Important Notice About Your UBS Accounts

Transcription

1 Important Notice About Your UBS Accounts Please note: Immediate action may be appropriate. You should read each section of this notice carefully to better understand how these changes may affect your accounts. What s Inside: Summary of Changes to Your Account Agreement...1 Important Reminder About Your UBS Account Fees...2 Explanation of Changes to Your Account Agreement...2 I. Annual fee payment process Sale of mutual funds shares to pay fees...2 II. New interest rate tiers for deposits at UBS Bank USA...2 III. Changes to billing of brokerage accounts with PACE investments...3 Reminder Regarding Annual Service Fees and Maintenance Fees...4 A. One annual service fee for an unlimited number of UBS RMAs, IRAs and IRA RMAs...4 B. Annual service fees for Basic Investment Accounts...4 C. Annual service fees for IRAs...4 D. Annual maintenance fees for Marketing Relationships less than $25, E. Termination fees for transferred accounts...4 F. Frequently Asked Questions (FAQs) regarding fees...4 Changes to Your Account Agreement...7 As described in more detail in the pages that follow, we are a making a number of changes to your Account Agreement. These changes involve the following three items: 1. Annual fee payment process Sale of mutual fund shares to pay fee Each year the annual service fees and maintenance fees (if applicable) on your billable brokerage accounts are charged on the annual billing date, which is the fourth business day of December. The annual billing date is December 4 for If there is insufficient cash in your billable accounts to cover these fees, UBS will sell domestic mutual fund holdings in the account and use the proceeds to pay the fees. This will take place on the second Monday of March each year, which will be March 8 for The UBS Custodial Agreement for traditional IRAs, Roth IRAs, SIMPLE IRAs, Coverdell Education Savings Accounts or 403(b)(7)s (collectively referred to as IRAs ) were amended in 2008 to provide for the sale of mutual fund shares to pay fees. These documents have now been further amended to reflect the date change for the sale of mutual fund shares, giving you more time to pay fees before the sale takes place. For more information, including information about actions you can take and options you may have in order to avoid the sale of your mutual fund shares, see section I on page 2 titled Annual fee payment process Sale of mutual fund shares to pay fee. 2. New interest rate tiers for deposits at UBS Bank USA Effective December 7, 2009, the interest rate tiers for deposits at UBS Bank USA (the Bank ) under the UBS Deposit Account Sweep Program will change. The interest rates paid by the Bank are tiered based upon the total amount of eligible assets that you hold with the Bank and UBS Financial Services Inc.* The amount of your eligible assets (and the interest rate tier that applies to your bank deposits) is calculated based upon the total amount of eligible assets in your Marketing Relationship. For more information, including information about the current and new interest rate tier levels, see section II on page 2 titled, New interest rate tiers for deposits at UBS Bank USA. 3. Annual service fees for brokerage accounts that also hold PACE investments Effective December 4, 2009, if you have an account that holds a PACE mutual fund asset allocation investment and also holds any assets that are not eligible for the PACE program (e.g., equities, fixed income, non-eligible mutual funds), your account will be charged the same annual service fee that applies to all brokerage accounts of that account type (e.g., RMA, retirement accounts, Business Services Account BSA, Basic Investment Account) unless the account is otherwise eligible for potential fee waivers. This annual service fee is in addition to the annual PACE program fee. For more information, see section III on page 3 titled Changes to billing of brokerage accounts with PACE investments.

