 3.500 to 3.600 | 17,500,000 | |||||||||||||||
9,700 | California Statewide Community Development Authority (Kaiser Permanente) | 02/09/07 to 03/08/07 | 3.500 to 3.520 | 9,700,000 | |||||||||||||||
5,610 | Long Beach Gas Utility | 02/06/07 to 03/05/07 | 3.470 to 3.520 | 5,610,000 | |||||||||||||||
1,250 | Los Angeles County Capital Asset Leasing Corp. | 02/09/07 | 3.520 | 1,250,000 | |||||||||||||||
15,000 | Los Angeles County Department of Water and Power | 03/06/07 to 03/09/07 | 3.440 to 3.450 | 15,000,000 | |||||||||||||||
5,000 | Los Angeles County Transportation | 03/09/07 | 3.410 | 5,000,000 | |||||||||||||||
3,500 | Riverside County | 02/14/07 | 3.500 | 3,500,000 | |||||||||||||||
18,136 | San Diego County Regional Transportation Commission | 01/18/07 to 03/12/07 | 3.430 to 3.500 | 18,136,000 | |||||||||||||||
3,500 | San Diego County Water | 03/08/07 | 3.520 | 3,500,000 | |||||||||||||||
7,000 | San Jose Finance Authority | 03/07/07 | 3.430 | 7,000,000 |
63
UBS RMA California Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Tax-exempt commercial paper—(concluded) | |||||||||||||||||||
$ | 3,000 | Turlock Irrigation District | 02/07/07 | 3.520 | % | $ | 3,000,000 | ||||||||||||
5,700 | Ventura County Public Finance Authority | 02/09/07 | 3.480 | 5,700,000 | |||||||||||||||
Total tax-exempt commercial paper (cost—$94,896,000) | 94,896,000 | ||||||||||||||||||
Total investments (cost—$1,059,021,479 which approximates cost for federal income tax purposes)—100.60% | 1,059,021,479 | ||||||||||||||||||
Liabilities in excess of other assets—(0.60)% | (6,270,857 | ) | |||||||||||||||||
Net assets (applicable to 1,053,164,143 shares of beneficial interest outstanding equivalent to $1.00 per share)—100.00% | $ | 1,052,750,622 |
A Variable rate demand notes are payable on demand. The interest rates shown are the current rates as of December 31, 2006 and reset periodically.
1 Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities, which represent 4.60% of net assets as of December 31, 2006, are considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers.
ACES Adjustable Convertible Extendable Securities
AMBAC American Municipal Bond Assurance Corporation
FGIC Financial Guaranty Insurance Company
FHLMC Federal Home Loan Mortgage Corporation
FSA Financial Security Assurance
MBIA Municipal Bond Investors Assurance
PUTTERs Puttable tax-exempt receipts
XLCA XL Capital Assurance
Weighted average maturity—15 days
See accompanying notes to financial statements
64
UBS RMA New York Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—90.82% | |||||||||||||||||||
$ | 27,450 | New York State Dormitory Authority Revenue (Cornell University), Series B | A | 3.850 to 3.980% | $ | 27,450,000 | |||||||||||||
10,668 | New York State Dormitory Authority Revenue (Mental Health Facilities Improvement), Series F-2B (FSA Insured) | A | 3.870 | 10,668,000 | |||||||||||||||
6,422 | New York State Dormitory Authority Revenue (Metropolitan Museum of Art) | A | 3.850 | 6,422,000 | |||||||||||||||
8,000 | New York State Dormitory Authority Revenue Non-State Supported Debt (Long Island University) (CIFG Insured) | A | 4.000 | 8,000,000 | |||||||||||||||
5,795 | New York State Dormitory Authority Revenue Non-State Supported Debt, Series C (CIFG Insured) | A | 3.870 | 5,795,000 | |||||||||||||||
17,300 | New York State Dormitory Authority Revenue Non-State Supported Debt (University of Rochester), Series A-1 (MBIA Insured) | A | 3.840 | 17,300,000 | |||||||||||||||
8,780 | New York State Dormitory Authority Revenue (Wagner College) | A | 3.900 | 8,780,000 | |||||||||||||||
6,000 | New York State Energy Research & Development Authority Facilities Revenue (Con Edison), Subseries A-1 | A | 3.850 | 6,000,000 | |||||||||||||||
11,750 | New York State Energy Research & Development Authority Pollution Control Revenue (Orange & Rockland Project), Series A (AMBAC Insured) | A | 3.830 | 11,750,000 |
65
UBS RMA New York Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 10,400 | New York State Energy Research & Development Authority Pollution Control Revenue (Orange & Rockland Project), Series A (FGIC Insured) | A | 3.830 | % | $ | 10,400,000 | ||||||||||||
4,900 | New York State Housing Finance Agency (Normandie Court I Project) | A | 3.850 | 4,900,000 | |||||||||||||||
19,800 | New York State Housing Finance Agency Service Contract Revenue Refunding, Series A | A | 3.850 | 19,800,000 | |||||||||||||||
9,900 | New York State Housing Finance Agency Service Contract Revenue Refunding, Series D | A | 3.850 | 9,900,000 | |||||||||||||||
7,395 | New York State Local Government Assistance Corp., Series B | A | 3.840 | 7,395,000 | |||||||||||||||
6,000 | New York State Local Government Assistance Corp., Series C | A | 3.840 | 6,000,000 | |||||||||||||||
12,265 | New York State Local Government Assistance Corp., Series G | A | 3.830 | 12,265,000 | |||||||||||||||
6,250 | New York State Thruway Authority Personal Income Tax Revenue (PUTTERs), Series 1186 (FSA Insured)1 | A | 3.950 | 6,250,000 | |||||||||||||||
3,500 | New York State Thruway Authority Second Generation Highway & Bridge Trust Fund (PUTTERs), Series 1413 (AMBAC Insured)1 | A | 3.950 | 3,500,000 |
66
UBS RMA New York Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 14,000 | New York State Urban Development Corp. Revenue (State Facilities & Equipment), Subseries A-3-B (CIFG Insured) | A | 3.830 | % | $ | 14,000,000 | ||||||||||||
8,570 | New York State Urban Development Corp. Revenue (State Facilities & Equipment), Subseries A-3-C (CIFG Insured) | A | 3.950 | 8,570,000 | |||||||||||||||
3,720 | Dutchess County Industrial Development Agency Civic Facilities Revenue (Marist College), Series A | A | 3.920 | 3,720,000 | |||||||||||||||
6,550 | Erie County Water Authority (AMBAC Insured) | A | 3.840 | 6,550,000 | |||||||||||||||
2,390 | Great Neck North Water Authority Systems Revenue, Series A (FGIC Insured) | A | 3.950 | 2,390,000 | |||||||||||||||
26,400 | Jay Street Development Corp. New York City Facility Lease Revenue (Jay Street Project), Series A-3 | A | 3.850 | 26,400,000 | |||||||||||||||
7,000 | Long Island Power Authority Electric Systems Revenue, Series D (FSA Insured) | A | 3.950 | 7,000,000 | |||||||||||||||
4,635 | Long Island Power Authority Electric Systems Revenue, Subseries 1-B | A | 3.980 | 4,635,000 | |||||||||||||||
4,700 | Long Island Power Authority Electric Systems Revenue, Subseries 3-B | A | 3.880 | 4,700,000 | |||||||||||||||
4,100 | Long Island Power Authority Electric Systems Revenue, Subseries 7-A (FSA Insured) | A | 3.830 | 4,100,000 | |||||||||||||||
5,800 | Mamaroneck Union Free School District Tax Anticipation Notes | 03/09/07 | 4.000 | 5,803,977 |
67
UBS RMA New York Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 10,375 | Metropolitan Transit Authority New York Dedicated Tax Fund (ABN AMRO MuniTops Certificates Trust, Series 2006-49) (MBIA Insured)1 | A | 3.940 | % | $ | 10,375,000 | ||||||||||||
6,790 | Metropolitan Transportation Authority Revenue (PUTTERs), Series 1659 (FSA Insured)1 | A | 3.950 | 6,790,000 | |||||||||||||||
9,500 | Metropolitan Transportation Authority Revenue, Subseries G-2 | A | 3.880 | 9,500,000 | |||||||||||||||
7,015 | Monroe County Industrial Development Agency Civic Facilities Revenue Refunding (Nazareth College), Series B (MBIA Insured) | A | 3.890 | 7,015,000 | |||||||||||||||
4,625 | Nassau County Interim Finance Authority, Series A (FSA Insured) | A | 3.900 | 4,625,000 | |||||||||||||||
26,900 | New York City Housing Development Corp. Multi-Family Mortgage Revenue (The Crest), Series A | A | 3.900 | 26,900,000 | |||||||||||||||
6,500 | New York City Housing Development Corp. Multi-Family Rental Housing (Queenswood Apartments), Series A | A | 3.850 | 6,500,000 | |||||||||||||||
7,300 | New York City Housing Development Corp. Special Obligation Revenue (Montefiore Medical Center), Series A | A | 3.830 | 7,300,000 | |||||||||||||||
26,970 | New York City Industrial Development Agency Civic Facility Revenue (Center for Jewish History Project) | A | 3.850 | 26,970,000 |
68
UBS RMA New York Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 4,205 | New York City Industrial Development Agency Civic Facility Revenue (Church of Heavenly Rest) | A | 3.900 | % | $ | 4,205,000 | ||||||||||||
4,000 | New York City Industrial Development Agency Civic Facility Revenue (Lycee Francais de New York Project), Series B | A | 3.980 | 4,000,000 | |||||||||||||||
8,415 | New York City Industrial Development Agency Civic Facility Revenue (MSMC Realty Corp. Project) | A | 3.870 | 8,415,000 | |||||||||||||||
27,350 | New York City Industrial Development Agency Revenue (Liberty 1 Bryant Park LLC), Series B | A | 4.000 | 27,350,000 | |||||||||||||||
3,000 | New York City Municipal Finance Authority Water & Sewer Systems Revenue (Second General Resolution), Series CC-1 | A | 3.950 | 3,000,000 | |||||||||||||||
9,350 | New York City Municipal Water Finance Authority Water & Sewer Systems Revenue (Second Generation Resolution), Series AA-1 | A | 3.900 | 9,350,000 | |||||||||||||||
2,900 | New York City Municipal Water Finance Authority Water & Sewer Systems Revenue, Series C (FGIC Insured) | A | 3.880 | 2,900,000 | |||||||||||||||
10,000 | New York City Municipal Water Finance Authority Water & Sewer Systems Revenue, Series F-2 | A | 3.930 | 10,000,000 | |||||||||||||||
4,000 | New York City, Series I, Subseries I-4 | A | 3.930 | 4,000,000 |
69
UBS RMA New York Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 13,000 | New York City, Series I, Subseries I-5 | A | 3.900 | % | $ | 13,000,000 | ||||||||||||
2,050 | New York City, Series I, Subseries I-6 | A | 3.900 | 2,050,000 | |||||||||||||||
13,460 | New York City, Subseries A-4 | A | 3.900 | 13,460,000 | |||||||||||||||
7,300 | New York City, Subseries E-5 | A | 3.950 | 7,300,000 | |||||||||||||||
8,385 | New York City Trust for Cultural Resources Revenue (Asia Society) | A | 3.890 | 8,385,000 | |||||||||||||||
9,215 | New York City Trust for Cultural Resources Revenue (Museum of Broadcasting) | A | 3.850 | 9,215,000 | |||||||||||||||
2,440 | New York City Trust for Cultural Resources Revenue (Pierpont Morgan Library) | A | 3.900 | 2,440,000 | |||||||||||||||
4,800 | Niagara Falls Bridge Commission Toll Revenue, Series A (FGIC Insured) | A | 3.840 | 4,800,000 | |||||||||||||||
14,285 | Oneida County Industrial Development Agency Revenue Civic Facilities (Hamilton College) (MBIA Insured) | A | 3.950 | 14,285,000 | |||||||||||||||
3,000 | Port Authority of New York and New Jersey Special Obligation Revenue (Versatile Structure Obligation), Series 2 | A | 3.880 | 3,000,000 | |||||||||||||||
3,475 | Port Authority of New York and New Jersey Special Obligation Revenue (Versatile Structure Obligation), Series 3 | A | 3.900 | 3,475,000 |
70
UBS RMA New York Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(concluded) | |||||||||||||||||||
$ | 17,295 | Port Authority of New York and New Jersey Special Obligation Revenue (Versatile Structure Obligation), Series 5 | A | 3.900 | % | $ | 17,295,000 | ||||||||||||
2,500 | Riverhead Industrial Development Agency Civic Facilities Revenue Refunding (Central Suffolk Hospital), Series C | A | 3.890 | 2,500,000 | |||||||||||||||
10,000 | Rockland County Tax Anticipation Notes | 03/22/07 | 4.500 | 10,018,788 | |||||||||||||||
15,500 | Suffolk County Tax Anticipation Notes | 08/16/07 | 4.250 | 15,570,370 | |||||||||||||||
18,700 | Suffolk County Water Authority Bond Anticipation Notes | A | 3.850 | 18,700,000 | |||||||||||||||
4,300 | Syracuse Revenue Anticipation Notes, Series C | 06/29/07 | 4.250 | 4,315,231 | |||||||||||||||
26,100 | Triborough Bridge & Tunnel Authority Revenue General Purpose, Series B | A | 3.850 | 26,100,000 | |||||||||||||||
9,015 | Triborough Bridge & Tunnel Authority Revenue General Purpose, Series B (AMBAC Insured) | A | 3.860 | 9,015,000 | |||||||||||||||
Total municipal bonds and notes (cost—$634,563,366) | 634,563,366 | ||||||||||||||||||
Tax-exempt commercial paper—11.13% | |||||||||||||||||||
20,000 | New York City Municipal Water Finance Authority | 01/11/07 to 02/08/07 | 3.550 to 3.600 | 20,000,000 | |||||||||||||||
10,100 | New York State Environmental Facilities Corp. | 03/07/07 to 03/08/07 | 3.520 to 3.580 | 10,100,000 | |||||||||||||||
28,181 | New York State Power Authority | 01/18/07 to 03/08/07 | 3.520 to 3.580 | 28,181,000 |
71
UBS RMA New York Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Tax-exempt commercial paper—(concluded) | |||||||||||||||||||
$ | 19,500 | Metropolitan Transportation Authority | 01/23/07 to 01/31/07 | 3.530 to 3.620% | $ | 19,500,000 | |||||||||||||
Total tax-exempt commercial paper (cost—$77,781,000) | 77,781,000 | ||||||||||||||||||
Total investments (cost—$712,344,366 which approximates cost for federal income tax purposes)—101.95% | 712,344,366 | ||||||||||||||||||
Liabilities in excess of other assets—(1.95)% | (13,645,026 | ) | |||||||||||||||||
Net assets (applicable to 698,823,841 shares of beneficial interest outstanding equivalent to $1.00 per share)—100.00% | $ | 698,699,340 |
A Variable rate demand notes are payable on demand. The interest rates shown are the current rates as of December 31, 2006, and reset periodically.
1 Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities, which represent 3.85% of net assets as of December 31,2006, are considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers.
