UBS PRIVATE INVESTOR FUNDS INC
497, 1996-03-11
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                       UBS PRIVATE INVESTOR FUNDS, INC.
                           UBS TAX EXEMPT BOND FUND
 
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PROSPECTUS
 
UBS TAX EXEMPT BOND FUND
6 ST. JAMES AVENUE
BOSTON, MASSACHUSETTS 02116
FOR INFORMATION CALL (800) 914-8566
 
UBS  Tax Exempt Bond Fund (the 'Fund') seeks  to provide a high level of current
income exempt from federal income tax  consistent with moderate risk of  capital
and  maintenance of liquidity. It is designed  for investors who seek tax exempt
yields greater than those generally available from a portfolio of short-term tax
exempt obligations and who are willing to incur the greater price fluctuation of
intermediate-term instruments.
 
The Fund is  a diversified, no-load  mutual fund  for which there  are no  sales
charges or exchange or redemption fees. The Fund is one of several series of UBS
Private  Investor Funds, Inc. (the 'Company'), an open-end management investment
company organized as a corporation under Maryland law.
 
The Fund is advised by  the New York Branch (the  'Branch' or the 'Adviser')  of
Union Bank of Switzerland (the 'Bank').
 
This  Prospectus  sets forth  concisely the  information about  the Fund  that a
prospective investor  ought to  know before  investing. It  should be  read  and
retained  for  future reference.  A Statement  of Additional  Information, dated
March 1, 1996, provides further discussion of certain topics referred to in this
Prospectus and other matters that may be of interest to investors. The Statement
of Additional  Information  has been  filed  with the  Securities  and  Exchange
Commission  and is  incorporated herein  by reference  and is  available without
charge upon written  request from  the Company  or the  Distributor (as  defined
herein)  at the addresses  set forth on the  back cover of  the Prospectus or by
calling (800) 914-8566.
 
INVESTMENTS IN THE FUND ARE NOT  DEPOSITS WITH OR OBLIGATIONS OF, OR  GUARANTEED
OR  ENDORSED BY, UNION BANK OF SWITZERLAND OR ANY OTHER BANK. SHARES OF THE FUND
ARE NOT  INSURED  BY THE  FEDERAL  DEPOSIT INSURANCE  CORPORATION,  THE  FEDERAL
RESERVE  BOARD, OR ANY OTHER  GOVERNMENTAL AGENCY. AN INVESTMENT  IN THE FUND IS
SUBJECT TO RISKS THAT MAY CAUSE THE  VALUE OF THE INVESTMENT TO FLUCTUATE.  WHEN
THE  INVESTMENT IS REDEEMED,  THE VALUE MAY  BE HIGHER OR  LOWER THAN THE AMOUNT
ORIGINALLY INVESTED BY THE INVESTOR.
 
THESE SECURITIES HAVE  NOT BEEN APPROVED  OR DISAPPROVED BY  THE SECURITIES  AND
EXCHANGE  COMMISSION OR ANY  STATE SECURITIES COMMISSION  NOR HAS THE SECURITIES
AND EXCHANGE  COMMISSION OR  ANY  STATE SECURITIES  COMMISSION PASSED  UPON  THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
 
PROSPECTUS DATED MARCH 1, 1996.

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UBS TAX EXEMPT BOND FUND
INVESTORS FOR WHOM THE FUND IS DESIGNED
 
UBS Tax Exempt Bond Fund (the 'Fund') is designed for investors seeking a higher
level  of current income that is exempt from federal income tax from a portfolio
of tax exempt securities than that available from a portfolio of short-term  tax
exempt obligations and who are willing to incur the greater price fluctuation of
intermediate-term   instruments.  The  Fund  seeks  to  achieve  its  investment
objective by  investing primarily  in municipal  securities that  earn  interest
exempt  from federal income tax in the opinion of the issuer's bond counsel. See
'Investment Objective and Policies'.
 
The minimum initial investment in the  Fund is $25,000, except that the  minimum
initial  investment is $10,000 for shareholders of another series of UBS Private
Investor Funds, Inc. (the 'Company'). The minimum subsequent investment for  all
investors  is $5,000.  These minimums  may be  waived for  certain accounts. See
'Purchase of Shares'. If shareholders reduce their total investment in shares of
the Fund to  less than $10,000,  their investment will  be subject to  mandatory
redemption.  See  'Redemption of Shares--Mandatory Redemption'.  The Fund is one
of several  series of  the Company,  an open-end  management investment  company
organized as a Maryland corporation.
 
This   Prospectus  describes  the  Fund's  investment  objective  and  policies,
management and operations to enable investors to decide if the Fund suits  their
investment needs.
 