2 Important Reminder About Your UBS Account Fees In September 2008 we notified you about changes in the annual service and maintenance fees that may affect your accounts at UBS, including the following: Annual service fee of $150 for an unlimited number of Resource Management Accounts (RMAs ), Individual Retirement Accounts (IRAs) and IRA RMAs Annual service fee of $150 for each Business Services Account BSA Annual service fee of $75 for each Basic Investment Account Annual service fee for each stand-alone IRA increased from $40 to $75 Annual service fee of $175 for each International Resource Management Account (IRMA ) Annual maintenance fee of $75 if your Marketing Relationship does not meet a minimum of $25,000 in eligible assets A move to calendar-year billing Termination fees for transferred accounts Depending on the type and number of accounts you maintain with us, as well as the level of assets in those accounts, it may be possible for you to reduce the amount of fees you will pay to us for 2009 if you take certain actions by November 30, For more information, including information about actions you can take and options you may have in order to reduce your fee payments, see the section on page 4 titled, Reminder regarding annual service fees and maintenance fees. Explanation of changes to your Account Agreement I. Annual fee payment process Sale of mutual funds shares to pay fees You currently have the ability to pay your annual fees, which include the annual service fees applicable to your RMA, IRA, IRA RMA, Basic Investment Account, Business Services Account BSA, Qualified Plan fee, Qualified Plan Prototype fee, and the annual maintenance fee, if any: By a deposit into your account via check, federal funds wire transfer, by electronic funds transfer or by debit from another UBS non-retirement account By deduction from the cash balance in your account if it has sufficient cash to cover the fee (including freecredit balances; funds in any eligible sweep instrument in your account such as your deposit account at the Bank or another sweep instrument like an RMA money market sweep fund; or available margin) Your annual service fee and maintenance fee for 2009 will be billed and payable on December 4, If you do not pay these fees and there is insufficient cash or margin available in your account, we will include the amount of these fees as part of your unpaid debit balance on your December monthly statement. If this debit balance for unpaid fees is not satisfied, UBS will sell a sufficient number of shares of the billable account s mutual fund assets to satisfy the fees. This will take place on the second Monday of March each year, which will be March 8 for This process is explained in detail in the Changes to Your Account Agreement on page 7, but in general, we will sell shares first from the account s largest position subject to a front-end load or sales charge, followed by positions that could be subject to a back-end load, and finally, positions in no-load funds. In each case we will start with the largest position by value based on the previous day s Net Asset Value (NAV) and continue with successively smaller positions as necessary. If due to limits on the number of transactions, all required transactions cannot be completed in a single day, we will process transactions for all retirement accounts first, and then for all other account types, each by order of account numbers. We will not sell shares of offshore funds or closed-end funds in this process. If the sale does not result in sufficient funds to satisfy the annual service fee, the unpaid balance will remain due. You may incur applicable contingent deferred sales charges and transaction fees as a result of these sales. These sales may be a taxable event, and UBS will not be liable for any tax consequences or for any losses or lost profits relating to these sales. Please note that the sale of your mutual fund shares to cover your annual service fees and maintenance fee is not reversible after the sale occurs. You can avoid this action if, between December 4, 2009 and March 5, 2010, you pay any debit balance for outstanding fees. For more information, please contact your UBS Financial Advisor before December 4 to discuss the best way for you to pay your 2009 annual fees, or for any other questions you may have regarding the new payment process. II. New interest rate tiers for deposits at UBS Bank USA Interest rate tier changes Beginning with the interest period that starts on December 7, 2009, the interest rate tiers for deposits at the Bank under the UBS Deposit Account Sweep Program (the Program ) will change as follows: 2

