N-CSRS 1 a2167697zn-csrs.txt N-CSRS 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 ----------------------------------------------- UBS MUNICIPAL MONEY MARKET SERIES ---------------------------------------------------------------------- (Exact name of registrant as specified in charter) 51 West 52nd Street, New York, New York 10019-6114 ---------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Mark F. Kemper, Esq. UBS Global Asset Management (US) Inc. 51 West 52nd Street New York, NY 10019-6114 (Name and address of agent for service) Copy to: Jack W. Murphy, Esq. Dechert LLP 1775 I Street, N.W. Washington, DC 20006-2401 Registrant's telephone number, including area code: 212-882 5000 Date of fiscal year end: June 30 Date of reporting period: December 31, 2005 ITEM 1. REPORTS TO STOCKHOLDERS. [UBS GLOBAL ASSET MANAGEMENT LOGO] 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, 2005 February 15, 2006 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, 2005. PERFORMANCE With short-term interest rates rising during the past six months, the yields available on money market securities rose as well. As of December 31, 2005, the Funds' seven day current yields were: UBS RMA Money Market Portfolio: 3.73%; UBS RMA U.S. Government Portfolio: 3.33%; UBS RMA Tax-Free Fund Inc.: 2.78%; UBS RMA California Municipal Money Fund: 2.67%; UBS RMA New York Municipal Money Fund: 2.70%; and UBS RMA New Jersey Municipal Money Fund: 2.52%. (For more on the Funds' performance, refer to "Performance and Portfolio Characteristics at a Glance" on pages 8 and 9.) AN INTERVIEW WITH THE PORTFOLIO MANAGERS Q. HOW WOULD YOU DESCRIBE THE ECONOMIC ENVIRONMENT DURING THE REPORTING PERIOD? A. Although the US economy faced a number of challenges during the reporting period, including high oil prices, rising short-term interest rates, continuing challenges on a geopolitical level and a devastating hurricane season at home, it ultimately proved to be quite resilient by most measures. Gross domestic product (GDP) growth rates for the first three quarters of 2005 averaged more than 3.7%. Although advance estimates for [SIDENOTE] 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 Markowitz Robert Sabatino UBS Global Asset Management (US) 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 (US) 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 the fourth quarter came in at 1.1%, which is well below the current trend, preliminary data indicate the lower growth rate was likely the result of lackluster consumer spending during the fourth quarter, and we believe GDP growth may pick up again in 2006. Q. HOW DID THE FEDERAL RESERVE BOARD (THE "FED") REACT IN THIS ECONOMIC ENVIRONMENT? A. As expected, the Fed continued to raise interest rates in an attempt to temper growth and ward off a potential increase in inflation. After five rate hikes in 2004, the Fed again increased the federal funds rate eight additional times during 2005 (four of which were during the reporting period) and once more after the period ended. In total, the Fed's 14 rate hikes have driven the federal funds rate from 1.00% to 4.50%. Also of note, Ben Bernanke replaced Alan Greenspan as Chairman of the Fed at the end of his term in February 2006. Mr. Bernanke has pledged continuity with the Greenspan era, and we believe the market generally regards this appointment as positive news. Q. HOW WERE THE PORTFOLIOS POSITIONED DURING THE SEMIANNUAL PERIOD? A. We maintained our "bulleted" yield curve positioning, emphasizing securities with six-month maturities, while avoiding those with one-year maturities, which we believed appeared overvalued. Generally, a more bulleted strategy may help performance in a rising rate environment such as that of the past six months. In particular, we targeted securities maturing around the dates of the Fed meetings in order to maximize our ability to capture higher yields. From a weighted average maturity standpoint, the portfolios all held shorter maturity positions, with weighted average maturities ranging from 17 to 29 days at the end of December for the tax-free funds. The weighted average maturity of UBS RMA Money Market Portfolio and UBS RMA U.S. Government Portfolio was somewhat longer, both approximately 43 days at the end of December. The shorter maturity stance of the portfolios benefited performance during the reporting period. Q. WHAT TYPES OF SECURITIES DID YOU EMPHASIZE FOR THE PORTFOLIOS? A. For all six of the portfolios, quality, liquidity and yield remained paramount in our selection process. Within the tax-exempt portfolios, we emphasized variable rate demand notes--notes that are repayable on demand and whose interest rate is reset periodically, often daily. We believe there are frequently seasonal opportunities to add to this type of holding at attractive prices, and we took advantage of that trend during the course of the period. Within UBS RMA U.S. Government Portfolio, we continued to allocate a large portion of the portfolio's holdings to US Treasury securities. We did, however, increase our exposure to repurchase agreements over the course of the period. Within UBS RMA Money Market Portfolio, commercial paper and certificates of 2 deposit continued to make up a significant portion of the portfolio. We also reduced the Portfolio's exposure to U.S. government agency obligations over the reporting period, transferring assets to corporate floating rate securities, which we believed represented an attractive value. Q. HOW DO YOU ANTICIPATE STRUCTURING THE PORTFOLIOS GOING FORWARD? A. In general, we remain cautious regarding making any predictions as to when the Fed will pause or end its tightening campaign, and feel interest rates may continue to climb for some time. Yields, we believe--especially on the long end of the curve--will likely rise at some point in the coming months, as the current flatness of the curve is unsustainable in our opinion. On a macroeconomic level, the economy appears to be on fairly solid footing, and we will continue to rely on our research team to interpret developing macroeconomic events and to identify market-specific opportunities as they arise. 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. Sincerely, /s/ W. Douglas Beck /s/ Elbridge T. Gerry W. Douglas Beck, CFA Elbridge T. Gerry III PRESIDENT PORTFOLIO MANAGER UBS RMA Money Fund Inc. (UBS RMA UBS RMA Tax-Free Fund Inc. Money Market Portfolio and UBS RMA UBS RMA California Municipal U.S. Government Portfolio) Money Fund UBS RMA Tax-Free Fund Inc. UBS RMA New York Municipal UBS Managed Municipal Trust (UBS RMA Money Fund California Municipal Money Fund and UBS RMA New Jersey Municipal UBS RMA New York Municipal Money Money Fund Fund) MANAGING DIRECTOR UBS Municipal Money Market Series (UBS UBS Global Asset Management RMA New Jersey Municipal Money (US) Inc. Fund) EXECUTIVE DIRECTOR UBS Global Asset Management (US) Inc. * 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. 3 /s/ Michael Markowitz /s/ Robert Sabatino Michael Markowitz Robert Sabatino PORTFOLIO MANAGER PORTFOLIO MANAGER UBS RMA Money Market Portfolio UBS RMA Money Market Portfolio UBS RMA U.S. Government Portfolio UBS RMA U.S. Government Portfolio MANAGING DIRECTOR DIRECTOR UBS Global Asset Management (US) Inc. UBS Global Asset Management (US) Inc. /s/ Ryan Nugent 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 (US) Inc. This letter is intended to assist shareholders in understanding how the Funds and Portfolios performed during the six months ended December 31, 2005. The views and opinions in the letter were current as of February 15, 2006. 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 any Fund's or Portfolio's future investment intent. We encourage you to consult your financial advisor regarding your personal investment program. 4 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, 2005 to December 31, 2005. ACTUAL EXPENSES The first line in the table below 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 table below 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. 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. Therefore, the second line in 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(R) (RMA(R)) Program or Business Services Account BSA(R) Program fees as these are external to the Funds and relate to those programs. * 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. 5 UBS RMA MONEY MARKET PORTFOLIO
BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* JULY 1, 2005 DECEMBER 31, 2005 07/01/05 TO 12/31/05 --------------------------------------------------------------------------------------------------- Actual $ 1,000.00 $ 1,016.00 $ 3.00 Hypothetical (5% annual return before expenses) 1,000.00 1,022.23 3.01
* Expenses are equal to the Fund's annualized net 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 U.S. GOVERNMENT PORTFOLIO
BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* JULY 1, 2005 DECEMBER 31, 2005 07/01/05 TO 12/31/05 --------------------------------------------------------------------------------------------------- Actual $ 1,000.00 $ 1,015.00 $ 3.10 Hypothetical (5% annual return before expenses) 1,000.00 1,022.13 3.11
* Expenses are equal to the Fund's annualized expense ratio of 0.61%, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period). UBS RMA TAX-FREE FUND INC.
BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* JULY 1, 2005 DECEMBER 31, 2005 07/01/05 TO 12/31/05 --------------------------------------------------------------------------------------------------- Actual $ 1,000.00 $ 1,010.40 $ 2.99 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 ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* JULY 1, 2005 DECEMBER 31, 2005 07/01/05 TO 12/31/05 --------------------------------------------------------------------------------------------------- Actual $ 1,000.00 $ 1,009.90 $ 3.19 Hypothetical (5% annual return before expenses) 1,000.00 1,022.03 3.21
* Expenses are equal to the Fund's annualized expense ratio of 0.63%, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period). 6 UBS RMA NEW YORK MUNICIPAL MONEY FUND
BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* JULY 1, 2005 DECEMBER 31, 2005 07/01/05 TO 12/31/05 --------------------------------------------------------------------------------------------------- Actual $ 1,000.00 $ 1,009.80 $ 3.39 Hypothetical (5% annual return before expenses) 1,000.00 1,021.83 3.41
* Expenses are equal to the Fund's annualized expense ratio of 0.67%, 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 JERSEY MUNICIPAL MONEY FUND
BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* JULY 1, 2005 DECEMBER 31, 2005 07/01/05 TO 12/31/05 --------------------------------------------------------------------------------------------------- Actual $ 1,000.00 $ 1,009.10 $ 3.95 Hypothetical (5% annual return before expenses) 1,000.00 1,021.27 3.97
* Expenses are equal to the Fund's annualized expense ratio of 0.78%, multiplied by the average account value over the period, multiplied by 184 divided by 365 (to reflect the one-half year period). 7 PERFORMANCE AND PORTFOLIO CHARACTERISTICS AT A GLANCE (UNAUDITED) UBS RMA MONEY MARKET PORTFOLIO
YIELDS AND CHARACTERISTICS 12/31/05 6/30/05 12/31/04 ----------------------------------------------------------------------------------------------------------- Seven-Day Current Yield* 3.73% 2.63% 1.75% Seven-Day Effective Yield* 3.80 2.66 1.76 Weighted Average Maturity** 43 days 42 days 46 days Net Assets (bn) $ 10.4 $ 10.4 $ 11.2 PORTFOLIO COMPOSITION*** 12/31/05 6/30/05 12/31/04 ----------------------------------------------------------------------------------------------------------- Commercial Paper 53.7% 53.1% 41.6% Certificates of Deposit 20.1 20.2 25.2 Short-Term Corporate Obligations 17.6 14.0 12.3 U.S. Government Agency Obligations 7.2 10.1 21.3 Bank Notes 1.0 1.0 -- Money Market Funds 0.3 0.5 0.2 Repurchase Agreements 0.0+ 1.0 -- Time Deposit -- -- 0.3 Other Assets Less Liabilities 0.1 0.1 (0.9) ----------------------------------------------------------------------------------------------------------- TOTAL 100.0% 100.0% 100.0% -----------------------------------------------------------------------------------------------------------
UBS RMA U.S. GOVERNMENT PORTFOLIO
YIELDS AND CHARACTERISTICS 12/31/05 6/30/05 12/31/04 ----------------------------------------------------------------------------------------------------------- Seven-Day Current Yield* 3.33% 2.46% 1.40% Seven-Day Effective Yield* 3.38 2.49 1.41 Weighted Average Maturity** 43 days 38 days 45 days Net Assets (bn) $ 1.1 $ 1.1 $ 1.2 PORTFOLIO COMPOSITION*** 12/31/05 6/30/05 12/31/04 ----------------------------------------------------------------------------------------------------------- Repurchase Agreements 64.0% 53.1% 66.4% U.S. Government Obligations 34.0 50.0 51.5 Money Market Funds 0.5 0.6 1.2 Other Assets Less Liabilities 1.5 (3.7) (19.1) ----------------------------------------------------------------------------------------------------------- TOTAL 100.0% 100.0% 100.0% -----------------------------------------------------------------------------------------------------------
UBS RMA TAX-FREE FUND INC
YIELDS AND CHARACTERISTICS 12/31/05 6/30/05 12/31/04 ----------------------------------------------------------------------------------------------------------- Seven-Day Current Yield* 2.78% 1.88% 1.28% Seven-Day Effective Yield* 2.82 1.90 1.29 Weighted Average Maturity** 19 days 11 days 17 days Net Assets (bn) $ 3.4 $ 3.4 $ 3.1 PORTFOLIO COMPOSITION*** 12/31/05 6/30/05 12/31/04 ----------------------------------------------------------------------------------------------------------- Municipal Bonds and Notes 95.0% 92.2% 94.8% Tax-Exempt Commercial Paper 7.6 8.2 10.5 Money Market Fund 0.0+ -- -- Other Assets Less Liabilities (2.6) (0.4) (5.3) ----------------------------------------------------------------------------------------------------------- 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 MIGHT 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 and 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 Funds and 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. 8 UBS RMA CALIFORNIA MUNICIPAL MONEY FUND
YIELDS AND CHARACTERISTICS 12/31/05 6/30/05 12/31/04 ----------------------------------------------------------------------------------------------------------- Seven-Day Current Yield* 2.67% 1.71% 1.24% Seven-Day Effective Yield* 2.70 1.73 1.25 Weighted Average Maturity** 18 days 20 days 18 days Net Assets (mm) $ 934.1 $ 808.8 $ 816.6 PORTFOLIO COMPOSITION*** 12/31/05 6/30/05 12/31/04 ----------------------------------------------------------------------------------------------------------- Municipal Bonds and Notes 89.3% 92.3% 94.8% Tax-Exempt Commercial Paper 10.4 10.1 7.4 Money Market Fund -- 0.3 -- Other Assets Less Liabilities 0.3 (2.7) (2.2) ----------------------------------------------------------------------------------------------------------- TOTAL 100.0% 100.0% 100.0% -----------------------------------------------------------------------------------------------------------
UBS RMA NEW YORK MUNICIPAL MONEY FUND
YIELDS AND CHARACTERISTICS 12/31/05 6/30/05 12/31/04 ----------------------------------------------------------------------------------------------------------- Seven-Day Current Yield* 2.70% 1.76% 1.15% Seven-Day Effective Yield* 2.73 1.77 1.16 Weighted Average Maturity** 17 days 7 days 24 days Net Assets (mm) $ 626.2 $ 596.1 $ 557.8 PORTFOLIO COMPOSITION*** 12/31/05 6/30/05 12/31/04 ----------------------------------------------------------------------------------------------------------- Municipal Bonds and Notes 94.0% 93.5% 90.8% Tax-Exempt Commercial Paper 7.6 6.2 13.3 Other Assets Less Liabilities (1.6) 0.3 (4.1) ----------------------------------------------------------------------------------------------------------- TOTAL 100.0% 100.0% 100.0% -----------------------------------------------------------------------------------------------------------
UBS RMA NEW JERSEY MUNICIPAL MONEY FUND
YIELDS AND CHARACTERISTICS 12/31/05 6/30/05 12/31/04 ----------------------------------------------------------------------------------------------------------- Seven-Day Current Yield* 2.52% 1.64% 1.11% Seven-Day Effective Yield* 2.55 1.65 1.12 Weighted Average Maturity** 29 days 10 days 18 days Net Assets (mm) $ 151.9 $ 134.2 $ 135.2 PORTFOLIO COMPOSITION*** 12/31/05 6/30/05 12/31/04 ----------------------------------------------------------------------------------------------------------- Municipal Bonds and Notes 97.5% 94.6% 94.8% Money Market Fund 1.7 -- -- Tax-Exempt Commercial Paper -- 5.2 4.9 Other Assets Less Liabilities 0.8 0.2 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 MIGHT 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. 9 UBS RMA MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS -- DECEMBER 31, 2005 (UNAUDITED)
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE -------------------------------------------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY OBLIGATIONS--7.23% $ 415,000 Federal Home Loan Bank 01/21/06 to 4.195 to 03/13/06 4.360%* $ 414,945,735 142,705 Federal Home Loan Bank 03/06/06 to 3.625 to 06/08/06 5.125 142,864,782 112,596 Federal Home Loan Mortgage Corp. 02/01/06 to 4.205 to 02/02/06 4.210@ 112,182,109 84,075 Federal Home Loan Mortgage Corp. 10/23/06 4.250 84,075,000 -------------------------------------------------------------------------------------------------------------------- Total U.S. Government Agency Obligations (cost--$754,067,626) 754,067,626 -------------------------------------------------------------------------------------------------------------------- BANK NOTE--0.96% BANKING-NON-U.S.--0.96% 100,000 Royal Bank of Scotland PLC (cost--$100,045,407) 02/24/06 4.400* 100,045,407 CERTIFICATES OF DEPOSIT--20.13% NON-U.S.--11.22% 190,000 Barclays Bank PLC 01/05/06 to 4.030 to 01/06/06 4.055 190,000,062 210,500 BNP Paribas 02/13/06 to 3.965 to 05/23/06 4.520 210,500,000 160,000 Calyon N.A., Inc. 01/20/06 4.110 160,000,000 100,000 Deutsche Bank AG 08/03/06 4.170 100,000,000 95,000 Fortis Bank NV-SA 07/07/06 3.930 95,000,000 124,500 HBOS Treasury Services PLC 02/06/06 to 4.225 to 03/21/06 4.370 124,500,000 38,250 Natexis Banque Populaires 03/29/06 4.405 38,250,000 75,000 Royal Bank of Canada 09/15/06 4.715 75,000,000 27,000 Societe Generale 11/17/06 4.700 27,000,000 100,000 Svenska Handelsbanken 11/08/06 4.750 100,000,000 50,000 UniCredito Italiano SpA 03/13/06 3.915 50,000,000 -------------------------------------------------------------------------------------------------------------------- 1,170,250,062 -------------------------------------------------------------------------------------------------------------------- U.S.--8.91% 256,000 American Express, Federal 01/10/06 to 4.290 to Savings Bank 01/19/06 4.310 256,000,000 134,500 Citibank N.A. 01/05/06 to 4.035 to 03/06/06 4.405 134,500,000 260,000 First Tennessee Bank N.A. (Memphis) 01/30/06 to 4.310 to 03/27/06 4.450 260,000,000
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PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE -------------------------------------------------------------------------------------------------------------------- CERTIFICATES OF DEPOSIT--(CONCLUDED) U.S.--(CONCLUDED) $ 279,000 Wells Fargo Bank N.A. 01/06/06 to 4.260 to 01/18/06 4.320% $ 279,000,000 929,500,000 -------------------------------------------------------------------------------------------------------------------- Total Certificates of Deposit (cost--$2,099,750,062) 2,099,750,062 -------------------------------------------------------------------------------------------------------------------- COMMERCIAL PAPER@--53.71% ASSET BACKED-BANKING--1.66% 174,697 Atlantis One Funding 02/07/06 to 4.140 to 04/04/06 4.200 173,335,039 ASSET BACKED-MISCELLANEOUS--23.10% 252,000 Amsterdam Funding Corp. 01/12/06 to 01/20/06 4.300 251,547,067 154,017 Barton Capital Corp. 01/03/06 to 4.070 to 01/10/06 4.200 153,938,704 257,917 Bryant Park Funding LLC 01/09/06 to 4.280 to 01/25/06 4.340 257,462,707 102,145 Chariot Funding LLC 01/11/06 to 4.290 to 01/19/06 4.300 101,947,430 259,116 Falcon Asset Securitization Corp. 01/23/06 to 4.310 to 01/26/06 4.315 258,382,829 150,000 Kitty Hawk Funding Corp. 01/17/06 4.300 149,713,333 120,023 Old Line Funding Corp. 01/03/06 to 4.200 to 02/06/06 4.320 119,865,443 186,883 Preferred Receivables Funding Corp. 01/09/06 to 4.290 to 01/23/06 4.330 186,504,543 205,127 Ranger Funding Co. LLC 01/20/06 to 4.290 to 02/01/06 4.350 204,551,158 225,750 Sheffield Receivables Corp. 01/04/06 to 4.290 to 01/31/06 4.340 225,364,826 47,229 Thunderbay Funding 01/10/06 4.060 47,181,062 218,500 Variable Funding Capital Corp. 01/20/06 4.260 to 4.310 218,006,364 235,600 Windmill Funding Corp. 01/10/06 to 4.250 to 01/18/06 4.300 235,160,950 -------------------------------------------------------------------------------------------------------------------- 2,409,626,416 -------------------------------------------------------------------------------------------------------------------- ASSET BACKED-SECURITIES--9.19% 36,000 Beta Finance, Inc. 02/07/06 4.320 35,840,160 40,160 Cancara Asset Securitization LLC 01/18/06 4.300 40,078,453