AMBAC American Municipal Bond Assurance Corporation
CIFG CDC IXIS Financial Guaranty
FGIC Financial Guaranty Insurance Company
FSA Financial Security Assurance
MBIA Municipal Bond Investors Assurance
PUTTERs Puttable tax-exempt receipts
Weighted average maturity—16 days |
See accompanying notes to financial statements
72
UBS RMA New Jersey Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—96.08% | |||||||||||||||||||
$ | 675 | New Jersey Economic Development Authority (Bayonne Project Improvement), Series A | A | 3.950 | % | $ | 675,000 | ||||||||||||
4,200 | New Jersey Economic Development Authority (Bayonne Project Improvement), Series B | A | 3.950 | 4,200,000 | |||||||||||||||
2,070 | New Jersey Economic Development Authority (Bayonne Project Improvement), Series C | A | 3.950 | 2,070,000 | |||||||||||||||
3,600 | New Jersey Economic Development Authority (Crowley Liner Services Project) | A | 3.870 | 3,600,000 | |||||||||||||||
750 | New Jersey Economic Development Authority (Danic Urban Renewal) | A | 3.920 | 750,000 | |||||||||||||||
405 | New Jersey Economic Development Authority (Kenwood USA Corp. Project) | A | 3.940 | 405,000 | |||||||||||||||
2,000 | New Jersey Economic Development Authority Market Transition Facility Revenue Refunding (Senior Lien), Series A (MBIA Insured) | 07/01/07 | 6.000 | 2,023,875 | |||||||||||||||
555 | New Jersey Economic Development Authority Revenue (Hun School Princeton Project) | A | 3.900 | 555,000 | |||||||||||||||
2,000 | New Jersey Economic Development Authority Revenue (Lawrenceville School Project), Series B | A | 3.790 | 2,000,000 | |||||||||||||||
1,785 | New Jersey Economic Development Authority Revenue (PUTTERs), Series 853 (FSA Insured)1 | A | 3.950 | 1,785,000 |
73
UBS RMA New Jersey Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 4,000 | New Jersey Economic Development Authority Revenue Refunding (Foreign Trade Zone Project) | A | 3.990 | % | $ | 4,000,000 | ||||||||||||
3,400 | New Jersey Economic Development Authority School Revenue (Facilities Construction), Subseries R-1 | A | 3.900 | 3,400,000 | |||||||||||||||
700 | New Jersey Economic Development Authority School Revenue (Facilities Construction), Subseries R-3 | A | 3.950 | 700,000 | |||||||||||||||
3,200 | New Jersey Economic Development Authority Specialty Facilities Revenue (Port Newark Container LLC)2 | A | 3.930 | 3,200,000 | |||||||||||||||
7,505 | New Jersey Economic Development Authority (Stolthaven Project), Series A | A | 3.870 | 7,505,000 | |||||||||||||||
1,630 | New Jersey Economic Development Authority (Thermal Energy Limited Partnership)2 | A | 3.950 | 1,630,000 | |||||||||||||||
2,000 | New Jersey Economic Development Authority Transportation, Series N10-Regulation D (AMBAC Insured)1 | A | 3.980 | 2,000,000 | |||||||||||||||
7,050 | New Jersey Economic Development Authority Water Facilities Revenue Refunding (United Water NJ, Inc. Project), Series A (AMBAC Insured) | A | 3.900 | 7,050,000 | |||||||||||||||
300 | New Jersey Economic Development Authority Water Facilities Revenue Refunding (United Water NJ, Inc. Project), Series B (AMBAC Insured) | A | 3.950 | 300,000 |
74
UBS RMA New Jersey Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 1,000 | New Jersey Economic Development Authority Water Facilities Revenue Refunding (United Water NJ, Inc. Project), Series C (AMBAC Insured)2 | A | 4.000 | % | $ | 1,000,000 | ||||||||||||
4,800 | New Jersey Educational Facilities Authority (College of New Jersey), Series A (AMBAC Insured) | A | 3.880 | 4,800,000 | |||||||||||||||
7,900 | New Jersey Educational Facilities Authority (Princeton University), Series B | A | 3.900 | 7,900,000 | |||||||||||||||
7,600 | New Jersey Educational Facilities Authority Revenue Refunding (Institutional Advanced Study), Series B | A | 3.950 | 7,600,000 | |||||||||||||||
2,500 | New Jersey Health Care Facilities Authority (Capital Health Systems Obligation), Group B | A | 3.880 | 2,500,000 | |||||||||||||||
4,420 | New Jersey Health Care Facilities Authority (Community Hospital Group), Series A-1 | A | 3.880 | 4,420,000 | |||||||||||||||
2,545 | New Jersey Health Care Facilities Authority (Robert Wood Johnson University) | A | 3.880 | 2,545,000 | |||||||||||||||
5,800 | New Jersey Health Care Facilities Authority (St. Peter's Hospital), Series B | A | 3.620 | 5,800,000 | |||||||||||||||
4,440 | New Jersey Health Care Facilities Financing Authority (St. Barnabas Health Care System), Series A | A | 3.870 | 4,440,000 | |||||||||||||||
6,215 | New Jersey Health Care Facilities Financing Authority Revenue, Series A3 | A | 3.870 | 6,215,000 |
75
UBS RMA New Jersey Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 1,080 | New Jersey Health Care Facilities Financing Authority Revenue, Series A4 | A | 3.880 | % | $ | 1,080,000 | ||||||||||||
2,760 | New Jersey Sports & Exposition Authority, Series B-1 (MBIA Insured) | A | 3.830 | 2,760,000 | |||||||||||||||
1,500 | New Jersey Sports & Exposition Authority, Series B-2 (MBIA Insured) | A | 3.830 | 1,500,000 | |||||||||||||||
6,000 | New Jersey State Housing & Mortgage Finance Agency Revenue (Multi-Family Housing), Series D (FGIC Insured)2 | A | 3.930 | 6,000,000 | |||||||||||||||
1,570 | New Jersey State Housing & Mortgage Finance Agency Revenue (Single Family Housing), Series N | A | 3.980 | 1,570,000 | |||||||||||||||
2,305 | New Jersey State Transportation Trust Fund Authority (PUTTERs), Series 1144 (FSA Insured)1 | A | 3.950 | 2,305,000 | |||||||||||||||
2,000 | New Jersey Tax Revenue Anticipation Notes | 06/22/07 | 4.500 | 2,008,776 | |||||||||||||||
5,000 | New Jersey Turnpike Authority (FGIC Insured) | A | 3.840 | 5,000,000 | |||||||||||||||
1,350 | New Jersey Turnpike Authority Revenue, Series C-1 (FSA Insured) | A | 3.880 | 1,350,000 | |||||||||||||||
2,400 | New Jersey Turnpike Authority Revenue, Series C-2 (FSA Insured) | A | 3.880 | 2,400,000 | |||||||||||||||
2,670 | New Jersey Wastewater Treatment Trust Refunding, (Wastewater Treatment), Series A (MBIA Insured) | 05/15/07 | 7.000 | 2,703,587 |
76
UBS RMA New Jersey Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(continued) | |||||||||||||||||||
$ | 910 | Atlantic County Improvement Authority Revenue (Pooled Government Loan Program) | A | 3.880 | % | $ | 910,000 | ||||||||||||
600 | Bergen County Improvement Authority Limited Obligation Subordinated Special Purpose (EnCap Golf Holdings, LLC), Series C2 | A | 3.930 | 600,000 | |||||||||||||||
2,000 | Bergen County Improvement Authority (Senior Special Purpose Limited Obligation), Series B2 | A | 3.910 | 2,000,000 | |||||||||||||||
2,000 | Bergen County New Jersey Vocational & Technical School District Revenue Anticipation Notes | 02/02/07 | 4.250 | 2,001,030 | |||||||||||||||
5,243 | Boonton Bond Anticipation Notes | 03/29/07 | 4.000 | 5,248,212 | |||||||||||||||
670 | Essex County Improvement Authority Revenue (Jewish Community Center Metropolitan Project) | A | 3.880 | 670,000 | |||||||||||||||
1,600 | Essex County Improvement Authority Revenue (Pooled Government Loan Program) | A | 3.900 | 1,600,000 | |||||||||||||||
2,900 | Gloucester County Industrial Pollution Control Financing Authority Revenue Refunding Pollution Control (ExxonMobil Project) | A | 3.760 | 2,900,000 | |||||||||||||||
2,500 | Mercer County Improvement Authority (Atlantic Foundation) (MBIA Insured) | A | 3.860 | 2,500,000 | |||||||||||||||
4,000 | Montclair Township Temporary Notes | 03/15/07 | 4.250 | 4,004,896 |
77
UBS RMA New Jersey Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
Municipal bonds and notes—(concluded) | |||||||||||||||||||
$ | 7,585 | Port Authority of New York and New Jersey Special Obligation Revenue (Versatile Structure Obligation), Series 3 | A | 3.900 | % | $ | 7,585,000 | ||||||||||||
500 | Port Authority of New York and New Jersey Special Obligation Revenue (Versatile Structure Obligation), Series 5 | A | 3.900 | 500,000 | |||||||||||||||
8,635 | Rutgers State University Refunding, Series A | A | 3.900 | 8,635,000 | |||||||||||||||
1,625 | Salem County Pollution Control Financing Refunding (Atlantic City Electric), Series A (MBIA Insured) | A | 3.880 | 1,625,000 | |||||||||||||||
1,500 | University of Medicine & Dentistry, Series B | A | 3.910 | 1,500,000 | |||||||||||||||
Total municipal bonds and notes (cost—$166,025,376) | 166,025,376 | ||||||||||||||||||
Tax-exempt commercial paper—3.52% | |||||||||||||||||||
3,000 | New Jersey Economic Development Authority Revenue (Keystone Energy Service Co.) | 03/07/07 | 3.600 | 3,000,000 | |||||||||||||||
3,090 | Port Authority of New York and New Jersey | 02/06/07 to 03/08/07 | 3.520 to 3.590 | 3,090,000 | |||||||||||||||
Total tax-exempt commercial paper (cost—$6,090,000) | 6,090,000 | ||||||||||||||||||
Total investments (cost—$172,115,376 which approximates cost for federal income tax purposes)—99.60% | 172,115,376 | ||||||||||||||||||
Other assets in excess of liabilities—0.40% | 690,927 | ||||||||||||||||||
Net assets (applicable to 172,802,891 shares of beneficial interest outstanding equivalent to $1.00 per share)—100.00% | $ | 172,806,303 |
A Variable rate demand notes are payable on demand. The interest rates shown are the current rates as of December 31, 2006, and reset periodically.
78
UBS RMA New Jersey Municipal Money Fund
Statement of net assets—December 31, 2006 (unaudited)
1 Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities, which represent 3.52% of net assets as of December 31, 2006, are considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers.
2 Securities subject to Alternative Minimum Tax.
AMBAC American Municipal Bond Assurance Corporation
FGIC Financial Guaranty Insurance Company
FSA Financial Security Assurance
MBIA Municipal Bond Investors Assurance
PUTTERs Puttable tax-exempt receipts
Weighted average maturity—18 days
See accompanying notes to financial statements
79
UBS RMA
Statement of operations
For the six months ended December 31, 2006 (unaudited) | |||||||||||
Money Market Portfolio | U.S. Government Portfolio | ||||||||||
Investment income: | |||||||||||
Interest | $ | 319,786,371 | $ | 24,786,020 | |||||||
Securities lending income (includes $62; $0; $0; $0; $0; $0, respectively, earned from an affiliated entity) | 26,968 | 70,475 | |||||||||
319,813,339 | 24,856,495 | ||||||||||
Expenses: | |||||||||||
Investment advisory and administration fees | 29,971,259 | 2,108,028 | |||||||||
Service fees | 7,492,815 | 595,424 | |||||||||
Transfer agency and related services fees | 3,219,867 | 114,395 | |||||||||
Custody and accounting fees | 839,195 | 66,688 | |||||||||
Insurance expense | 250,904 | 40,781 | |||||||||
Reports and notices to shareholders | 182,286 | 8,177 | |||||||||
Federal and state registration fees | 178,877 | 23,176 | |||||||||
Directors'/Trustees' fees | 75,525 | 12,838 | |||||||||
Professional fees | 55,673 | 51,740 | |||||||||
Interest expense | — | — | |||||||||
Other expenses | 34,745 | 7,093 | |||||||||
42,301,146 | 3,028,340 | ||||||||||
Less: Fee waivers by investment advisor and administrator | (7,503,736 | ) | — | ||||||||
Net expenses | 34,797,410 | 3,028,340 | |||||||||
Net investment income | 285,015,929 | 21,828,155 | |||||||||
Net realized gains from investment activities | 206,038 | 55,600 | |||||||||
Net increase in net assets resulting from operations | $ | 285,221,967 | $ | 21,883,755 |
80
For the six months ended December 31, 2006 (unaudited) | |||||||||||||||||||
Tax-Free Fund | California Municipal Money Fund | New York Municipal Money Fund | New Jersey Municipal Money Fund | ||||||||||||||||
Investment income: | |||||||||||||||||||
Interest | $ | 73,646,146 | $ | 18,693,617 | $ | 11,681,137 | $ | 2,836,682 | |||||||||||
Securities lending income (includes $62; $0; $0; $0; $0; $0, respectively, earned from an affiliated entity) | — | — | — | — | |||||||||||||||
73,646,146 | 18,693,617 | 11,681,137 | 2,836,682 | ||||||||||||||||
Expenses: | |||||||||||||||||||
Investment advisory and administration fees | 8,360,566 | 2,348,775 | 1,546,513 | 371,320 | |||||||||||||||
Service fees | 2,587,906 | 679,017 | 413,565 | 97,323 | |||||||||||||||
Transfer agency and related services fees | 654,230 | 136,591 | 122,041 | 42,588 | |||||||||||||||
Custody and accounting fees | 289,845 | 76,050 | 46,319 | 11,354 | |||||||||||||||
Insurance expense | 81,304 | 22,467 | 15,055 | 3,653 | |||||||||||||||
Reports and notices to shareholders | 38,297 | 8,117 | 7,791 | 4,458 | |||||||||||||||
Federal and state registration fees | 103,832 | 19,640 | 16,798 | 14,625 | |||||||||||||||
Directors'/Trustees' fees | 36,134 | 13,419 | 11,389 | 8,469 | |||||||||||||||
Professional fees | 58,739 | 53,710 | 58,727 | 50,683 | |||||||||||||||
Interest expense | 1,755 | — | — | — | |||||||||||||||
Other expenses | 31,633 | 7,850 | 7,224 | 5,360 | |||||||||||||||
12,244,241 | 3,365,636 | 2,245,422 | 609,833 | ||||||||||||||||
Less: Fee waivers by investment advisor and administrator | — | — | — | — | |||||||||||||||
Net expenses | 12,244,241 | 3,365,636 | 2,245,422 | 609,833 | |||||||||||||||
Net investment income | 61,401,905 | 15,327,981 | 9,435,715 | 2,226,849 | |||||||||||||||
Net realized gains from investment activities | — | — | — | — | |||||||||||||||
Net increase in net assets resulting from operations | $ | 61,401,905 | $ | 15,327,981 | $ | 9,435,715 | $ | 2,226,849 |
See accompanying notes to financial statements
81
UBS RMA
Statement of changes in net assets
For the six months ended December 31, 2006 (unaudited) | For the year ended June 30, 2006 | ||||||||||
UBS RMA Money Market Portfolio | |||||||||||
From operations: | |||||||||||
Net investment income | $ | 285,015,929 | $ | 389,912,181 | |||||||
Net realized gains from investment activities | 206,038 | 108,762 | |||||||||
Net increase in net assets resulting from operations | 285,221,967 | 390,020,943 | |||||||||
Dividends to shareholders from: | |||||||||||
Net investment income | (285,015,929 | ) | (389,912,181 | ) | |||||||
Net increase in net assets from capital share transactions | 1,904,858,261 | 201,965,286 | |||||||||
Net increase in net assets | 1,905,064,299 | 202,074,048 | |||||||||
Net assets: | |||||||||||
Beginning of period | 10,627,952,031 | 10,425,877,983 | |||||||||
End of period | $ | 12,533,016,330 | $ | 10,627,952,031 | |||||||
Accumulated undistributed net investment income | $ | — | $ | — | |||||||
UBS RMA U.S. Government Portfolio | |||||||||||
From operations: | |||||||||||
Net investment income | $ | 21,828,155 | $ | 34,374,312 | |||||||
Net realized gains from investment activities | 55,600 | 35,189 | |||||||||
Net increase in net assets resulting from operations | 21,883,755 | 34,409,501 | |||||||||
Dividends to shareholders from: | |||||||||||
Net investment income | (21,828,155 | ) | (34,374,312 | ) | |||||||
Net increase (decrease) in net assets from capital share transactions | 168,174,425 | (266,283,169 | ) | ||||||||
Net increase (decrease) in net assets | 168,230,025 | (266,247,980 | ) | ||||||||
Net assets: | |||||||||||
Beginning of period | 845,449,920 | 1,111,697,900 | |||||||||
End of period | $ | 1,013,679,945 | $ | 845,449,920 | |||||||
Accumulated undistributed net investment income | $ | — | $ | — |
See accompanying notes to financial statements
82
UBS RMA
Statement of changes in net assets
For the six months ended December 31, 2006 (unaudited) | For the year ended June 30, 2006 | ||||||||||
UBS RMA Tax-Free Fund | |||||||||||
From operations: | |||||||||||
Net investment income | $ | 61,401,905 | $ | 86,328,736 | |||||||
Net realized loss from investment activities | — | (345 | ) | ||||||||
Net increase in net assets resulting from operations | 61,401,905 | 86,328,391 | |||||||||
Dividends to shareholders from: | |||||||||||
Net investment income | (61,401,905 | ) | (86,328,736 | ) | |||||||
Net increase in net assets from capital share transactions | 811,936,803 | 158,743,041 | |||||||||
Net increase in net assets | 811,936,803 | 158,742,696 | |||||||||
Net assets: | |||||||||||
Beginning of period | 3,565,356,695 | 3,406,613,999 | |||||||||
End of period | $ | 4,377,293,498 | $ | 3,565,356,695 | |||||||
Accumulated undistributed net investment income | $ | — | $ | — | |||||||
UBS RMA California Municipal Money Fund | |||||||||||
From operations: | |||||||||||
Net investment income | $ | 15,327,981 | $ | 20,859,931 | |||||||
Net increase in net assets resulting from operations | 15,327,981 | 20,859,931 | |||||||||
Dividends to shareholders from: | |||||||||||
Net investment income | (15,327,981 | ) | (20,859,931 | ) | |||||||
Net increase in net assets from beneficial interest transactions | 111,126,764 | 132,861,609 | |||||||||
Net increase in net assets | 111,126,764 | 132,861,609 | |||||||||
Net assets: | |||||||||||
Beginning of period | 941,623,858 | 808,762,249 | |||||||||
End of period | $ | 1,052,750,622 | $ | 941,623,858 | |||||||
Accumulated undistributed net investment income | $ | — | $ | — |
See accompanying notes to financial statements
83
UBS RMA
Statement of changes in net assets
For the six months ended December 31, 2006 (unaudited) | For the year ended June 30, 2006 | ||||||||||
UBS RMA New York Municipal Money Fund | |||||||||||
From operations: | |||||||||||
Net investment income | $ | 9,435,715 | $ | 14,373,582 | |||||||
Net increase in net assets resulting from operations | 9,435,715 | 14,373,582 | |||||||||
Dividends to shareholders from: | |||||||||||
Net investment income | (9,435,715 | ) | (14,373,582 | ) | |||||||
Net increase in net assets from beneficial interest transactions | 86,003,693 | 16,624,370 | |||||||||
Net increase in net assets | 86,003,693 | 16,624,370 | |||||||||
Net assets: | |||||||||||
Beginning of period | 612,695,647 | 596,071,277 | |||||||||
End of period | $ | 698,699,340 | $ | 612,695,647 | |||||||
Accumulated undistributed net investment income | $ | — | $ | — | |||||||
UBS RMA New Jersey Municipal Money Fund | |||||||||||
From operations: | |||||||||||
Net investment income | $ | 2,226,849 | $ | 2,987,912 | |||||||
Net increase in net assets resulting from operations | 2,226,849 | 2,987,912 | |||||||||
Dividends to shareholders from: | |||||||||||
Net investment income | (2,226,849 | ) | (2,987,912 | ) | |||||||
Net increase in net assets from beneficial interest transactions | 38,166,820 | 465,905 | |||||||||
Net increase in net assets | 38,166,820 | 465,905 | |||||||||
Net assets: | |||||||||||
Beginning of period | 134,639,483 | 134,173,578 | |||||||||
End of period | $ | 172,806,303 | $ | 134,639,483 | |||||||
Accumulated undistributed net investment income | $ | — | $ | — |
See accompanying notes to financial statements
84
UBS RMA
Notes to financial statements (unaudited)
Organization and significant accounting policies
UBS RMA Money Fund Inc. (the "Corporation") and UBS RMA Tax-Free Fund Inc. ("RMA Tax-Free") were organized under the laws of Maryland on July 2, 1982 and are registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended, as open-end management investment companies. RMA Tax-Free is a diversified mutual fund and the Corporation is a series mutual fund and currently has three portfolios, each of which are diversified series: UBS RMA Money Market Portfolio ("Money Market Portfolio"), UBS RMA U.S. Government Portfolio ("U.S. Government Portfolio") and UBS Retirement Money Fund. The financial statements of UBS Retirement Money Fund are not included herein.