3 Current interest rate tiers as of September 2009 Tier 6 $2 million and more Tier 5 $1 million to $1,999,999 Tier 4 $500,000 to $999,999 Tier 3 $250,000 to $499,999 Tier 2 $100,000 to $249,999 Tier 1 Less than $100,000 Interest rate tiers effective December 7, 2009 Tier 6 $10 million and more Tier 5 $2 million to $9,999,999 Tier 4 $1 million to $1,999,999 Tier 3 $500,000 to $999,999 Tier 2 $250,000 to $499,999 Tier 1 Less than $250,000 The interest rates paid by the Bank are tiered based upon the total amount of eligible assets that you hold with the Bank and UBS Financial Services Inc. The amount of your eligible assets (and the interest rate tier that applies to your Bank deposits) is calculated based upon the total amount of eligible assets in your Marketing Relationship. Interest rates are set by the Bank in its discretion based on a number of factors, including prevailing business and economic conditions. Current interest rates and other important information regarding the Program and your alternatives are available online at UBS Online Services or by contacting your Financial Advisor. As a review of the new interest rate tiers set forth above shows, in order to qualify for Tiers 2 through 6, you will now need to have a higher amount of eligible assets at the Bank and UBS Financial Services Inc. Based on a historical comparison of interest rates paid by the Bank and yields on alternative cash sweep options, clients with total eligible Marketing Relationship assets of less than $500,000 should expect to receive interest rates on their Bank deposits that are substantially lower than the prevailing rate of return of alternative cash sweep options for their UBS Financial Services Inc. accounts. Alternatives If you do not wish to have your available cash deposited in the Bank through the Program, for certain UBS Financial Services Inc. and UBS International Inc. accounts (including RMA accounts) you may elect to have your available cash automatically swept into a tax-exempt money market sweep fund. 1 Please note that if you have a Basic Investment Account, IRA or IRA RMA, you are not eligible to select a tax-exempt money market sweep fund. If eligible, you may elect a tax-exempt money market sweep fund by contacting your Financial Advisor at any time. Prospectuses for the tax-exempt money market sweep funds may be obtained by contacting your Financial Advisor or online at sweepyields. Please read them carefully. UBS Financial Services Inc. and UBS International Inc. also offer a number of investment products that you may wish to consider as alternatives to maintaining cash deposits at the Bank through the Program. Your investment objectives, liquidity needs and risk tolerance should be considered in reviewing these alternatives. Some of these alternatives may pay an interest rate or dividend that is higher than the rate you receive on your deposits at the Bank. While deposits at the Bank, certificates of deposit and any other available deposit products offered by FDIC-insured depository institutions are covered by FDIC insurance up to the applicable FDIC insurance limits, other investment alternatives, such as money market mutual funds, are not FDIC-insured, are not guaranteed by a bank, and may lose value. FDIC insurance Your deposits at the Bank are insured by the Federal Deposit Insurance Corporation (FDIC), which protects deposit accounts at member banks. FDIC protection is subject to the rules and limitations of the FDIC. More information is available online at at on UBS Online Services or by contacting your Financial Advisor. III. Changes to billing of brokerage accounts with PACE investments PACE is a mutual fund asset allocation program that is held in a brokerage account. If you participate in the PACE program (i.e., PACE Select Advisors and PACE Multi Advisors), you are subject to the annual PACE program fee as it pertains to the amount of your eligible assets invested in PACE. The PACE program fee includes our services on asset allocation, automatic rebalancing, performance reporting and the advice and guidance of your Financial Advisor. You may hold non-pace eligible assets (e.g., equities, fixed income, and non-pace eligible mutual funds) in the same brokerage account as your PACE investment. If you hold both PACE and non-pace eligible assets (other than free credit balances, deposits at the Bank or funds in another sweep instrument) in the same brokerage account or if you use the cash management services of an RMA, your account is subject to the same annual service fee and maintenance fee that apply to all brokerage accounts of the same account type (e.g., RMA, IRA, Basic Investment Account). For example, if your PACE investment account is the primary billable RMA in your Marketing Relationship and it holds assets not eligible for PACE, it will be charged an annual service fee of $150 and maintenance fee (if applicable) beginning in The annual service fee and maintenance fee are in addition to the annual PACE program fees. The annual service fee and maintenance fee may be waived based on the same conditions applicable to accounts that do not participate in the PACE program. Please refer to the section below titled Reminder regarding annual service fees and maintenance fees for information about the annual fees. 3