The  following  table  illustrates  that  Fund  investors  incur  no shareholder
transaction expenses: their  investments in  the Fund  are subject  only to  the
operating  expenses set forth below as a  percentage of the Fund's average daily
net assets. Fund expenses are  discussed below under the headings  'Management',
'Expenses' and 'Shareholder Services'.
 
<TABLE>
<S>                                                                                                  <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases...................................................................   None
Sales Load Imposed on Reinvested Dividends........................................................   None
Deferred Sales Load...............................................................................   None
Redemption Fees...................................................................................   None
Exchange Fees.....................................................................................   None
 
EXPENSE TABLE
 
ANNUAL OPERATING EXPENSES*
Advisory Fees, After Fee Waiver**.................................................................   0.00%
Rule 12b-1 Fees...................................................................................   None
Other Expenses, After Expense Reimbursements***...................................................   0.80%
                                                                                                     ----
Total Operating Expenses, After Fee Waivers and Expense Reimbursements*...........................   0.80%
                                                                                                     ----
                                                                                                     ----
</TABLE>
 
*   Expenses are expressed as a percentage of the Fund's projected average daily
net  assets and are based on estimates of the expenses to be incurred during the
current  fiscal   year,   after  any   applicable   fee  waivers   and   expense
reimbursements.  Without  such  fee waivers  and  expense  reimbursements, Total
Operating Expenses would be equal,  on an annual basis,  to 2.74% of the  Fund's
projected average daily net assets. See 'Management'.
 
**    The New  York Branch  (the 'Branch'  or  the 'Adviser')  of Union  Bank of
Switzerland (the 'Bank') has agreed to waive fees and reimburse the Fund for any
of its operating expenses to the extent that the Fund's total operating expenses
exceed, on an annual basis,  0.80% of the Fund's  average daily net assets.  The
Branch may modify or discontinue this undertaking at any time in the future with
30 days' notice to the Fund. The advisory fee would be 0.45% if there were not a
fee waiver. See 'Expenses'.
 
***  The  fees  and expenses  in  Other Expenses,  After  Expense Reimbursements
include fees  payable to  Signature Broker-Dealer  Services, Inc.  ('Signature')
under  the Administrative Services  Agreement, fees payable  to Investors Bank &
Trust Company (the 'Custodian' or the  'Transfer Agent') as custodian, and  fees
payable  to the  Branch under  the Shareholder  Servicing Agreement.  For a more
detailed description of
 
                                      -2-
 
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contractual fee arrangements, including fee waivers and expense  reimbursements,
and  of the fees and  expenses included in Other  Expenses, see 'Management' and
'Shareholder Services'.
 
EXAMPLE
 
An investor would pay the following expenses on a $1,000 investment, assuming  a
5% annual return and a redemption at the end of each time period:
 
<TABLE>
<S>                                                            <C>
1 Year......................................................   $ 8
3 Years.....................................................   $26
</TABLE>
 
The  above Expense  Table is designed  to assist investors  in understanding the
various direct and indirect costs and expenses that Fund investors are  expected
to  bear. In connection with the above  Example, please note that $1,000 is less
than the Fund's minimum investment requirement and that there are no  redemption
or exchange fees of any kind. See 'Purchase of Shares', 'Exchange of Shares' and
'Redemption  of Shares'. THE EXAMPLE IS  HYPOTHETICAL; IT IS INCLUDED SOLELY FOR
ILLUSTRATIVE PURPOSES,  AND ASSUMES  THE  CONTINUATION OF  THE FEE  WAIVERS  AND
EXPENSE  REIMBURSEMENTS REPRESENTED IN THE ABOVE  'EXPENSE TABLE'. IT SHOULD NOT
BE CONSIDERED A  REPRESENTATION OF  FUTURE PERFORMANCE; ACTUAL  EXPENSES MAY  BE
MORE OR LESS THAN THOSE SHOWN.
 
INVESTMENT OBJECTIVE AND POLICIES
 
The  Fund's investment  objective and  policies are  described below. Additional
information about the  Fund's investment  policies appears in  the Statement  of
Additional  Information (the  'SAI') under 'Investment  Objective and Policies'.
There can be no assurance that the Fund's investment objective will be achieved.
The Fund's investment  objective is to  provide a high  level of current  income
exempt  from federal  income tax  consistent with  moderate risk  of capital and
maintenance of liquidity. See 'Taxes'.
 
The Fund is designed for investors who seek tax exempt yields greater than those
generally available from a  portfolio of short-term  tax exempt obligations  and
who  are willing  to incur  the greater  price fluctuation  of intermediate-term
instruments.
 