UBS Managed Municipal Trust ("Managed Municipal Trust") and UBS Municipal Money Market Series ("Municipal Money Market Series") were organized under Massachusetts law by Declarations of Trust dated November 21, 1986 and September 14, 1990, respectively, and are registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended, as open-end management investment companies. Managed Municipal Trust currently offers two non-diversified series: UBS RMA California Municipal Money Fund ("RMA California") and UBS RMA New York Municipal Money Fund ("RMA New York"). Municipal Money Market Series currently offers one non-diversified series: UBS RMA New Jersey Municipal Money Fund ("RMA New Jersey", and when referred together with Money Market Portfolio, U.S. Government Portfolio, RMA Tax-Free, RMA California and RMA New York, collectively, the "Funds").
In the normal course of business the Funds may enter into contracts that contain a variety of representations or that provide indemnification for certain liabilities. The Funds' maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote.
85
UBS RMA
Notes to financial statements (unaudited)
The preparation of financial statements in accordance with US generally accepted accounting principles requires the Funds' 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, unless a Fund's Board of Directors/Trustees (the "Board") determines that this does not represent fair value. Periodic review and monitoring of the valuation of securities held by the Funds is performed in an effort to ensure that amortized cost 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.
In September 2006, the Financial Accounting Standards Board ("FASB") issued Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. As of December 31, 2006, management does not believe the adoption of FAS 157 will impact the amounts reported in the financial statements, however, additional disclosures will be required about the inputs used to develop the measurements of fair value and the effect of certain of the measurements reported in the statement of operations for a fiscal period.
Repurchase agreements—The Money Market Portfolio and the U.S. Government Portfolio may purchase securities or other obligations from a bank or securities dealer (or its affiliate), subject
86
UBS RMA
Notes to financial statements (unaudited)
to the seller's agreement to repurchase them at an agreed upon date (or upon demand) and price. The Money Market Portfolio and the U.S. Government Portfolio maintain custody of the underlying obligations prior to their repurchase, either through their regular custodian or through a special "tri-party" custodian or sub-custodian that maintains a separate account for both the Money Market Portfolio and/or the U.S. Government Portfolio and their counterparty. The underlying collateral is valued daily 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 Money Market Portfolio and U.S. Government Portfolio generally have the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. Repurchase agreements involving obligations other than US government securities (such as commercial paper, corporate bonds and mortgage loans) may be subject to special risks and may not have the benefit of certain protections in the event of counterparty insolvency. If the seller (or seller's guarantor, if any) becomes insolvent, the Money Market Portfolio and the U.S. Government Portfolio may suffer delays, costs and possible losses in connection with the disposition or retention of the collateral. 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. The Money Market Portfolio and the U.S. Government Portfolio may participate in joint repurchase agreement transactions with other funds managed, advised or sub-advised by UBS Global Asset Management (Americas) Inc. ("UBS Global AM").
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 US 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.
87
UBS RMA
Notes to financial statements (unaudited)
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, country or region.
Additionally, RMA California, RMA New York and RMA New Jersey follow an investment policy of investing primarily in municipal obligations of one state. Economic changes affecting each state and certain of its public bodies and municipalities may affect the ability of issuers within each state to pay interest on, or repay principal of, municipal obligations held by each of those Funds.
Investment advisor and administrator
Each Fund's Board has approved an investment advisory and administration contract ("Advisory Contract") for each Fund with UBS Financial Services Inc., an indirect wholly owned subsidiary of UBS AG, under which UBS Financial Services Inc. serves as investment advisor and administrator of the Funds. In accordance with the Advisory Contract, each Fund pays UBS Financial Services Inc. an investment advisory and administration fee, which is accrued daily and paid monthly, in accordance with the following schedules:
Average daily net assets | Annual rate | ||||||
Money Market Portfolio: | |||||||
All | 0.50 | %† |
† UBS Financial Services Inc. has agreed to waive portions of its investment advisory and administration fee for the Money Market Portfolio (the "Portfolio") so that the fee rate is reduced to the following: up to $1.0 billion in average daily net assets—0.50%; in excess of $1.0 billion up to $1.5 billion in average daily net assets—0.44%; and over $1.5 billion in average daily net assets—0.36%. UBS Financial Services Inc. has further agreed to cap the Portfolio's aggregate management and shareholder services fees (paid pursuant to the Portfolio's Shareholder Services Plan) so that the total of these does not exceed 0.50% of the Portfolio's average daily net assets. This cap results in an effective investment advisory and administration fee rate not to exceed 0.375% of the Portfolio's average daily net assets. (UBS Financial Services Inc. is waiving a portion of its advisory and administration fees to offset the shareholder services fees, and this waiver continues for as long as the Portfolio's Shareholder Services Plan remains in effect.) Accordingly, for the six months ended December 31, 2006, UBS Financial Services Inc. waived $7,503,736 of its investment advisory and administration fees from the Portfolio. At December 31, 2006, UBS Financial Services Inc. owed the Portfolio $1,322,489 for fee waivers under the above agreement.
88
UBS RMA
Notes to financial statements (unaudited)
Average daily net assets | Annual rate | ||||||
U.S. Government Portfolio, RMA California and RMA New York: | |||||||
Up to $300 million | 0.50 | % | |||||
In excess of $300 million up to $750 million | 0.44 | % | |||||
Over $750 million | 0.36 | % | |||||
RMA Tax-Free: | |||||||
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 | % |
Effective August 1, 2006, the Advisory Contract for RMA New Jersey was amended to reduce the compensation paid by the Fund to UBS Financial Services Inc. to the following:
Average daily net assets | Annual rate | ||||||
Up to $300 million | 0.45 | % | |||||
In excess of $300 million up to $750 million | 0.39 | % | |||||
Over $750 million | 0.31 | % |
Prior to August 1, 2006, RMA New Jersey paid UBS Financial Services Inc. an investment advisory and administration fee according to the following: up to $300 million in average daily net assets—0.50%; in excess of $300 million up to $750 million in average daily net assets—0.44%; and over $750 million in average daily net assets—0.36%.
At December 31, 2006, the Funds owed UBS Financial Services Inc. for investment advisory and administration fees as follows:
Money Market Portfolio | $ | 5,269,165 | |||||
U.S. Government Portfolio | 372,954 | ||||||
RMA Tax-Free | 1,485,882 | ||||||
RMA California | 411,696 | ||||||
RMA New York | 265,215 | ||||||
RMA New Jersey | 67,831 |
UBS Global AM serves as sub-advisor and sub-administrator to the Funds pursuant to sub-advisory and sub-administration contracts between UBS Financial Services Inc. and UBS Global AM (each a
89
UBS RMA
Notes to financial statements (unaudited)
"Sub-Advisory Contract"). In accordance with each Sub-Advisory Contract, UBS Financial Services Inc. (not the Funds) pays UBS Global AM a fee, accrued daily and paid monthly, at an annual rate of 0.08% of the respective Fund's average daily net assets.
Additional information regarding compensation to affiliate of a board member
Effective March 1, 2005, Professor Meyer Feldberg accepted the position of senior advisor to Morgan Stanley, resulting in him becoming an interested board member of the Funds. The Funds have been informed that Professor Feldberg's role at Morgan Stanley does not involve matters directly affecting any UBS funds. Fund transactions are executed through Morgan Stanley based on that firm's ability to provide best execution of the transactions. During the six months ended December 31, 2006, the Funds purchased and sold certain securities (e.g., fixed income securities) in principal trades with Morgan Stanley having aggregate values as follows:
Money Market Portfolio | $ | 5,052,109,979 | |||||
U.S. Government Portfolio | 16,877,000,000 | ||||||
RMA Tax-Free | 1,110,662,550 | ||||||
RMA California | 409,410,000 | ||||||
RMA New York | 160,455,000 | ||||||
RMA New Jersey | 86,500,000 |
Morgan Stanley received compensation in connection with these trades, which may have been in the form of a "mark-up" or "mark-down" of the price of the securities, a fee from the issuer for maintaining a commercial paper program, or some other form of compensation. Although the precise amount of this compensation is not generally known by the Fund's investment advisor or sub-advisor, it is believed that under normal circumstances such compensation represents a small portion of the total value of the transactions.
90
UBS RMA
Notes to financial statements (unaudited)
Shareholder service plans
UBS Global Asset Management (US) Inc. ("UBS Global AM (US)") is the principal underwriter of each Fund's shares and has appointed UBS Financial Services Inc. as a dealer for the sale of the Funds' shares. Under the shareholder service plans, Money Market Portfolio, U.S. Government Portfolio, RMA Tax-Free, RMA California and RMA New York pay UBS Global AM (US) a monthly service fee, which is accrued daily and paid monthly at an annual rate of up to 0.15% of average daily net assets, and RMA New Jersey is authorized to pay at the annual rate of up to 0.12% of average daily net assets, for providing certain shareholder services. Currently, UBS Global AM (US) is compensated for providing such services at the annual rate of 0.125% of the Fund's average daily net assets for each of those Funds except for RMA New Jersey, which pays at the annual rate of 0.12% of the Fund's average daily net assets. At December 31, 2006, the Funds owed UBS Global AM (US) for such service fees as follows:
Money Market Portfolio | $ | 1,317,291 | |||||
U.S. Government Portfolio | 106,496 | ||||||
RMA Tax-Free | 462,849 | ||||||
RMA California | 119,948 | ||||||
RMA New York | 70,995 | ||||||
RMA New Jersey | 18,088 |
Transfer agency related services fees
UBS Financial Services Inc. provides transfer agency related services to the Funds pursuant to a delegation of authority from PFPC Inc. ("PFPC"), the Funds' transfer agent, and is compensated for these services by PFPC, not the Funds.
91
UBS RMA
Notes to financial statements (unaudited)
For the six months ended December 31, 2006, UBS Financial Services Inc. received from PFPC, not the Funds, total transfer agency related services fees as follows:
Money Market Portfolio | $ | 2,004,100 | |||||
U.S. Government Portfolio | 68,245 | ||||||
RMA Tax-Free | 430,045 | ||||||
RMA California | 85,898 | ||||||
RMA New York | 74,301 | ||||||
RMA New Jersey | 24,557 |
Securities lending
Each Fund may lend securities up to 331/3% of its total assets to qualified broker-dealers or institutional investors. The loans are secured at all times by cash, US government securities or irrevocable letters of credit in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. Each Fund will regain ownership of loaned securities to exercise certain beneficial rights; however, each Fund may bear the risk of delay in recovery of, or even loss of rights in, the securities loaned should the borrower fail financially. Each Fund receives compensation for lending its securities from interest or dividends earned on the cash, US government securities or irrevocable letters of credit held as collateral, net of fee rebates paid to the borrower plus reasonable administrative and custody fees. UBS Financial Services Inc. and other affiliated broker-dealers have been approved as borrowers under the Funds' securities lending program. UBS Securities LLC is the lending agent for each Fund. For the six months ended December 31, 2006, UBS Securities LLC earned $9,179 and $24,781 in compensation from the Money Market Portfolio and the U.S. Government Portfolio, respectively, as the Funds' lending agent. At December 31, 2006, the Money Market Portfolio and U.S. Government Portfolio owed UBS Securities LLC $2,792 and $2,798, respectively, in compensation as the Fund's lending agent. At December 31, 2006, the U.S. Government Portfolio had securities on loan having a market value of $147,893,472. The U.S. Government Portfolio's
92
UBS RMA
Notes to financial statements (unaudited)
custodian held US Government agency securities having an aggregate value of $150,867,275 as collateral for portfolio securities loaned as follows:
Principal amount (000) | Maturity dates | Interest rates | Value | ||||||||||||||||
$ | 97,185 | Federal Home | |||||||||||||||||
Loan Bank | 08/19/11 | 5.375 | % | $ | 100,751,663 | ||||||||||||||
48,773 | Federal Home Loan Mortgage Corp. | 07/15/14 | 5.000 | 50,115,612 | |||||||||||||||
$ | 150,867,275 |
RMA Tax-Free, RMA California, RMA New York and RMA New Jersey did not loan any securities during the six months ended December 31, 2006. The Money Market Portfolio did not have any securities on loan at December 31, 2006.
Bank line of credit
RMA Tax-Free participates with certain other funds managed, advised or sub-advised by UBS Global AM in a $100 million committed credit facility with State Street Bank and Trust Company ("Committed Credit Facility"), to be utilized for temporary financing until the settlement of sales or purchases of portfolio securities, the repurchase or redemption of shares of RMA Tax-Free at the request of shareholders and other temporary or emergency purposes. Under the Committed Credit Facility arrangement, RMA Tax-Free has agreed to pay commitment fees, pro rata, based on the relative asset size of the funds in the Committed Credit Facility. Interest will be charged to RMA Tax-Free at the overnight federal funds rate in effect at the time of borrowings, plus 0.50%. For the six months ended December 31, 2006, RMA Tax-Free had an outstanding borrowing of $10,874,579 for 1 day at an annualized interest rate of 5.81%, which resulted in $1,755 of interest expense.
93
UBS RMA
Notes to financial statements (unaudited)
Other liabilities and components of net assets
At December 31, 2006, the Funds had the following liabilities outstanding:
Dividends payable | Payable for investments purchased | Payable for cash collateral from securities loaned | Other accrued expenses* | ||||||||||||||||
Money Market Portfolio | $ | 16,337,110 | — | — | $ | 1,841,297 | |||||||||||||
U.S. Government Portfolio | 1,221,356 | — | $ | 1,604 | 111,439 | ||||||||||||||
RMA Tax-Free | 3,884,313 | $ | 142,002,728 | — | 368,389 | ||||||||||||||
RMA California | 925,776 | 10,001,033 | — | 106,240 | |||||||||||||||
RMA New York | 592,664 | 15,570,370 | — | 100,488 | |||||||||||||||
RMA New Jersey | 148,277 | — | — | 48,595 |
* Excludes investment advisory and administration fees and service fees.
At December 31, 2006, the components of net assets for each of the Funds were as follows:
Accumulated paid in capital | Accumulated net realized gain (loss) | Total net assets | |||||||||||||
Money Market Portfolio | $ | 12,532,634,309 | $ | 382,021 | $ | 12,533,016,330 | |||||||||
U.S. Government Portfolio | 1,013,765,707 | (85,762 | ) | 1,013,679,945 | |||||||||||
RMA Tax-Free | 4,377,291,912 | 1,586 | 4,377,293,498 | ||||||||||||
RMA California | 1,052,727,457 | 23,165 | 1,052,750,622 | ||||||||||||
RMA New York | 698,670,500 | 28,840 | 698,699,340 | �� | |||||||||||
RMA New Jersey | 172,802,892 | 3,411 | 172,806,303 |
Federal tax status
Each Fund intends to distribute all or substantially all of its 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 their net investment income, net realized capital gains and
94
UBS RMA
Notes to financial statements (unaudited)
certain other amounts, if any, the Funds intend not to be subject to a federal excise tax.