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PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE -------------------------------------------------------------------------------------------------------------------- COMMERCIAL PAPER@--(CONTINUED) ASSET BACKED-SECURITIES--(CONCLUDED) $ 50,000 CC (USA), Inc. (Centauri) 01/17/06 4.070% $ 49,909,556 157,000 Galaxy Funding, Inc. 03/27/06 to 4.140 to 04/03/06 4.420 155,351,171 255,247 Grampian Funding LLC 03/08/06 to 4.365 to 04/21/06 4.400 252,600,355 224,153 Scaldis Capital LLC 01/19/06 to 4.300 to 01/25/06 4.330 223,613,498 202,434 Solitaire Funding LLC 01/23/06 to 4.300 to 03/08/06 4.370 201,386,285 -------------------------------------------------------------------------------------------------------------------- 958,779,478 -------------------------------------------------------------------------------------------------------------------- AUTOMOBILE OEM--0.24% 25,000 BMW U.S. Capital LLC 01/03/06 4.180 24,994,194 BANKING-NON-U.S.--5.92% 156,050 Alliance & Leicester PLC 01/05/06 to 4.000 to 04/07/06 4.350 155,222,579 243,607 Depfa Bank PLC 01/13/06 to 4.065 to 02/07/06 4.190 242,967,568 124,200 DNB NOR ASA 01/03/06 4.320 to 4.330 124,170,165 95,000 Nationwide Building Society 01/04/06 4.310 94,965,879 -------------------------------------------------------------------------------------------------------------------- 617,326,191 -------------------------------------------------------------------------------------------------------------------- BANKING-U.S.--7.95% 146,000 Abbey National N.A. LLC 01/03/06 4.290 to 4.320 145,965,120 45,000 CBA (Delaware) Finance, Inc. 01/09/06 4.030 44,959,700 115,500 Danske Corp. 03/27/06 4.050 to 4.100 114,390,467 188,100 Deutsche Bank Financial LLC 01/04/06 to 4.330 to 01/10/06 4.400 187,971,258 95,000 Dexia Delaware LLC 03/10/06 4.380 94,214,033 243,100 Nordea N.A., Inc. 02/09/06 to 4.090 to 04/03/06 4.245 241,499,803 -------------------------------------------------------------------------------------------------------------------- 829,000,381 -------------------------------------------------------------------------------------------------------------------- BROKERAGE--4.37% 256,500 Bear Stearns Cos., Inc. 01/17/06 to 4.200 to 03/13/06 4.390 255,392,505 156,000 Goldman Sachs Group, Inc. 02/03/06 4.280 155,387,960
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PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE -------------------------------------------------------------------------------------------------------------------- COMMERCIAL PAPER@--(CONCLUDED) BROKERAGE--(CONCLUDED) $ 45,000 Morgan Stanley 01/03/06 4.430% $ 44,988,925 -------------------------------------------------------------------------------------------------------------------- 455,769,390 -------------------------------------------------------------------------------------------------------------------- FINANCE-NONCAPTIVE DIVERSIFIED--1.28% 49,450 CIT Group, Inc. 01/23/06 4.170 49,323,985 85,000 General Electric Capital Corp. 03/14/06 3.870 84,342,100 133,666,085 -------------------------------------------------------------------------------------------------------------------- Total Commercial Paper (cost--$5,602,497,174) 5,602,497,174 -------------------------------------------------------------------------------------------------------------------- SHORT-TERM CORPORATE OBLIGATIONS--17.56% ASSET BACKED-SECURITIES--4.62% 106,000 Dorada Finance, Inc.** 03/10/06 3.500 105,999,013 229,250 K2 (USA) LLC** 01/03/06 to 4.291 to 01/20/06 4.325* 229,242,871 147,000 Links Finance LLC** 01/03/06 to 4.095 to 01/17/06 4.320* 146,992,744 -------------------------------------------------------------------------------------------------------------------- 482,234,628 -------------------------------------------------------------------------------------------------------------------- AUTOMOTIVE OEM--0.58% 60,650 American Honda Finance Corp.** 02/22/06 to 4.413 to 03/21/06 4.530* 60,675,768 BANKING-NON-U.S.--2.62% 100,000 ANZ National International Ltd.** 01/09/06 4.311* 100,000,000 173,000 HBOS Treasury Services PLC** 01/03/06 4.311* 173,000,000 -------------------------------------------------------------------------------------------------------------------- 273,000,000 -------------------------------------------------------------------------------------------------------------------- BANKING-U.S.--1.88% 196,000 Bank of America N.A. 01/31/06 4.310* 196,000,000 BROKERAGE--3.52% 52,250 Citigroup Global Markets Holdings, Inc. 03/06/06 4.587* 52,289,552 100,000 Goldman Sachs Group, Inc. 01/03/06 4.315* 100,000,000 215,000 Morgan Stanley 01/03/06 4.280 to 4.320* 215,000,000 -------------------------------------------------------------------------------------------------------------------- 367,289,552 -------------------------------------------------------------------------------------------------------------------- FINANCE-CAPTIVE AUTOMOTIVE--1.89% 197,100 Toyota Motor Credit Corp. 01/03/06 to 4.261 to 01/09/06 4.300* 197,095,047
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PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE -------------------------------------------------------------------------------------------------------------------- SHORT-TERM CORPORATE OBLIGATIONS--(CONCLUDED) FINANCE-NONCAPTIVE CONSUMER--2.06% $ 215,000 HSBC Finance Corp. 01/03/06 to 4.355 to 03/22/06 4.551%* $ 215,117,972 FINANCE-NONCAPTIVE DIVERSIFIED--0.39% 40,000 General Electric Capital Corp. 01/09/06 4.440* 40,000,000 -------------------------------------------------------------------------------------------------------------------- Total Short-Term Corporate Obligations (cost--$1,831,412,967) 1,831,412,967 -------------------------------------------------------------------------------------------------------------------- REPURCHASE AGREEMENT--0.00% 265 Repurchase Agreement dated 12/30/05 with State Street Bank & Trust Co., collateralized by $92,737 U.S. Treasury Bonds, 7.875% to 8.125% due 08/15/19 to 02/15/21 and $143,269 U.S. Treasury Notes, 2.375% due 08/31/06; (value--$270,438); proceeds; $265,093 (cost--$265,000) 01/03/06 3.150 265,000 NUMBER OF SHARES (000) ---------- MONEY MARKET FUND+--0.29% 30,332 BlackRock Provident Institutional TempFund (cost--$30,332,298) 4.160 30,332,298 -------------------------------------------------------------------------------------------------------------------- Total Investments (cost--$10,418,370,534 which approximates cost for federal income tax purposes)--99.88% 10,418,370,534 Other assets in excess of liabilities--0.12% 12,057,744 -------------------------------------------------------------------------------------------------------------------- Net Assets (applicable to 10,431,667,872 shares of common stock outstanding equivalent to $1.00 per share)--100.00% $ 10,430,428,278 --------------------------------------------------------------------------------------------------------------------
* Variable rate securities--maturity dates reflect earlier of reset dates or stated maturity dates. The interest rates shown are the current rates as of December 31, 2005, and reset periodically. ** Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities, which represent 7.82% of net assets as of December 31, 2005, are considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers. @ Interest rates shown are the discount rates at date of purchase. + Interest rate shown reflects yield at December 31, 2005. OEM Original Equipment Manufacturer 14 ISSUER BREAKDOWN BY COUNTRY
PERCENTAGE OF PORTFOLIO ASSETS --------------------------------------------------------------- United States 79.3% United Kingdom 8.0 France 4.2 Ireland 2.3 Norway 1.2 Germany 1.0 New Zealand 1.0 Sweden 1.0 Belgium 0.9 Canada 0.7 Italy 0.4 --------------------------------------------------------------- Total 100.0% ---------------------------------------------------------------
Weighted average maturity -- 43 days See accompanying notes to financial statements 15 UBS RMA U.S. GOVERNMENT PORTFOLIO STATEMENT OF NET ASSETS -- DECEMBER 31, 2005 (UNAUDITED)
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE ----------------------------------------------------------------------------------------------------------- U.S. GOVERNMENT OBLIGATIONS--33.98% $ 50,000 U.S. Treasury Bills 01/17/06 4.100%@ $ 49,920,278 85,000 U.S. Treasury Bills (1) 03/23/06 to 3.905 to 04/13/06 3.950@ 84,168,979 225,150 U.S. Treasury Notes (1) 01/31/06 to 1.500 to 07/31/06 2.750 223,529,254 ----------------------------------------------------------------------------------------------------------- Total U.S. Government Obligations (cost--$357,618,511) 357,618,511 ----------------------------------------------------------------------------------------------------------- REPURCHASE AGREEMENTS--64.02% 130,000 Repurchase Agreement dated 12/30/05 with Bank of America, collateralized by $111,943,000 U.S. Treasury Bills, zero coupon due 04/27/06 and $22,388,000 U.S. Treasury Notes, 2.625% to 3.875% due 11/15/06 to 05/15/09; (value--$132,600,433); proceeds: $130,047,667 01/03/06 3.300 130,000,000 85,000 Repurchase Agreement dated 12/30/05 with Bear Stearns & Co., collateralized by $69,001,000 U.S. Treasury Bonds, 5.250% to 9.250% due 02/15/16 to 02/15/29; (value--$87,811,226); proceeds: $85,028,333 01/03/06 3.000 85,000,000 33,300 Repurchase Agreement dated 12/30/05 with Deutsche Bank Securities, Inc., collateralized by $3,825,000 U.S. Treasury Bills, zero coupon due 02/09/06, $7,126,000 U.S. Treasury Notes, 3.625% due 04/30/07 and $41,311,000 U.S. Treasury Stripped Interest Payment Bonds, zero coupon due 08/15/17 to 11/15/28; (value--$33,966,319); proceeds: $33,312,395 01/03/06 3.350 33,300,000
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PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE ----------------------------------------------------------------------------------------------------------- REPURCHASE AGREEMENTS--(CONCLUDED) $ 100,000 Repurchase Agreement dated 12/30/05 with Goldman Sachs Group, Inc., collateralized by $102,181,000 U.S. Treasury Notes, 4.000% due 03/15/10; (value--$102,000,416); proceeds: $100,036,111 01/03/06 3.250% $ 100,000,000 150,000 Repurchase Agreement dated 12/30/05 with Merrill Lynch & Co., collateralized by $154,245,000 U.S. Treasury Bills, zero coupon due 03/16/06; (value--$153,000,244); proceeds: $150,055,833 01/03/06 3.350 150,000,000 175,000 Repurchase Agreement dated 12/30/05 with Morgan Stanley, collateralized by $128,326,000 U.S. Treasury Bonds, 8.000% due 11/15/21; (value--$178,500,792); proceeds: $175,066,111 01/03/06 3.400 175,000,000 370 Repurchase Agreement dated 12/30/05 with State Street Bank & Trust Co., collateralized by $129,481 U.S. Treasury Bonds, 7.875% to 8.125% due 08/15/19 to 02/15/21 and $200,036 U.S. Treasury Notes, 2.375% due 08/31/06; (value--$377,592); proceeds: $370,130 01/03/06 3.150 370,000 ----------------------------------------------------------------------------------------------------------- Total Repurchase Agreements (cost--$673,670,000) 673,670,000 ----------------------------------------------------------------------------------------------------------- NUMBER OF SHARES (000) --------- MONEY MARKET FUNDS+--0.52% 5,451 AIM Treasury Portfolio 3.547 5,451,126 ++ 0 Federated Treasury Obligation Fund 3.372 97 ++ 0 Provident Treasury Trust 3.599 78 ----------------------------------------------------------------------------------------------------------- Total Money Market Funds (cost--$5,451,301) 5,451,301 -----------------------------------------------------------------------------------------------------------
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VALUE ---------------------------------------------------------------------------------- Total Investments (cost--$1,036,739,812 which approximates cost for federal income tax purposes) (2)--98.52% $ 1,036,739,812 Other assets in excess of liabilities--1.48% 15,592,856 ---------------------------------------------------------------------------------- Net Assets (applicable to 1,052,881,400 shares of common stock outstanding equivalent to $1.00 per share)--100.00% $ 1,052,332,668 ----------------------------------------------------------------------------------
@ Interest rates shown are the discount rates at date of purchase. + Interest rates shown reflect yield at December 31, 2005. ++ Amount represents less than 500 shares. (1) Security, or portion thereof, was on loan at December 31, 2005. (2) Includes $291,703,431 of investments in securities on loan, at market value. Weighted average maturity -- 43 days See accompanying notes to financial statements 18 UBS RMA TAX-FREE FUND INC. STATEMENT OF NET ASSETS -- DECEMBER 31, 2005 (UNAUDITED)
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--95.04% ALABAMA--2.83% $ 25,000 Alabama Special Care Facilities Financing Authority of Mobile (Ascension Health Credit Group), Series B A 3.500% $ 25,000,000 12,375 Birmingham Refunding, Series A A 3.560 12,375,000 10,900 Jefferson County Limited Obligation School Warrants, Series B A 3.550 10,900,000 11,265 Mobile Industrial Development Board, Dock and Wharf Revenue Refunding (Holnam, Inc. Project), Series A A 3.480 11,265,000 8,700 Mobile Industrial Development Board, Dock and Wharf Revenue Refunding (Holnam, Inc. Project), Series B A 3.500 8,700,000 12,700 Port City Medical Clinic Board Revenue (Infirmary Health Systems), Series A A 3.480 12,700,000 14,875 University of Alabama Revenue (University Hospital), Series C A 3.450 14,875,000 --------------------------------------------------------------------------------------------------------------------- 95,815,000 --------------------------------------------------------------------------------------------------------------------- ALASKA--0.85% 28,870 Alaska Housing Finance Corp., Series A A 3.550 28,870,000 --------------------------------------------------------------------------------------------------------------------- ARIZONA--1.85% 8,000 Apache County Industrial Development Authority (Tucson Electric Power Co.--Springerville Project) A 3.560 8,000,000 11,200 Apache County Industrial Development Authority (Tucson Electric Power Co.--Springerville Project), Series B A 3.550 11,200,000 35,000 Apache County Industrial Development Authority (Tucson Electric Power Co.--Springerville Project), Series C A 3.560 35,000,000 8,200 Pima County Industrial Development Authority (Tucson Electric Power Co.--Irvington Project), Series A A 3.550 8,200,000 --------------------------------------------------------------------------------------------------------------------- 62,400,000 ---------------------------------------------------------------------------------------------------------------------
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PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) CALIFORNIA--0.76% $ 9,700 California Department of Water Resources, Power Supply Revenue Refunding, Subseries F-3 A 3.200% $ 9,700,000 16,000 California Department of Water Resources, Power Supply Revenue Refunding, Subseries G-14 A 3.170 16,000,000 --------------------------------------------------------------------------------------------------------------------- 25,700,000 --------------------------------------------------------------------------------------------------------------------- COLORADO--3.86% 5,500 Colorado Educational and Cultural Facilities Authority Revenue Refunding (National Jewish Federation Board Program), Series A-1 A 3.700 5,500,000 9,600 Colorado Educational and Cultural Facilities Authority Revenue Refunding (National Jewish Federation Board Program), Series A-8 A 3.700 9,600,000 11,300 Colorado Educational and Cultural Facilities Authority Revenue Refunding (National Jewish Federation Board Program), Series B-1 A 3.700 11,300,000 10,260 Colorado Educational and Cultural Facilities Authority Revenue Refunding (National Jewish Federation Board Program), Series B-2 A 3.700 10,260,000 26,200 Colorado Educational and Cultural Facilities Authority Revenue Refunding (National Jewish Federation Board Program), Series C-1 A 3.700 26,200,000 24,995 Denver City & County Certificates of Participation Refunding (Wellington E Web Project), Series C-1 A 3.550 24,995,000 8,260 East 470 Public Highway Authority Revenue Refunding, Vehicle Registration Fee A 3.550 8,260,000 4,700 Moffat County Pollution Control Revenue Refunding (Pacificorp Projects) A 3.750 4,700,000 29,560 University of Colorado Hospital Authority Revenue, Series A A 3.480 29,560,000 --------------------------------------------------------------------------------------------------------------------- 130,375,000 ---------------------------------------------------------------------------------------------------------------------
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PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) DELAWARE--1.20% $ 25,000 Delaware Economic Development Authority Revenue (Hospital Billing and Collections), Series C A 3.520% $ 25,000,000 15,455 University of Delaware Revenue, Series A A 3.500 15,455,000 --------------------------------------------------------------------------------------------------------------------- 40,455,000 --------------------------------------------------------------------------------------------------------------------- DISTRICT OF COLUMBIA--2.31% 13,065 District of Columbia (Multi-Modal), Series A A 3.550 13,065,000 5,620 District of Columbia Refunding, Series D A 3.550 5,620,000 25,000 District of Columbia Revenue (George Washington University), Series B A 3.580 25,000,000 9,000 District of Columbia Revenue (Hillel: The Foundation for Jewish Campus Life) A 3.550 9,000,000 16,430 District of Columbia Revenue (Pooled Loan Program), Series A A 3.550 16,430,000 9,100 District of Columbia, Series D-1 A 3.480 9,100,000 --------------------------------------------------------------------------------------------------------------------- 78,215,000 --------------------------------------------------------------------------------------------------------------------- FLORIDA--3.92% 33,595 Dade County Water & Sewer System Revenue A 3.380 33,595,000 5,000 Gainesville Utilities System Revenue Refunding, Series C A 3.700 5,000,000 10,655 Jacksonville Health Facilities Authority, Hospital Revenue, Series A A 3.750 10,655,000 12,275 Lakeland Educational Facilities Revenue (Florida Southern College of Lakeland Project) A 3.540 12,275,000 12,900 Nassau County Pollution Control Revenue (ITT Rayonier, Inc. Project) A 3.540 12,900,000 5,700 Palm Beach County Housing Finance Authority, Housing Revenue Refunding (Cotton Bay Apartments Project), Series D A 3.400 5,700,000
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PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) FLORIDA--(CONCLUDED) $ 6,400 Palm Beach County Housing Finance Authority, Housing Revenue Refunding (Mahogony Bay Apartments Project), Series C A 3.400% $ 6,400,000 45,965 Sunshine State Governmental Financing Commission Revenue 3.450 to A 3.550 45,965,000 --------------------------------------------------------------------------------------------------------------------- 132,490,000 --------------------------------------------------------------------------------------------------------------------- GEORGIA--2.30% 36,770 Burke County Development Authority, Pollution Control 3.540 to Revenue (Oglethorpe Power Corp.), Series A A 3.580 36,770,000 15,000 Fulton County Development Authority Revenue (Boys & Girls Club of America) A 3.550 15,000,000 16,000 Municipal Electric Authority of Georgia (General Resolution Projects), Subordinated, Series C A 3.500 16,000,000 10,000 Municipal Electric Authority of Georgia (Project One), Subordinated, Series D A 3.500 10,000,000 --------------------------------------------------------------------------------------------------------------------- 77,770,000 --------------------------------------------------------------------------------------------------------------------- ILLINOIS--9.57% 22,745 Chicago (Neighborhoods Alive 21 Program), Series B A 3.550 22,745,000 53,050 Chicago O'Hare International Airport Revenue, Second Lien Series C A 3.550 53,050,000 10,000 Chicago Refunding Project, Series D A 3.510 10,000,000 15,335 Chicago Sales Tax Revenue Refunding A 3.580 15,335,000 16,020 Illinois Development Finance Authority, Multi-Family Housing Revenue Refunding (Orleans-Illinois Project) A 3.580 16,020,000 11,400 Illinois Development Finance Authority Revenue (Chicago Symphony Orchestra) A 3.540 11,400,000 14,100 Illinois Development Finance Authority Revenue (Francis W. Parker School Project) A 3.530 14,100,000 7,800 Illinois Development Finance Authority Revenue Refunding (Evanston Northwestern), Series A A 3.570 7,800,000
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PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) ILLINOIS--(CONCLUDED) $ 24,000 Illinois Development Finance Authority Revenue (St. Vincent De Paul Project), Series A A 3.480% $ 24,000,000 10,000 Illinois Educational Facilities Authority Revenue (ACI/Cultural Pooled Financing) A 3.520 10,000,000 26,640 Illinois Health Facilities Authority Revenue Refunding (Advocate Health Care), Series B A 3.520 26,640,000 8,000 Illinois Health Facilities Authority Revenue, Revolving Fund (Pooled Loan), Series C A 3.580 8,000,000 50,900 Illinois Toll & Highway Authority Priority Refunding, Series B A 3.480 50,900,000 20,000 Metropolitan Water Reclamation District of Greater Chicago, Capital Improvement, Series E A 3.530 20,000,000 7,000 Metropolitan Water Reclamation District of Greater Chicago Refunding, Series A A 3.500 7,000,000 26,500 Metropolitan Water Reclamation District of Greater Chicago Refunding, Series B A 3.500 26,500,000 --------------------------------------------------------------------------------------------------------------------- 323,490,000 --------------------------------------------------------------------------------------------------------------------- INDIANA--4.2 8,200 Indiana Educational Facilities Authority Revenue (University of Notre Dame du Lac) A 3.500 8,200,000 10,000 Indiana Finance Authority, Environmental Improvement Revenue Refunding (Ispat Inland, Inc.) A 3.550 10,000,000 13,315 Indiana Health Facility Financing Authority, Hospital Revenue (Aces Rehabilitation Hospital) A 3.500 13,315,000 11,000 Indiana Health Facility Financing Authority Revenue (Ascension Health Credit Group), Series A-3 A 3.350 11,000,000 82,600 Indiana Health Facility Financing Authority Revenue (Ascension Health Credit Group), Series B A 3.530 82,600,000