The Fund attempts to achieve its investment objective by investing primarily  in
municipal  securities that pay interest that is,  in the opinion of bond counsel
for the issuer, exempt from federal income tax. As a fundamental policy,  during
normal market conditions, the Fund will invest at least 80% of its net assets in
obligations  the interest on which is exempt from federal income taxation, which
obligations will not include obligations that may be subject to the  alternative
minimum  tax. Interest  on these  securities may be  subject to  state and local
taxes. For  more  detailed  information regarding  tax  matters,  including  the
applicability  of the alternative minimum tax, see 'Taxes'. The remainder of the
Fund's portfolio may be invested  in U.S. dollar-denominated debt securities  of
foreign and domestic issuers.
 
The  Adviser  anticipates that  the duration  (as defined  below) of  the Fund's
portfolio will usually be  between one and  seven years. In  view of the  Fund's
duration, under normal market conditions, the Fund's yield can be expected to be
higher  and its net asset  value less stable than those  of a money market fund.
The maturities of  the individual securities  in the Fund's  portfolio may  vary
widely from its duration, however, and may be as long as 30 years. Duration is a
measure  of a bond's price  sensitivity, expressed in years.  It is a measure of
interest rate risk of a bond calculated by taking into consideration the  number
of  years until  the average  dollar, in present  value terms,  is received from
principal and interest payments. For example, for a bond with a duration of four
years, every 1%  change in  yield will result  in a  4% change in  price in  the
opposite  direction. The Adviser will  select long-term or short-term securities
for the  Fund  depending  on  several factors,  including  whether  the  Adviser
believes interest rates will rise or fall in the future.
 
The  Fund intends to manage its portfolio  actively in pursuit of its investment
objective. Portfolio transactions are  undertaken principally to accomplish  the
Fund's  objective  in relation  to expected  movements in  the general  level of
interest rates, but the  Fund may also engage  in short-term trading  consistent
with its objective. To the extent the Fund engages in short-term trading, it may
incur  increased  transaction  and  tax costs.  See  'Taxes'  below.  The annual
portfolio turnover  rate  for  the  Fund  is expected  to  be  under  100%.  See
'Portfolio Transactions' in the SAI.
 
                                      -3-
 
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The  value of  the Fund's  investments will  generally fluctuate  inversely with
changes  in  prevailing  interest  rates.  The  existing  value  of  the  Fund's
investments  will also be affected by changes in the creditworthiness of issuers
and other market factors.  The quality criteria  applied in selecting  portfolio
securities  are  intended  to  minimize  adverse  price  changes  due  to credit
considerations. The  value  of  the  Fund's municipal  securities  can  also  be
affected  by market reaction to legislative  consideration of various tax reform
proposals. Although  the  net asset  value  of  the Fund  fluctuates,  the  Fund
attempts  to preserve the value of its investments to the extent consistent with
its objective.
 
MUNICIPAL BONDS. The Fund may invest in bonds issued by or on behalf of  states,
territories  and possessions of  the United States and  the District of Columbia
and their political subdivisions,  agencies, authorities and  instrumentalities.
These obligations may be general obligation bonds secured by the issuer's pledge
of  its full  faith, credit and  taxing power  for the payment  of principal and
interest, or they may  be revenue bonds payable  from specific revenue  sources,
but  not generally backed by the issuer's taxing power. These include industrial
development bonds where payment is the responsibility of the private  industrial
user of the facility financed by the bonds. Because industrial development bonds
are  generally subject to federal income tax or the alternative minimum tax, the
Fund may invest only up to 20% of its net assets in industrial development bonds
or other securities subject to federal income tax.
 
MUNICIPAL NOTES. The Fund may also  invest in municipal notes of various  types,
including  notes issued in anticipation of receipt of taxes, the proceeds of the
sale of bonds, other revenues or grant proceeds, as well as municipal commercial
paper and municipal demand  obligations such as variable  rate demand notes  and
master  demand obligations. The  interest rate on variable  rate demand notes is
adjustable at  periodic  intervals as  specified  in the  notes.  Master  demand
obligations  permit  the  investment  of  fluctuating  amounts  at  periodically
adjusted interest rates. They are  governed by agreements between the  municipal
issuer  and the Adviser acting as agent,  for no additional fee, in its capacity
as the Fund's Adviser and as fiduciary for other clients. Although master demand
obligations are not marketable to third  parties, the Fund considers them to  be
liquid  because they are payable on demand. For more information about municipal
notes, see 'Investment Objective and Policies' in the SAI.
 