The tax character of all distributions paid to shareholders by the Money Market Portfolio and U.S. Government Portfolio during the six months ended December 31, 2006 and the fiscal year ended June 30, 2006 was ordinary income. The tax character of all distributions paid to shareholders by RMA Tax-Free, RMA California, RMA New York and RMA New Jersey during the six months ended December 31, 2006 and the fiscal year ended June 30, 2006 was tax-exempt income.
The components of accumulated earnings (deficit) on a tax basis for the current fiscal year will be determined after the Funds' fiscal year ending June 30, 2007.
At June 30, 2006, the following Funds had net capital loss carryforwards available as reductions, to the extent provided in the regulations, of any future net realized capital gains. These losses expire as follows:
Fiscal year ending | Money Market Portfolio | U.S. Government Portfolio | RMA Tax-Free | RMA California | RMA New York | RMA New Jersey | |||||||||||||||||||||
2011 | — | $ | 66,251 | — | — | — | $ | 30 | |||||||||||||||||||
2012 | — | 54,167 | — | — | — | — | |||||||||||||||||||||
2013 | $ | 1,580,188 | 34,572 | $ | 175 | — | $ | 2,330 | 253 | ||||||||||||||||||
2014 | — | 69,517 | — | $ | 390 | — | 657 | ||||||||||||||||||||
$ | 1,580,188 | $ | 224,507 | $ | 175 | $ | 390 | $ | 2,330 | $ | 940 |
In accordance with US Treasury regulations, the Money Market Portfolio and RMA Tax-Free have elected to defer realized capital losses of $14,173 and $345, respectively, arising after October 31, 2005. Such losses are treated for tax purposes as arising on July 1, 2006.
On July 13, 2006, FASB released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial
95
UBS RMA
Notes to financial statements (unaudited)
statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing a fund's tax return to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. Based on the Securities and Exchange Commission's announcement on December 22, 2006, the implementation of FIN 48 must be incorporated into accounting practices no later than the last business day of the Funds' December 31, 2007 semiannual report. Management continues to evaluate the application of FIN 48 to the Fund, and is not in a position at this time to estimate the significance of its impact, if any, on the Funds' financial statements.
Capital share transactions
There are 60 billion $0.001 par value shares of common stock authorized for the Money Market Portfolio, 10 billion $0.001 par value shares of common stock authorized for the U.S. Government Portfolio and 20 billion $0.001 par value shares of common stock authorized for RMA Tax-Free. Transactions in capital shares, at $1.00 per share, were as follows:
For the six months ended December 31, 2006: | Money Market Portfolio | U.S. Government Portfolio | RMA Tax-Free | ||||||||||||
Shares sold | 73,794,713,348 | 4,278,784,098 | 21,425,068,681 | ||||||||||||
Shares repurchased | (72,155,462,048 | ) | (4,130,955,268 | ) | (20,670,301,848 | ) | |||||||||
Dividends reinvested | 265,606,961 | 20,345,595 | 57,169,970 | ||||||||||||
Net increase in shares outstanding | 1,904,858,261 | 168,174,425 | 811,936,803 |
96
UBS RMA
Notes to financial statements (unaudited)
For the year ended June 30, 2006: | Money Market Portfolio | U.S. Government Portfolio | RMA Tax-Free | ||||||||||||
Shares sold | 130,539,445,900 | 8,039,913,466 | 37,029,751,216 | ||||||||||||
Shares repurchased | (130,712,166,383 | ) | (8,339,456,937 | ) | (36,954,404,043 | ) | |||||||||
Dividends reinvested | 374,685,769 | 33,260,302 | 83,395,868 | ||||||||||||
Net increase (decrease) in shares outstanding | 201,965,286 | (266,283,169 | ) | 158,743,041 |
Beneficial interest
There is an unlimited amount of $0.001 par value shares of beneficial interest authorized for RMA California, RMA New York and RMA New Jersey. Transactions in shares of beneficial interest, at $1.00 per share were as follows:
For the six months ended December 31, 2006: | RMA California | RMA New York | RMA New Jersey | ||||||||||||
Shares sold | 6,470,550,228 | 3,671,348,918 | 969,322,650 | ||||||||||||
Shares repurchased | (6,373,729,154 | ) | (3,594,140,773 | ) | (933,213,754 | ) | |||||||||
Dividends reinvested | 14,305,690 | 8,795,548 | 2,057,924 | ||||||||||||
Net increase in shares outstanding | 111,126,764 | 86,003,693 | 38,166,820 | ||||||||||||
For the year ended June 30, 2006: | RMA California | RMA New York | RMA New Jersey | ||||||||||||
Shares sold | 12,621,749,957 | 7,503,855,781 | 1,888,223,327 | ||||||||||||
Shares repurchased | (12,508,912,428 | ) | (7,501,011,261 | ) | (1,890,609,106 | ) | |||||||||
Dividends reinvested | 20,024,080 | 13,779,850 | 2,851,684 | ||||||||||||
Net increase in shares outstanding | 132,861,609 | 16,624,370 | 465,905 |
97
UBS RMA Money Market Portfolio
Financial highlights
Selected data for a share of common stock outstanding throughout each period is presented below:
For the six months ended December 31, 2006 | |||||||
(unaudited) | |||||||
Net asset value, beginning of period | $ | 1.00 | |||||
Net investment income | 0.024 | ||||||
Dividends from net investment income | (0.024 | ) | |||||
Distributions from net realized gains from investment activities | — | ||||||
Total dividends and distributions | (0.024 | ) | |||||
Net asset value, end of period | $ | 1.00 | |||||
Total investment return1 | 2.42 | % | |||||
Ratios/supplemental data: | |||||||
Net assets, end of period (000's) | $ | 12,533,016 | |||||
Expenses to average net assets, net of fee waivers by advisor | 0.58 | %* | |||||
Expenses to average net assets, before fee waivers by advisor | 0.71 | %* | |||||
Net investment income to average net assets | 4.75 | %* |
* Annualized.
@ Amount of distribution paid represents less than $0.0005 per share.
1 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and other distributions, if any, 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 the period of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions.
2 During the period August 1, 2004 through June 30, 2005, UBS Financial Services Inc. waived a portion of its advisory and administration fees. The ratio excluding the waiver is the same since the fee waiver represents less than 0.005%.
98
For the years ended June 30, | |||||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||||||
Net investment income | 0.037 | 0.016 | 0.005 | 0.010 | 0.022 | ||||||||||||||||||
Dividends from net investment income | (0.037 | ) | (0.016 | ) | (0.005 | ) | (0.010 | ) | (0.022 | ) | |||||||||||||
Distributions from net realized gains from investment activities | — | (0.000 | )@ | (0.000 | )@ | — | — | ||||||||||||||||
Total dividends and distributions | (0.037 | ) | (0.016 | ) | (0.005 | ) | (0.010 | ) | (0.022 | ) | |||||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||||||
Total investment return1 | 3.71 | % | 1.65 | % | 0.51 | % | 1.02 | % | 2.25 | % | |||||||||||||
Ratios/supplemental data: | |||||||||||||||||||||||
Net assets, end of period (000's) | $ | 10,627,952 | $ | 10,425,878 | $ | 12,434,286 | $ | 21,832,875 | $ | 22,768,982 | |||||||||||||
Expenses to average net assets, net of fee waivers by advisor | 0.58 | % | 0.58 | %2 | 0.60 | % | 0.61 | % | 0.60 | % | |||||||||||||
Expenses to average net assets, before fee waivers by advisor | 0.71 | % | 0.58 | % | 0.60 | % | 0.61 | % | 0.60 | % | |||||||||||||
Net investment income to average net assets | 3.66 | % | 1.59 | % | 0.50 | % | 1.02 | % | 2.21 | % |
99
UBS RMA U.S. Government Portfolio
Financial highlights
Selected data for a share of common stock outstanding throughout each period is presented below:
For the six months ended December 31, 2006 | |||||||
(unaudited) | |||||||
Net asset value, beginning of period | $ | 1.00 | |||||
Net investment income | 0.023 | ||||||
Dividends from net investment income | (0.023 | ) | |||||
Net asset value, end of period | $ | 1.00 | |||||
Total investment return1 | 2.33 | % | |||||
Ratios/supplemental data: | |||||||
Net assets, end of period (000's) | $ | 1,013,680 | |||||
Expenses to average net assets | 0.64 | %* | |||||
Net investment income to average net assets | 4.58 | %* |
* Annualized.
1 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and other distributions, if any, 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 the period of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions.
100
For the years ended June 30, | |||||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||||||
Net investment income | 0.034 | 0.015 | 0.005 | 0.010 | 0.021 | ||||||||||||||||||
Dividends from net investment income | (0.034 | ) | (0.015 | ) | (0.005 | ) | (0.010 | ) | (0.021 | ) | |||||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||||||
Total investment return1 | 3.49 | % | 1.50 | % | 0.48 | % | 1.00 | % | 2.12 | % | |||||||||||||
Ratios/supplemental data: | |||||||||||||||||||||||
Net assets, end of period (000's) | $ | 845,450 | $ | 1,111,698 | $ | 1,250,917 | $ | 2,510,453 | $ | 2,356,829 | |||||||||||||
Expenses to average net assets | 0.62 | % | 0.61 | % | 0.58 | % | 0.56 | % | 0.57 | % | |||||||||||||
Net investment income to average net assets | 3.38 | % | 1.49 | % | 0.48 | % | 1.00 | % | 2.06 | % |
101
UBS RMA Tax-Free Fund Inc.
Financial highlights
Selected data for a share of common stock outstanding throughout each period is presented below:
For the six months ended December 31, 2006 | |||||||
(unaudited) | |||||||
Net asset value, beginning of period | $ | 1.00 | |||||
Net investment income | 0.015 | ||||||
Dividends from net investment income | (0.015 | ) | |||||
Net asset value, end of period | $ | 1.00 | |||||
Total investment return1 | 1.50 | % | |||||
Ratios/supplemental data: | |||||||
Net assets, end of period (000's) | $ | 4,377,293 | |||||
Expenses to average net assets | 0.59 | %* | |||||
Net investment income to average net assets | 2.97 | %* |
* Annualized.
1 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and other distributions, if any, 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 the period of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder could pay on Fund distributions.
102
For the years ended June 30, | |||||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||||||
Net investment income | 0.024 | 0.012 | 0.004 | 0.007 | 0.012 | ||||||||||||||||||
Dividends from net investment income | (0.024 | ) | (0.012 | ) | (0.004 | ) | (0.007 | ) | (0.012 | ) | |||||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||||||
Total investment return1 | 2.40 | % | 1.23 | % | 0.38 | % | 0.67 | % | 1.24 | % | |||||||||||||
Ratios/supplemental data: | |||||||||||||||||||||||
Net assets, end of period (000's) | $ | 3,565,357 | $ | 3,406,614 | $ | 2,935,936 | $ | 3,238,850 | $ | 3,255,520 | |||||||||||||
Expenses to average net assets | 0.60 | % | 0.59 | % | 0.60 | % | 0.63 | % | 0.60 | % | |||||||||||||
Net investment income to average net assets | 2.38 | % | 1.23 | % | 0.38 | % | 0.67 | % | 1.23 | % |
103
UBS RMA California Municipal Money Fund
Financial highlights
Selected data for a share of beneficial interest outstanding throughout each period is presented below:
For the six months ended December 31, 2006 | |||||||
(unaudited) | |||||||
Net asset value, beginning of period | $ | 1.00 | |||||
Net investment income | 0.014 | ||||||
Dividends from net investment income | (0.014 | ) | |||||
Net asset value, end of period | $ | 1.00 | |||||
Total investment return1 | 1.43 | % | |||||
Ratios/supplemental data: | |||||||
Net assets, end of period (000's) | $ | 1,052,751 | |||||
Expenses to average net assets, net of fee waivers by advisor | 0.62 | %* | |||||
Net investment income to average net assets | 2.82 | %* |
* Annualized.
1 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and other distributions, if any, 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 the period of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder could pay on Fund distributions.
2 During the year ended June 30, 2004, UBS Financial Services Inc. waived a portion of its advisory and administration fees. The ratio excluding the waiver is the same since the fee waiver represents less than 0.005%.
104
For the years ended June 30, | |||||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||||||
Net investment income | 0.023 | 0.011 | 0.003 | 0.006 | 0.011 | ||||||||||||||||||
Dividends from net investment income | (0.023 | ) | (0.011 | ) | (0.003 | ) | (0.006 | ) | (0.011 | ) | |||||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||||||
Total investment return1 | 2.29 | % | 1.15 | % | 0.31 | % | 0.60 | % | 1.10 | % | |||||||||||||
Ratios/supplemental data: | |||||||||||||||||||||||
Net assets, end of period (000's) | $ | 941,624 | $ | 808,762 | $ | 739,133 | $ | 767,006 | $ | 753,664 | |||||||||||||
Expenses to average net assets, net of fee waivers by advisor | 0.63 | % | 0.64 | % | 0.65 | %2 | 0.66 | % | 0.65 | % | |||||||||||||
Net investment income to average net assets | 2.28 | % | 1.16 | % | 0.31 | % | 0.60 | % | 1.09 | % |
105
UBS RMA New York Municipal Money Fund
Financial highlights
Selected data for a share of beneficial interest outstanding throughout each period is presented below:
For the six months ended December 31, 2006 | |||||||
(unaudited) | |||||||
Net asset value, beginning of period | $ | 1.00 | |||||
Net investment income | 0.014 | ||||||
Dividends from net investment income | (0.014 | ) | |||||
Net asset value, end of period | $ | 1.00 | |||||
Total investment return1 | 1.45 | % | |||||
Ratios/supplemental data: | |||||||
Net assets, end of period (000's) | $ | 698,699 | |||||
Expenses to average net assets, net of fee waivers by advisor | 0.68 | %* | |||||
Net investment income to average net assets | 2.85 | %* |
* Annualized.
1 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and other distributions, if any, 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 the period of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder could pay on Fund distributions.
2 During the year ended June 30, 2004, UBS Financial Services Inc. waived a portion of its advisory and administration fees. The ratio excluding the waiver is the same since the fee waiver represents less than 0.005%.
106
For the years ended June 30, | |||||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||||||
Net investment income | 0.023 | 0.011 | 0.003 | 0.006 | 0.011 | ||||||||||||||||||
Dividends from net investment income | (0.023 | ) | (0.011 | ) | (0.003 | ) | (0.006 | ) | (0.011 | ) | |||||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||||||
Total investment return1 | 2.28 | % | 1.13 | % | 0.29 | % | 0.62 | % | 1.08 | % | |||||||||||||
Ratios/supplemental data: | |||||||||||||||||||||||
Net assets, end of period (000's) | $ | 612,696 | $ | 596,071 | $ | 562,396 | $ | 588,851 | $ | 559,341 | |||||||||||||
Expenses to average net assets, net of fee waivers by advisor | 0.67 | % | 0.67 | % | 0.67 | %2 | 0.67 | % | 0.68 | % | |||||||||||||
Net investment income to average net assets | 2.27 | % | 1.12 | % | 0.29 | % | 0.62 | % | 1.07 | % |
107
UBS RMA New Jersey Municipal Money Fund
Financial highlights
Selected data for a share of beneficial interest outstanding throughout each period is presented below:
For the six months ended December 31, 2006 | |||||||
(unaudited) | |||||||
Net asset value, beginning of period | $ | 1.00 | |||||
Net investment income | 0.014 | ||||||
Dividends from net investment income | (0.014 | ) | |||||
Net asset value, end of period | $ | 1.00 | |||||
Total investment return1 | 1.39 | % | |||||
Ratios/supplemental data: | |||||||
Net assets, end of period (000's) | $ | 172,806 | |||||
Expenses to average net assets, net of fee waivers by advisor | 0.75 | %* | |||||
Net investment income to average net assets | 2.75 | %* |
* Annualized.
1 Total investment return is calculated assuming a $10,000 investment on the first day of each period reported, reinvestment of all dividends and other distributions, if any, 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 the period of less than one year has not been annualized. Returns do not reflect the deduction of taxes that a shareholder could pay on Fund distributions.
2 During the year ended June 30, 2004, UBS Financial Services Inc. waived a portion of its advisory and administration fees. The ratio excluding the waiver is the same since the fee waiver represents less than 0.005%.
108
For the years ended June 30, | |||||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||||||
Net asset value, beginning of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||||||
Net investment income | 0.021 | 0.010 | 0.002 | 0.005 | 0.010 | ||||||||||||||||||
Dividends from net investment income | (0.021 | ) | (0.010 | ) | (0.002 | ) | (0.005 | ) | (0.010 | ) | |||||||||||||
Net asset value, end of period | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||||||
Total investment return1 | 2.11 | % | 1.05 | % | 0.16 | % | 0.51 | % | 0.97 | % | |||||||||||||
Ratios/supplemental data: | |||||||||||||||||||||||
Net assets, end of period (000's) | $ | 134,639 | $ | 134,174 | $ | 137,440 | $ | 161,854 | $ | 128,500 | |||||||||||||
Expenses to average net assets, net of fee waivers by advisor | 0.81 | % | 0.79 | % | 0.76 | %2 | 0.73 | % | 0.77 | % | |||||||||||||
Net investment income to average net assets | 2.10 | % | 1.02 | % | 0.15 | % | 0.50 | % | 0.94 | % |
109
UBS RMA
General information (unaudited)
Quarterly Form N-Q portfolio schedules
The Funds will file their complete schedules of portfolio holdings with the Securities and Exchange Commission ("SEC") for the first and third quarters of each fiscal year on Form N-Q. The Funds' Forms N-Q are available on the SEC's Web site at http://www.sec.gov. The Funds' Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC 0330. Additionally, you may obtain copies of Forms N-Q from the Funds upon request by calling 1-800-647 1568.