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PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE -------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) INDIANA--(CONCLUDED) $ 9,640 Indianapolis Local Public Improvement Bond Bank Refunding, Series F-2 A 3.480% $ 9,640,000 10,000 Indianapolis Local Public Improvement Bond Bank Refunding (Waterworks Project), Series G-1 A 3.520 10,000,000 --------------------------------------------------------------------------------------------------------------------- 144,755,000 --------------------------------------------------------------------------------------------------------------------- IOWA--1.13% 10,000 Iowa Finance Authority, Health Care Facilities Revenue Refunding (Iowa Health System), Series B-3 A 3.550 10,000,000 10,000 Iowa Finance Authority Revenue Refunding (Wheaton Franciscan), Series B A 3.480 10,000,000 18,100 Iowa Higher Education Loan Authority Revenue (Aces Education Loan Private College) A 3.620 18,100,000 --------------------------------------------------------------------------------------------------------------------- 38,100,000 --------------------------------------------------------------------------------------------------------------------- KENTUCKY--1.30% 22,700 Kenton County Airport Board, Special Facilities Revenue Refunding, Series B A 3.570 22,700,000 13,675 Louisville & Jefferson County Visitors & Convention Community Refunding (Kentucky International Convention), Series B A 3.580 13,675,000 7,475 Shelby County Lease Revenue, Series A A 3.700 7,475,000 --------------------------------------------------------------------------------------------------------------------- 43,850,000 --------------------------------------------------------------------------------------------------------------------- LOUISIANA--0.86% 13,105 Louisiana Public Facilities Authority Revenue (College and University Equipment and Capital), Series A A 3.550 13,105,000 16,100 South Louisiana Port Commission Marine Terminal Facilities Revenue Refunding (Occidental Petroleum) A 3.550 16,100,000 --------------------------------------------------------------------------------------------------------------------- 29,205,000 --------------------------------------------------------------------------------------------------------------------- MARYLAND--3.52% 13,770 Baltimore County Revenue (Oak Crest Village, Inc. Project), Series A A 3.520 13,770,000
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PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE -------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) MARYLAND--(CONCLUDED) $ 18,475 Baltimore Industrial Development Authority Revenue (Baltimore Capital Acquisition) A 3.550% $ 18,475,000 28,900 Maryland Health & Higher Educational Facilities Authority Revenue (Pooled Loan Program), Series A A 3.550 28,900,000 43,575 Maryland Health & Higher Educational Facilities Authority Revenue (Pooled Loan Program), Series B A 3.500 43,575,000 14,092 Maryland Health & Higher Educational Facilities Authority Revenue (Pooled Loan Program), Series D A 3.520 14,092,000 -------------------------------------------------------------------------------------------------------------------- 118,812,000 -------------------------------------------------------------------------------------------------------------------- MASSACHUSETTS--9.52% 11,000 Massachusetts Development Finance Agency Revenue (Draper Laboratory Issue) A 3.520 11,000,000 8,500 Massachusetts Health & Educational Facilities Authority Revenue (Capital Asset Program), Series E A 3.750 8,500,000 21,510 Massachusetts Health & Educational Facilities Authority Revenue (Partners Healthcare System), Series P-1 A 3.540 21,510,000 14,650 Massachusetts Health & Educational Facilities Authority Revenue (Partners Healthcare System), Series P-2 A 3.550 14,650,000 109,530 Massachusetts State Refunding, Series A A 3.500 109,530,000 24,850 Massachusetts Water Resources Authority Refunding (General Multi-Modal), Subordinated Series B A 3.540 24,850,000 43,800 Massachusetts Water Resources Authority Refunding (General Multi-Modal), Subordinated Series C A 3.540 43,800,000 25,000 Massachusetts Water Resources Authority Refunding (General Multi-Modal), Subordinated Series D A 3.540 25,000,000 25,000 Massachusetts Water Resources Authority, Series A A 3.480 25,000,000
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PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE -------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) MASSACHUSETTS--(CONCLUDED) $ 37,800 Route 3 North Transportation Improvements Association, Lease Revenue (Demand Obligation Bond), Series B A 3.490% $ 37,800,000 -------------------------------------------------------------------------------------------------------------------- 321,640,000 -------------------------------------------------------------------------------------------------------------------- MICHIGAN--0.98% 10,000 Michigan Building Authority Revenue (Multi-Modal Facilities Program), Series IIA A 3.330 10,000,000 16,800 Michigan Housing Development Authority, Single Family Mortgage Revenue Refunding, Series A A 3.550 16,800,000 6,315 University of Michigan Revenue (University Hospital), Series A A 3.750 6,315,000 -------------------------------------------------------------------------------------------------------------------- 33,115,000 -------------------------------------------------------------------------------------------------------------------- MISSISSIPPI--0.02% 650 Harrison County Pollution Control Revenue Refunding (E.I. Du Pont De Nemours) A 3.750 650,000 MISSOURI--2.81% 12,000 Bi-State Development Agency Metropolitan District Revenue Subordinated (Mass Transit MetroLink), Series A A 3.500 12,000,000 3,100 Missouri Development Finance Board, Cultural Facilities Revenue (Nelson Gallery Foundation), Series B A 3.700 3,100,000 13,200 Missouri Health & Educational Facilities Authority Revenue (Assemblies of God College) A 3.550 13,200,000 12,282 Missouri Health & Educational Facilities Authority Revenue (Barnes Hospital Project), Series B A 3.580 12,282,000 14,525 Missouri Health & Educational Facilities Authority Revenue (Washington University), Series A A 3.700 14,525,000
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PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE -------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) MISSOURI--(CONCLUDED) $ 25,075 Missouri Health & Educational Facilities Authority Revenue (Washington 3.700% to University), Series B A 3.750 $ 25,075,000 14,740 University of Missouri Revenue (University Systems Facilities), Series A A 3.700 14,740,000 -------------------------------------------------------------------------------------------------------------------- 94,922,000 -------------------------------------------------------------------------------------------------------------------- NEBRASKA--0.33% 11,100 NEBHELP, Inc. Revenue (Multiple-Mode), Series E A 3.550 11,100,000 NEVADA--0.27% 9,000 Clark County Airport Improvement Revenue Refunding, Series A A 3.490 9,000,000 NEW HAMPSHIRE--1.15% 13,800 New Hampshire Business Finance Authority Resource Recovery Revenue Refunding (Wheelabrator), Series A A 3.550 13,800,000 25,000 New Hampshire Health & Education Facilities Authority Revenue (Dartmouth College Issue) A 3.520 25,000,000 -------------------------------------------------------------------------------------------------------------------- 38,800,000 -------------------------------------------------------------------------------------------------------------------- NEW YORK--0.30% 10,000 New York City, Subseries H-2 A 3.470 10,000,000 NORTH CAROLINA--8.93% 9,800 Charlotte Certificates of Participation (Governmental Facilities Authority), Series F A 3.550 9,800,000 68,680 Charlotte Water & Sewer System Revenue Refunding, Series C A 3.500 68,680,000 20,500 Concord Utilities System Revenue Refunding, Series B A 3.480 20,500,000 10,300 Fayetteville Public Works Commission Revenue Refunding, Series A A 3.490 10,300,000 63,000 Mecklenburg County Certificates of Participation A 3.500 63,000,000
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PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE -------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) NORTH CAROLINA--(CONCLUDED) $ 11,760 North Carolina Educational Facilities Finance Agency Revenue (Elon College) A 3.510% $ 11,760,000 5,955 North Carolina Educational Facilities Finance Agency Revenue (Providence Day School) A 3.550 5,955,000 30,300 North Carolina Medical Care Commission Health Care Facilities Revenue Refunding (Duke University Health System), Series C A 3.480 30,300,000 16,550 North Carolina Medical Care Commission Hospital Revenue (Baptist Hospitals Project) A 3.510 16,550,000 15,000 North Carolina Refunding, Series B A 3.420 15,000,000 21,050 North Carolina Refunding, Series C A 3.480 21,050,000 28,750 Union County, Series A A 3.490 28,750,000 -------------------------------------------------------------------------------------------------------------------- 301,645,000 -------------------------------------------------------------------------------------------------------------------- OHIO--3.89% 10,000 Butler County Capital Funding Revenue (CCAO Low Cost Capital), Series A A 3.520 10,000,000 14,900 Cleveland-Cuyahoga County Port Authority Revenue (Euclid Ave./93rd St. Garage Office) A 3.580 14,900,000 18,900 Columbus Sewer Revenue Refunding A 3.510 18,900,000 26,130 Franklin County Hospital Revenue Refunding and Improvement (U.S. Health Corp.), Series A A 3.490 26,130,000 10,100 Franklin County Hospital Revenue Refunding Subordinated (OhioHealth 3.500 10,100,000 Doctors Hospital), Series B A 7,220 Mahoning County Housing Revenue (Youngstown State University Project) A 3.530 7,220,000 14,200 Ohio Air Quality Development Authority Revenue Refunding (Ohio Edison Project), Series A A 3.550 14,200,000 29,900 Ohio Water Development Authority Revenue Refunding (Water Development-Pure Water Project) A 3.540 29,900,000 -------------------------------------------------------------------------------------------------------------------- 131,350,000 --------------------------------------------------------------------------------------------------------------------
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PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) OREGON--0.65% $ 15,000 Oregon Tax Anticipation Notes, Series A 11/27/06 4.500% $ 15,187,846 6,700 Portland Multi-Family Revenue (South Park Block Project), Series A A 3.470 6,700,000 --------------------------------------------------------------------------------------------------------------------- 21,887,846 --------------------------------------------------------------------------------------------------------------------- PENNSYLVANIA--7.02% 10,100 Butler County General Authority Revenue Refunding (Conneaut School District Project), Series A A 3.520 10,100,000 10,560 Cumberland County Municipal Authority Revenue Refunding (Lutheran Services Northeast/Tressler Lutheran Services Obligated Group Project), Series C A 3.510 10,560,000 14,065 Delaware County Authority, Hospital Revenue (Crozer-Chester Medical Center) A 3.520 14,065,000 45,450 Delaware Valley Regional Finance Authority (Local Government Revenue) A 3.500 45,450,000 25,615 Lancaster County Hospital Authority Revenue (Health Center, Masonic Homes Project) A 3.520 25,615,000 9,000 Philadelphia Authority for Industrial Development Revenue (Regional Performing Arts Center Project) A 3.520 9,000,000 11,300 Philadelphia Hospitals & Higher Education Facilities Authority Revenue Refunding 3.700 11,300,000 (Children's Hospital Project), Series A A 25,920 Philadelphia Hospitals & Higher Education Facilities Authority Revenue Refunding 3.700 25,920,000 (Children's Hospital Project), Series B A 57,095 Philadelphia Water & Wastewater Revenue Refunding, Series B A 3.480 57,095,000 14,200 University of Pittsburgh of the Commonwealth Systems of Higher Education (University Capital Project), Series B A 3.520 14,200,000 13,925 York General Authority Revenue (Pooled Financing Subordinated), Series B A 3.520 13,925,000 --------------------------------------------------------------------------------------------------------------------- 237,230,000 ---------------------------------------------------------------------------------------------------------------------
29
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) RHODE ISLAND--0.38% $ 13,000 Rhode Island Health & Educational Building Corp. Revenue (Higher Education Facilities-Brown University), Series A A 3.500% $ 13,000,000 SOUTH CAROLINA--2.07% 27,800 Piedmont Municipal Power Agency, South Carolina Electric Revenue Refunding, Series A A 3.450 27,800,000 10,000 Piedmont Municipal Power Agency, South Carolina Electric Revenue Refunding, Series B A 3.450 10,000,000 10,300 Piedmont Municipal Power Agency, South Carolina Electric Revenue Refunding, Subseries B-2 A 3.450 10,300,000 10,000 South Carolina Educational Facilities Authority for Private Nonprofit Institutions of Higher Learning Refunding and Improvement (Anderson College) A 3.550 10,000,000 12,015 South Carolina Jobs-Economic Development Authority, Hospital Facilities Revenue (Regional Medical Center of Orangeburg) A 3.480 12,015,000 --------------------------------------------------------------------------------------------------------------------- 70,115,000 --------------------------------------------------------------------------------------------------------------------- TENNESSEE--3.95% 51,700 Clarksville Public Building Authority Revenue, Pooled Financing (Tennessee Municipal Bond Fund) A 3.750 51,700,000 9,800 Metropolitan Government of Nashville & Davidson County, Health & Educational Facilities Board Revenue (Vanderbilt University) Series A A 3.500 9,800,000 13,695 Metropolitan Government of Nashville & Davidson County, Industrial Development Refunding (David Lipscomb University Project) A 3.550 13,695,000
30
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) TENNESSEE--(CONCLUDED) $ 5,660 Montgomery County Public Building Authority Revenue Financing Government Obligation (Pooled Loan) A 3.550% $ 5,660,000 680 Montgomery County Public Building Authority Revenue (Pooled Loan) A 3.750 680,000 44,000 Shelby County Public Improvement and School, Series B A 3.550 44,000,000 7,870 Tusculum Health Educational & Housing Facilities Board, Educational Facilities Revenue (Tusculum College Project) A 3.550 7,870,000 --------------------------------------------------------------------------------------------------------------------- 133,405,000 --------------------------------------------------------------------------------------------------------------------- TEXAS--6.16% 15,000 Dallas North Tollway System Revenue, Series C A 3.550 15,000,000 23,900 Harris County Health Facilities Development Corp. Revenue Refunding (The Methodist Systems), Series B A 3.700 23,900,000 7,050 Tarrant County Housing Finance Corp. Revenue Refunding (Multi-Family Housing Apartments Project) A 3.580 7,050,000 133,500 Texas Tax and Revenue Anticipation Notes 08/31/06 4.500 134,799,344 24,165 Texas Turnpike Authority, Central Texas Turnpike System Revenue, First Tier, Series B A 3.480 24,165,000 3,400 Texas Water Development Board Revenue Refunding Subordinated (State Revolving Fund) A 3.750 3,400,000 --------------------------------------------------------------------------------------------------------------------- 208,314,344 --------------------------------------------------------------------------------------------------------------------- VIRGINIA--0.38% 11,545 Fairfax County Economic Development Authority Revenue (Smithsonian Institution), Series A A 3.500 11,545,000 1,400 Roanoke Industrial Development Authority, Hospital Revenue Refunding (Carilion Health Systems), Series B A 3.700 1,400,000 --------------------------------------------------------------------------------------------------------------------- 12,945,000 ---------------------------------------------------------------------------------------------------------------------
31
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONCLUDED) WASHINGTON--5.39% $ 23,000 Energy Northwest Washington Electric Revenue Refunding (Project No. 3), Series D-3-1 A 3.490% $ 23,000,000 17,500 Energy Northwest Washington Electric Revenue Refunding (Project No. 3), Series E A 3.580 17,500,000 23,195 King County Sewer Revenue (Junior Lien), Series A A 3.530 23,195,000 22,200 King County Sewer Revenue (Junior Lien), Series B A 3.550 22,200,000 8,600 Seattle Municipal Light & Power Revenue A 3.420 8,600,000 35,370 Snohomish County Public Utility District No. 001, Electric Revenue Refunding (Generation Systems), Series 2001A A 3.490 35,370,000 10,000 Tulalip Tribes of The Tulalip Reservation Special Revenue Refunding A 3.570 10,000,000 6,850 Washington Health Care Facilities Authority Revenue (Providence Services), Series A A 3.700 6,850,000 22,745 Washington Public Power Supply Systems Nuclear Project No. 1 Revenue Refunding, Series 1A-2 A 3.490 22,745,000 12,830 Washington Public Power Supply Systems Nuclear Project No. 3 Electric Revenue Refunding, Series 3A A 3.500 12,830,000 --------------------------------------------------------------------------------------------------------------------- 182,290,000 --------------------------------------------------------------------------------------------------------------------- WISCONSIN--0.30% 10,000 Wisconsin Center District Tax Revenue, Series A A 3.550 10,000,000 --------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds and Notes (cost--$3,211,711,190) 3,211,711,190 --------------------------------------------------------------------------------------------------------------------- TAX-EXEMPT COMMERCIAL PAPER--7.58% ARIZONA--0.67% 22,725 Salt River Agricultural Improvement & Power 02/09/06 to 02/13/06 3.100 22,725,000
32
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- TAX-EXEMPT COMMERCIAL PAPER--(CONTINUED) DISTRICT OF COLUMBIA--0.19% $ 6,500 District of Columbia (American National Red Cross) 11/01/06 2.800% $ 6,500,000 FLORIDA--1.24% 5,000 Florida Local Government Finance Commission 02/14/06 3.100 5,000,000 37,000 Jacksonville Electric Authority 01/20/06 to 2.850 to 02/22/06 3.150 37,000,000 --------------------------------------------------------------------------------------------------------------------- 42,000,000 --------------------------------------------------------------------------------------------------------------------- GEORGIA--1.01% 34,000 Burke County Development Authority Pollution Control Revenue, (Oglethorpe Power Corp.) 01/11/06 to 01/17/06 2.820 34,000,000 ILLINOIS--0.47% 16,000 Illinois Educational Facilities Authority Revenue 01/18/06 2.820 16,000,000 LOUISIANA--0.41% 13,970 Louisiana Offshore Terminal Authority Deepwater Port Revenue Refunding (Loop, Inc. First Stage), Series A 01/19/06 2.900 13,970,000 MASSACHUSETTS--0.52% 4,000 Commonwealth of Massachusetts 01/17/06 3.240 4,000,000 13,700 Massachusetts Water Authority 02/08/06 3.150 13,700,000 --------------------------------------------------------------------------------------------------------------------- 17,700,000 --------------------------------------------------------------------------------------------------------------------- MINNESOTA--1.25% 24,500 City of Rochester (Mayo Clinic) 01/24/06 to 2.900 to 01/26/06 3.000 24,500,000 17,600 Rochester Health Care Facility 03/10/06 3.160 17,600,000 --------------------------------------------------------------------------------------------------------------------- 42,100,000 --------------------------------------------------------------------------------------------------------------------- TEXAS--0.73% 14,500 City of Houston 01/23/06 to 2.850 to 01/25/06 2.930 14,500,000
33
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- TAX-EXEMPT COMMERCIAL PAPER--(CONCLUDED) TEXAS--(CONCLUDED) $ 10,048 Texas Department of Transportation 02/15/06 3.130% $ 10,048,000 --------------------------------------------------------------------------------------------------------------------- 24,548,000 --------------------------------------------------------------------------------------------------------------------- UTAH--0.16% 5,400 Intermountain Power Agency 02/13/06 3.130 5,400,000 WASHINGTON--0.93% 23,300 King County Sewer Revenue 02/10/06 to 02/14/06 2.870 23,300,000 8,000 Port of Tacoma 01/13/06 2.850 8,000,000 --------------------------------------------------------------------------------------------------------------------- 31,300,000 --------------------------------------------------------------------------------------------------------------------- Total Tax-Exempt Commercial Paper (cost--$256,243,000) 256,243,000 --------------------------------------------------------------------------------------------------------------------- NUMBER OF SHARES (000) ---------- MONEY MARKET FUND+--0.01% 500 AIM Tax Free Investments (cost--$500,000) 3.160 500,000 --------------------------------------------------------------------------------------------------------------------- Total Investments (cost--$3,468,454,190 which approximates cost for federal income tax purposes)--102.63% 3,468,454,190 Liabilities in excess of other assets--(2.63)% (88,946,115) --------------------------------------------------------------------------------------------------------------------- Net Assets (applicable to 3,380,243,834 shares of common stock outstanding equivalent to $1.00 per share)--100.00% $ 3,379,508,075 ---------------------------------------------------------------------------------------------------------------------