TAXABLE BONDS. The Fund intends to  invest its assets principally in tax  exempt
securities.  However, it may invest up to 20% of its net assets in a broad range
of U.S. dollar denominated debt securities of domestic and foreign issuers,  the
interest income from which may be subject to federal, as well as state and local
and  foreign income  taxes. These include  debt securities of  various types and
maturities,  e.g.,  debentures,  notes,  mortgage  securities,  equipment  trust
certificates  and  other  collateralized securities,  securities  of  the United
States government  and zero  coupon  securities. Collateralized  securities  are
backed  by a pool of assets such as loans or receivables that generate cash flow
to cover  the payments  due  on the  securities. Collateralized  securities  are
subject  to certain risks,  including a decline  in the value  of the collateral
backing the security, failure of the collateral to generate the anticipated cash
flow or  in certain  cases more  rapid prepayment  than anticipated  because  of
events  affecting the collateral, such as accelerated prepayment of mortgages or
other loans  backing these  securities or  destruction of  equipment subject  to
equipment trust certificates. In the event of any such prepayment, the Fund will
be required to reinvest the proceeds of prepayments at interest rates prevailing
at  the time of reinvestment, which may be  lower than the interest rates on the
prepaid securities. In addition, the value  of zero coupon securities, which  do
not pay interest, is more volatile than that of interest bearing debt securities
with  the same maturity. The Fund does not  expect to invest more than 5% of its
assets  in  securities  of  foreign  issuers.  All  such  investments  will   be
denominated  in U.S.  Dollars. See  'Additional Investment  Information and Risk
Factors'  for  further  information  on  foreign  investments  and   convertible
securities.  The Portfolio may purchase nonpublicly offered debt securities. See
'Illiquid Investments; Privately Placed and Other Unregistered Securities'.
 
The  Fund  may  invest  in  money  market  instruments  that  meet  the  quality
requirements  described below,  except that short-term  municipal obligations of
New York State  issuers may  be rated MIG-2  by Moody's  Investors Service  Inc.
('Moody's')  or SP-2  by Standard  & Poor's  Corporation ('Standard  & Poor's').
Under normal circumstances, the  Fund will purchase  these securities to  invest
temporary  cash balances or to maintain  liquidity to meet withdrawals. However,
the Fund  may also  invest in  money  market instruments,  without limit,  as  a
temporary  defensive measure taken during, or in anticipation of, adverse market
conditions.
 
                                      -4-
 
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QUALITY INFORMATION. The Fund will not purchase any municipal obligation  unless
it is rated at least Aaa, Aa, A, Baa, MIG-1 or Prime-1 by Moody's or AAA, AA, A,
BBB,  SP-1 or A1 by Standard &  Poor's (except for short-term obligations of New
York State issuers as described  above) or, if it  is unrated, in the  Adviser's
opinion  it is of comparable  quality. It is the  Fund's current policy that its
non-municipal debt securities will be  rated at least Baa  or BBB by Moody's  or
Standard  & Poor's, respectively. These standards  must be satisfied at the time
an investment is made. If the quality of the investment later declines, the Fund
may continue to hold the investment. Securities  rated Baa by Moody's or BBB  by
Standard  & Poor's  are considered investment  grade, but  have some speculative
characteristics.
 
ADDITIONAL INVESTMENT INFORMATION AND RISK FACTORS
 
The Fund  may  purchase  municipal obligations  together  with  puts,  municipal
obligations  on a when-issued  or delayed delivery  basis, enter into repurchase
and reverse repurchase agreements, purchase synthetic variable rate instruments,
loan its  portfolio  securities,  purchase  investment  company  securities  and
certain privately placed securities, and enter into certain hedging transactions
that may involve options on securities and securities indices, futures contracts
and options on futures contracts and currency options.
 
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Fund may purchase securities on
a  when-issued  or delayed  delivery basis.  Delivery of  and payment  for these
securities may take as long  as a month or more  after the date of the  purchase
commitment.  The  value of  these securities  is  subject to  market fluctuation
during this  period  and  no  interest  or income  accrues  to  the  Fund  until
settlement.  At the time of settlement, a  when-issued security may be valued at
less than its purchase price. Between  the trade and settlement dates, the  Fund
will  maintain a segregated account with the Custodian consisting of a portfolio
of high grade,  liquid debt  securities with  a value  at least  equal to  these
commitments.  When entering into a  when-issued or delayed delivery transaction,
the Fund will  rely on the  other party  to consummate the  transaction; if  the
other  party fails  to do so,  the Fund may  be disadvantaged. It  is the Fund's
current policy  not  to enter  into  when-issued commitments  exceeding  in  the
aggregate  15% of the market  value of the Fund's  total assets less liabilities
(excluding the obligations created by these commitments).
 