Proxy voting policies, procedures and record
You may obtain a description of each Fund's (1) proxy voting policies, (2) proxy voting procedures and (3) information regarding how a Fund voted any proxies related to portfolio securities during the most recent 12-month period ended June 30 for which an SEC filing has been made, without charge, upon request by contacting a Fund directly at 1-800-647 1568, online on a Fund's Web site: www.ubs.com/ubsglobalam-proxy, or on the EDGAR Database on the SEC's Web site (http://www.sec.gov).
110
UBS RMA Money Market Portfolio
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
Background. At a meeting of the board of UBS RMA Money Fund, Inc. (the "Corporation") on July 19, 2006, the members of the board, including the directors who are not "interested persons" of the Corporation ("Independent Directors"), as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), considered and approved the continuance of the Investment Advisory and Administration Contract between the Corporation and UBS Financial Services Inc. ("UBS Financial Services"), with respect to UBS RMA Money Market Portfolio (the "Fund") (the "Investment Advisory and Administration Contract") and the Sub-Advisory and Sub-Administration Contract between UBS Financial Services and UBS Global Asset Management (Americas) Inc. ("UBS Global AM") with respect to the Fund ("Sub-Advisory and Sub-Administration Contract"). In preparing for the meeting, the board members had requested and received information from UBS Financial Services and UBS Global AM to assist them, including performance and expense information for other investment companies with similar investment objectives. The board received and considered a variety of information about UBS Financial Services and UBS Global AM, as well as the advisory, sub-advisory, administrative, sub-administrative and distribution arrangements for the Fund. The Independent Directors discussed the materials initially provided by management prior to the scheduled board meeting in a session with their independent legal counsel and requested, and received from management, supplemental materials to assist them in their consideration of the Investment Advisory and Administration Contract and Sub-Advisory and Sub-Administration Contract. The board received materials detailing the administrative and sub-administrative services provided to the Fund by UBS Financial Services and UBS Global AM, respectively, which include p roviding accounting and financial analysis, ensuring that all financial and tax regulatory reporting requirements are met, certifying required Securities and Exchange Commission documentation and monitoring the performance of the Fund's service providers.
The Independent Directors also met for several hours the evening before the board meeting and met again after management's presentation was completed to review the disclosure
111
UBS RMA Money Market Portfolio
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
that had been made to them at the meeting. At all of these sessions the Independent Directors met in session with their independent legal counsel. The Independent Directors also received a memorandum from their independent legal counsel discussing the duties of board members in considering approval of advisory, administration, distribution and service agreements.
In its consideration of the approval of the Investment Advisory and Administration Contract and Sub-Advisory and Sub-Administration Contract, the board considered the following factors:
Nature, extent and quality of the services under the investment advisory and administration contract and the sub-advisory and sub-administration contract. The board received and considered information regarding the nature, extent and quality of management and sub-advisory services provided to the Fund by UBS Financial Services under the Investment Advisory and Administration Contract and UBS Global AM and its predecessor, UBS Global Asset Management (US) Inc., under the Sub-Advisory and Sub-Administration Contract (and a predecessor agreement) during the past year. The board also received a description of the administrative and other services rendered to the Fund and its shareholders by management, including in particular UBS Financial Services' oversight of UBS Global AM's provision of sub-advisory and sub-administration services. The board noted th at information received at regular meetings throughout the year related to the services rendered by UBS Financial Services concerning the management of the Fund's affairs and UBS Financial Services' role in overseeing UBS Global AM's provision of sub-advisory and sub-administrative services to the Fund and management's role in coordinating providers of other services to the Fund, including custody, accounting and transfer agency services. The board's evaluation of the services provided by UBS Financial Services and UBS Global AM took into account the board's knowledge and familiarity gained as board members of funds in the UBS New York fund complex, including the scope and quality of UBS Financial Services' and UBS Global AM's investment management, sub-advisory
112
UBS RMA Money Market Portfolio
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
and other capabilities and the quality of management's administrative, sub-administrative and other services. The board observed that the scope of services provided by management had expanded over time as a result of regulatory and other developments, including maintaining and monitoring UBS Global AM's own and the Fund's expanded compliance programs.
The board had available to it the qualifications, backgrounds and responsibilities of the Fund's senior personnel and the portfolio management team primarily responsible for the day-to-day portfolio management of the Fund and recognized that many of these persons report to the board regularly, some at every board meeting, and that at each regular meeting the board receives a detailed report on the Fund's performance. The board also considered, based on its knowledge of UBS Financial Services, UBS Global AM and their affiliates, the financial resources available to management and its parent organization, UBS AG. In that regard, the board received extensive financial information regarding UBS Financial Services and UBS Global AM and noted that they are wholly owned, indirect subsidiaries of one of the largest financial services firms in the world. It was also noted that UBS Global AM, the sub-advisor, had well over $100 billion in assets under management and was part of the UBS Global Asset Management Division, which had over $600 billion of assets under management worldwide.
The board reviewed how transactions in Fund assets are effected. In addition, management reported to the board on, among other things, its disaster recovery plans and portfolio manager compensation plan.
The board concluded that, overall, it was satisfied with the nature, extent and quality of services provided (and expected to be provided) to the Fund under the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract.
113
UBS RMA Money Market Portfolio
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
Advisory fees and expense ratios. The board reviewed and considered the contractual advisory and administration fee (the "Contractual Management Fee") payable by the Fund to UBS Financial Services in light of the nature, extent and quality of the advisory and administrative services provided by UBS Financial Services. The board also reviewed and considered any fee waiver arrangement implemented for the Fund and considered the actual fee rate (after taking any waivers and reimbursements into account) (the "Actual Management Fee"). The board also considered that the Fund's Contractual Management Fee was reduced by a contractual fee waiver arrangement so that the management fee will not exceed the following breakpoint schedule: up to $1.0 billion in average daily net assets—0.50%; in excess of $1.0 billion and up to $1.5 billion in average daily ne t assets—0.44%; over $1.5 billion in average daily net assets—0.36%. The board noted that UBS Financial Services had also agreed that it would cap the Fund's aggregate management and service fees so that the total of these two expenses would not exceed the Fund's Contractual Management Fee.
In connection with its consideration of management fees for UBS funds generally, the board also received information on UBS Global AM's standard institutional account fees. There was no direct parallel for a money market fund on the institutional account fee schedule, although information was included for fixed income products with a short duration. Management explained to the board that it believed that such information was of limited usefulness as separately managed and institutional accounts were not subject to the constraints under the 1940 Act, which applied to the Fund. The board noted management's explanation that comparisons with such accounts may be of limited relevance given the different structures and regulatory requirements of mutual funds versus such accounts and the differences in the levels of services required by mutual funds and such accounts. The board also received information on fees charged to other mutual funds managed by UBS Financial Services or UBS Global AM.
114
UBS RMA Money Market Portfolio
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
The board also received and considered information comparing the Fund's Contractual Management Fee, Actual Management Fee and overall expenses with those of funds in a group of funds selected and provided by Lipper, Inc. ("Lipper"), an independent provider of investment company data (the "Expense Group"). In addition to the Contractual and Actual Management Fees, the board also reviewed and considered total expenses of the Fund. The comparative Lipper information showed that the Fund's Contractual Management Fee, Actual Management Fee and total expenses were each in the third quintile for its Expense Group for the comparison periods utilized in the Lipper report (with the first quintile representing that fifth of the funds in the Expense Group with the lowest level of fees or expenses, as applicable, and the fifth quintile representing that fifth of the funds in the Expense Group with the highest level of fees or expenses, as ap plicable).
The board did not receive comparative information from Lipper with respect to the Fund's sub-advisory and sub-administration fee (together, the "Sub-Advisory Fee"). The board noted that the compensation paid to UBS Global AM is paid by UBS Financial Services, not the Fund, and, accordingly, that the retention of UBS Global AM does not increase the fees otherwise incurred by the Fund's shareholders.
Taking all of the above into consideration, the board determined that the management fee and Sub-Advisory Fee were reasonable in light of the nature, extent and quality of the services provided to the Fund under the Investment Advisory and Administration Contract and Sub-Advisory and Sub-Administration Contract.
Fund performance. The board received and considered performance information of the Fund compared to other funds (the "Performance Universe") selected by Lipper over the one-, three-, five- and ten-year and since inception periods ended April 30, 2006. The board was provided with a description of the methodology Lipper used to determine the similarity of the
115
UBS RMA Money Market Portfolio
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
Fund with the funds included in its Performance Universe. The board also noted that it had received information throughout the year at periodic intervals with respect to the Fund's performance.
The comparative Lipper information showed that the Fund's performance was in the second quintile for each of the periods shown (with the first quintile representing that fifth of the funds in the Performance Universe with the highest performance and the fifth quintile representing that fifth of the funds in the Performance Universe with the lowest performance). Based on its review, the board concluded that the Fund's investment performance was satisfactory.
Economies of scale. The board received and considered information from management regarding whether there have been economies of scale with respect to the management of the Fund, whether the Fund has appropriately benefited from any economies of scale, and whether there is potential for realization of any further economies of scale. The board considered whether economies of scale in the provision of services to the Fund were being passed along to the shareholders.
The board noted that the Fund's Contractual Management Fee, after giving effect to the contractual waivers, contained breakpoints. The board considered that the Fund's asset level exceeded the breakpoints and, as a result, the Fund and its shareholders realized certain economies of scale because the total expense ratio of the Fund was lower than if no breakpoints had been in place. Accordingly, the board determined that economies of scale were passed on to shareholders in the form of breakpoints to the management fee. The board also noted that as the Fund's assets have increased over time, it has realized other economies of scale as certain expenses, such as fees for directors, auditors and legal fees, become a smaller percentage of overall assets. The board also noted that the Fund's Sub-Advisory Fee did not contain breakpoints but also that, as the
116
UBS RMA Money Market Portfolio
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
Sub-Advisory Fee is paid by UBS Financial Services, not the Fund, separate considerations of economies of scale with respect to the Sub-Advisory Fee were not relevant.
Generally, in light of UBS Financial Services' profitability data, management fee, and the breakpoints currently in place, the board believed that UBS Financial Services' sharing of current economies of scale with the Fund was acceptable.
Other benefits to UBS Global AM. The board considered other benefits received by UBS Financial Services, UBS Global AM and their affiliates as a result of their relationship with the Fund, including the opportunity to offer additional products and services to Fund shareholders. In light of the costs of providing investment management, sub-advisory, administrative, sub-administrative and other services to the Fund and UBS Financial Services' and UBS Global AM's ongoing commitment to the Fund, the profits and other ancillary benefits that UBS Financial Services and its affiliates received were considered reasonable. In light of all of the foregoing, the board approved the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract to continue for another year.
In making its decision, the board identified no single factor as being determinative in approving the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract. The Independent Directors were advised by separate independent legal counsel throughout the process. The board discussed the proposed continuance of the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract in a private session with their independent legal counsel at which no representatives of UBS Financial Services or UBS Global AM were present.
117
UBS RMA U.S. Government Portfolio
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
Background. At a meeting of the board of UBS RMA Money Fund Inc. (the "Corporation") on July 19, 2006, the members of the board, including the directors who are not "interested persons" of the Corporation ("Independent Directors"), as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), considered and approved the continuance of the Investment Advisory and Administration Contract between the Corporation and UBS Financial Services Inc. ("UBS Financial Services"), with respect to UBS RMA U.S. Government Portfolio (the "Fund") (the "Investment Advisory and Administration Contract") and the Sub-Advisory and Sub-Administration Contract between UBS Financial Services and UBS Global Asset Mana gement (Americas) Inc. ("UBS Global AM") with respect to the Fund ("Sub-Advisory and Sub-Administration Contract"). In preparing for the meeting, the board members had requested and received information from UBS Financial Services and UBS Global AM to assist them, including performance and expense information for other investment companies with similar investment objectives. The board received and considered a variety of information about UBS Financial Services and UBS Global AM, as well as the advisory, sub-advisory, administrative, sub-administrative and distribution arrangements for the Fund. The Independent Directors discussed the materials initially provided by management prior to the scheduled board meeting in a session with their independent legal counsel and requested, and received from management, supplemental materials to assist them in their consideration of the Investment Advisory and Administration Contract and Sub-Advisory and Sub-Administration Contract. The board received materials detailing the administrative and sub-administrative services provided to the Fund by UBS Financial Services and UBS Global AM, respectively, which include providing accounting and financial analysis, ensuring that all financial and tax regulatory reporting requirements are met, certifying required Securities and Exchange Commission documentation and monitoring the performance of the Fund's service providers.
The Independent Directors also met for several hours the evening before the board meeting and met again after management's presentation was completed to review the disclosure
118
UBS RMA U.S. Government Portfolio
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
that had been made to them at the meeting. At all of these sessions the Independent Directors met in session with their independent legal counsel. The Independent Directors also received a memorandum from their independent legal counsel discussing the duties of board members in considering approval of advisory, administration, distribution and service agreements.
In its consideration of the approval of the Investment Advisory and Administration Contract and Sub-Advisory and Sub-Administration Contract, the board considered the following factors:
Nature, extent and quality of the services under the investment advisory and administration contract and the sub-advisory and sub-administration contract. The board received and considered information regarding the nature, extent and quality of management and sub-advisory services provided to the Fund by UBS Financial Services under the Investment Advisory and Administration Contract and UBS Global AM and its predecessor, UBS Global Asset Management (US) Inc., under the Sub-Advisory and Sub-Administration Contract (and a predecessor agreement) during the past year. The board also received a description of the administrative and other services rendered to the Fund and its shareholders by management, including in particular UBS Financial Services' oversight of UBS Global AM's provision of sub-advisory and sub-administration services. The board noted th at information received at regular meetings throughout the year related to the services rendered by UBS Financial Services concerning the management of the Fund's affairs and UBS Financial Services' role in overseeing UBS Global AM's provision of sub-advisory and sub-administrative services to the Fund and management's role in coordinating providers of other services to the Fund, including custody, accounting and transfer agency services. The board's evaluation of the services provided by UBS Financial Services and UBS Global AM took into account the board's knowledge and familiarity gained as board members of funds in the UBS New York fund complex, including the scope and quality of UBS Financial Services' and UBS Global AM's investment management, sub-advisory and other capabilities and the quality of management's
119
UBS RMA U.S. Government Portfolio
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
administrative, sub-administrative and other services. The board observed that the scope of services provided by management had expanded over time as a result of regulatory and other developments, including maintaining and monitoring UBS Global AM's own and the Fund's expanded compliance programs.
The board had available to it the qualifications, backgrounds and responsibilities of the Fund's senior personnel and the portfolio management team primarily responsible for the day-to-day portfolio management of the Fund and recognized that many of these persons report to the board regularly, some at every board meeting, and that at each regular meeting the board receives a detailed report on the Fund's performance. The board also considered, based on its knowledge of UBS Financial Services, UBS Global AM and their affiliates, the financial resources available to management and its parent organization, UBS AG. In that regard, the board received extensive financial information regarding UBS Financial Services and UBS Global AM and noted that they are wholly owned, indirect subsidiaries of one of the largest financial services firms in the world. It was also noted that UBS Global AM, the sub-advisor, had well over $100 billion in assets under management and was part of the UBS Global Asset Management Division, which had over $600 billion of assets under management worldwide.
The board reviewed how transactions in Fund assets are effected. In addition, management reported to the board on, among other things, its disaster recovery plans and portfolio manager compensation plan.
The board concluded that, overall, it was satisfied with the nature, extent and quality of services provided (and expected to be provided) to the Fund under the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract.
Advisory fees and expense ratios. The board reviewed and considered the contractual advisory and administration fee (the
120
UBS RMA U.S. Government Portfolio
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
"Contractual Management Fee") payable by the Fund to UBS Financial Services in light of the nature, extent and quality of the advisory and administrative services provided by UBS Financial Services. The board also reviewed and considered any fee waiver and/or expense reimbursement arrangement implemented for the Fund and considered the actual fee rate (after taking any waivers and reimbursements into account) (the "Actual Management Fee").
In connection with its consideration of management fees for UBS funds generally, the board also received information on UBS Global AM's standard institutional account fees. There was no direct parallel for a money market fund on the institutional account fee schedule, although information was included for fixed income products with a short duration. Management explained to the board that it believed that such information was of limited usefulness as separately managed and institutional accounts were not subject to the constraints under the 1940 Act, which applied to the Fund. The board noted management's explanation that comparisons with such accounts may be of limited relevance given the different structures and regulatory requirements of mutual funds versus such accounts and the differences in the levels of services required by mutual funds and such accounts. The board also received information on fees charged to other mutual funds managed by UBS Financial Services or UBS Global AM.