A Variable rate demand notes are payable on demand. The interest rates shown are the current rates as of December 31, 2005, and reset periodically. + Interest rate shown reflects yield at December 31, 2005. Weighted average maturity -- 19 days See accompanying notes to financial statements 34 UBS RMA CALIFORNIA MUNICIPAL MONEY FUND STATEMENT OF NET ASSETS -- DECEMBER 31, 2005 (UNAUDITED)
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--89.32% $ 2,100 California, Daily Kindergarten Universal, Series A-1 A 3.730% $ 2,100,000 8,120 California, Daily Kindergarten Universal, Series A-2 A 3.700 8,120,000 1,100 California, Daily Kindergarten Universal, Series A-5 A 3.750 1,100,000 3,300 California, Daily Kindergarten Universal, Series B-1 A 3.730 3,300,000 14,650 California, Daily Kindergarten Universal, Series B-2 A 3.650 14,650,000 18,000 California Department of Veteran Affairs Home Purchase, Subseries A-2 A 3.450 18,000,000 10,000 California Department of Water Resources Power Supply Revenue (Putters), Series 344 A 3.540 10,000,000 3,640 California Department of Water Resources Power Supply Revenue, Series B-3 A 3.650 3,640,000 7,200 California Department of Water Resources Power Supply Revenue, Series B-4 A 3.750 7,200,000 7,000 California Department of Water Resources Power Supply Revenue, Series C-1 A 3.550 7,000,000 15,000 California Department of Water Resources Power Supply Revenue, Subseries F-3 A 3.200 15,000,000 8,000 California Department of Water Resources Power Supply Revenue, Subseries G-14 A 3.170 8,000,000 6,600 California Economic Recovery, Series C-9 A 3.650 6,600,000 10,000 California Health Facilities Financing Authority (Catholic Health Facilities), Series J A 3.450 10,000,000 8,004 California Health Facilities Financing Authority (Floating Pooled Loan Program), Series B A 3.500 8,004,000 30,755 California Health Facilities Financing Authority (Hospital Adventist Health Systems), 3.530 to Series A A 3.700 30,755,000
35
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) $ 600 California Health Facilities Financing Authority (Sutter/CHS), Series B A 3.750% $ 600,000 32,250 California Infrastructure & Economic Development Revenue (Asian Art Museum Foundation) A 3.700 32,250,000 15,500 California Infrastructure & Economic Development Revenue (Buck Institute Age Research) A 3.540 15,500,000 11,900 California Infrastructure & Economic Development Revenue (Independent Systems Operation Corp. Project), Series B A 3.450 11,900,000 7,900 California Infrastructure & Economic Development Revenue (Independent Systems Operation Corp. Project), Series C A 3.500 7,900,000 8,000 California Infrastructure & Economic Development Revenue (Rand Corp.), Series B A 3.750 8,000,000 8,000 California, Series A-1 A 3.750 8,000,000 10,800 California, Series A-2 A 3.750 10,800,000 5,000 California, Series C-1 A 3.500 5,000,000 2,100 California Statewide Communities Development Authority Revenue Certificates of Participation Refunding (House Ear Institute) A 3.700 2,100,000 18,560 California Statewide Communities Development Authority Revenue (Kaiser Permanente), Series C A 3.550 18,560,000 3,400 California Statewide Communities Development Authority Revenue (Kaiser Permanente), Series M A 3.480 3,400,000 19,420 California Transit Financing Authority A 3.500 19,420,000 9,920 Association of Bay Area Governments Finance Authority for Nonprofit Corps. Certificates of Participation (Lucile Salter Packard Project) A 3.540 9,920,000 21,200 Bay Area Toll Authority Toll Bridge Revenue (San Francisco Bay Area), Series A A 3.490 21,200,000
36
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) $ 12,300 Bay Area Toll Authority Toll Bridge Revenue (San Francisco Bay Area), Series B A 3.430% $ 12,300,000 8,000 Bay Area Toll Authority Toll Bridge Revenue (San Francisco Bay Area), Series C A 3.500 8,000,000 15,215 Conejo Valley Unified School District Tax and Revenue Anticipation Notes 06/30/06 3.500 15,280,759 8,000 Desert Sands Unified School District Tax and Revenue Anticipation Notes 07/07/06 3.500 8,035,920 8,620 East Bay Municipal Utility District Water Systems Revenue Refunding, Subseries A A 3.430 8,620,000 9,600 East Bay Municipal Utility District Water Systems Revenue Refunding, Subseries B A 3.470 9,600,000 10,600 East Bay Municipal Utility District Water Systems Revenue Refunding, Subseries B-1 A 3.430 10,600,000 10,000 East Bay Municipal Utility District Water Systems Revenue Refunding, Subseries B-3 A 3.450 10,000,000 8,000 Elk Grove Unified School District Tax and Revenue Anticipation Notes 07/06/06 3.750 8,027,744 13,745 Irvine Improvement Bond Act 1915 Limited Obligation (Assessment District 85-7-1) A 3.550 13,745,000 10,500 Los Angeles County Transport Commission Sales Tax and Revenue, Series A A 3.430 10,500,000 12,400 Los Angeles Multi-Family Housing Revenue (Museum Terrace Apartments), Series H A 3.350 12,400,000 10,000 Los Angeles Water and Power Revenue, Subseries A-1 A 3.450 10,000,000 5,000 Los Angeles Water and Power Revenue, Subseries A-4 A 3.450 5,000,000 9,900 Los Angeles Water and Power Revenue, Subseries A-5 A 3.450 9,900,000 7,300 Los Angeles Water and Power Revenue, Subseries A-7 A 3.450 7,300,000
37
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) $ 9,350 Los Angeles Water and Power Revenue, Subseries B-3 A 3.730% $ 9,350,000 13,150 Los Angeles Water and Power Revenue, Subseries B-6 A 3.700 13,150,000 9,000 Madera Irrigation Financing Authority Water Revenue, Series A A 3.750 9,000,000 10,000 Metropolitan Water District Southern California Waterworks Revenue, Series B-1 A 3.450 10,000,000 20,000 Metropolitan Water District Southern 3.450 to California Waterworks Revenue, Series B-2 A 3.500 20,000,000 12,900 Metropolitan Water District Southern California Waterworks Revenue, Series B-4 A 3.430 12,900,000 3,350 M-S-R Public Power Agency Revenue Subordinated Lien (San Juan Project), Series F A 3.700 3,350,000 5,850 Newport Beach Revenue (Hoag Memorial Hospital), Series A A 3.700 5,850,000 1,100 Newport Beach Revenue (Hoag Memorial Hospital), Series B A 3.700 1,100,000 12,670 Newport Beach Revenue (Hoag Memorial Hospital), Series C A 3.700 12,670,000 10,000 Northern California Power Agency Revenue Refunding (Hydroelectric No. 1-A) A 3.430 10,000,000 4,965 Northern California Transmission Agency Revenue Refunding (California-Oregon Transmission), Series A A 3.380 4,965,000 25,513 Oakland Alameda County Coliseum Authority Lease Revenue A 3.520 25,513,000 12,000 Oakland Alameda County Coliseum Authority Lease Revenue (Coliseum Project), Series C-2 A 3.500 12,000,000 6,590 Orange County Apartment Development Revenue (Niguel Village), Series AA A 3.450 6,590,000 13,200 Orange County Apartment Development Revenue (Seaside Meadow), Series C A 3.430 13,200,000 32,300 Orange County Water District Revenue Certificates of Participation, Series A A 3.430 32,300,000
38
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) $ 6,460 Pasadena Certificates of Participation (Rose Bowl Imports Project) A 3.500% $ 6,460,000 2,000 Pittsburg Redevelopment Agency Tax Allocation (Los Medanos Community), Subseries A A 3.750 2,000,000 17,000 Puerto Rico Commonwealth Tax and Revenue Anticipation Notes 07/28/06 4.500 17,121,163 5,000 Riverside County Certificates of Participation (Aces Riverside County Public Facility), Series A A 3.400 5,000,000 5,650 Sacramento County Certificates of Participation (Administration Center and Courthouse Project) A 3.500 5,650,000 5,500 Sacramento County Sanitation District Financing Authority Revenue Subordinated Lien (Sacramento), Series C A 3.450 5,500,000 7,500 Sacramento Unified School District Certificates of Participation A 3.550 7,500,000 8,800 San Bernardino County Certificates of Participation (County Center Refinancing Project) A 3.450 8,800,000 10,000 San Diego County Certificates of Participation A 3.500 10,000,000 4,000 San Francisco City and County Redevelopment Agency Revenue (Community Facilities District No. 4) A 3.550 4,000,000 8,800 San Jose Redevelopment Agency Revenue (Merged Area Redevelopment Project), Series B A 3.450 8,800,000 15,050 Simi Valley Multi-Family Housing Revenue Refunding (Lincoln Wood Ranch) A 3.490 15,050,000 5,300 South Placer Wastewater Authority California Wastewater Revenue, Series B A 3.500 5,300,000 14,700 Southern California Public Power Authority Transmission Project Revenue, Subordinated Refunding (Southern Transmission) A 3.430 14,700,000 4,200 Turlock Irrigation District Certificates of Participation (Capital Improvement and Refunding Project) A 3.700 4,200,000
39
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONCLUDED) $ 25,000 Western Placer Unified School Certificates of Participation (School Facilities Project), Series A A 3.500% $ 25,000,000 --------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds and Notes (cost--$834,347,586) 834,347,586 --------------------------------------------------------------------------------------------------------------------- TAX-EXEMPT COMMERCIAL PAPER--10.37% 10,000 California Educational Facilities Authority (Carnegie Institute of Washington), 01/11/06 to 3.050 to Series B 01/12/06 3.150 10,000,000 15,700 California Statewide Community Development 01/19/06 to 2.820 to Authority (Kaiser Permanente) 02/22/06 2.140 5,700,000 4,900 East Bay Municipal Utility District Water Systems Revenue 02/15/06 3.100 4,900,000 23,300 Los Angeles County Capital Asset 01/12/06 to 2.840 to Leasing Corp. 02/06/06 3.120 23,300,000 9,000 Los Angeles Muni Improvement Corp. 02/10/06 to 02/13/06 3.100 9,000,000 7,500 Sacramento Municipal Utility District 01/10/06 to 3.210 to 01/11/06 3.230 7,500,000 5,000 San Diego County Water 02/09/06 2.800 5,000,000 11,500 San Francisco City and County 01/17/06 to 3.110 to Public Utilities Commission 01/23/06 3.130 11,500,000 5,000 Transmission Authority of Northern California 02/14/06 3.120 5,000,000 5,000 University of California Regents 01/20/06 2.800 5,000,000 --------------------------------------------------------------------------------------------------------------------- Total Tax-Exempt Commercial Paper(cost--$96,900,000) 96,900,000 --------------------------------------------------------------------------------------------------------------------- Total Investments (cost--$931,247,586 which approximates cost for federal income tax purposes)--99.69% 931,247,586 Other assets in excess of liabilities--0.31% 2,868,297 --------------------------------------------------------------------------------------------------------------------- Net Assets (applicable to 934,529,404 shares of beneficial interest outstanding equivalent to $1.00 per share)--100.00% $ 934,115,883 ---------------------------------------------------------------------------------------------------------------------
A Variable rate demand notes are payable on demand. The interest rates shown are the current rates as of December 31, 2005 and reset periodically. Weighted average maturity -- 18 days See accompanying notes to financial statements 40 UBS RMA NEW YORK MUNICIPAL MONEY FUND STATEMENT OF NET ASSETS--DECEMBER 31, 2005 (UNAUDITED)
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--93.96% $ 20,620 New York State Dormitory Authority 3.450 to Revenue (Cornell University), Series B A 3.700% $ 20,620,000 8,000 New York State Dormitory Authority Revenue (Mental Health Facilities Improvement), Series F-2B A 3.520 8,000,000 6,992 New York State Dormitory Authority Revenue (Metropolitan Museum of Art) A 3.500 6,992,000 7,600 New York State Dormitory Authority Revenue Non State Supported Debt (North Shore-Long Island Jewish), Series A A 3.470 7,600,000 5,400 New York State Dormitory Authority Revenue Non State Supported Debt, Series C A 3.550 5,400,000 12,200 New York State Dormitory Authority Revenue (Wagner College) A 3.560 12,200,000 6,000 New York State Energy Research & Development Authority Facilities Revenue (Con Edison), Subseries A-1 A 3.470 6,000,000 22,150 New York State Energy Research & Development Authority Pollution Control Revenue (Orange & Rockland Project), Series A A 3.450 22,150,000 3,660 New York State Environmental Facilities Corp. Clean Water & Drinking Revolving Funds (NYC Municipal Water Finance), Series C 06/15/06 4.000 3,678,657 3,500 New York State Environmental Facilities Corp. Solid Waste Disposal Revenue Refunding (G.E. Co.), Series A A 3.720 3,500,000 5,000 New York State Housing Finance Agency (Normandie Court I Project) A 3.520 5,000,000 13,000 New York State Housing Finance Agency Revenue (North End Ave. Housing), Series A A 3.560 13,000,000 10,000 New York State Housing Finance Agency Service Contract Revenue, Series D A 3.520 10,000,000 5,500 New York State Local Government Assistance Corp. Refunding (Sub Lien), Series A-5V A 3.450 5,500,000
41
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) $ 6,000 New York State Local Government Assistance Corp. Refunding (Sub Lien), Series A-6V A 3.450% $ 6,000,000 7,595 New York State Local Government Assistance Corp., Series B A 3.450 7,595,000 12,665 New York State Local Government Assistance Corp., Series G A 3.420 12,665,000 6,270 New York State Thruway Authority Personal Income Tax Revenue (Putters), Series 1186 A 3.550 6,270,000 14,000 New York State Urban Development Corp. Revenue (State Facilities & Equipment), Subseries A-3-B A 3.450 14,000,000 6,000 New York State Urban Development Corp. Revenue (State Facilities & Equipment), Subseries A-3-C A 3.520 6,000,000 3,053 Arlington Central School District Bond Anticipation Notes 11/01/06 4.250 3,080,844 6,550 Erie County Water Authority A 3.450 6,550,000 2,490 Great Neck North Water Authority Systems Revenue, Series-A A 3.520 2,490,000 18,300 Jay Street Development Corp. New York City Facility Lease Revenue (Jay Street Project), Series A-3 A 3.470 18,300,000 7,000 Long Island Power Authority Electric Systems Revenue, Series D A 3.520 7,000,000 8,900 Long Island Power Authority Electric Systems Revenue, Series G A 3.460 8,900,000 2,000 Long Island Power Authority Electric Systems Revenue, Subseries 1-B A 3.700 2,000,000 2,300 Long Island Power Authority Electric Systems Revenue, Subseries 3-B A 3.720 2,300,000 5,000 Long Island Power Authority Electric Systems Revenue, Subseries 7-A A 3.430 5,000,000 5,000 Metropolitan Transportation Authority, Series D-1 A 3.480 5,000,000 7,700 Metropolitan Transportation Authority, Subseries A-2 A 3.460 7,700,000 12,000 Metropolitan Transportation Authority, Subseries A-3 A 3.350 12,000,000
42
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) $ 3,155 Metropolitan Transportation Authority, Subseries G-2 A 3.750% $ 3,155,000 7,355 Monroe County Industrial Development Agency Civic Facilities Revenue Refunding (Nazareth College), Series B A 3.530 7,355,000 4,820 Nassau County Interim Finance Authority, Series A A 3.500 4,820,000 10,000 New Rochelle School District Tax Anticipation Notes, Series A 06/30/06 3.750 10,027,300 19,500 New York City Housing Development Corp. Multi-Family Mortgage Revenue (The Crest), Series A A 3.550 19,500,000 6,000 New York City Housing Development Corp. Multi-Family Rental Housing (90 West Street), Series A A 3.550 6,000,000 6,500 New York City Housing Development Corp. Multi-Family Rental Housing (Queenswood Apartments), Series A A 3.500 6,500,000 14,135 New York City Industrial Development Agency Civic Facility Revenue (Center for Jewish History Project) A 3.510 14,135,000 4,420 New York City Industrial Development Agency Civic Facility Revenue (Church of Heavenly Rest) A 3.560 4,420,000 6,640 New York City Industrial Development Agency Civic Facility Revenue (Lycee Francais De New York Project), Series B A 3.700 6,640,000 6,810 New York City Industrial Development Agency Civic Facility Revenue (MSMC Realty Corp. Project) A 3.540 6,810,000 3,000 New York City Industrial Development Agency Civic Facility Revenue (National Audubon Society) A 3.700 3,000,000 31,450 New York City Industrial Development Agency Revenue (Liberty 1 Bryant Park LLC), Series B A 3.770 31,450,000 15,100 New York City Municipal Water Finance Authority Water & Sewer Systems Revenue (Fiscal 2003), Subseries C-1 A 3.820 15,100,000
43
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE --------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONCLUDED) $ 1,200 New York City Municipal Water Finance Authority Water & Sewer Systems Revenue (Second Generation Resolution), Series AA-1 A 3.770% $ 1,200,000 14,600 New York City Municipal Water Finance Authority Water & Sewer Systems Revenue, Series A A 3.670 14,600,000 5,000 New York City Municipal Water Finance Authority Water & Sewer Systems Revenue, Series F-2 A 3.560 5,000,000 3,260 New York City, Series B, Subseries B-5 A 3.750 3,260,000 5,100 New York City, Series B-2, Subseries B-5 A 3.750 5,100,000 7,200 New York City, Series E, Subseries E-2 A 3.700 7,200,000 4,900 New York City, Series H, Subseries H-2 A 3.820 4,900,000 3,900 New York City, Subseries A-4 A 3.820 3,900,000 2,500 New York City, Subseries E-4 A 3.740 2,500,000 5,000 New York City, Subseries F-3 A 3.520 5,000,000 5,360 New York City Trust for Cultural Resources Revenue (Asia Society) A 3.460 5,360,000 14,645 Oneida County Industrial Development Agency Revenue Civic Facilities (Hamilton College) A 3.520 14,645,000 19,635 Oneida Indian Nation A 3.450 19,635,000 21,700 Port Authority of New York & New Jersey Special Obligation Revenue (Versatile Structure Obligation), Series 2 A 3.720 21,700,000 655 Port Authority of New York & New Jersey Special Obligation Revenue (Versatile Structure Obligation), Series 3 A 3.750 655,000 10,000 Puerto Rico Commonwealth Tax & Revenue Anticipation Notes 07/28/06 4.500 10,071,272 3,395 Rensselaer County Industrial Development Agency Civic Facilities Revenue (Polytech Institute Project), Series A A 3.520 3,395,000 5,000 Suffolk County Tax Anticipation Notes 09/07/06 4.250 5,039,930 20,900 Suffolk County Water Authority Bond Anticipation Notes A 3.490 20,900,000 24,215 Triborough Bridge & Tunnel Authority 3.470 to Revenue General Purpose, Series B A 3.490 24,215,000 8,658 Yonkers Industrial Development Agency (Consumers Union Facility) A 3.650 8,657,645 --------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds and Notes (cost--$588,337,648) 588,337,648 ---------------------------------------------------------------------------------------------------------------------
44
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE -------------------------------------------------------------------------------------------------------------------- TAX-EXEMPT COMMERCIAL PAPER--7.66% $ 6,000 New York City General Obligation 01/17/06 2.830% $ 6,000,000 16,400 New York State Environmental 01/12/06 to 2.800 to Facilities Corp. 02/01/06 2.820 16,400,000 25,578 New York State Power Authority 01/11/06 to 2.840 to 02/10/06 3.120 25,578,000 -------------------------------------------------------------------------------------------------------------------- Total Tax-Exempt Commercial Paper (cost--$47,978,000) 47,978,000 -------------------------------------------------------------------------------------------------------------------- Total Investments (cost--$636,315,648 which approximates cost for federal income tax purposes)--101.62% 636,315,648 Liabilities in excess of other assets--(1.62)% (10,146,308) -------------------------------------------------------------------------------------------------------------------- Net Assets (applicable to 626,293,841 shares of beneficial interest outstanding equivalent to $1.00 per share)--100.00% $ 626,169,340 --------------------------------------------------------------------------------------------------------------------
A Variable rate demand notes are payable on demand. The interest rates shown are the current rates as of December 31, 2005 and reset periodically. Weighted average maturity -- 17 days See accompanying notes to financial statements 45 UBS RMA NEW JERSEY MUNICIPAL MONEY FUND STATEMENT OF NET ASSETS - DECEMBER 31, 2005 (UNAUDITED)
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE -------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--97.47% $ 325 New Jersey Economic Development Authority (Bayonne Project Improvement), Series A A 3.730% $ 325,000 3,700 New Jersey Economic Development Authority (Bayonne Project Improvement), Series B A 3.730 3,700,000 2,670 New Jersey Economic Development Authority (Bayonne Project Improvement), Series C A 3.730 2,670,000 4,000 New Jersey Economic Development Authority (Crowley Liner Services Project) A 3.470 4,000,000 1,250 New Jersey Economic Development Authority (Danic Urban Renewal) A 3.550 1,250,000 1,985 New Jersey Economic Development Authority (Institute of Electrical), Series A A 3.480 1,985,000 405 New Jersey Economic Development Authority (Kenwood USA Corp. Project) A 3.500 405,000 300 New Jersey Economic Development Authority (Lawrenceville School Project) A 3.750 300,000 9,775 New Jersey Economic Development Authority (Lawrenceville School Project), Series B A 3.650 9,775,000 5,905 New Jersey Economic Development Authority (Stolthaven Project), Series A A 3.680 5,905,000 1,800 New Jersey Economic Development Authority (Thermal Energy Limited Partnership) A 3.580 1,800,000 2,000 New Jersey Economic Development Authority (Transportation), Series N10-Regulation D A 3.580 2,000,000 735 New Jersey Economic Development Authority Refunding (First Mortgage-Franciscan) A 3.480 735,000 3,200 New Jersey Economic Development Authority Speciality Facilities Revenue (Port Newark Container LLC) A 3.530 3,200,000 6,000 New Jersey Economic Development Authority Water Facilities Revenue Refunding (United Water NJ, Inc. Project), Series A A 3.750 6,000,000