4 Reminder regarding annual service fees and maintenance fees As disclosed in September 2008, changes to your annual service and maintenance fees starting in 2009 are as follows: A. One annual service fee for an unlimited number of UBS RMAs, IRAs and IRA RMAs Once you pay the annual service fee of $150 for your primary RMA account, we will waive the annual service fees for an unlimited number of additional RMAs, IRAs, IRA RMAs and Business Services Account BSAs (Sole Proprietorships only) within the same Marketing Relationship. (See FAQ #3 on page 4 explaining Marketing Relationships and FAQ #4 on page 5 explaining which account is your primary RMA for billing purposes.) We will automatically waive the annual service fee for your primary RMA if you meet either one of these criteria: Your eligible Marketing Relationship assets are $1,000,000 or more; or You have qualifying direct deposits to any account in your Marketing Relationship prior to your annual billing date 2 B. Annual service fees for Basic Investment Accounts All Basic Investment Accounts are now charged an annual service fee of $75. This fee will be charged regardless of the frequency of your account activity, the level of assets held, frequency or amounts of qualifying direct deposits, or whether your Basic Investment Account is within the same Marketing Relationship as your primary RMA. You may elect to upgrade a Basic Investment Account to an RMA. 3 The new RMA will automatically be connected to your primary RMA and the annual service fee for this second account will be waived. C. Annual service fees for IRAs Annual service fees for stand-alone IRAs increased from $40 to $75. This fee will be automatically waived if your IRA is within the same Marketing Relationship as your primary RMA. D. Annual maintenance fees for Marketing Relationships less than $25,000 If your Marketing Relationship does not meet a minimum of $25,000 in eligible assets, the primary billable account in your Marketing Relationship will be charged an annual maintenance fee of $75. 4 This maintenance fee will be charged even if the annual service fees for your accounts have been waived for that calendar year. The maintenance fee will not be charged for a calendar year if the minimum asset amount of $25,000 is reached at the end of any month during the calendar year up until the last business day in November. E. Termination fees for transferred accounts If you maintain an account any time during the calendar year and you instruct us to transfer your account to another financial institution, you are subject to a termination fee that is equal to the annual service fees and an account transfer fee of $75 per transferred account, other than IRAs. If you instruct us to transfer your account to another financial institution between the annual billing date and the end of the calendar year (e.g., December 4, 2009 and December 31, 2009), you will not be charged the termination fee. However, an account transfer fee of $75 will apply for each account transferred. To help you identify how these 2009 fee changes may impact you, as well as options you should consider in order to possibly reduce your fees, please review the following frequently asked questions and answers: F. Frequently asked questions (FAQs) regarding fees 1. How do I determine if my account is an RMA or a Basic Investment Account? A Basic Investment Account does not offer cash management services such as checkwriting, bill pay or deferred debit and credit cards. If your account is a Basic Investment Account, your UBS account statement will say Investment Account at the top. You may also see your statements online if you are enrolled in UBS Online Services. Currently, no new Basic Investment Accounts can be opened at the firm. If your account is an RMA, your UBS account statement will say Resource Management Account at the top. You may also see your statements online if you are enrolled in UBS Online Services. In addition, an RMA provides everyday cash management services such as checkwriting, bill pay, and deferred debit and credit cards that are not available with a Basic Investment Account. If you are still unsure of the type of account you have, please contact your Financial Advisor or call UBS Client Services at What account types have opportunities to save on annual service fees? Once you pay the annual service fee of $150 for your primary RMA account, the annual service fees for an unlimited number of additional RMAs, IRAs, IRA RMAs and Business Services Account BSAs (Sole Proprietorships only) will be waived, as long as the accounts are held within the same Marketing Relationship at UBS. 3. What is a Marketing Relationship? Marketing Relationships represent the automatic combination of Statement Households using Social Security Numbers (SSNs) or Tax Identification Numbers (TINs) and ZIP codes. 5 They are created by the automatic combination of Statement Households in either of the following circumstances: The primary Tax Reporter s SSN/TIN on any account in one Statement Household matches the Tax Reporter s SSN/TIN on any account in another Statement Household, or 4