The board also received and considered information comparing the Fund's Contractual Management Fee, Actual Management Fee and overall expenses with those of funds in a group of funds selected and provided by Lipper, Inc. ("Lipper"), an independent provider of investment company data (the "Expense Group"). In addition to the Contractual and Actual Management Fees, the board also reviewed and considered total expenses of the Fund. The comparative Lipper information showed that the Fund's Contractual Management Fee and Actual Management Fee were in the third quintile and its total expenses were in the second quintile for its Expense Group for
121
UBS RMA U.S. Government Portfolio
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
the comparison periods utilized in the Lipper report (with the first quintile representing that fifth of the funds in the Expense Group with the lowest level of fees or expenses, as applicable, and the fifth quintile representing that fifth of the funds in the Expense Group with the highest level of fees or expenses, as applicable).
The board did not receive comparative information from Lipper with respect to the Fund's sub-advisory and sub-administration fee (together, the "Sub-Advisory Fee"). The board noted that the compensation paid to UBS Global AM is paid by UBS Financial Services, not the Fund, and, accordingly, that the retention of UBS Global AM does not increase the fees otherwise incurred by the Fund's shareholders.
Taking all of the above into consideration, the board determined that the management fee and Sub-Advisory Fee were reasonable in light of the nature, extent and quality of the services provided to the Fund under the Investment Advisory and Administration Contract and Sub-Advisory and Sub-Administration Contract.
Fund performance. The board received and considered performance information of the Fund compared to other funds (the "Performance Universe") selected by Lipper over the one-, three-, five- and ten-year and since inception periods ended April 30, 2006. The board was provided with a description of the methodology Lipper used to determine the similarity of the Fund with the funds included in its Performance Universe. The board also noted that it had received information throughout the year at periodic intervals with respect to the Fund's performance.
The comparative Lipper information showed that the Fund's performance was in the third quintile for the one-, three- and ten-year periods and since inception and in the second quintile for the five-year period (with the first quintile representing that fifth of the funds in the Performance Universe with the highest
122
UBS RMA U.S. Government Portfolio
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
performance and the fifth quintile representing that fifth of the funds in the Performance Universe with the lowest performance). Based on its review, the board concluded that the Fund's investment performance was satisfactory.
Economies of scale. The board received and considered information from management regarding whether there have been economies of scale with respect to the management of the Fund, whether the Fund has appropriately benefited from any economies of scale, and whether there is potential for realization of any further economies of scale. The board considered whether economies of scale in the provision of services to the Fund were being passed along to the shareholders.
The board noted that the Fund's Contractual Management Fee contained breakpoints. The board considered that the Fund's asset level exceeded the breakpoints and, as a result, the Fund and its shareholders realized certain economies of scale because the total expense ratio of the Fund was lower than if no breakpoints had been in place. Accordingly, the board determined that economies of scale were passed on to shareholders in the form of breakpoints to the management fee. The board also noted that as the Fund's assets have increased over time, it has realized other economies of scale as certain expenses, such as fees for directors, auditors and legal fees, become a smaller percentage of overall assets. The board also noted that the Fund's Sub-Advisory Fee did not contain breakpoints but also that, as the Sub-Advisory Fee is paid by UBS Financial Services, not the Fund, separate considerations of economies of scale with respect to the Sub-Advisory Fee were not relevant.
Generally, in light of UBS Financial Services' profitability data, management fee, and the breakpoints currently in place, the board believed that UBS Financial Services' sharing of current economies of scale with the Fund was acceptable.
123
UBS RMA U.S. Government Portfolio
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
Other benefits to UBS Global AM. The board considered other benefits received by UBS Financial Services, UBS Global AM and their affiliates as a result of their relationship with the Fund, including the opportunity to offer additional products and services to Fund shareholders. In light of the costs of providing investment management, sub-advisory, administrative, sub-administrative and other services to the Fund and UBS Financial Services' and UBS Global AM's ongoing commitment to the Fund, the profits and other ancillary benefits that UBS Financial Services and its affiliates received were considered reasonable. In light of all of the foregoing, the board approved the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract to continue for another year.
In making its decision, the board identified no single factor as being determinative in approving the Investment Advisory and Administration Contract and the Sub-Advisory and SubAdministration Contract. The Independent Directors were advised by separate independent legal counsel throughout the process. The board discussed the proposed continuance of the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract in a private session with their independent legal counsel at which no representatives of UBS Financial Services or UBS Global AM were present.
124
UBS RMA Tax-Free Fund Inc.
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
Background. At a meeting of the board of UBS RMA Tax-Free Fund Inc. (the "Fund") on July 19, 2006, the members of the board, including the directors who are not "interested persons" of the Fund ("Independent Directors"), as defined in the Investment Company Act of 1940, as amended (1940 Act), considered and approved the continuance of the Investment Advisory and Administration Contract between the Fund and UBS Financial Services Inc. ("UBS Financial Services") (the "Investment Advisory and Administration Contract") and the Sub-Advisory and Sub-Administration Contract between UBS Financial Services and UBS Global Asset Management (Americas) Inc. ("UBS Global AM") ("Sub-Advisory and Sub-Administration Contract"). In preparing for the meeting, the board members had requested and received information from UBS Financial Services and UBS Global AM to assis t them, including performance and expense information for other investment companies with similar investment objectives. The board received and considered a variety of information about UBS Financial Services and UBS Global AM, as well as the advisory, sub-advisory, administrative, sub-administrative and distribution arrangements for the Fund. The Independent Directors discussed the materials initially provided by management prior to the scheduled board meeting in a session with their independent legal counsel and requested, and received from management, supplemental materials to assist them in their consideration of the Investment Advisory and Administration Contract and Sub-Advisory and Sub-Administration Contract. The board received materials detailing the administrative and sub-administrative services provided to the Fund by UBS Financial Services and UBS Global AM, respectively, which include providing accounting and financial analysis, ensuring that all financial and tax regulatory reporting requiremen ts are met, certifying required Securities and Exchange Commission documentation and monitoring the performance of the Fund's service providers.
The Independent Directors also met for several hours the evening before the board meeting and met again after management's presentation was completed to review the disclosure
125
UBS RMA Tax-Free Fund Inc.
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
that had been made to them at the meeting. At all of these sessions the Independent Directors met in session with their independent legal counsel. The Independent Directors also received a memorandum from their independent legal counsel discussing the duties of board members in considering approval of advisory, administration, distribution and service agreements.
In its consideration of the approval of the Investment Advisory and Administration Contract and Sub-Advisory and Sub-Administration Contract, the board considered the following factors:
Nature, extent and quality of the services under the investment advisory and administration contract and sub-advisory and sub-administration contract. The board received and considered information regarding the nature, extent and quality of management and sub-advisory services provided to the Fund by UBS Financial Services under the Investment Advisory and Administration Contract and UBS Global AM and its predecessor, UBS Global Asset Management (US) Inc., under the Sub-Advisory and Sub-Administration Contract (and a predecessor agreement) during the past year. The board also received a description of the administrative and other services rendered to the Fund and its shareholders by management, including in particular UBS Financial Services' oversight of UBS Global AM's provision of sub-advisory and sub-administration services. The board noted that i nformation received at regular meetings throughout the year related to the services rendered by UBS Financial Services concerning the management of the Fund's affairs and UBS Financial Services' role in overseeing UBS Global AM's provision of sub-advisory and sub-administrative services to the Fund and management's role in coordinating providers of other services to the Fund, including custody, accounting and transfer agency services. The board's evaluation of the services provided by UBS Financial Services and UBS Global AM took into account the board's knowledge and familiarity gained as board members of funds in the UBS New York fund complex, including the scope and quality of
126
UBS RMA Tax-Free Fund Inc.
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
UBS Financial Services' and UBS Global AM's investment management, sub-advisory and other capabilities and the quality of management's administrative, sub-administrative and other services. The board observed that the scope of services provided by management had expanded over time as a result of regulatory and other developments, including maintaining and monitoring UBS Global AM's own and the Fund's expanded compliance programs.
The board had available to it the qualifications, backgrounds and responsibilities of the Fund's senior personnel and the portfolio management team primarily responsible for the day-to-day portfolio management of the Fund and recognized that many of these persons report to the board regularly, some at every board meeting, and that at each regular meeting the board receives a detailed report on the Fund's performance. The board also considered, based on its knowledge of UBS Financial Services, UBS Global AM and their affiliates, the financial resources available to management and its parent organization, UBS AG. In that regard, the board received extensive financial information regarding UBS Financial Services and UBS Global AM and noted that they are wholly owned, indirect subsidiaries of one of the largest financial services firms in the world. It was also noted that UBS Global AM, the sub-advisor, had well over $100 billion in assets under management and was part of the UBS Global Asset Management Division, which had over $600 billion of assets under management worldwide.
The board reviewed how transactions in Fund assets are effected. In addition, management reported to the board on, among other things, its disaster recovery plans and portfolio manager compensation plan.
The board concluded that, overall, it was satisfied with the nature, extent and quality of services provided (and expected to be provided) to the Fund under the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract.
127
UBS RMA Tax-Free Fund Inc.
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
Advisory fees and expense ratios. The board reviewed and considered the contractual advisory and administration fee (the "Contractual Management Fee") payable by the Fund to UBS Financial Services in light of the nature, extent and quality of the advisory and administrative services provided by UBS Financial Services. The board also reviewed and considered any fee waiver and/or expense reimbursement arrangement implemented for the Fund and considered the actual fee rate (after taking any waivers and reimbursements into account) (the "Actual Management Fee").
In connection with its consideration of management fees for UBS funds generally, the board also received information on UBS Global AM's standard institutional account fees. There was no direct parallel for a money market fund on the institutional account fee schedule, although information was included for fixed income products with a short duration. Management believed that such information was of limited usefulness as separately managed and institutional accounts were not subject to the constraints under the 1940 Act, which applied to the Fund. The board noted management's explanation that comparisons with such accounts may be of limited relevance given the different structures and regulatory requirements of mutual funds versus such accounts and the differences in the levels of services required by mutual funds and such accounts. The board also received information on fees charged to other mutual funds managed by UBS Financial Services or UBS Global AM.
The board also received and considered information comparing the Fund's Contractual Management Fee, Actual Management Fee and overall expenses with those of funds in a group of funds selected and provided by Lipper, Inc. ("Lipper"), an independent provider of investment company data (the "Expense Group"). In addition to the Contractual and Actual Management Fees, the board also reviewed and considered total expenses of the Fund. The comparative Lipper information showed that the Fund's Contractual Management Fee was in the third quintile, its Actual
128
UBS RMA Tax-Free Fund Inc.
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
Management Fee was in the fourth quintile and its total expenses were in the second quintile for its Expense Group for the comparison periods utilized in the Lipper report (with the first quintile representing that fifth of the funds in the Expense Group with the lowest level of fees or expenses, as applicable, and the fifth quintile representing that fifth of the funds in the Expense Group with the highest level of fees or expenses, as applicable).
The board did not receive comparative information from Lipper with respect to the Fund's sub-advisory and sub-administration fee (together, the "Sub-Advisory Fee"). The board noted that the compensation paid to UBS Global AM is paid by UBS Financial Services, not the Fund, and, accordingly, that the retention of UBS Global AM does not increase the fees otherwise incurred by the Fund's shareholders.
Taking all of the above into consideration, the board determined that the management fee and Sub-Advisory Fee were reasonable in light of the nature, extent and quality of the services provided to the Fund under the Investment Advisory and Administration Contract and Sub-Advisory and Sub-Administration Contract.
Fund performance. The board received and considered performance information of the Fund compared to other funds (the "Performance Universe") selected by Lipper over the one-, three-, five- and ten-year and since inception periods ended April 30, 2006. The board was provided with a description of the methodology Lipper used to determine the similarity of the Fund with the funds included in its Performance Universe. The board also noted that it had received information throughout the year at periodic intervals with respect to the Fund's performance.
The comparative Lipper information showed that the Fund's performance was in the second quintile for the one- and three-year periods, in the third quintile for the five- and ten-year periods, and in the fourth quintile for the since inception period (with the first quintile representing that fifth of the funds in the
129
UBS RMA Tax-Free Fund Inc.
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
Performance Universe with the highest performance and the fifth quintile representing that fifth of the funds in the Performance Universe with the lowest performance). Based on its review, the board concluded that the Fund's investment performance was satisfactory.
Economies of scale. The board received and considered information from management regarding whether there have been economies of scale with respect to the management of the Fund, whether the Fund has appropriately benefited from any economies of scale, and whether there is potential for realization of any further economies of scale. The board considered whether economies of scale in the provision of services to the Fund were being passed along to the shareholders. The board also considered whether alternative fee structures (such as breakpoints) would be more appropriate or reasonable taking into consideration economies of scale or other efficiencies.
The board noted that the Fund's Contractual Management Fee contained breakpoints. The board considered that the Fund's asset level exceeded the breakpoints and, as a result, the Fund and its shareholders realized certain economies of scale because the total expense ratio of the Fund was lower than if no breakpoints had been in place. Accordingly, the board determined that economies of scale were passed on to shareholders in the form of breakpoints to the management fee. The board also noted that as the Fund's assets have increased over time, it has realized other economies of scale as certain expenses, such as fees for directors, auditors and legal fees, become a smaller percentage of overall assets. The board also noted that the Fund's sub-advisory fee did not contain breakpoints but also that, as the sub-advisory fee is paid by UBS Financial Services, not the Fund, separate considerations of economies of scale with respect to the sub-advisory fee were not relevant.
Generally, in light of UBS Financial Services' profitability data, management fee, and the breakpoints currently in place, the
130
UBS RMA Tax-Free Fund Inc.
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
board believed that UBS Financial Services' sharing of current economies of scale with the Fund was acceptable.
Other benefits to UBS Global AM. The board considered other benefits received by UBS Financial Services, UBS Global AM and their affiliates as a result of their relationship with the Fund, including the opportunity to offer additional products and services to Fund shareholders. In light of the costs of providing investment management, sub-advisory, administrative, sub-administrative and other services to the Fund and UBS Financial Services' and UBS Global AM's ongoing commitment to the Fund, the profits and other ancillary benefits that UBS Financial Services and its affiliates received were considered reasonable. In light of all of the foregoing, the board approved the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract to continue for another year.
In making its decision, the board identified no single factor as being determinative in approving the Investment Advisory and Administration Agreement and the Sub-Advisory and SubAdministration Contract. The Independent Directors were advised by separate independent legal counsel throughout the process. The board discussed the proposed continuance of the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract in a private session with their independent legal counsel at which no representatives of UBS Financial Services or UBS Global AM were present.
131
UBS RMA California Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
Background. At a meeting of the board of UBS Managed Municipal Trust (the "Trust") on July 19, 2006, the members of the board, including the trustees who are not "interested persons" of the Trust ("Independent Trustees"), as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), considered and approved the continuance of the Investment Advisory and Administration Contract between the Trust and UBS Financial Services Inc. ("UBS Financial Services"), with respect to UBS RMA California Municipal Money Fund (the "Fund") (the "Investment Advisory and Administration Contract") and the Sub-Advisory and Sub-Administration Contract between UBS Financial Services and UBS Global Asset Management (Americas) Inc. ("UBS Global AM") with respect to the Fund ("Sub-Advisory and Sub-Administration Contract"). In preparing for the meeting, the boar d members had requested and received information from UBS Financial Services and UBS Global AM to assist them, including performance and expense information for other investment companies with similar investment objectives. The board received and considered a variety of information about UBS Financial Services and UBS Global AM, as well as the advisory, sub-advisory, administrative, sub-administrative and distribution arrangements for the Fund. The Independent Trustees discussed the materials initially provided by management prior to the scheduled board meeting in a session with their independent legal counsel and requested, and received from management, supplemental materials to assist them in their consideration of the Investment Advisory and Administration Contract and Sub-Advisory and Sub-Administration Contract. The board received materials detailing the administrative and sub-administrative services provided to the Fund by UBS Financial Services and UBS Global AM, respectively, which include providing accounting and financial analysis, ensuring that all financial and tax regulatory reporting requirements are met, certifying required Securities and Exchange Commission documentation and monitoring the performance of the Fund's service providers.
The Independent Trustees also met for several hours the evening before the board meeting and met again after management's presentation was completed to review the disclosure
132
UBS RMA California Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
that had been made to them at the meeting. At all of these sessions the Independent Trustees met in session with their independent legal counsel. The Independent Trustees also received a memorandum from their independent legal counsel discussing the duties of board members in considering approval of advisory, administration, distribution and service agreements.