46
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE -------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONTINUED) $ 900 New Jersey Economic Development Authority Water Facilities Revenue Refunding (United Water NJ, Inc. Project), Series B A 3.750% $ 900,000 4,800 New Jersey Educational Facilities Authority (College of New Jersey), Series A A 3.480 4,800,000 10,715 New Jersey Educational Facilities Authority 3.700 to (Princeton University), Series B A 3.750 10,715,000 1,900 New Jersey Health Care Facilities Authority (Community Hospital Group), Series A-1 A 3.480 1,900,000 1,950 New Jersey Health Care Facilities Authority (Robert Wood Johnson University) A 3.480 1,950,000 3,770 New Jersey Health Care Facilities Authority (St. Barnabas), Series A A 3.470 3,770,000 5,800 New Jersey Health Care Facilities Authority (St. Peter's Hospital), Series B A 3.550 5,800,000 4,000 New Jersey Health Care Facilities Authority (Variable Capital Health Systems Obligation), Group B A 3.480 4,000,000 3,600 New Jersey Health Care Facilities Financing Authority Revenue, Series A3 A 3.470 3,600,000 2,335 New Jersey Health Care Facilities Financing Authority Revenue (Virtua Health Issue) 07/01/06 5.000 2,356,761 1,900 New Jersey Sports & Exposition Authority, Series B-1 A 3.520 1,900,000 6,070 New Jersey State Housing & Mortgage Finance Agency Revenue (Single Family Housing), Series N A 3.520 6,070,000 4,000 New Jersey State Tax & Revenue Anticipation Notes, Series A 06/23/06 4.000 4,018,128 1,500 New Jersey State Transportation Trust Fund Authority (Putters), Series 1142 A 3.550 1,500,000 2,000 New Jersey State Transportation Trust Fund Authority (Putters), Series 1144 A 3.550 2,000,000 4,000 New Jersey Turnpike Authority A 3.460 4,000,000 2,000 New Jersey Turnpike Authority (Putters), Series 155 A 3.550 2,000,000
47
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE -------------------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES--(CONCLUDED) $ 1,210 Atlantic County Improvement Authority Revenue (Pooled Government Loan Program) A 3.540% $ 1,210,000 2,000 Bergen County Improvement Authority (Senior Special Purpose Limited Obligation), Series B A 3.570 2,000,000 3,162 Bound Brook Bond Anticipation Notes 06/16/06 4.250 3,173,913 1,075 Essex County Improvement Authority Revenue (Jewish Community Center Metropolitan Project) A 3.480 1,075,000 4,325 Gloucester County Industrial Pollution Control Financing Authority Revenue Refunding (Pollution Control-ExxonMobil) A 3.600 4,325,000 3,500 Mercer County Improvement Authority (Atlantic Foundation) A 3.460 3,500,000 1,605 Middle Township School District Grant Anticipation Notes 07/07/06 4.250 1,612,283 1,850 Monmouth County Improvement Authority (Pooled Government Loan Program) A 3.450 1,850,000 4,000 Pequannock Township Bond Anticipation Notes 08/03/06 4.000 4,025,047 5,235 Port Authority of New York and New Jersey Special Obligation Revenue (Versatile Structure Obligation), Series 3 A 3.750 5,235,000 2,400 Port Authority of New York and New Jersey Special Obligation Revenue (Versatile Structure Obligation), Series 4 A 3.800 2,400,000 1,655 Port Authority of New York and New Jersey Special Obligation Revenue (Versatile Structure Obligation), Series 5 A 3.750 1,655,000 3,000 Puerto Rico Commonwealth Tax & Revenue Anticipation Notes 07/28/06 4.500 3,021,382 4,115 Rutgers State University Refunding, Series A A 3.650 4,115,000 1,525 Salem County Pollution Control Financing Refunding (Atlantic City Electric), Series A A 3.520 1,525,000 2,000 Somerville New Jersey Bond Anticipation Notes 05/12/06 4.000 2,006,471 -------------------------------------------------------------------------------------------------------------------- Total Municipal Bonds and Notes (cost--$148,058,985) 148,058,985 --------------------------------------------------------------------------------------------------------------------
48
NUMBER OF SHARES INTEREST (000) RATES VALUE -------------------------------------------------------------------------------------------------------------------- MONEY MARKET FUND+--1.71% 2,600 BlackRock New Jersey Municipal Money Market Portfolio (cost--$2,600,000) 2.981% $ 2,600,000 -------------------------------------------------------------------------------------------------------------------- Total Investments (cost--$150,658,985 which approximates cost for federal income tax purposes)--99.18% 150,658,985 Other assets in excess of liabilities--0.82% 1,252,844 -------------------------------------------------------------------------------------------------------------------- Net Assets (applicable to 151,908,417 shares of beneficial interest outstanding equivalent to $1.00 per share)--100.00% $ 151,911,829 --------------------------------------------------------------------------------------------------------------------
A Variable rate demand notes are payable on demand. The interest rates shown are the current rates as of December 31, 2005 and reset periodically. + Interest rate shown reflects yield at December 31, 2005. Weighted average maturity -- 29 days See accompanying notes to financial statements 49 UBS RMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2005 (UNAUDITED) -------------------------------- MONEY MARKET U.S. GOVERNMENT PORTFOLIO PORTFOLIO ----------------------------------------------------------------------------------------------- INVESTMENT INCOME: Interest $ 198,363,841 $ 19,514,296 Securities lending income -- 142,522 198,363,841 19,656,818 EXPENSES: Investment advisory and administration fees 26,481,828 2,381,699 Service fees 6,620,457 690,449 Transfer agency and related services fees 3,337,688 121,050 Custody and accounting fees 565,109 58,843 Insurance expense 293,718 31,090 Reports and notices to shareholders 260,252 13,946 Federal and state registration fees 113,234 23,071 Directors'/Trustees' fees 55,558 11,450 Professional fees 54,106 47,542 Interest expense -- -- Other expenses 49,398 10,105 37,831,348 3,389,245 Less: Fee waivers by investment advisor and administrator (6,620,457) -- Net expenses 31,210,891 3,389,245 Net investment income 167,152,950 16,267,573 Net realized gains (losses) from investment activities 125,195 16,122 Net increase in net assets resulting from operations $ 167,278,145 $ 16,283,695
50
FOR THE SIX MONTHS ENDED DECEMBER 31, 2005 (UNAUDITED) ------------------------------------------------------------------ CALIFORNIA NEW YORK NEW JERSEY TAX-FREE MUNICIPAL MUNICIPAL MUNICIPAL FUND MONEY FUND MONEY FUND MONEY FUND --------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Interest $ 46,797,044 $ 11,402,262 $ 8,045,346 $ 1,777,995 Securities lending income -- -- -- -- 46,797,044 11,402,262 8,045,346 1,777,995 EXPENSES: Investment advisory and administration fees 7,281,886 1,981,335 1,451,545 344,882 Service fees 2,213,364 551,434 386,593 82,772 Transfer agency and related services fees 481,263 107,645 99,159 36,255 Custody and accounting fees 189,138 47,162 32,951 7,402 Insurance expense 77,130 18,974 13,807 3,193 Reports and notices to shareholders 35,161 7,658 6,937 4,276 Federal and state registration fees 45,686 14,574 14,836 12,496 Directors'/Trustees' fees 20,865 9,168 8,121 6,027 Professional fees 49,252 44,643 44,525 37,288 Interest expense 26,543 -- -- -- Other expenses 35,716 9,225 7,855 6,352 10,456,004 2,791,818 2,066,329 540,943 Less: Fee waivers by investment advisor and administrator -- -- -- -- Net expenses 10,456,004 2,791,818 2,066,329 540,943 Net investment income 36,341,040 8,610,444 5,979,017 1,237,052 Net realized gains (losses) from investment activities (345) -- -- -- Net increase in net assets resulting from operations $ 36,340,695 $ 8,610,444 $ 5,979,017 $ 1,237,052
See accompanying notes to financial statements 51 UBS RMA STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED FOR THE DECEMBER 31, 2005 YEAR ENDED (UNAUDITED) JUNE 30, 2005 --------------------------------------------------------------------------------------------------------------------------- UBS RMA MONEY MARKET PORTFOLIO FROM OPERATIONS: Net investment income $ 167,152,950 $ 183,907,797 Net realized gain (loss) from investment activities 125,195 (1,698,238) Net increase in net assets resulting from operations 167,278,145 182,209,559 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (167,152,950) (183,907,797) Net realized gains from investment activities -- (2,152,500) Total dividends and distributions to shareholders (167,152,950) (186,060,297) Net increase (decrease) in net assets from capital share transactions 4,425,100 (2,004,556,930) Net increase (decrease) in net assets 4,550,295 (2,008,407,668) NET ASSETS: Beginning of period 10,425,877,983 12,434,285,651 End of period $ 10,430,428,278 $ 10,425,877,983 --------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed net investment income $ -- $ -- --------------------------------------------------------------------------------------------------------------------------- UBS RMA U.S. GOVERNMENT PORTFOLIO FROM OPERATIONS: Net investment income $ 16,267,573 $ 17,682,078 Net realized gain (loss) from investment activities 16,122 (121,037) Net increase in net assets resulting from operations 16,283,695 17,561,041 DIVIDENDS TO SHAREHOLDERS FROM: Net investment income (16,267,573) (17,682,078) Net decrease in net assets from capital share transactions (59,381,354) (139,098,548) Net decrease in net assets (59,365,232) (139,219,585) NET ASSETS: Beginning of period 1,111,697,900 1,250,917,485 End of period $ 1,052,332,668 $ 1,111,697,900 --------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed net investment income $ -- $ -- ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements 52
FOR THE SIX MONTHS ENDED FOR THE DECEMBER 31, 2005 YEAR ENDED (UNAUDITED) JUNE 30, 2005 ---------------------------------------------------------------------------------------------------------------------------- UBS RMA TAX-FREE FUND FROM OPERATIONS: Net investment income $ 36,341,040 $ 40,517,259 Net realized losses from investment activities (345) (175) Net increase in net assets resulting from operations 36,340,695 40,517,084 DIVIDENDS TO SHAREHOLDERS FROM: Net investment income (36,341,040) (40,517,259) Net increase (decrease) in net assets from capital share transactions (27,105,579) 470,677,868 Net increase (decrease) in net assets (27,105,924) 470,677,693 NET ASSETS: Beginning of period 3,406,613,999 2,935,936,306 End of period $ 3,379,508,075 $ 3,406,613,999 --------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed net investment income $ -- $ -- --------------------------------------------------------------------------------------------------------------------------- UBS RMA CALIFORNIA MUNICIPAL MONEY FUND FROM OPERATIONS: Net investment income $ 8,610,444 $ 9,305,862 Net realized loss from investment activities -- (390) Net increase in net assets resulting from operations 8,610,444 9,305,472 DIVIDENDS TO SHAREHOLDERS FROM: Net investment income (8,610,444) (9,305,862) Net increase in net assets from beneficial interest transactions 125,353,634 69,629,637 Net increase in net assets 125,353,634 69,629,247 NET ASSETS: Beginning of period 808,762,249 739,133,002 End of period $ 934,115,883 $ 808,762,249 --------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed net investment income $ -- $ -- ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements 53
FOR THE SIX MONTHS ENDED FOR THE DECEMBER 31, 2005 YEAR ENDED (UNAUDITED) JUNE 30, 2005 ---------------------------------------------------------------------------------------------------------------------------- UBS RMA NEW YORK MUNICIPAL MONEY FUND FROM OPERATIONS: Net investment income $ 5,979,017 $ 6,642,585 Net realized gain from investment activities -- 20 Net increase in net assets resulting from operations 5,979,017 6,642,605 DIVIDENDS TO SHAREHOLDERS FROM: Net investment income (5,979,017) (6,642,585) Net increase in net assets from beneficial interest transactions 30,098,063 33,675,671 Net increase in net assets 30,098,063 33,675,691 NET ASSETS: Beginning of period 596,071,277 562,395,586 End of period $ 626,169,340 $ 596,071,277 --------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed net investment income $ -- $ -- --------------------------------------------------------------------------------------------------------------------------- UBS RMA NEW JERSEY MUNICIPAL MONEY FUND FROM OPERATIONS: Net investment income $ 1,237,052 $ 1,407,171 Net realized loss from investment activities -- (657) Net increase in net assets resulting from operations 1,237,052 1,406,514 DIVIDENDS TO SHAREHOLDERS FROM: Net investment income (1,237,052) (1,407,171) Net increase (decrease) in net assets from beneficial interest transactions 17,738,251 (3,266,054) Net increase (decrease) in net assets 17,738,251 (3,266,711) NET ASSETS: Beginning of period 134,173,578 137,440,289 End of period $ 151,911,829 $ 134,173,578 --------------------------------------------------------------------------------------------------------------------------- Accumulated undistributed net investment income $ -- $ -- ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements 54 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 with 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. The preparation of financial statements in accordance with U.S. 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. 55 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 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 the 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 U.S 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 (US) Inc. ("UBS Global AM"). UBS Global AM is an indirect wholly owned asset management subsidiary of UBS AG, an internationally diversified organization with headquarters in Zurich and Basel, Switzerland and operations in many areas of the financial services industry. 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 U.S. generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. CONCENTRATION OF RISK The ability of the issuers of the debt securities held by the Funds to meet their obligations may be affected by economic developments, including those particular to a specific industry, 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. 56 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: $0 to $1.0 billion--0.50%; in excess of $1.0 billion up to $1.5 billion--0.44%; and over $1.5 billion--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 management 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, 2005, UBS Financial Services Inc. waived $6,620,457 of its investment advisory and administration fees from the Portfolio. At December 31, 2005, UBS Financial Services Inc. owed the Portfolio $1,108,524 for fee waivers.
AVERAGE DAILY NET ASSETS ANNUAL RATE -------------------------------------------------------------------------------- U.S. GOVERNMENT PORTFOLIO, RMA CALIFORNIA, RMA NEW YORK AND RMA NEW JERSEY: 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%
At December 31, 2005, the Funds owed UBS Financial Services Inc. for investment advisory and administration fees as follows: Money Market Portfolio $ 4,434,097 U.S. Government Portfolio 390,870 RMA Tax-Free 1,239,096 RMA California 340,553 RMA New York 237,864 RMA New Jersey 63,058
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 "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. 57 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, 2005, 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 $ 3,727,757,376 U.S. Government Portfolio 19,895,000,000 RMA Tax-Free 1,037,968,700 RMA California 319,440,000 RMA New York 81,500,000 RMA New Jersey 82,358,500
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 UBS Global AM, UBS Global AM believes that under normal circumstances it represents a small portion of the total value of the transactions. SHAREHOLDER SERVICE PLANS UBS Global AM 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 shareholder service plans, Money Market Portfolio, U.S. Government Portfolio, RMA Tax-Free, RMA California and RMA New York pay UBS Global AM a monthly service fee 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 is compensated for providing such services at the annual rate of 0.125% for each of those Funds except for RMA New Jersey, which pays at the annual rate of 0.12%. At December 31, 2005, the Funds owed UBS Global AM for such service fees as follows: Money Market Portfolio $ 1,108,524 U.S. Government Portfolio 112,716 RMA Tax-Free 377,159 RMA California 95,245 RMA New York 63,232 RMA New Jersey 15,134
58 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. For the six months ended December 31, 2005, UBS Financial Services Inc. received from PFPC, not the Funds, total transfer agency related services fees as follows: Money Market Portfolio $ 1,997,811 U.S. Government Portfolio 66,537 RMA Tax-Free 298,810 RMA California 63,722 RMA New York 57,549 RMA New Jersey 19,022
SECURITIES LENDING Each Fund may lend securities up to 33 1/3% of its total assets to qualified broker-dealers or institutional investors. The loans are secured at all times by cash, U.S. 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, U.S. 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, 2005, UBS Securities LLC earned $47,917 in compensation from the U.S. Government Portfolio as the Fund's lending agent. At December 31, 2005, the U.S. Government Portfolio owed UBS Securities LLC $5,336 in compensation as the Fund's lending agent. At December 31, 2005, the U.S. Government Portfolio had securities on loan having a market value of $291,703,431. The U.S. Government Portfolio's custodian held U.S. Government agency securities having an aggregate value of $298,254,615 as collateral for portfolio securities loaned as follows:
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE -------------------------------------------------------------------------------------------------------- $ 95,678 Federal Home Loan Mortgage Corp. 06/15/11 6.000% $ 101,657,875 116,839 Federal National Mortgage Association 09/15/09 6.625 126,618,775
59
PRINCIPAL AMOUNT MATURITY INTEREST (000) DATES RATES VALUE ---------------------------------------------------------------------------------------------------------- $ 47,100 Federal National Mortgage Association 03/15/12 6.125% $ 51,326,989 18,400 Federal National Mortgage Association 09/01/15 5.625 18,650,976 ---------------------------------------------------------------------------------------------------------- $ 298,254,615 ----------------------------------------------------------------------------------------------------------
Money Market Portfolio, RMA Tax-Free, RMA California, RMA New York and RMA New Jersey did not loan any securities during the six months ended December 31, 2005. 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, 2005, RMA Tax-Free had an average daily amount of borrowing of $54,789,555 for 4 days with a related weighted average annualized interest rate of 4.36%, which resulted in $26,543 of interest expense. OTHER LIABILITIES AND COMPONENTS OF NET ASSETS At December 31, 2005, the Funds had the following liabilities outstanding:
PAYABLE FOR OTHER DIVIDENDS INVESTMENTS LOAN ACCRUED PAYABLE PURCHASED PAYABLE EXPENSES* ----------------------------------------------------------------------------------------------- Money Market Portfolio $ 9,477,738 -- -- $ 2,352,468 U.S. Government Portfolio 859,001 $ 49,920,278 -- 290,740 RMA Tax-Free 2,333,260 57,762,480 $ 49,199,645 385,700 RMA California 599,777 -- -- 117,594 RMA New York 404,902 12,001,144 -- 101,961 RMA New Jersey 87,335 -- -- 43,635
* Excludes investment advisory and administration fees and service fees. 60 At December 31, 2005, the components of net assets for each of the Funds were as follows:
ACCUMULATED ACCUMULATED NET REALIZED TOTAL PAID IN CAPITAL GAIN (LOSS) NET ASSETS ------------------------------------------------------------------------------------------------------- Money Market Portfolio $ 10,430,235,862 $ 192,416 $ 10,430,428,278 U.S. Government Portfolio 1,052,493,097 (160,429) 1,052,332,668 RMA Tax-Free 3,379,506,489 1,586 3,379,508,075 RMA California 934,092,718 23,165 934,115,883 RMA New York 626,140,500 28,840 626,169,340 RMA New Jersey 151,908,418 3,411 151,911,829
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 certain other amounts, if any, the Funds intend not to be subject to a federal excise tax. The tax character of distributions paid to shareholders by the Money Market Portfolio and U.S. Government Portfolio during the six months ended December 31, 2005 and the fiscal year ended June 30, 2005 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, 2005 and the fiscal year ended June 30, 2005 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, 2006. At June 30, 2005, 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:
MONEY U.S. FISCAL YEAR MARKET GOVERNMENT RMA RMA RMA ENDING PORTFOLIO PORTFOLIO TAX-FREE NEW YORK NEW JERSEY ------------------------------------------------------------------------ 2011 -- $ 66,251 -- -- $ 30 2012 -- 54,167 -- -- -- 2013 $ 1,703,123 34,572 $ 175 $ 2,330 253 ------------------------------------------------------------------------ $ 1,703,123 $ 154,990 $ 175 $ 2,330 $ 283 ------------------------------------------------------------------------
61 In accordance with U.S. Treasury regulations, the following Funds have elected to defer realized capital losses arising after October 31, 2004. Such losses are treated for tax purposes as arising on July 1, 2005.