5 The Tax Reporter s SSN/TIN on any account in one Statement Household matches the secondary SSN/TIN on any account in another Statement Household, and the nine-digit ZIP code is the same on all accounts in both Statement Households. 4. How do I know which account is my primary billable RMA? A primary RMA may be an RMA, IRA RMA,or Business Services Account BSA (Sole Proprietorships only). The primary account is considered the billable account in a Marketing Relationship and is generally determined in the following order: 1. RMA Joint Account, 2. RMA Individual Account, 3. RMA Custodial Account, 4. RMA Guardian Account, 5. RMA Trust Account, 6. Business Services Account BSA (Sole Proprietorships only), 7. IRA RMA. Any of these accounts that are used as collateral for a loan by UBS Bank USA will be considered last in priority. Among comparable account and ownership types, the billable account is the one with the earliest account opening date. 5. Will I also be charged a $75 annual service fee for each Basic Investment Account in my Marketing Relationship, even if I am charged an annual service fee of $150 for my primary billable RMA? Yes. You will still be charged an annual service fee of $75 for each Basic Investment Account even if you already maintain a primary RMA in your Marketing Relationship. For example, if you have three Basic Investment Accounts, you will be charged annual service fees totaling $225 for the three Basic Investment Accounts, in addition to the $150 annual service fee for your RMA. You can lower your overall annual service fees within your Marketing Relationship by upgrading your Basic Investment Accounts to RMAs. Once you pay the annual service fee of $150 for your primary RMA, we will waive the annual service fees for an unlimited number of additional RMAs. Using the example above, you could reduce your total annual service fees from $375 ($225 + $150) to $ How can I save money on annual service fees if I have multiple Basic Investment Accounts and IRAs in my current Marketing Relationship? If you already maintain an RMA in your Marketing Relationship, you will not be charged an annual service fee for upgrading your Basic Investment Accounts to RMAs. Once you pay the annual service fee of $150 for your primary RMA, we will waive the annual service fees for an unlimited number of additional RMAs, IRAs, and IRA RMAs. 7. What is the deadline in 2009 for me to upgrade Basic Investment Accounts to RMAs? Account upgrades from Basic Investment Accounts to RMAs must be done by November 30, 2009 so that you will not be charged the $75 annual service fee on December 4, 2009 for each Basic Investment Account. The $150 annual service fee for the primary RMA will apply. 8. What will happened to my UBS Cashfund shares in my Basic Investment Account if I upgrade to an RMA? RMAs are not eligible to have UBS Cashfund as a cash sweep option. If UBS Cashfund is your current primary cash sweep option, any shares of UBS Cashfund will be sold when you request an upgrade. Uninvested cash in an RMA is swept to an FDIC-insured deposit account at UBS Bank USA, if you are eligible to participate in that program, or you may elect to have your available cash automatically swept into a tax-exempt money market fund. 1 Contact your Financial Advisor to discuss sweep options for ineligible accounts. Prospectuses for the tax-exempt money market sweep funds may be obtained by contacting your Financial Advisor or online at Please read them carefully. 9. How do I upgrade from a Basic Investment Account to an RMA? Upgrading your Basic Investment Account to an RMA is easy. Simply contact your Financial Advisor or call UBS Client Services at How can I save money on IRA fees? If you already maintain an RMA in your Marketing Relationship or if you upgrade a stand-alone IRA to an IRA RMA, you will only be charged one $150 annual service fee for an unlimited number of RMAs, IRAs or IRA RMAs. The annual service fee for your additional IRA(s) will automatically be waived. 11. Are there more ways to save on service fees? Yes. We will automatically waive the annual service fee of $150 for your primary RMA if you meet either one of these criteria: Your eligible Marketing Relationship assets are $1,000,000 or more; or You have qualifying direct deposits to accounts in your Marketing Relationship prior to your annual billing date How can I avoid being assessed the $75 annual maintenance fee for Marketing Relationships with less than $25,000 in eligible assets? In order to avoid the $75 fee, you can add or transfer additional assets into your UBS Marketing Relationship accounts (including IRAs) to bring the level of your eligible assets above $25,000. This can include cash and other assets you might currently hold at other financial institutions. The maintenance fee will not be charged for a calendar year if the minimum asset amount of $25,000 is reached at the end of any month during the calendar year up until the last business day in November. 13. How are termination and transfer fees assessed? If you instruct us to transfer your account to another brokerdealer, you are subject to a termination fee that is equal to the annual service fee, as well as an account transfer fee of $75, other than IRAs. For example, if you transfer your Basic Investment 5