In its consideration of the approval of the Investment Advisory and Administration Contract and Sub-Advisory and Sub-Administration Contract, the board considered the following factors:
Nature, extent and quality of the services under the investment advisory and administration contract and the sub-advisory and sub-administration contract. The board received and considered information regarding the nature, extent and quality of management and sub-advisory services provided to the Fund by UBS Financial Services under the Investment Advisory and Administration Contract and UBS Global AM and its predecessor, UBS Global Asset Management (US) Inc., under the Sub-Advisory and Sub-Administration Contract (and a predecessor agreement) during the past year. The board also received a description of the administrative and other services rendered to the Fund and its shareholders by management, including in particular UBS Financial Services' oversight of UBS Global AM's provision of sub-advisory and sub-administration services. The board noted th at information received at regular meetings throughout the year related to the services rendered by UBS Financial Services concerning the management of the Fund's affairs and UBS Financial Services' role in overseeing UBS Global AM's provision of sub-advisory and sub-administrative services to the Fund and management's role in coordinating providers of other services to the Fund, including custody, accounting and transfer agency services. The board's evaluation of the services provided by UBS Financial Services and UBS Global AM took into account the board's knowledge and familiarity gained as board members of funds in the UBS New York fund complex, including the scope and quality of UBS Financial Services' and UBS Global AM's investment management,
133
UBS RMA California Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
sub-advisory and other capabilities and the quality of management's administrative, sub-administrative and other services. The board observed that the scope of services provided by management had expanded over time as a result of regulatory and other developments, including maintaining and monitoring UBS Global AM's own and the Fund's expanded compliance programs.
The board had available to it the qualifications, backgrounds and responsibilities of the Fund's senior personnel and the portfolio management team primarily responsible for the day-to-day portfolio management of the Fund and recognized that many of these persons report to the board regularly, some at every board meeting, and that at each regular meeting the board receives a detailed report on the Fund's performance. The board also considered, based on its knowledge of UBS Financial Services, UBS Global AM and their affiliates, the financial resources available to management and its parent organization, UBS AG. In that regard, the board received extensive financial information regarding UBS Financial Services and UBS Global AM and noted that they are wholly owned, indirect subsidiaries of one of the largest financial services firms in the world. It was also noted that UBS Global AM, the sub-advisor, had well over $100 billion in assets under management and was part of the UBS Global Asset Management Division, which had over $600 billion of assets under management worldwide.
The board reviewed how transactions in Fund assets are effected. In addition, management reported to the board on, among other things, its disaster recovery plans and portfolio manager compensation plan.
The board concluded that, overall, it was satisfied with the nature, extent and quality of services provided (and expected to be provided) to the Fund under the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract.
134
UBS RMA California Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
Advisory fees and expense ratios. The board reviewed and considered the contractual advisory and administration fee (the "Contractual Management Fee") payable by the Fund to UBS Financial Services in light of the nature, extent and quality of the advisory and administrative services provided by UBS Financial Services. The board also reviewed and considered any fee waiver arrangement implemented for the Fund and considered the actual fee rate (after taking any waivers and reimbursements into account) (the "Actual Management Fee").
In connection with its consideration of management fees for UBS funds generally, the board also received information on UBS Global AM's standard institutional account fees. There was no direct parallel for a money market fund on the institutional account fee schedule, although information was included for fixed income products with a short duration. Management explained to the board that it believed that such information was of limited usefulness as separately managed and institutional accounts were not subject to the constraints under the 1940 Act, which applied to the Fund. The board noted management's explanation that comparisons with such accounts may be of limited relevance given the different structures and regulatory requirements of mutual funds versus such accounts and the differences in the levels of services required by mutual funds and such accounts. The board also received information on fees charged to other mutual funds managed by UBS Financial Services or UBS Global AM.
The board also received and considered information comparing the Fund's Contractual Management Fee, Actual Management Fee and overall expenses with those of funds in a group of funds selected and provided by Lipper, Inc. ("Lipper"), an independent provider of investment company data (the "Expense Group"). In addition to the Contractual and Actual Management Fees, the board also reviewed and considered total expenses of the Fund. The comparative Lipper information showed that the Fund's Contractual Management Fee was in the first quintile, its Actual Management Fee was in the third quintile and total expenses were in the fifth quintile for its Expense Group for the comparison periods utilized in the Lipper
135
UBS RMA California Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
report (with the first quintile representing that fifth of the funds in the Expense Group with the lowest level of fees or expenses, as applicable, and the fifth quintile representing that fifth of the funds in the Expense Group with the highest level of fees or expenses, as applicable). Management noted to the board that in comparison with other state tax-free funds' overall expenses, the Fund's total expenses were competitive if its 12b-1 service fee was not included for purposes of the comparison. Management explained that it believed this was a more appropriate comparison as not all funds in the Fund's Expense Group are part of a program that offers additional benefits and features of an RMA-like platform and financial advisor servicing.
The board did not receive comparative information from Lipper with respect to the Fund's sub-advisory and sub-administration fee (together, the "Sub-Advisory Fee"). The board noted that the compensation paid to UBS Global AM is paid by UBS Financial Services, not the Fund, and, accordingly, that the retention of UBS Global AM does not increase the fees otherwise incurred by the Fund's shareholders.
Taking all of the above into consideration, the board determined that the management fee and Sub-Advisory Fee were reasonable in light of the nature, extent and quality of the services provided to the Fund under the Investment Advisory and Administration Contract and Sub-Advisory and Sub-Administration Contract.
Fund performance. The board received and considered performance information of the Fund compared to other funds (the "Performance Universe") selected by Lipper over the one-, three-, five- and ten-year and since inception periods ended April 30, 2006. The board was provided with a description of the methodology Lipper used to determine the similarity of the Fund with the funds included in its Performance Universe. The board also noted that it had received information throughout the year at periodic intervals with respect to the Fund's performance.
136
UBS RMA California Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
The comparative Lipper information showed that the Fund's performance was in the fourth quintile for the one-, three- and five-year periods and since inception and the fifth quintile for the ten-year period (with the first quintile representing that fifth of the funds in the Performance Universe with the highest performance and the fifth quintile representing that fifth of the funds in its Performance Universe with the lowest performance). Management explained that, in comparison with its Performance Universe, the Fund's portfolio was generally of higher overall credit quality and contained very minimum exposure to positions subject to the alternative minimum tax ("AMT"). Management noted that the Fund was managed in a higher quality, generally more defensive posture than a number of its peers. Both of these portfolio management decisions had resulted in a slightly lower yield over time when compared to its Performance Group. Ma nagement also noted that, as California was a relatively-high tax state, peers that may have less sensitive (or less affluent) a client base tended to incorporate significant exposures to AMT investments, and that these differentials in AMT investments between the Fund and its peers were frequently the reason for the Fund's fourth quintile placement. Management also noted that, more recently, the portfolio management team's decision to have a very short weighted average maturity of its portfolio had penalized performance to a degree. Based on its review and management's explanation, the board concluded that the Fund's investment performance was satisfactory.
Economies of scale. The board received and considered information from management regarding whether there have been economies of scale with respect to the management of the Fund, whether the Fund has appropriately benefited from any economies of scale, and whether there is potential for realization of any further economies of scale. The board considered whether economies of scale in the provision of services to the Fund were being passed along to the shareholders.
137
UBS RMA California Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
The board noted that the Fund's Contractual Management Fee contained breakpoints. The board considered that the Fund's asset level exceeded the breakpoints and, as a result, the Fund and its shareholders realized certain economies of scale because the total expense ratio of the Fund was lower than if no breakpoints had been in place. Accordingly, the board determined that economies of scale were passed on to shareholders in the form of breakpoints to the Management Fee. The board also noted that as the Fund's assets have increased over time, it has realized other economies of scale as certain expenses, such as fees for trustees, auditors and legal fees, become a smaller percentage of overall assets. The board also noted that the Fund's Sub-Advisory Fee did not contain breakpoints but also that, as the Sub-Advisory Fee is paid by UBS Financial Services, not the Fund, separate considerations of economies of scale with respect to t he Sub-Advisory Fee were not relevant.
Generally, in light of UBS Financial Services' profitability data, management fee, and the breakpoints currently in place, the board believed that UBS Financial Services' sharing of current economies of scale with the Fund was acceptable.
Other benefits to UBS Global AM. The board considered other benefits received by UBS Financial Services, UBS Global AM and their affiliates as a result of their relationship with the Fund, including the opportunity to offer additional products and services to Fund shareholders. In light of the costs of providing investment management, sub-advisory, administrative, sub-administrative and other services to the Fund and UBS Financial Services' and UBS Global AM's ongoing commitment to the Fund, the profits and other ancillary benefits that UBS Financial Services and its affiliates received were considered reasonable. In light of all of the foregoing, the board approved the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract to continue for another year.
138
UBS RMA California Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
In making its decision, the board identified no single factor as being determinative in approving the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract. The Independent Trustees were advised by separate independent legal counsel throughout the process. The board discussed the proposed continuance of the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract in a private session with their independent legal counsel at which no representatives of UBS Financial Services or UBS Global AM were present.
139
UBS RMA New York Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
Background. At a meeting of the board of UBS Managed Municipal Trust (the "Trust") on July 19, 2006, the members of the board, including the trustees who are not "interested persons" of the Trust ("Independent Trustees"), as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), considered and approved the continuance of the Investment Advisory and Administration Contract between the Trust and UBS Financial Services Inc. ("UBS Financial Services"), with respect to UBS RMA New York Municipal Money Fund (the "Fund") (the "Investment Advisory and Administration Contract") and the Sub-Advisory and Sub-Administration Contract between UBS Financial Services and UBS Global Asset Management (Americas) Inc. ("UBS Global AM") with respect to the Fund ("Sub-Advisory and Sub-Administration Contract"). In preparing for the meeting, the board members had requested and received information from UBS Financial Services and UBS Global AM to assist them, including performance and expense information for other investment companies with similar investment objectives. The board received and considered a variety of information about UBS Financial Services and UBS Global AM, as well as the advisory, sub-advisory, administrative, sub-administrative and distribution arrangements for the Fund. The Independent Trustees discussed the materials initially provided by management prior to the scheduled board meeting in a session with their independent legal counsel and requested, and received from management, supplemental materials to assist them in their consideration of the Investment Advisory and Administration Contract and Sub-Advisory and Sub-Administration Contract. The board received materials detailing the administrative and sub-administrative services provided to the Fund by UBS Financial Services and UBS Global AM, respectively, which include providing ac counting and financial analysis, ensuring that all financial and tax regulatory reporting requirements are met, certifying required Securities and Exchange Commission documentation and monitoring the performance of the Fund's service providers.
The Independent Trustees also met for several hours the evening before the board meeting and met again after management's presentation was completed to review the disclosure
140
UBS RMA New York Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
that had been made to them at the meeting. At all of these sessions the Independent Trustees met in session with their independent legal counsel. The Independent Trustees also received a memorandum from their independent legal counsel discussing the duties of board members in considering approval of advisory, administration, distribution and service agreements.
In its consideration of the approval of the Investment Advisory and Administration Contract and Sub-Advisory and Sub-Administration Contract, the board considered the following factors:
Nature, extent and quality of the services under the investment advisory and administration contract and the sub-advisory and sub-administration contract. The board received and considered information regarding the nature, extent and quality of management and sub-advisory services provided to the Fund by UBS Financial Services under the Investment Advisory and Administration Contract and UBS Global AM and its predecessor, UBS Global Asset Management (US) Inc., under the Sub-Advisory and Sub-Administration Contract (and a predecessor agreement) during the past year. The board also received a description of the administrative and other services rendered to the Fund and its shareholders by management, including in particular UBS Financial Services' oversight of UBS Global AM's provision of sub-advisory and sub-administration services. The board noted th at information received at regular meetings throughout the year related to the services rendered by UBS Financial Services concerning the management of the Fund's affairs and UBS Financial Services' role in overseeing UBS Global AM's provision of sub-advisory and sub-administrative services to the Fund and management's role in coordinating providers of other services to the Fund, including custody, accounting and transfer agency services. The board's evaluation of the services provided by UBS Financial Services and UBS Global AM took into account the board's knowledge and familiarity gained as board members of funds in the UBS New York fund complex, including the scope and quality of UBS Financial Services' and UBS Global AM's investment
141
UBS RMA New York Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
management, sub-advisory and other capabilities and the quality of management's administrative, sub-administrative and other services. The board observed that the scope of services provided by management had expanded over time as a result of regulatory and other developments, including maintaining and monitoring UBS Global AM's own and the Fund's expanded compliance programs.
The board had available to it the qualifications, backgrounds and responsibilities of the Fund's senior personnel and the portfolio management team primarily responsible for the day-to-day portfolio management of the Fund and recognized that many of these persons report to the board regularly, some at every board meeting, and that at each regular meeting the board receives a detailed report on the Fund's performance. The board also considered, based on its knowledge of UBS Financial Services, UBS Global AM and their affiliates, the financial resources available to management and its parent organization, UBS AG. In that regard, the board received extensive financial information regarding UBS Financial Services and UBS Global AM and noted that they are wholly owned, indirect subsidiaries of one of the largest financial services firms in the world. It was also noted that UBS Global AM, the sub-advisor, had well over $100 billion in assets under management and was part of the UBS Global Asset Management Division, which had over $600 billion of assets under management worldwide.
The board reviewed how transactions in Fund assets are effected. In addition, management reported to the board on, among other things, its disaster recovery plans and portfolio manager compensation plan.
The board concluded that, overall, it was satisfied with the nature, extent and quality of services provided (and expected to be provided) to the Fund under the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract.
142
UBS RMA New York Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
Advisory fees and expense ratios. The board reviewed and considered the contractual advisory and administration fee (the "Contractual Management Fee") payable by the Fund to UBS Financial Services in light of the nature, extent and quality of the advisory and administrative services provided by UBS Financial Services. The board also reviewed and considered any fee waiver arrangement implemented for the Fund and considered the actual fee rate (after taking any waivers and reimbursements into account) (the "Actual Management Fee").
In connection with its consideration of management fees for UBS funds generally, the board also received information on UBS Global AM's standard institutional account fees. There was no direct parallel for a money market fund on the institutional account fee schedule, although information was included for fixed income products with a short duration. Management explained to the board that it believed that such information was of limited usefulness as separately managed and institutional accounts were not subject to the constraints under the 1940 Act, which applied to the Fund. The board noted management's explanation that comparisons with such accounts may be of limited relevance given the different structures and regulatory requirements of mutual funds versus such accounts and the differences in the levels of services required by mutual funds and such accounts. The board also received information on fees charged to other mutual funds managed by UBS Financial Services or UBS Global AM.
The board also received and considered information comparing the Fund's Contractual Management Fee, Actual Management Fee and overall expenses with those of funds in a group of funds selected and provided by Lipper, Inc. ("Lipper"), an independent provider of investment company data (the "Expense Group"). In addition to the Contractual and Actual Management Fees, the board also reviewed and considered total expenses of the Fund. The comparative Lipper information showed that the Fund's Contractual Management Fee was in the second quintile, its Actual Management Fee was in the third quintile and total expenses were in the fourth quintile for its Expense Group for the comparison periods utilized in the Lipper
143
UBS RMA New York Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
report (with the first quintile representing that fifth of the funds in the Expense Group with the lowest level of fees or expenses, as applicable, and the fifth quintile representing that fifth of the funds in the Expense Group with the highest level of fees or expenses, as applicable). Management noted to the board that in comparison with other state tax-free funds' overall expenses, the Fund's total expenses were competitive if its 12b-1 service fee was not included for purposes of the comparison. Management explained that it believed this was a more appropriate comparison as not all funds in the Fund's Expense Group are part of a program that offers additional benefits and features of an RMA-like platform and financial advisor servicing. Management also noted that although the Fund's total expenses were in the fourth quintile, they were only one basis point (0.01%) higher than the Expense Group Median.
The board did not receive comparative information from Lipper with respect to the Fund's sub-advisory and sub-administration fee (together, the "Sub-Advisory Fee"). The board noted that the compensation paid to UBS Global AM is paid by UBS Financial Services, not the Fund, and, accordingly, that the retention of UBS Global AM does not increase the fees otherwise incurred by the Fund's shareholders.
Taking all of the above into consideration, the board determined that the management fee and Sub-Advisory Fee were reasonable in light of the nature, extent and quality of the services provided to the Fund under the Investment Advisory and Administration Contract and Sub-Advisory and Sub-Administration Contract.
Fund performance. The board received and considered performance information of the Fund compared to other funds (the "Performance Universe") selected by Lipper over the one-, three-, five- and ten-year and since inception periods ended April 30, 2006. The board was provided with a description of the methodology Lipper used to determine the similarity of the Fund with the funds included in its Performance Universe. The board also noted that it had received information throughout the year at periodic intervals with respect to the Fund's performance.
144
UBS RMA New York Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
The comparative Lipper information showed that the Fund's performance was in the fourth quintile for the one-, three-, five- and ten-year periods (with the first quintile representing that fifth of the funds in the Performance Universe with the highest performance and the fifth quintile representing that fifth of the funds in the Performance Universe with the lowest performance). Management explained that, in comparison with its Performance Universe, the Fund's portfolio was generally of higher overall credit quality and contained very minimum exposure to positions subject to the alternative minimum tax ("AMT"). Management noted that the Fund was managed in a higher quality, generally more defensive posture than a number of its peers. Both of these portfolio management decisions had resulted in a slightly lower yield over time when compared to its Performance Group. Management also noted that, as New York was a relatively-high t ax state, peers that may have less sensitive (or less affluent) a client base tended to incorporate significant exposures to AMT investments, and that these differentials in AMT investments between the Fund and its peers were frequently the reason for the Fund's fourth quintile placement. Management also noted that, more recently, the portfolio management team's decision to have a very short weighted average maturity of its portfolio had penalized performance to a degree. Based on its review and management's explanation, the board concluded that the Fund's investment performance was satisfactory.