CAPITAL LOSSES -------------------------------------- U.S. Government $ 104,706 RMA California 390 RMA New Jersey 657
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 MONEY MARKET U.S. GOVERNMENT RMA DECEMBER 31, 2005: PORTFOLIO PORTFOLIO TAX-FREE ------------------------------------------------------------------------------------------------------------ Shares sold 60,716,642,956 4,092,988,393 16,294,553,787 Shares repurchased (60,869,590,233) (4,167,834,309) (16,355,824,999) Dividends reinvested 157,372,377 15,464,562 34,165,633 ------------------------------------------------------------------------------------------------------------ Net increase (decrease) in shares outstanding 4,425,100 (59,381,354) (27,105,579) ------------------------------------------------------------------------------------------------------------ FOR THE YEAR ENDED MONEY MARKET U.S. GOVERNMENT RMA JUNE 30, 2005: PORTFOLIO PORTFOLIO TAX-FREE ------------------------------------------------------------------------------------------------------------ Shares sold 107,179,988,213 7,721,452,084 26,082,741,027 Shares repurchased (109,361,306,575) (7,877,416,751) (25,650,628,491) Dividends reinvested 176,761,432 16,866,119 38,565,332 ------------------------------------------------------------------------------------------------------------ Net increase (decrease) in shares outstanding (2,004,556,930) (139,098,548) 470,677,868 ------------------------------------------------------------------------------------------------------------
62 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, 2005: RMA CALIFORNIA RMA NEW YORK RMA NEW JERSEY ---------------------------------------------------------------------------------------------------------- Shares sold 5,315,299,200 3,275,418,373 857,225,063 Shares repurchased (5,197,957,828) (3,250,891,609) (840,632,945) Dividends reinvested 8,012,262 5,571,299 1,146,133 ---------------------------------------------------------------------------------------------------------- Net increase in shares outstanding 125,353,634 30,098,063 17,738,251 ---------------------------------------------------------------------------------------------------------- FOR THE YEAR ENDED JUNE 30, 2005: RMA CALIFORNIA RMA NEW YORK RMA NEW JERSEY ---------------------------------------------------------------------------------------------------------- Shares sold 8,313,721,208 5,766,075,108 1,539,954,219 Shares repurchased (8,252,923,028) (5,738,665,436) (1,544,542,372) Dividends reinvested 8,831,457 6,265,999 1,322,099 ---------------------------------------------------------------------------------------------------------- Net increase (decrease) in shares outstanding 69,629,637 33,675,671 (3,266,054) ----------------------------------------------------------------------------------------------------------
63 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 FOR THE YEARS ENDED JUNE 30, DECEMBER 31, 2005 ------------------------------------------------------------------------- (UNAUDITED) 2005 2004 2003 2002 2001 -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Net investment income 0.016 0.016 0.005 0.010 0.022 0.055 Dividends from net investment income (0.016) (0.016) (0.005) (0.010) (0.022) (0.055) Distributions from net realized gains from investment activities -- (0.000)@ (0.000)@ -- -- -- Total dividends and distributions (0.016) (0.016) (0.005) (0.010) (0.022) (0.055) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL INVESTMENT RETURN(1) 1.60% 1.65% 0.51% 1.02% 2.25% 5.61% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 10,430,428 $ 10,425,878 $ 12,434,286 $ 21,832,875 $ 22,768,982 $ 22,609,036 Expenses to average net assets, net of fee waivers by advisor 0.59%* 0.58%(2) 0.60% 0.61% 0.60% 0.59% Expenses to average net assets, before fee waivers by advisor 0.71%* 0.58% 0.60% 0.61% 0.60% 0.59% Net investment income to average net assets, net of fee waivers by advisor 3.15%* 1.59%(2) 0.50% 1.02% 2.21% 5.42% Net investment income to average net assets, before fee waivers by advisor 3.03%* 1.59% 0.50% 1.02% 2.21% 5.42%
* 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. (2) During the period August 31, 2004 through June 30, 2005, UBS Financial Services Inc. waived a portion of its advisory and administration fees. The ratios excluding the waiver are the same since the fee waiver represents less than 0.005%. @ Amount of distribution paid represents less than $0.0005 per share. 64 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 FOR THE YEARS ENDED JUNE 30, DECEMBER 31, 2005 --------------------------------------------------------------------- (UNAUDITED) 2005 2004 2003 2002 2001 ---------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Net investment income 0.015 0.015 0.005 0.010 0.021 0.052 Dividends from net investment income (0.015) (0.015) (0.005) (0.010) (0.021) (0.052) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL INVESTMENT RETURN(1) 1.50% 1.50% 0.48% 1.00% 2.12% 5.31% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 1,052,333 $ 1,111,698 $ 1,250,917 $ 2,510,453 $ 2,356,829 $ 2,000,303 Expenses to average net assets 0.61%* 0.61% 0.58% 0.56% 0.57% 0.57% Net investment income to average net assets 2.95%* 1.49% 0.48% 1.00% 2.06% 5.15%
* 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. 65 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 FOR THE YEARS ENDED JUNE 30, DECEMBER 31, 2005 --------------------------------------------------------------------- (UNAUDITED) 2005 2004 2003 2002 2001 ---------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Net investment income 0.010 0.012 0.004 0.007 0.012 0.032 Dividends from net investment income (0.010) (0.012) (0.004) (0.007) (0.012) (0.032) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL INVESTMENT RETURN(1) 1.04% 1.23% 0.38% 0.67% 1.24% 3.28% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 3,379,508 $ 3,406,614 $ 2,935,936 $ 3,238,850 $ 3,255,520 $ 3,286,150 Expenses to average net assets 0.59%* 0.59% 0.60% 0.63% 0.60% 0.59% Net investment income to average net assets 2.05%* 1.23% 0.38% 0.67% 1.23% 3.20%
* 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. 66 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 FOR THE YEARS ENDED JUNE 30, DECEMBER 31, 2005 ------------------------------------------------------------------------ (UNAUDITED) 2005 2004 2003 2002 2001 ------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Net investment income 0.010 0.011 0.003 0.006 0.011 0.027 Dividends from net investment income (0.010) (0.011) (0.003) (0.006) (0.011) (0.027) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL INVESTMENT RETURN(1) 0.99% 1.15% 0.31% 0.60% 1.10% 2.75% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 934,116 $ 808,762 $ 739,133 $ 767,006 $ 753,664 $ 759,961 Expenses to average net assets, net of fee waivers by advisor 0.63%* 0.64% 0.65%(2) 0.66% 0.65% 0.66% Net investment income to average net assets, net of fee waivers by advisor 1.95%* 1.16% 0.31%(2) 0.60% 1.09% 2.70%
* 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 Service Inc. waived a portion of its advisory and administration fees. The ratios excluding the waiver are the same since the fee waiver represents less than 0.005%. 67 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 FOR THE YEARS ENDED JUNE 30, DECEMBER 31, 2005 ------------------------------------------------------------------------ (UNAUDITED) 2005 2004 2003 2002 2001 ------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Net investment income 0.010 0.011 0.003 0.006 0.011 0.030 Dividends from net investment income (0.010) (0.011) (0.003) (0.006) (0.011) (0.030) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL INVESTMENT RETURN(1) 0.98% 1.13% 0.29% 0.62% 1.08% 3.04% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 626,169 $ 596,071 $ 562,396 $ 588,851 $ 559,341 $ 574,490 Expenses to average net assets, net of fee waivers by advisor 0.67%* 0.67% 0.67%(2) 0.67% 0.68% 0.69% Net investment income to average net assets, net of fee waivers by advisor 1.93%* 1.12% 0.29%(2) 0.62% 1.07% 2.95%
* 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 ratios excluding the waiver are the same since the fee waiver represents less than 0.005%. 68 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 FOR THE YEARS ENDED JUNE 30, DECEMBER 31, 2005 ------------------------------------------------------------------------ (UNAUDITED) 2005 2004 2003 2002 2001 ------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 Net investment income 0.009 0.010 0.002 0.005 0.010 0.028 Dividends from net investment income (0.009) (0.010) (0.002) (0.005) (0.010) (0.028) NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 TOTAL INVESTMENT RETURN(1) 0.91% 1.05% 0.16% 0.51% 0.97% 2.86% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 151,912 $ 134,174 $ 137,440 $ 161,854 $ 128,500 $ 102,162 Expenses to average net assets, net of fee waivers by advisor 0.78%* 0.79% 0.76%(2) 0.73% 0.77% 0.79% Net investment income to average net assets, net of fee waivers by advisor 1.79%* 1.02% 0.15%(2) 0.50% 0.94% 2.77%
* 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 ratios excluding the waiver are the same since the fee waiver represents less than 0.01%. 69 UBS RMA GENERAL INFORMATION (UNAUDITED) SHAREHOLDER INFORMATION--UBS RMA MONEY MARKET PORTFOLIO & UBS RMA U.S. GOVERNMENT PORTFOLIO A special meeting of shareholders of UBS RMA Money Fund, Inc. (the "Corporation") was held on December 21, 2005. UBS RMA Money Market Portfolio and UBS RMA U.S. Government Portfolio (each a "Fund") are two of the three portfolios comprising the Corporation. Shareholders of all three portfolios of the Corporation, including the two Funds, voted together as a single class in the election of board members. At the meeting, Richard Q. Armstrong, David J. Beaubien, Alan S. Bernikow, Richard R. Burt, Meyer Feldberg, Bernard H. Garil, Heather Richardson Higgins and William D. White were elected to serve as directors for an indefinite term until their successors are duly elected and qualified or until they retire, resign or are earlier removed. The shares were voted as indicated below:
TO VOTE FOR OR WITHHOLD IN THE ELECTION OF: SHARES VOTED FOR SHARES WITHHOLD AUTHORITY ------------------------------------------------------------------------------- Richard Q. Armstrong 12,926,813,486.599 382,262,700.021 David J. Beaubien 12,894,932,539.714 414,143,646.906 Alan S. Bernikow 12,917,145,567.570 391,930,619.050 Richard R. Burt 12,925,738,374.086 383,337,812.534 Meyer Feldberg 12,914,466,848.362 394,609,338.258 Bernard H. Garil 12,940,774,429.761 368,301,756.859 Heather Richardson Higgins 12,921,490,612.943 387,585,573.677 William D. White 12,909,060,097.843 400,016,088.777
To the best of the Corporation's knowledge, there were no "broker non-votes." (Broker non-votes are shares held in street name for which the broker indicates that instructions have not been received from the beneficial owners or other persons entitled to vote and for which the broker does not have discretionary voting authority.) Mr. White retired from the board at the end of January 2006. 70 SHAREHOLDER INFORMATION--UBS RMA TAX-FREE FUND INC. A special meeting of shareholders of UBS RMA Tax-Free Fund Inc. (the "Fund") was held on December 21, 2005. At the meeting, Richard Q. Armstrong, David J. Beaubien, Alan S. Bernikow, Richard R. Burt, Meyer Feldberg, Bernard H. Garil, Heather Richardson Higgins and William D. White were elected to serve as directors for an indefinite term until their successors are duly elected and qualified or until they retire, resign or are earlier removed. The shares were voted as indicated below:
TO VOTE FOR OR WITHHOLD IN THE ELECTION OF: SHARES VOTED FOR SHARES WITHHOLD AUTHORITY ------------------------------------------------------------------------------- Richard Q. Armstrong 3,296,130,098.843 100,551,682.707 David J. Beaubien 3,288,769,625.508 107,912,156.042 Alan S. Bernikow 3,248,165,528.429 148,516,253.121 Richard R. Burt 3,249,371,377.920 147,310,403.630 Meyer Feldberg 3,242,975,285.117 153,706,496.433 Bernard H. Garil 3,305,576,298.984 91,105,482.566 Heather Richardson Higgins 3,302,454,578.144 94,227,203.406 William D. White 3,287,794,472.769 108,887,308.781
To the best of the Fund's knowledge, there were no "broker non-votes." (Broker non-votes are shares held in street name for which the broker indicates that instructions have not been received from the beneficial owners or other persons entitled to vote and for which the broker does not have discretionary voting authority.) Mr. White retired from the board at the end of January 2006. 71 SHAREHOLDER INFORMATION--UBS RMA CALIFORNIA MUNICIPAL MONEY FUND & UBS RMA NEW YORK MUNICIPAL MONEY FUND A special meeting of shareholders of UBS Managed Municipal Trust (the "Trust") was held on December 21, 2005. UBS RMA California Municipal Money Fund and UBS RMA New York Municipal Money Fund (each a "Fund") are the two portfolios comprising the Trust. Shareholders of both Funds voted together as a single class in the election of board members. At the meeting, Richard Q. Armstrong, David J. Beaubien, Alan S. Bernikow, Richard R. Burt, Meyer Feldberg, Bernard H. Garil, Heather Richardson Higgins and William D. White were elected to serve as trustees for an indefinite term until their successors are duly elected and qualified or until they retire, resign or are earlier removed. The shares were voted as indicated below:
TO VOTE FOR OR WITHHOLD IN THE ELECTION OF: SHARES VOTED FOR SHARES WITHHOLD AUTHORITY ------------------------------------------------------------------------------- Richard Q. Armstrong 1,472,026,716.832 34,762,122.338 David J. Beaubien 1,471,924,272.505 34,864,566.665 Alan S. Bernikow 1,434,298,733.657 72,490,105.513 Richard R. Burt 1,434,378,546.904 72,410,292.266 Meyer Feldberg 1,472,785,417.651 34,003,421.519 Bernard H. Garil 1,472,926,238.750 33,862,600.420 Heather Richardson Higgins 1,471,987,815.119 34,801,024.051 William D. White 1,470,594,856.306 36,193,982.864
To the best of the Trust's knowledge, there were no "broker non-votes." (Broker non-votes are shares held in street name for which the broker indicates that instructions have not been received from the beneficial owners or other persons entitled to vote and for which the broker does not have discretionary voting authority.) Mr. White retired from the board at the end of January 2006. 72 SHAREHOLDER INFORMATION--UBS RMA NEW JERSEY MUNICIPAL MONEY FUND A special meeting of shareholders of UBS Municipal Money Market Series (the "Trust") was held on December 21, 2005. UBS RMA New Jersey Municipal Money Fund (the "Fund") is the sole portfolio comprising the Trust. Shareholders of the Fund voted in the election of board members. At the meeting, Richard Q. Armstrong, David J. Beaubien, Alan S. Bernikow, Richard R. Burt, Meyer Feldberg, Bernard H. Garil, Heather Richardson Higgins and William D. White were elected to serve as trustees for an indefinite term until their successors are duly elected and qualified or until they retire, resign or are earlier removed. The shares were voted as indicated below:
TO VOTE FOR OR WITHHOLD IN THE ELECTION OF: SHARES VOTED FOR SHARES WITHHOLD AUTHORITY ------------------------------------------------------------------------------- Richard Q. Armstrong 138,142,984.034 2,399,766.926 David J. Beaubien 138,726,104.534 1,816,646.426 Alan S. Bernikow 138,733,403.932 1,809,347.028 Richard R. Burt 138,733,403.932 1,809,347.028 Meyer Feldberg 138,733,403.932 1,809,347.028 Bernard H. Garil 138,733,403.932 1,809,347.028 Heather Richardson Higgins 138,726,104.534 1,816,646.426 William D. White 138,733,403.932 1,809,347.028
To the best of the Trust's knowledge, there were no "broker non-votes." (Broker non-votes are shares held in street name for which the broker indicates that instructions have not been received from the beneficial owners or other persons entitled to vote and for which the broker does not have discretionary voting authority.) Mr. White retired from the board at the end of January 2006. 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. 73 UBS RMA Money Market Portfolio Board Approval of the 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 20, 2005, the board members, including the Corporation's Independent Directors (I.E., those directors who are not "interested persons" of the Corporation as that term is defined in the Investment Company Act of 1940, as amended), considered and approved the continuance of the Advisory and Administration Contract between the Corporation and UBS Financial Services Inc. with respect to UBS RMA Money Market Portfolio (the "Fund") ("Advisory and Administration Contract") and the Sub-Advisory and Sub-Administration Contract between UBS Financial Services Inc. and UBS Global Asset Management (US) 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 Inc. 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 concerning UBS Financial Services Inc. and UBS Global AM, as well as the advisory, sub-advisory, administrative, sub-administrative and distribution arrangements for the Fund, certain portions of which are discussed below. 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 Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract. Subsequently, the Chairman of the board and independent legal counsel to the Independent Directors met with management representatives to discuss generally how information would be provided at the board meeting. 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 that had been presented 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. BOARD APPROVAL OF ADVISORY AND ADMINISTRATION CONTRACT AND SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT. In approving the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract, the board, including the Independent Directors, considered the following factors: NATURE, EXTENT AND QUALITY OF THE SERVICES UNDER THE 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 Inc. under the Advisory and Administration 74 Contract and UBS Global AM under the Sub-Advisory and Sub-Administration Contract, respectively, 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 Inc.'s oversight of UBS Global AM's provision of sub-advisory and sub-administrative services. The board noted that information received at regular meetings throughout the year related to the services rendered by UBS Financial Services Inc. concerning the management of the Fund's affairs and UBS Financial Services Inc.'s 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 Inc. 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 Inc.'s 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. The board also considered, based on its knowledge of UBS Financial Services Inc., UBS Global AM and their affiliates, the financial resources available to management and its parent organization, UBS AG. The board reviewed how transactions in Fund assets are effected. While UBS Global AM's brokerage policies and practices, the standards applied in seeking best execution, UBS Global AM's policies and practices regarding soft dollars, the use of a broker affiliated with UBS Financial Services Inc. and UBS Global AM and the existence of quality controls applicable to brokerage allocation procedures were available to the board, many of these policies and practices were deemed not applicable to the management of a money market fund's portfolio. Management reminded the board that the Fund functions as a sweep vehicle. In addition, management also reported to the board on, among other things, its disaster recovery plans and portfolio manager compensation arrangements. The board concluded that, overall, it was satisfied with the nature, extent and quality of services provided (and expected to be provided) under the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract. 75 FUND PERFORMANCE. The board received and considered performance information of the Fund compared to other funds (the "Performance Universe") selected by Lipper, Inc. ("Lipper"), an independent provider of investment company data, over the one-, three-, five-, and 10-year periods ended May 31, 2005. The board was provided with a description of the methodology Lipper used to determine the similarity of the Fund with the funds included in the 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 consistently in the second quintile for the one-, three-, and ten-year periods and in the first quintile for the five-year period and, thus, that the Fund had outperformed most of the funds in its Performance Universe. Based on its review, the board concluded that the Fund's investment performance was satisfactory. MANAGEMENT FEES AND EXPENSE RATIOS. The board reviewed and considered the contractual management fee (the "Contractual Management Fee") (0.50%) payable by the Fund to UBS Financial Services Inc. in light of the nature, extent and quality of the management and administrative services provided by UBS Financial Services Inc. The board also considered that effective July 1, 2005, in connection with shareholders' recent approval of a shareholder services plan for the Fund, the Fund's Contractual Management Fee was reduced by a contractual fee waiver arrangement so that the management fee is not to 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 net assets--0.44%; over $1.5 billion in average daily net assets--0.36%. The board noted that UBS Financial Services Inc. had also agreed, in connection with the shareholders' approval of the plan, 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 current Contractual Management Fee. The board also reviewed and considered the actual fee rate paid by the Fund (the "Actual Management Fee") (0.371%) which was calculated based upon the comparison period utilized by Lipper, but then adjusted by Lipper to reflect the imposition of the new fee waiver discussed above. Additionally, the board received and considered information comparing the Fund's Contractual Management Fee, Actual Management Fee and overall expenses with those of other funds in a group of funds selected and provided by Lipper (the "Expense Group"). The board also received information on UBS Global Asset Management (Americas) Inc.'s (an affiliate of both UBS Financial Services Inc. and UBS Global AM) standard institutional account fees for short-term fixed income-type accounts. The board noted that these fees were lower than the Contractual and Actual Management Fees (which Contractual and Actual Management Fees reflect the aggregate of fees payable to UBS Financial 76 Services Inc. and the sub-advisory and sub-administration fees payable to UBS Global AM), but also 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, the differences in the levels of services required by mutual funds and such accounts and the memorandum provided by the Fund's legal counsel discussing court decisions regarding the limited usefulness of such comparisons. Management also discussed with the board the Fund's distribution arrangements. The board noted that UBS Global AM is the principal distributor of the Fund's shares and has appointed UBS Financial Services Inc. as a dealer for the sale of the Fund's shares. The board also noted that the Fund's shareholders had recently approved the adoption of a shareholder services plan with respect to the Fund, under which plan UBS Global AM pays all or virtually all of the service fee to UBS Financial Services Inc. The comparative Lipper information showed that the Fund's Contractual Management Fee and Actual Management Fee were in the fifth and second quintile, respectively, of the funds in their Expense Group (I.E., ninth and fourth lowest of ten respectively, for the comparison periods utilized in the Lipper report, after adjusting the data for the more recent fee waivers) and that, therefore, although the Fund's Contractual Management Fee was higher than that of most of the funds in its Expense Group, its Actual Management Fee was below the average for its Expense Group. The board also noted that the Fund's total expenses of 0.598% were third lowest in its Expense Group for the comparison period utilized in the Lipper report, placing it in the second quintile for its Expense Group. The board did not receive comparative information from Lipper with respect to the Fund's sub-advisory and sub-administration fee (the "Sub-advisory Fee"). The board noted that the compensation paid to UBS Global AM is paid by UBS Financial Services Inc., 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 Contractual Management Fee and the Sub-advisory Fee were reasonable in light of the nature, extent and quality of the services provided to the Fund under the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract, respectively. UBS FINANCIAL SERVICES INC. PROFITABILITY. The board received and considered a profitability analysis of UBS Financial Services Inc. and its affiliates in providing services to the Fund. The board also received profitability information with respect to the UBS New York fund complex as a whole. In addition, the board received information with respect to the allocation methodologies used in preparing this profitability data. The board also received information about UBS Financial Services Inc.'s profitability in comparison with the limited available industry data. 77 UBS Financial Services Inc.'s profitability was considered not excessive in light of the nature, extent and quality of the services provided to the Fund. 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 given the addition of the service plan. 