6 Account, you will be subject to a $75 annual service fee and an additional $75 account transfer fee, totaling $150. Below are a few examples of how the termination and transfer fees are assessed between the first business day in January through the annual billing date each year: Example 1 Account Type Termination Fee Transfer Fees (ACAT) RMA Primary $150 $75 RMA #2 $0 $75 RMA #3 $0 $75 IRA $0 $0 Termination and transfer fees total: $375 Example 2 Account Type Termination Fee Transfer Fees (ACAT) RMA $150 $75 Basic $75 $75 IRA $0 $0 Termination and transfer fees total: $375 Example 3 Account Type Termination Fee Transfer Fees (ACAT) Basic $75 $75 Basic $75 $75 IRA $75 $0 If you instruct us to transfer your account to another brokerdealer between December 4, 2009, and December 31, 2009, you will not be subject to a termination fee that is equal to the annual service fee. However, an account transfer fee of $75 will be applied for each account transferred, other than IRAs. If you instruct us to transfer your account to another brokerdealer after January 1, 2010, you will be charged a termination fee equal to your 2010 annual service fees and an account transfer fee of $75 for each account transferred, other than IRAs. These charges are in addition to the 2009 annual service fees you will be charged in December When did the move to calendar-year billing go into effect? We initiated a calendar-year billing cycle effective this year. You will be billed for annual service fee(s) on the fourth business day each December. Previously, you were billed for annual service fee(s) during the anniversary month in which you opened your account(s). For more information Our relationship with you is about much more than fees and charges for our services. It s about listening, understanding and helping you plan and manage your financial life the way you want. If you have any questions regarding these changes to your Account Agreement, please contact your Financial Advisor or UBS Client Services. For calls from within the U.S., please call For calls from outside the U.S., please call collect. Termination and transfer fees total: $375 1 UBS Financial Services Inc. offers the following tax-exempt money market sweep funds: 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 and Puerto Rico Short Term Investment Fund, Inc. (the PR Fund ). State-specific municipal funds are designed for residents of those states. The PR Fund is offered exclusively to Puerto Rico residents as defined in the PR Fund s prospectus. The PR Fund is not a money market fund registered under the U.S. Investment Company Act of 1940, does not comply with rules applicable to U.S. registered funds and presents a higher degree of risk than those funds. The tax-exempt money market sweep funds are sold by prospectus only, are NOT FDIC-INSURED, NOT BANK GUARANTEED, AND MAY LOSE VALUE. 2 Qualifying direct deposits (e.g., payroll, Social Security payments, pension payments, insurance and annuity distributions) are defined as having direct deposits totaling at least $1,000 per month for the two-month period immediately prior to the annual billing date. 3 Basic Investment Accounts opened for business entities cannot be upgraded to an RMA. If you choose to upgrade to a Business Services Account BSA (other than a Sole Proprietorship), you will be charged $150 annual service fee. Basic Investment Accounts opened for non-resident aliens can only be upgraded to an IRMA. If you choose to upgrade to an IRMA, you will be charged a $175 annual service fee. 4 For Marketing Relationships where there is not a primary billable account, the maintenance fee will be charged to the oldest non-retirement account followed by the oldest retirement account. 5 Statement Households are defined as accounts which share the same last name(s), address, and branch. They apply only to individual, joint, custodial and trust accounts. The RMA and Business Services Account BSA are brokerage accounts. Resource Management Account, RMA and Business Services Account BSA are registered service marks of UBS Financial Services Inc. * UBS Financial Services Inc. serves as a clearing firm for UBS International Inc. and UBS Financial Services Incorporated of Puerto Rico; therefore, the information in this material provided by UBS Financial Services Inc. also applies to clients of UBS International Inc. and UBS Financial Services Incorporated of Puerto Rico unless otherwise specified. 6

7 Below are the changes to your Account Agreement: The first paragraph of the section Order of Permitted Payments in the General Terms and Conditions section of all account agreements is revised to read as follows: We will deduct any Permitted Payments from your Account within your Account s Withdrawal Limit in the following order: i. From uninvested free credit cash balances, if any, held in the Account pending investment; ii. From the withdrawal, or proceeds of a redemption or liquidation of your Sweep Option holdings, if any; iii. From Available Margin in the Account, if it has margin; and iv. From the proceeds of the sale of mutual fund holdings, to the extent of any unpaid fees, as more fully described in the Fees and Charges Section. The first paragraph under Timing of the annual account fee billing in the Fees and Charges section of all account agreements is revised to read as follows: Your annual service fees and maintenance fees, if applicable, are billed on the fourth business day in December of each year. The fees are