Economies of scale. The board received and considered information from management regarding whether there have been economies of scale with respect to the management of the Fund, whether the Fund has appropriately benefited from any economies of scale, and whether there is potential for realization of any further economies of scale. The board considered whether economies of scale in the provision of services to the Fund were being passed along to the shareholders.
145
UBS RMA New York Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
The board noted that the Fund's Contractual Management Fee contained breakpoints. The board considered that the Fund's asset level exceeded the first breakpoint and, as a result, the Fund and its shareholders realized certain economies of scale because the total expense ratio of the Fund was lower than if no breakpoints had been in place. Accordingly, the board determined that economies of scale were passed on to shareholders in the form of breakpoints to the Management Fee. The board also noted that as the Fund's assets have increased over time, it has realized other economies of scale as certain expenses, such as fees for trustees, auditors and legal fees, become a smaller percentage of overall assets. The board also noted that the Fund's Sub-Advisory Fee did not contain breakpoints but also that, as the Sub-Advisory Fee is paid by UBS Financial Services, not the Fund, separate considerations of economies of scale with respect to the Sub-Advisory Fee were not relevant.
Generally, in light of UBS Financial Services' profitability data, management fee, and the breakpoints currently in place, the board believed that UBS Financial Services' sharing of current economies of scale with the Fund was acceptable.
Other benefits to UBS Global AM. The board considered other benefits received by UBS Financial Services, UBS Global AM and their affiliates as a result of their relationship with the Fund, including the opportunity to offer additional products and services to Fund shareholders. In light of the costs of providing investment management, sub-advisory, administrative, sub-administrative and other services to the Fund and UBS Financial Services' and UBS Global AM's ongoing commitment to the Fund, the profits and other ancillary benefits that UBS Financial Services and its affiliates received were considered reasonable. In light of all of the foregoing, the board approved the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract to continue for another year.
146
UBS RMA New York Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
In making its decision, the board identified no single factor as being determinative in approving the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract. The Independent Trustees were advised by separate independent legal counsel throughout the process. The board discussed the proposed continuance of the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract in a private session with their independent legal counsel at which no representatives of UBS Financial Services or UBS Global AM were present.
147
UBS RMA New Jersey Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
Background. At a meeting of the board of UBS Municipal Money Market Series (the "Trust") on July 19, 2006, the members of the board, including the trustees who are not "interested persons" of the Trust ("Independent Trustees"), as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), considered and approved the continuance of the Investment Advisory and Administration Contract between the Trust and UBS Financial Services Inc. ("UBS Financial Services"), with respect to UBS RMA New Jersey Municipal Money Fund (the "Fund") (the "Investment Advisory and Administration Contract") and the Sub-Advisory and Sub-Administration Contract between UBS Financial Services and UBS Global Asset Management (Americas) Inc. ("UBS Global AM") with respect to the Fund ("Sub-Advisory and SubAdministration Contract"). In preparing for the meeting, the board members had requested and received information from UBS Financial Services and UBS Global AM to assist them, including performance and expense information for other investment companies with similar investment objectives. The board received and considered a variety of information about UBS Financial Services and UBS Global AM, as well as the advisory, sub-advisory, administrative, sub-administrative and distribution arrangements for the Fund. The Independent Trustees discussed the materials initially provided by management prior to the scheduled board meeting in a session with their independent legal counsel and requested, and received from management, supplemental materials to assist them in their consideration of the Investment Advisory and Administration Contract and Sub-Advisory and SubAdministration Contract. The board received materials detailing the administrative and sub-administrative services provided to the Fund by UBS Financial Services and UBS Global AM, respectively, which include provid ing accounting and financial analysis, ensuring that all financial and tax regulatory reporting requirements are met, certifying required Securities and Exchange Commission documentation and monitoring the performance of the Fund's service providers.
The Independent Trustees also met for several hours the evening before the board meeting and met again after management's presentation was completed to review the disclosure that had been made to them at the meeting. At all of these sessions the Independent Trustees met in session with their
148
UBS RMA New Jersey Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
independent legal counsel. The Independent Trustees also received a memorandum from their independent legal counsel discussing the duties of board members in considering approval of advisory, administration, distribution and service agreements.
In its consideration of the approval of the Investment Advisory and Administration Contract and Sub-Advisory and Sub-Administration Contract, the board considered the following factors:
Nature, extent and quality of the services under the investment advisory and administration contract and the sub-advisory and sub-administration contract. The board received and considered information regarding the nature, extent and quality of management and sub-advisory services provided to the Fund by UBS Financial Services under the Investment Advisory and Administration Contract and UBS Global AM and its predecessor, UBS Global Asset Management (US) Inc., under the Sub-Advisory and Sub-Administration Contract (and a predecessor agreement) during the past year. The board also received a description of the administrative and other services rendered to the Fund and its shareholders by management, including in particular UBS Financial Services' oversight of UBS Global AM's provision of sub-advisory and sub-administration services. The board noted th at information received at regular meetings throughout the year related to the services rendered by UBS Financial Services concerning the management of the Fund's affairs and UBS Financial Services' role in overseeing UBS Global AM's provision of sub-advisory and sub-administrative services to the Fund and management's role in coordinating providers of other services to the Fund, including custody, accounting and transfer agency services. The board's evaluation of the services provided by UBS Financial Services and UBS Global AM took into account the board's knowledge and familiarity gained as board members of funds in the UBS New York fund complex, including the scope and quality of UBS Financial Services' and UBS Global AM's investment management, subadvisory and other capabilities and the quality of management's administrative, sub-administrative and other services. The board observed that the scope of services provided by management had
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UBS RMA New Jersey Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
expanded over time as a result of regulatory and other developments, including maintaining and monitoring UBS Global AM's own and the Fund's expanded compliance programs.
The board had available to it the qualifications, backgrounds and responsibilities of the Fund's senior personnel and the portfolio management team primarily responsible for the day-to-day portfolio management of the Fund and recognized that many of these persons report to the board regularly, some at every board meeting, and that at each regular meeting the board receives a detailed report on the Fund's performance. The board also considered, based on its knowledge of UBS Financial Services, UBS Global AM and their affiliates, the financial resources available to management and its parent organization, UBS AG. In that regard, the board received extensive financial information regarding UBS Financial Services and UBS Global AM and noted that they are wholly owned, indirect subsidiaries of one of the largest financial services firms in the world. It was also noted that UBS Global AM, the sub-advisor, had well over $100 billion in assets under management and was part of the UBS Global Asset Management Division, which had over $600 billion of assets under management worldwide.
The board reviewed how transactions in Fund assets are effected. In addition, management reported to the board on, among other things, its disaster recovery plans and portfolio manager compensation plan.
The board concluded that, overall, it was satisfied with the nature, extent and quality of services provided (and expected to be provided) to the Fund under the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract.
Advisory fees and expense ratios. The board reviewed and considered the contractual advisory and administration fee (the "Contractual Management Fee") payable by the Fund to UBS Financial Services in light of the nature, extent and quality of the advisory and administrative services provided by UBS Financial
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UBS RMA New Jersey Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
Services. The board also reviewed and considered any fee waiver arrangement implemented for the Fund and considered the actual fee rate (after taking any waivers and reimbursements into account) (the "Actual Management Fee").
In connection with its consideration of management fees for UBS funds generally, the board also received information on UBS Global AM's standard institutional account fees. There was no direct parallel for a money market fund on the institutional account fee schedule, although information was included for fixed income products with a short duration. Management explained to the board that it believed that such information was of limited usefulness as separately managed and institutional accounts were not subject to the constraints under the 1940 Act, which applied to the Fund. The board noted management's explanation that comparisons with such accounts may be of limited relevance given the different structures and regulatory requirements of mutual funds versus such accounts and the differences in the levels of services required by mutual funds and such accounts. The board also received information on fees charged to other mutual funds managed by UBS Financial Services or UBS Global AM.
The board also received and considered information comparing the Fund's Contractual Management Fee, Actual Management Fee and overall expenses with those of funds in a group of funds selected and provided by Lipper, Inc. ("Lipper"), an independent provider of investment company data (the "Expense Group"). In addition to the Contractual and Actual Management Fees, the board also reviewed and considered total expenses of the Fund. The comparative Lipper information showed that the Fund's Contractual Management Fee was in the second quintile, its Actual Management Fee was in the fifth quintile and total expenses were in the fourth quintile for its Expense Group for the comparison periods utilized in the Lipper report (with the first quintile representing that fifth of the funds in the Expense Group with the lowest level of fees or expenses, as applicable, and the fifth quintile representing that fifth of the funds in the Expense Gr oup with the highest level of fees or expenses, as applicable). Management explained to the board that although the
151
UBS RMA New Jersey Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
Fund's Contractual Management Fee contained breakpoints, the relatively high level of total expenses was in part the result of the Fund's small size, which did not reach the first management fee breakpoint. At the meeting, management proposed a reduction in its management fee. UBS Financial Services proposed that the Investment Advisory and Administration Contract be amended so that the fee rate would be reduced to 0.45% on average daily net assets up to $300 million, 0.39% on average daily net assets in excess of $300 million and up to $750 million and 0.31% on average daily net assets over $750 million. UBS Financial Services believed that the 0.05% reduction from its current Contractual Management Fee at each breakpoint level would improve the Fund's relative position versus its peers.
The board did not receive comparative information from Lipper with respect to the Fund's sub-advisory and sub-administration fee (together, the "Sub-Advisory Fee"). The board noted that the compensation paid to UBS Global AM is paid by UBS Financial Services, not the Fund, and, accordingly, that the retention of UBS Global AM does not increase the fees otherwise incurred by the Fund's shareholders.
Taking all of the above into consideration, including the fee reduction proposed by management, the board determined that the management fee (as to be amended) and Sub-Advisory Fee were reasonable in light of the nature, extent and quality of the services provided to the Fund under the Investment Advisory and Administration Contract and Sub-Advisory and Sub-Administration Contract.
Fund performance. The board received and considered performance information of the Fund compared to other funds (the "Performance Universe") selected by Lipper over the one-, three-, five- and ten-year and since inception periods ended April 30, 2006. The board was provided with a description of the methodology Lipper used to determine the similarity of the Fund with the funds included in its Performance Universe. The board also noted that it had received information throughout the year at periodic intervals with respect to the Fund's performance.
The comparative Lipper information showed that the Fund's performance for the one-, three- and five-year periods was in the
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UBS RMA New Jersey Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
fourth quintile and in the fifth quintile for the ten-year and since inception periods (with the first quintile representing that fifth of the funds in the Performance Universe with the highest performance and the fifth quintile representing that fifth of the funds in the Performance Universe with the lowest performance). Management noted that the Fund was managed in a higher quality, generally more defensive posture than a number of its peers. Both of these portfolio management decisions had resulted in a slightly lower yield over time when compared to its Performance Group. Management also noted that, as New Jersey was a relatively-high tax state, peers that may have less sensitive (or less affluent) a client base tended to incorporate significant exposures to AMT investments, and that these differentials in AMT investments between the Fund and its peers were frequently the reason for the Fund's fourth or fifth quintile placem ent. Management also noted that, more recently, the portfolio management team's decision to have a very short weighted average maturity of its portfolio had penalized performance to a degree. Management added that the fee reduction it had proposed may help improve relative performance going forward. Based on its review and management's explanation, the board concluded that the Fund's investment performance was satisfactory.
Economies of scale. The board received and considered information from management regarding whether there have been economies of scale with respect to the management of the Fund, whether the Fund has appropriately benefited from any economies of scale, and whether there is potential for realization of any further economies of scale. The board considered whether economies of scale in the provision of services to the Fund were being passed along to the shareholders. The board also considered whether alternative fee structures (such as breakpoints) would be more appropriate or reasonable taking into consideration economies of scale or other efficiencies.
The board noted that the Fund's Contractual Management Fee contained breakpoints. Although the Fund had not yet reached the specified asset level at which a breakpoint to its Contractual Management Fee would be triggered, the board noted that the Fund's breakpoints reflected the potential for sharing economies of scale with shareholders as the Fund grows. The board also
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UBS RMA New Jersey Municipal Money Fund
Board approval of the investment advisory and administration contract and sub-advisory and sub-administration contract (unaudited)
noted that as the Fund's assets have increased over time, it has realized other economies of scale as certain expenses, such as fees for trustees, auditors and legal fees, become a smaller percentage of overall assets. The board also noted that the Fund's Sub-Advisory Fee did not contain breakpoints but also that, as the Sub-Advisory Fee is paid by UBS Financial Services Inc., not the Fund, separate considerations of economies of scale with respect to the Sub-Advisory Fee were not relevant.
Generally, in light of UBS Financial Services' profitability data, management fee, and the breakpoints currently in place, the board believed that UBS Financial Services' sharing of current economies of scale with the Fund was acceptable.
Other benefits to UBS Global AM. The board considered other benefits received by UBS Financial Services, UBS Global AM and their affiliates as a result of their relationship with the Fund, including the opportunity to offer additional products and services to Fund shareholders. In light of the costs of providing investment management, sub-advisory, administrative, sub-administrative and other services to the Fund and UBS Financial Services' and UBS Global AM's ongoing commitment to the Fund, the profits and other ancillary benefits that UBS Financial Services and its affiliates received were considered reasonable. In light of all of the foregoing, the board approved the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract to continue for another year, with the fee reduction discussed above.
In making its decision, the board identified no single factor as being determinative in approving the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract. The Independent Trustees were advised by separate independent legal counsel throughout the process. The board discussed the proposed continuance of the Investment Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract in a private session with their independent legal counsel at which no representatives of UBS Financial Services or UBS Global AM were present.
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Directors/Trustees
Richard Q. Armstrong Chairman Alan S. Bernikow Richard R. Burt | Meyer Feldberg Bernard H. Garil Heather R. Higgins | ||||||
Principal Officers
Kai R. Sotorp President Mark F. Kemper Vice President and Secretary Thomas Disbrow Vice President and Treasurer | Michael H. Markowitz Vice President (Taxable Funds) Elbridge T. Gerry, III Vice President (Tax-Free Funds) | ||||||
Investment Advisor and
Administrator
UBS Financial Services Inc.
1285 Avenue of the Americas
New York, New York 10019-6028
Sub-Advisor and Sub-Administrator
UBS Global Asset Management (Americas) Inc.
51 West 52nd Street
New York, New York 10019-6114
Principal Underwriter
UBS Global Asset Management (US) Inc.
51 West 52nd Street
New York, New York 10019-6114
The financial information included herein is taken from the records of the Funds without examination by independent registered public accountants who do not express an opinion thereon.
This report is not to be used in connection with the offering of shares of the Funds unless accompanied or preceded by an effective prospectus.
© 2007 UBS Global Asset Management (Americas) Inc. All rights reserved.
PRESORTED
STANDARD
U.S. POSTAGE
PAID
COMPUTERSHARE
UBS Global Asset Management (Americas) Inc.
51 West 52nd Street
New York, New York 10019
Item 2. Code of Ethics.
Form N-CSR disclosure requirement not applicable to this filing of a semi-annual report.
Item 3. Audit Committee Financial Expert.
Form N-CSR disclosure requirement not applicable to this filing of a semi-annual report.
Item 4. Principal Accountant Fees and Services.
Form N-CSR disclosure requirement not applicable to this filing of a semi-annual report.
Item 5. Audit Committee of Listed Registrants.
Not applicable to the registrant.
Item 6. Schedule of Investments.
Included as part of the report to shareholders filed under Item 1 of this form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to the registrant.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to the registrant.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to the registrant.
Item 10. Submission of Matters to a Vote of Security Holders.
The registrant’s Board has established a Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee will consider nominees recommended by shareholders if a vacancy occurs among those board members who are not “interested persons” as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended. In order to recommend a nominee, a shareholder should send a letter to the chairperson of the Nominating and Corporate Governance Committee, Richard R. Burt, care of the Secretary of the registrant at UBS Global Asset Management (Americas) Inc., 51 West 52nd Street, New York, New York 10019-6114, and indicate on the envelope “Nominating and Corporate Governance Committee.” The shareholder’s letter should state the nominee’s name and should include the nominee’s resume or curriculum vitae, and must be accompanied by a written consent of the individual to stand for election if nominated for the Board and to serve if elected by shareholders.
Item 11. Controls and Procedures.
(a) The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.
(b) The registrant’s principal executive officer and principal financial officer are aware of no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits.
(a) (1) Code of Ethics – Form N-CSR disclosure requirement not applicable to this filing of a semi-annual report.
(a) (2) Certifications of principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 is attached hereto as Exhibit EX-99.CERT.
(a) (3) Written solicitation to purchase securities under Rule 23c-1 under the Investment Company Act of 1940 sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons — not applicable to the registrant.
(b) Certifications of principal executive officer and principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is attached hereto as Exhibit EX-99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
UBS Municipal Money Market Series
By: | /s/ Kai R. Sotorp |
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| Kai R. Sotorp | ||
| President | ||
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Date: | March 9, 2007 |
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Kai R. Sotorp |
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| Kai R. Sotorp | ||||
| President | ||||
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Date: | March 9, 2007 |
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By: | /s/ Thomas Disbrow |
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| Thomas Disbrow | ||||
| Vice President and Treasurer | ||||
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Date: | March 9, 2007 |
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