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 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 Inc.'s profitability data, the Actual (as well as Contractual) Management Fee, and the breakpoints currently in place, the board believed that UBS Financial Services Inc.'s sharing of current economies of scale with the Fund was acceptable. OTHER BENEFITS TO UBS FINANCIAL SERVICES INC. AND UBS GLOBAL AM. The board considered other benefits received by UBS Financial Services Inc., 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 Inc.'s and UBS Global AM's ongoing commitment to the Fund, the profits and other ancillary benefits that UBS Financial Services Inc. and its affiliates received were considered reasonable. In light of all of the foregoing, the board approved the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract to continue for another year. 78 No single factor reviewed by the board was identified by the board as the principal factor in determining whether to approve the 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 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, Inc. or UBS Global AM were present. 79 UBS RMA U.S. Government Portfolio Board Approval of the 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 20, 2005, the board members, including the Corporation's Independent Directors (i.e., those directors who are not "interested persons" of the Corporation as that term is defined in the Investment Company Act of 1940, as amended), considered and approved the continuance of the Advisory and Administration Contract between the Corporation and UBS Financial Services Inc. with respect to UBS RMA U.S. Government Portfolio (the "Fund") ("Advisory and Administration Contract") and the Sub-Advisory and Sub-Administration Contract between UBS Financial Services Inc. and UBS Global Asset Management (US) 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 Inc. 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 concerning UBS Financial Services Inc. and UBS Global AM, as well as the advisory, sub-advisory, administrative, sub-administrative and distribution arrangements for the Fund, certain portions of which are discussed below. 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 Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract. Subsequently, the Chairman of the board and independent legal counsel to the Independent Directors met with management representatives to discuss generally how information would be provided at the board meeting. 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 that had been presented 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. BOARD APPROVAL OF ADVISORY AND ADMINISTRATION CONTRACT AND SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT. In approving the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract, the board, including the Independent Directors, considered the following factors: NATURE, EXTENT AND QUALITY OF THE SERVICES UNDER THE 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 Inc. under the Advisory and Administration Contract and UBS Global AM under the Sub-Advisory and Sub-Administration 80 Contract, respectively, 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 Inc.'s oversight of UBS Global AM's provision of sub-advisory and sub-administration services. The board noted that information received at regular meetings throughout the year related to the services rendered by UBS Financial Services Inc. concerning the management of the Fund's affairs and UBS Financial Services Inc.'s 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 Inc. 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 Inc.'s 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. The board also considered, based on its knowledge of UBS Financial Services Inc., UBS Global AM and their affiliates, the financial resources available to management and its parent organization, UBS AG. The board reviewed how transactions in Fund assets are effected. While UBS Global AM's brokerage policies and practices, the standards applied in seeking best execution, UBS Global AM's policies and practices regarding soft dollars, the use of a broker affiliated with UBS Financial Services Inc. and UBS Global AM and the existence of quality controls applicable to brokerage allocation procedures were available to the board, many of these policies and practices were deemed not applicable to the management of a money market fund's portfolio. In addition, management also reported to the board on, among other things, its disaster recovery plans and portfolio manager compensation arrangements. The board concluded that, overall, it was satisfied with the nature, extent and quality of services provided (and expected to be provided) under the Advisory and Administration Contract and the 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, Inc. ("Lipper"), an independent provider of investment company data, 81 over the one-, three-, five- and 10-year periods ended May 31, 2005. The board was provided with a description of the methodology Lipper used to determine the similarity of the Fund with the funds included in the 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 consistently in the second quintile for the one-, three-, and five-year periods and in the third quintile for the ten-year period and, thus, that the Fund's performance was above the Performance Universe average for the one-, three-, and five-year periods and approximately at the Performance Universe Average for the ten-year period. Based on its review, the board concluded that the Fund's investment performance was satisfactory. MANAGEMENT FEES AND EXPENSE RATIOS. The board reviewed and considered the contractual management fee (the "Contractual Management Fee") (0.428% after the imposition of breakpoints, which are discussed further) payable by the Fund to UBS Financial Services Inc. in light of the nature, extent and quality of the management and administrative services provided by UBS Financial Services Inc. The board also reviewed and considered the actual fee rate paid by the Fund (the "Actual Management Fee") (0.402%). Additionally, the board received and considered information comparing the Fund's Contractual Management Fee, Actual Management Fee and overall expenses with those of other funds in a group of funds selected and provided by Lipper (the "Expense Group"). The board also received information on UBS Global Asset Management (Americas) Inc.'s (an affiliate of both UBS Financial Services Inc. and UBS Global AM) standard institutional account fees for short-term fixed income-type accounts. The board noted that these fees were lower than the Contractual and Actual Management Fees (which Contractual and Actual Management Fees reflect the aggregate of fees payable to UBS Financial Services Inc. and the sub-advisory and sub-administration fees payable to UBS Global AM), but also 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, the differences in the levels of services required by mutual funds and such accounts and the memorandum provided by the Fund's legal counsel discussing court decisions regarding the limited usefulness of such comparisons. Management also discussed with the board the Fund's distribution arrangements. The board noted that UBS Global AM is the principal distributor of the Fund's shares and has appointed UBS Financial Services Inc. as a dealer for the sale of the Fund's shares, and that the Fund pays UBS Global AM a monthly service fee at the annual rate of up to 0.15% of the Fund's average daily net assets for providing certain shareholder services and 82 that, currently, the amount paid UBS Global AM is 0.125% of average daily net assets. The comparative Lipper information showed that the Fund's Contractual Management Fee and Actual Management Fee were in the third quintile and fourth quintile, respectively, of the funds in their Expense Group (I.E., fourth and fifth lowest of seven, respectively, for the comparison periods utilized in the Lipper report) and, thus, that the Fund's contractual and actual management fee were somewhat above the median for their Expense Group average. The board also noted that the Fund's total expenses of 0.578% were third lowest in its Expense Group for the comparison period utilized in the Lipper report, placing it in the second quintile for its Expense Group and thus, its total expenses were below the average for its Expense Group. 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 Inc., 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 Contractual Management Fee and the Sub-advisory Fee were reasonable in light of the nature, extent and quality of the services provided to the Fund under the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract, respectively. UBS FINANCIAL SERVICES INC. PROFITABILITY. The board received and considered a profitability analysis of UBS Financial Services Inc. and its affiliates in providing services to the Fund. The board also received profitability information with respect to the UBS New York fund complex as a whole. In addition, the board received information with respect to the allocation methodologies used in preparing this profitability data.The board also received information about UBS Financial Services Inc.'s profitability in comparison with the limited available industry data. UBS Financial Services Inc.'s profitability was considered not excessive in light of the nature, extent and quality of the services provided to the Fund. 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. 83 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 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 Inc.'s profitability data, the Actual (as well as Contractual) Management Fee and the breakpoints currently in place, the board believed that UBS Financial Services Inc.'s sharing of current economies of scale with the Fund was acceptable. OTHER BENEFITS TO UBS FINANCIAL SERVICES INC. AND UBS GLOBAL AM. The board considered other benefits received by UBS Financial Services Inc., 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 Inc.'s and UBS Global AM's ongoing commitment to the Fund, the profits and other ancillary benefits that UBS Financial Services Inc. and its affiliates received were considered reasonable. In light of all of the foregoing, the board approved each of the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract to continue for another year. No single factor reviewed by the board was identified by the board as the principal factor in determining whether to approve the 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 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 Inc. or UBS Global AM were present. 84 UBS RMA Tax-Free Fund Board Approval of the 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 20, 2005, the board members, including the directors who are not "interested persons" of the Fund ("Independent Directors") as defined in the Investment Company Act of 1940, as amended, considered and approved the continuance of the Advisory and Administration Contract between the Fund and UBS Financial Services Inc. ("Advisory and Administration Contract") and the Sub-Advisory and Sub-Administration Contract between UBS Financial Services Inc. and UBS Global Asset Management (US) 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 Inc. 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 concerning UBS Financial Services Inc. and UBS Global AM, as well as the advisory, sub-advisory, administrative, sub-administrative and distribution arrangements for the Fund, certain portions of which are discussed below. 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 Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract. Subsequently, the Chairman of the board and independent legal counsel to the Independent Directors met with management representatives to discuss generally how information would be provided at the board meeting. 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 that had been presented 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. BOARD APPROVAL OF ADVISORY AND ADMINISTRATION CONTRACT AND SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT. In approving the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract the board, including the Independent Directors, considered the following factors: NATURE, EXTENT AND QUALITY OF THE SERVICES UNDER THE 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 Inc. under the Advisory and Administration Contract and UBS Global AM under the Sub-Advisory and Sub-Administration Contract, respectively, during the past year. The board also received a description of the administrative and other services rendered to the Fund and its shareholders 85 by management, including in particular UBS Financial Services Inc.'s oversight of UBS Global AM's provision of sub-advisory and sub-administration services. The board noted that information received at regular meetings throughout the year related to the services rendered by UBS Financial Services Inc. concerning the management of the Fund's affairs and UBS Financial Services Inc.'s 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 Inc. 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 Inc.'s 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. The board also considered, based on its knowledge of UBS Financial Services Inc., UBS Global AM and their affiliates, the financial resources available to management and its parent organization, UBS AG. The board reviewed how transactions in Fund assets are effected. While UBS Global AM's brokerage policies and practices, the standards applied in seeking best execution, UBS Global AM's policies and practices regarding soft dollars, the use of a broker affiliated with UBS Financial Services Inc. and UBS Global AM and the existence of quality controls applicable to brokerage allocation procedures were available to the board, many of these policies and practices were deemed not applicable to the management of a money market fund's portfolio. In addition, management also reported to the board on, among other things, its disaster recovery plans and portfolio manager compensation arrangements. The board concluded that, overall, it was satisfied with the nature, extent and quality of services provided (and expected to be provided) under the Advisory and Administration Contract and the 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, Inc. ("Lipper"), an independent provider of investment company data, over the one-, three-, five- and 10-year periods ended May 31, 2005. The board was provided with a description of the methodology Lipper used to determine 86 the similarity of the Fund with the funds included in the 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-year period and the third quintile for the three-, five-year and 10 year periods shown. Based on its review, the board concluded that the Fund's investment performance was satisfactory. MANAGEMENT FEES AND EXPENSE RATIOS. The board reviewed and considered the contractual management fee (the "Contractual Management Fee") (0.415% after the imposition of breakpoints, which are discussed further below) payable by the Fund to UBS Financial Services Inc. in light of the nature, extent and quality of the management and administrative services provided by UBS Financial Services Inc. The board also reviewed and considered the actual fee rate paid by the Fund (the "Actual Management Fee") (0.415%). Additionally, the board received and considered information comparing the Fund's Contractual Management Fee, Actual Management Fee and overall expenses with those of other funds in a group of funds selected and provided by Lipper (the "Expense Group"). The board also received information on UBS Global Asset Management (Americas) Inc.'s (an affiliate of both UBS Financial Services Inc. and UBS Global AM) standard institutional account fees for short-term fixed income-type accounts. The board noted that these fees were lower than the Contractual and Actual Management Fees (which Contractual and Actual Management Fees reflect the aggregate of fees payable to UBS Financial Services Inc. and the sub-advisory and sub-administration fees payable to UBS Global AM), but also 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, the differences in the levels of services required by mutual funds and such accounts and the memorandum provided by the Fund's legal counsel discussing court decisions regarding the limited usefulness of such comparisons. Management also discussed with the board the Fund's distribution arrangements. The board noted that UBS Global AM is the principal distributor of the Fund's shares and has appointed UBS Financial Services Inc. as a dealer for the sale of the Fund's shares, and that the Fund pays UBS Global AM a monthly service fee at the annual rate of up to 0.15% of the Fund's average daily net assets for providing certain shareholder services and that, currently, the amount paid UBS Global AM is 0.125% of average daily net assets. The comparative Lipper information showed that the Fund's Contractual Management Fee and Actual Management Fee were each in the third quintile of the funds in their Expense Group (I.E., fourth lowest of seven, for the comparison periods utilized in the Lipper report). The board also noted that the Fund's total expenses of 0.603% was third lowest in its Expense Group for the comparison 87 period utilized in the Lipper report, placing it in the second quintile for its Expense Group. 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 Inc., not the Fund, and, accordingly, than 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 Contractual Management Fee and the Sub-advisory Fee were reasonable in light of the nature, extent and quality of the services provided to the Fund under the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract, respectively. UBS FINANCIAL SERVICES INC. PROFITABILITY. The board received and considered a profitability analysis of UBS Financial Services Inc. and its affiliates in providing services to the Fund. The board also received profitability information with respect to the UBS New York fund complex as a whole. In addition, the board received information with respect to the allocation methodologies used in preparing this profitability data. The board also received information about UBS Financial Services Inc.'s profitability in comparison with the limited available industry data. UBS Financial Services Inc.'s profitability was considered not excessive in light of the nature, extent and quality of the services provided to the Fund. 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 Contractual 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 Inc., not the Fund, separate considerations of economies of scale with respect to the Sub-advisory Fee were not relevant. 88 Generally, in light of UBS Financial Services Inc.'s profitability data, the Actual (as well as Contractual) Management Fee and the breakpoints currently in place, the board believed that UBS Financial Services Inc.'s sharing of current economies of scale with the Fund was acceptable. OTHER BENEFITS TO UBS FINANCIAL SERVICES INC. AND UBS GLOBAL AM. The board considered other benefits received by UBS Financial Services Inc., 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 Inc.'s and UBS Global AM's ongoing commitment to the Fund, the profits and other ancillary benefits that UBS Financial Services Inc. and its affiliates received were considered reasonable. In light of all of the foregoing, the board approved each of the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract to continue for another year. No single factor reviewed by the board was identified by the board as the principal factor in determining whether to approve the 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 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 Inc. or UBS Global AM were present. 89 UBS RMA California Municipal Money Fund Board Approval of the 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 20, 2005, the board members, including the Trust's Independent Trustees (i.e., those trustees who are not "interested persons" of the Trust as that term is defined in the Investment Company Act of 1940, as amended), considered and approved the continuance of the Advisory and Administration Contract between the Trust and UBS Financial Services Inc. with respect to UBS RMA California Municipal Money Fund (the "Fund") ("Advisory and Administration Contract") and the Sub-Advisory and Sub-Administration Contract between UBS Financial Services Inc. and UBS Global Asset Management (US) 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 Inc. 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 concerning UBS Financial Services Inc. and UBS Global AM, as well as the advisory, sub-advisory, administrative, sub-administrative and distribution arrangements for the Fund, certain portions of which are discussed below. 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 Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract. Subsequently, the Chairman of the board and independent legal counsel to the Independent Trustees met with management representatives to discuss generally how information would be provided at the board meeting. 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 presented 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. BOARD APPROVAL OF ADVISORY AND ADMINISTRATION CONTRACT AND SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT. In approving the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract, the board, including the Independent Trustees, considered the following factors: NATURE, EXTENT AND QUALITY OF THE SERVICES UNDER THE 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 Inc. under the Advisory and Administration Contract and UBS Global AM under the Sub-Advisory and Sub-Administration 90 Contract, respectively, 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 Inc.'s oversight of UBS Global AM's provision of sub-advisory and sub-administrative services. The board noted that information received at regular meetings throughout the year related to the services rendered by UBS Financial Services Inc. concerning the management of the Fund's affairs and UBS Financial Services Inc.'s 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 Inc. 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 Inc.'s 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. The board also considered, based on its knowledge of UBS Financial Services Inc., UBS Global AM and their affiliates, the financial resources available to management and its parent organization, UBS AG. The board reviewed how transactions in Fund assets are effected. While UBS Global AM's brokerage policies and practices, the standards applied in seeking best execution, UBS Global AM's policies and practices regarding soft dollars, the use of a broker affiliated with UBS Financial Services Inc. and UBS Global AM and the existence of quality controls applicable to brokerage allocation procedures were available to the board, many of these policies and practices were deemed not applicable to the management of a money market fund's portfolio. In addition, management also reported to the board on, among other things, its disaster recovery plans and portfolio manager compensation arrangements. The board concluded that, overall, it was satisfied with the nature, extent and quality of services provided (and expected to be provided) under the Advisory and Administration Contract and the 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, Inc. ("Lipper"), an independent provider of investment company data, 91 over the one-, three-, five- and 10-year periods ended May 31, 2005. The board was provided with a description of the methodology Lipper used to determine the similarity of the Fund with the funds included in the 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-year period and the fourth quintile for the three-, five- and 10-year periods shown. The Board requested that management explain the Fund's long-term underperformance. 