automatically deducted from each account that is being billed and will be posted on your December statement. If you do not have uninvested free credit balances, Sweep Option holdings or Available Margin, we will treat the unpaid fees as a debit balance in your Account. If this debit balance for unpaid fees is not satisfied, you understand and agree that UBS will sell a sufficient number of whole or fractional shares of the account s open-end regulated investment company assets ( mutual funds ) to satisfy the debit balance, as follows: These sales will take place on the second Monday of March each year. We will sell shares first from your largest position (by value based on the previous day s NAV) subject to a front-end load or sales charge, continuing with successively smaller positions as necessary. Next, we will sell your largest position that could be subject to a back-end load, continuing with successively smaller positions as necessary. Finally, we will sell your largest position in no-load funds, continuing with successively smaller positions as necessary. We will effect required transactions in a single day up to our systematic limits, and if all required transactions cannot be completed in a single day, we will process transactions for all retirement accounts first, in the alphanumeric order of the account number, and then for all other account types, also in alphanumeric order. We will not sell shares of offshore funds or closed-end funds in this process. If the sale does not result in sufficient funds, the unpaid debit balance will remain due. You may incur applicable contingent deferred sales charges and transaction fees as a result of these sales. These sales may be a taxable event, and UBS will not be liable for any tax consequences or for any losses or lost profits relating to these sales. The paragraph Determining the billable RMA, IRA RMA or Business Services Account BSA (Sole Proprietorship only) in the Fees and Charges sections is revised to read as follows: The primary billable account in a Marketing Relationship is generally determined in the following order: 1. RMA Joint Account 2. RMA Individual Account 3. RMA Custodial Account 4. RMA Guardian Account 5. RMA Trust Account 6. Business Services Account BSA (Sole Proprietorships only) 7. IRA RMA. Any of these accounts that are used as collateral for a loan by UBS Bank USA will be considered last in priority. Among comparable account and ownership types, the billable account is the one with the earliest account opening date. Changes to the UBS Custodial Agreements for traditional IRAs, Roth IRAs, SIMPLE IRAs, Coverdell Education Savings Accounts and 403(b)(7)s: The second paragraph of Section 10.4 of the UBS Custodial Agreement for traditional or Roth IRAs now reads: If any fees or other administrative expenses remain unpaid, then notwithstanding any other provision of the agreements with the Custodian governing the Client s accounts, the Custodian will, on the second Monday in March each year, sell whole or fractional shares of open-end regulated investment company assets ( mutual funds ) held in the IRA sufficient to pay such amounts. The Custodian will sell shares first from the largest position (by value based on the previous day s NAV) subject to a front-end load or sales charge, continuing with successively smaller positions as necessary. Next, the Custodian will sell the largest position that could be subject to a backend load, continuing with successively smaller positions as necessary. Finally, the Custodian will sell the largest position in no-load funds, continuing with successively smaller positions as necessary. The Custodian will effect required transactions in a single day up to the systematic limits, and if all required transactions cannot be completed in a single day, the Custodian will process transactions for all retirement accounts first, in the alphanumeric order of the account number. The Custodian will not sell shares of offshore funds or closed-end funds in this process. If the sale does not result in sufficient funds, the unpaid debit balance will remain due. You may incur applicable contingent deferred sales charges and transaction fees as a result of these sales. The Custodian shall not be liable to the Client for any losses or lost profits relating to these sales. For SIMPLE IRAs: The amendment to Section 10.4 above is adopted as Section 9.4 of the UBS Custodial Agreement for SIMPLE Retirement Accounts, with references to IRA changed to SIMPLE IRA. For Coverdell Education Savings Accounts: The amendment to Section 10.4 above is adopted as Section 8.4 of the UBS Custodial Agreement for Coverdell Education Savings Accounts with references to IRA changed to Coverdell Education Savings Account. For 403(b)(7) Accounts: The amendment to Section 10.4 above is adopted as the fourth paragraph of Section 5.05 of the UBS Custodial Agreement for 403(b)(7)s with references to IRA changed to 403(b)(7). 7

8 UBS Financial Services Inc UBS Financial Services Inc., UBS International Inc. and UBS Financial Services Incorporated of Puerto Rico are subsidiaries of UBS AG UBS Financial Services Inc. All rights reserved. Member SIPC.