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, in general, its state tax-free funds were managed in a higher quality, generally more defensive posture than a number of their peers. Both of these portfolio management decisions had resulted in a slightly lower yield over time when compared to the Performance Group. Management 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, including management's explanation that the Fund was being managed to provide a higher quality alternative to its investors in comparison to some of its peers, the board concluded that the Fund's investment performance was satisfactory. MANAGEMENT FEES AND EXPENSE RATIOS. The board reviewed and considered the contractual management fee (the "Contractual Management Fee") (0.447% after the imposition of breakpoints, which are discussed further below) payable by the Fund to UBS Financial Services Inc. in light of the nature, extent and quality of the management and administrative services provided by UBS Financial Services Inc. The board also reviewed and considered the actual fee rate paid by the Fund (the "Actual Management Fee") (0.457%). Additionally, the board received and considered information comparing the Fund's Contractual Management Fee, Actual Management Fee and overall expenses with those of other funds in a group of funds selected and provided by Lipper (the "Expense Group"). The board also received information on UBS Global Asset Management (Americas) Inc.'s (an affiliate of both UBS Financial Services Inc. and UBS Global AM) standard institutional account fees for short-term fixed income-type accounts. The board noted that these fees were lower than the Contractual and Actual Management Fees (which Contractual and Actual Management Fees 92 reflect the aggregate of fees payable to UBS Financial Services Inc. and the sub-advisory and sub-administration fees payable to UBS Global AM), but also 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, the differences in the levels of services required by mutual funds and such accounts and the memorandum provided by the Fund's legal counsel discussing court decisions regarding the limited usefulness of such comparisons. Management also discussed with the board the Fund's distribution arrangements. The board noted that UBS Global AM is the principal distributor of the Fund's shares and has appointed UBS Financial Services Inc. as a dealer for the sale of the Fund's shares, and that the Fund pays UBS Global AM a monthly service fee at the annual rate of up to 0.15% of the Fund's average daily net assets for providing certain shareholder services and that, currently, the amount paid UBS Global AM is 0.125% of average daily net assets. The comparative Lipper information showed that the Fund's Contractual Management Fee and Actual Management Fee were in the second and fourth quintile, respectively, of the funds in their Expense Group (I.E., third and sixth lowest of nine, respectively, for the comparison periods utilized in the Lipper report). The board also noted that the Fund's total expenses of 0.646% were seventh lowest in its Expense Group for the comparison period utilized in the Lipper report, placing it in the fourth quintile for its Expense Group. 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 Inc., 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 Contractual Management Fee and the Sub-advisory Fee were reasonable in light of the nature, extent and quality of the services provided to the Fund under the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract, respectively. UBS FINANCIAL SERVICES INC. PROFITABILITY. The board received and considered a profitability analysis of UBS Financial Services Inc. and its affiliates in providing services to the Fund. The board also received profitability information with respect to the UBS New York fund complex as a whole. In addition, the board received information with respect to the allocation methodologies used in preparing this profitability data. The board also received information about UBS Financial Services Inc.'s profitability in comparison with the limited available industry data. UBS Financial Services Inc.'s profitability was considered not excessive in light of the nature, extent and quality of the services provided to the Fund. 93 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 Contractual 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 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 Inc.'s profitability data, the Actual (as well as Contractual) Management Fee and the breakpoints currently in place, the board believed that UBS Financial Services Inc.'s sharing of current economies of scale with the Fund was acceptable. OTHER BENEFITS TO UBS FINANCIAL SERVICES INC. AND UBS GLOBAL AM. The board considered other benefits received by UBS Financial Services Inc., 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 Inc.'s and UBS Global AM's ongoing commitment to the Fund, the profits and other ancillary benefits that UBS Financial Services Inc. and its affiliates received were considered reasonable. In light of all of the foregoing, the board approved each of the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract to continue for another year. No single factor reviewed by the board was identified by the board as the principal factor in determining whether to approve the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract. The Independent Trustees 94 were advised by separate independent legal counsel throughout the process. The board discussed the proposed continuance of the 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 Inc. or UBS Global AM were present. 95 UBS RMA New York Municipal Money Fund Board Approval of the 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 20, 2005, the board members, including the Trust's Independent Trustees (i.e., those trustees who are not "interested persons" of the Trust as that term is defined in the Investment Company Act of 1940, as amended), considered and approved the continuance of the Advisory and Administration Contract between the Trust and UBS Financial Services Inc. with respect to UBS RMA New York Municipal Money Fund (the "Fund") ("Advisory and Administration Contract") and the Sub-Advisory and Sub-Administration Contract between UBS Financial Services Inc. and UBS Global Asset Management (US) 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 Inc. 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 concerning UBS Financial Services Inc. and UBS Global AM, as well as the advisory, sub-advisory, administrative, sub-administrative and distribution arrangements for the Fund, certain portions of which are discussed below. 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 Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract. Subsequently, the Chairman of the board and independent legal counsel to the Independent Trustees met with management representatives to discuss generally how information would be provided at the board meeting. 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 presented 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. BOARD APPROVAL OF ADVISORY AND ADMINISTRATION CONTRACT AND SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT. In approving the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract, the board, including the Independent Trustees, considered the following factors: NATURE, EXTENT AND QUALITY OF THE SERVICES UNDER THE 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 Inc. under the Advisory and Administration Contract and UBS Global AM under the Sub-Advisory and Sub-Administration Contract, respectively, during the past year. The board also received a description 96 of the administrative and other services rendered to the Fund and its shareholders by management, including in particular UBS Financial Services Inc.'s oversight of UBS Global AM's provision of sub-advisory and sub-administrative services. The board noted that information received at regular meetings throughout the year related to the services rendered by UBS Financial Services Inc. concerning the management of the Fund's affairs and UBS Financial Services Inc.'s 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 Inc. 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 Inc.'s 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. The board also considered, based on its knowledge of UBS Financial Services Inc., UBS Global AM and their affiliates, the financial resources available to management and its parent organization, UBS AG. The board reviewed how transactions in Fund assets are effected. While UBS Global AM's brokerage policies and practices, the standards applied in meeting best execution, UBS Global AM's policies and practices regarding soft dollars, the use of a broker affiliated with UBS Financial Services Inc. and UBS Global AM and the existence of quality controls applicable to brokerage allocation procedures were available to the board, many of these policies and practices were deemed not applicable to the management of a money market fund's portfolio. In addition, management also reported to the board on, among other things, its disaster recovery plans and portfolio manager compensation arrangements. The board concluded that, overall, it was satisfied with the nature, extent and quality of services provided (and expected to be provided) under the Advisory and Administration Contract and the 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, Inc. ("Lipper"), an independent provider of investment company data, over the one-, three-, five- and 10-year periods ended May 31, 2005. The board 97 was provided with a description of the methodology Lipper used to determine the similarity of the Fund with the funds included in the 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 consistently in the fourth quintile for the one-, three-, five-year and 10-year periods shown. The Board requested that management explain the Fund's underperformance. 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, in general, its state tax-free funds were managed in a higher quality, generally more defensive posture than a number of their peers. Both of these portfolio management decisions had resulted in a slightly lower yield over time when compared to the Performance Group. Management also noted that, as New York 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, including management's explanation that the Fund was being managed to provide a higher quality alternative to its investors in comparison to some of its peers, the board concluded that the Fund's investment performance was satisfactory. MANAGEMENT FEES AND EXPENSE RATIOS. The board reviewed and considered the contractual management fee (the "Contractual Management Fee") (0.471% after the imposition of breakpoints, which are discussed further below) payable by the Fund to UBS Financial Services Inc. in light of the nature, extent and quality of the management and administrative services provided by UBS Financial Services Inc. The board also reviewed and considered the actual fee rate paid by the Fund (the "Actual Management Fee") (0.470%). Additionally, the board received and considered information comparing the Fund's Contractual Management Fee, Actual Management Fee and overall expenses with those of other funds in a group of funds selected and provided by Lipper (the "Expense Group"). The board also received information on UBS Global Asset Management (Americas) Inc.'s (an affiliate of both UBS Financial Services Inc. and UBS Global AM) standard institutional account fees for short-term fixed income-type accounts. The board noted that these fees were lower than the Contractual and Actual Management Fees (which Contractual and Actual Management Fees reflect the aggregate of fees payable to UBS Financial Services Inc. and the 98 sub-advisory and sub-administration fees payable to UBS Global AM), but also 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, the differences in the levels of services required by mutual funds and such accounts and the memorandum provided by the Fund's legal counsel discussing court decisions regarding the limited usefulness of such comparisons. Management also discussed with the board the Fund's distribution arrangements. The board noted that UBS Global AM is the principal distributor of the Fund's shares and has appointed UBS Financial Services Inc. as a dealer for the sale of the Fund's shares, and that the Fund pays UBS Global AM a monthly service fee at the annual rate of up to 0.15% of the Fund's average daily net assets for providing certain shareholder services and that, currently, the amount paid UBS Global AM is 0.125% of average daily net assets. The comparative Lipper information showed that the Fund's Contractual Management Fee and Actual Management Fee were in the second and fourth quintile, respectively, of the funds in their Expense Group (I.E., fourth and sixth lowest, respectively, of nine, for the comparison periods utilized in the Lipper report). The board also noted that the Fund's total expenses of 0.667% were sixth lowest in its Expense Group for the comparison period utilized in the Lipper report, placing it in the fourth quintile for its Expense Group. 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 Inc., 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 Contractual Management Fee and the Sub-advisory Fee were reasonable in light of the nature, extent and quality of the services provided to the Fund under the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract, respectively. UBS FINANCIAL SERVICES INC. PROFITABILITY. The board received and considered a profitability analysis of UBS Financial Services Inc. and its affiliates in providing services to the Fund. The board also received profitability information with respect to the UBS New York fund complex as a whole. In addition, the board received information with respect to the allocation methodologies used in preparing this profitability data. The board also received information about UBS Financial Services Inc.'s profitability in comparison with the limited available industry data. UBS Financial Services Inc.'s profitability was considered not excessive in light of the nature, extent and quality of the services provided to the Fund. 99 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 first of its 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 Contractual 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 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 Inc.'s profitability data, the Actual (as well as Contractual) Management Fee and the breakpoints currently in place, the board believed that UBS Financial Services lnc.'s sharing of current economies of scale with the Fund was acceptable. OTHER BENEFITS TO UBS FINANCIAL SERVICES INC. AND UBS GLOBAL AM. The board considered other benefits received by UBS Financial Services lnc., 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 Inc.'s and UBS Global AM's ongoing commitment to the Fund, the profits and other ancillary benefits that UBS Financial Services Inc. and its affiliates received were considered reasonable. In light of all of the foregoing, the board approved each of the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract to continue for another year. No single factor reviewed by the board was identified by the board as the principal factor in determining whether to approve the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract. The Independent Trustees were advised by separate independent legal counsel throughout the 100 process. The board discussed the proposed continuance of the 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 Inc. or UBS Global AM were present. 101 UBS RMA New Jersey Municipal Money Fund Board Approval of the 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 20, 2005, the board members, including the Trust's Independent Trustees (i.e., those trustees who are not "interested persons" of the Trust as that term is defined in the Investment Company Act of 1940, as amended), considered and approved the continuance of the Advisory and Administration Contract between the Trust and UBS Financial Services Inc. with respect to UBS RMA New Jersey Municipal Money Fund (the "Fund") ("Advisory and Administration Contract") and the Sub-Advisory and Sub-Administration Contract between UBS Financial Services Inc. and UBS Global Asset Management (US) 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 Inc. 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 concerning UBS Financial Services Inc. and UBS Global AM, as well as the advisory, sub-advisory, administrative, sub-administrative and distribution arrangements for the Fund, certain portions of which are discussed below. 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 Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract. Subsequently, the Chairman of the board and independent legal counsel to the Independent Trustees met with management representatives to discuss generally how information would be provided at the board meeting. 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 presented 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. BOARD APPROVAL OF ADVISORY AND ADMINISTRATION CONTRACT AND SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT. In approving the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract, the board, including the Independent Trustees, considered the following factors: NATURE, EXTENT AND QUALITY OF THE SERVICES UNDER THE 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 102 Fund by UBS Financial Services Inc. under the Advisory and Administration Contract and UBS Global AM under the Sub-Advisory and Sub-Administration Contract, respectively, 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 Inc.'s oversight of UBS Global AM's provision of sub-advisory and sub-administrative services. The board noted that information received at regular meetings throughout the year related to the services rendered by UBS Financial Services Inc. concerning the management of the Fund's affairs and UBS Financial Services Inc.'s 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 Inc. 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 Inc.'s 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. The board also considered, based on its knowledge of UBS Financial Services Inc., UBS Global AM and their affiliates, the financial resources available to management and its parent organization, UBS AG. The board reviewed how transactions in Fund assets are effected. While UBS Global AM's brokerage policies and practices, the standards applied in seeking best execution, UBS Global AM's policies and practices regarding soft dollars, the use of a broker affiliated with UBS Financial Services Inc. and UBS Global AM and the existence of quality controls applicable to brokerage allocation procedures were available to the board, many of these policies and practices were deemed not applicable to the management of a money market fund's portfolio. In addition, management also reported to the board on, among other things, its disaster recovery plans and portfolio manager compensation arrangements. The board concluded that, overall, it was satisfied with the nature, extent and quality of services provided (and expected to be provided) under the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract. 103 FUND PERFORMANCE. The board received and considered performance information of the Fund compared to other funds (the "Performance Universe") selected by Lipper, Inc. ("Lipper"), an independent provider of investment company data, over the one-, three-, five- and 10-year periods ended May 31, 2005. The board was provided with a description of the methodology Lipper used to determine the similarity of the Fund with the funds included in the 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 consistently in the fourth quintile for the one-, three-, five-year and 10-year periods shown. The Board requested that management explain the Fund's underperformance. Management explained that, in comparison with its Performance Universe, the Fund's portfolio was generally of higher overall credit quality and contained relatively limited exposure to positions subject to the alternative minimum tax ("AMT"). Management noted that, in general, its state tax-free funds were managed in a higher quality, generally more defensive posture than a number of their peers. Both of these portfolio management decisions had resulted in a slightly lower yield over time when compared to the 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 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, including management's explanation that the Fund was being managed to provide a higher quality alternative to its investors in comparison to some of its peers, the board concluded that the Fund's investment performance was satisfactory. MANAGEMENT FEES AND EXPENSE RATIOS. The board reviewed and considered the contractual management fee (the "Contractual Management Fee") (0.50%) payable by the Fund to UBS Financial Services Inc. in light of the nature, extent and quality of the management and administrative services provided by UBS Financial Services Inc. The board also reviewed and considered the actual fee rate paid by the Fund (the "Actual Management Fee") (0.493%). Additionally, the board received and considered information comparing the Fund's Contractual Management Fee, Actual Management Fee and overall expenses with those of other funds in a group of funds selected and provided by Lipper (the "Expense Group"). The board also received information on UBS Global Asset Management (Americas) Inc.'s (an affiliate of both UBS Financial Services Inc. and UBS Global AM) standard institutional account fees for short-term fixed 104 income-type accounts. The board noted that these fees were lower than the Contractual and Actual Management Fees (which Contractual and Actual Management Fees reflect the aggregate of fees payable to UBS Financial Services Inc. and the sub-advisory and sub-administration fees payable to UBS Global AM), but also 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, the differences in the levels of services required by mutual funds and such accounts and the memorandum provided by the Fund's legal counsel discussing court decisions regarding the limited usefulness of such comparisons. Management also discussed with the board the Fund's distribution arrangements. The board noted that UBS Global AM is the principal distributor of the Fund's shares and has appointed UBS Financial Services Inc. as a dealer for the sale of the Fund's shares, and that the Fund pays UBS Global AM a monthly service fee at the annual rate of 0.12% of the Fund's average daily net assets for providing certain shareholder services. The comparative Lipper information showed that the Fund's Contractual Management Fee and Actual Management Fee were in the first and fourth quintile, respectively, of the funds in their Expense Group (I.E., second and eighth lowest, respectively, of ten, for the comparison periods utilized in the Lipper report). The board also noted that the Fund's total expenses of 0.755% were seventh lowest in its Expense Group for the comparison period utilized in the Lipper report, placing it in the fourth quintile for its Expense Group. 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 Inc., 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 the 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 the Sub-Advisory and Sub-Administration Contract, respectively. UBS FINANCIAL SERVICES INC. PROFITABILITY. The board received and considered a profitability analysis of UBS Financial Services Inc. and its affiliates in providing services to the Fund. The board also received profitability information with respect to the UBS New York fund complex as a whole. In addition, the board received information with respect to the allocation methodologies used in preparing this profitability data. The board also received information about UBS Financial Services Inc.'s profitability in comparison with the limited available 105 industry data. UBS Financial Services Inc.'s profitability was considered not excessive in light of the nature, extent and quality of the services provided to the Fund. 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. 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 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 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 Inc.'s profitability data, the Actual (as well as Contractual) Management Fee and the breakpoints which would provide for sharing of economies of scale with shareholders if the Fund grew, the board believed that UBS Financial Services lnc.'s sharing of current and potential economies of scale with the Fund was acceptable. OTHER BENEFITS TO UBS FINANCIAL SERVICES INC. AND UBS GLOBAL AM. The board considered other benefits received by UBS Financial Services Inc., 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 Inc.'s and UBS Global AM's ongoing commitment to the Fund, the profits and other ancillary benefits that UBS Financial Services Inc. and its affiliates received were considered reasonable. In light of all of the foregoing, the board approved each of the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract to continue for another year. No single factor reviewed by the board was identified by the board as the principal factor in determining whether to approve the Advisory and Administration Contract and the Sub-Advisory and Sub-Administration Contract. The Independent 106 Trustees were advised by separate independent legal counsel throughout the process. The board discussed the proposed continuance of the 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 Inc. or UBS Global AM were present. 107 (This page intentionally left blank) (This page intentionally left blank) (This page intentionally left blank) (This page intentionally left blank) (This page intentionally left blank) DIRECTORS/TRUSTEES Richard Q. Armstrong CHAIRMAN David J. Beaubien Alan S. Bernikow Richard R. Burt Meyer Feldberg Bernard H. Garil Heather Richardson Higgins PRINCIPAL OFFICERS W. Douglas Beck 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, SUB-ADMINISTRATOR AND 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. (C) 2006 UBS Global Asset Management (US) Inc. All rights reserved. [UBS LOGO] PRESORTED STANDARD U.S. POSTAGE PAID COMPUTERSHARE UBS GLOBAL ASSET MANAGEMENT (US) 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 (US) 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/ W. Douglas Beck ------------------- W. Douglas Beck President Date: March 10, 2006 -------------- 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/ W. Douglas Beck ------------------- W. Douglas Beck President Date: March 10, 2006 -------------- By: /s/ Thomas Disbrow ------------------ Thomas Disbrow Vice President and Treasurer Date: March 10, 2006 --------------