REPURCHASE AGREEMENTS. The Fund may engage in repurchase agreement  transactions
with  brokers, dealers or  banks that meet the  credit guidelines established by
the Company's  Board  of  Directors  (the 'Directors'  or  the  'Board').  In  a
repurchase  agreement, the Fund buys a security from a seller that has agreed to
repurchase it at a mutually agreed upon date and price, reflecting the  interest
rate  effective for the term  of the agreement. The  term of these agreements is
usually from overnight to one  week. A repurchase agreement  may be viewed as  a
fully  collateralized loan of money  by the Fund to  the seller. The Fund always
receives securities with  a market value  at least equal  to the purchase  price
plus accrued interest as collateral and this value is maintained during the term
of  the agreement. If  the seller defaults and  the collateral's value declines,
the Fund  might incur  a  loss. If  bankruptcy  proceedings are  commenced  with
respect to the seller, the Fund's realization upon the disposition of collateral
may be delayed or limited. Investments in repurchase agreements maturing in more
than  seven days and  certain other investments that  may be considered illiquid
are subject to certain limitations. See 'Illiquid Investments; Privately  Placed
and Other Unregistered Securities' below.
 
REVERSE  REPURCHASE  AGREEMENTS. The  Fund is  permitted  to enter  into reverse
repurchase agreements.  In a  reverse  repurchase agreement,  the Fund  sells  a
security  and agrees to repurchase it at  a mutually agreed upon date and price,
reflecting the interest  rate effective for  the term of  the agreement. It  may
also  be viewed as the borrowing of money  by the Fund and, therefore, is a form
of leverage.  Leverage may  cause the  Fund's gains  or losses,  if any,  to  be
magnified.  For more  information, including limitations  on the  use of reverse
repurchase agreements, see 'Investment Objective and Policies' in the SAI.
 
SECURITIES LENDING. Subject to applicable investment restrictions, the Fund  may
lend  its securities. The Fund may lend its securities if such loans are secured
continuously by cash or equivalent collateral or by a letter of credit in  favor
of  the Fund  at least equal  at all times  to 100%  of the market  value of the
securities loaned, plus accrued interest. While such securities are on loan, the
borrower will pay the Fund any income accruing thereon. Loans will be subject to
termination by the Fund in the normal settlement
 
                                      -5-
 
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time, generally three  business days  after notice, or  by the  borrower on  one
day's  notice. Borrowed securities must be returned when the loan is terminated.
Any gain or  loss in the  market price  of the borrowed  securities that  occurs
during  the term  of the loan  inures to the  Fund. The Fund  may pay reasonable
finders' and custodial  fees in connection  with a loan.  In addition, the  Fund
will consider all the facts and circumstances, including the creditworthiness of
the borrowing financial institution, and the Fund will not make any loans with a
term  in  excess of  one year.  The Fund  will  not lend  its securities  to any
officer, Director, employee or affiliate or placement agent of the Fund, or  the
Adviser,  Administrator or Distributor, unless otherwise permitted by applicable
law.
 
TAXABLE INVESTMENTS. The  Fund attempts to  invest its assets  primarily in  tax
exempt  municipal securities; however, the Fund is permitted to invest up to 20%
of the value of its net assets in securities the interest income on which may be
subject to federal, as  well as state  and local and  foreign income taxes.  The
Fund  may  make  taxable investments  pending  the investment  of  proceeds from
earlier sales of  its  portfolio  securities  or  when--in  the  opinion of  the
Adviser--adverse  market  conditions  exist.  In abnormal market conditions, if,
in the  judgment of  the Adviser  tax exempt  securities satisfying  the  Fund's
investment  objective may not be purchased, the Fund may, for defensive purposes
only, temporarily invest more than 20% of its net assets in taxable investments.
The taxable investments permitted for the  Fund include obligations of the  U.S.
Government  and its agencies and instrumentalities, bank obligations, commercial
paper, the  debt  securities  of  domestic  and  foreign  issuers  (U.S.  dollar
denominated)  and repurchase agreements and other  debt securities that meet the
Fund's quality requirements. See 'Taxes'.
 
PUTS. The Fund may  purchase, without limit, municipal  bonds or notes  together
with  the right to  resell them at an  agreed price or  yield within a specified
period prior to maturity. This right to resell is known as a put. The  aggregate
price paid for securities with puts may be higher than the price which otherwise
would  be paid. Consistent  with the Fund's investment  objective and subject to
the supervision of the Directors, the purpose of this practice is to permit  the
Fund  to  be  fully invested  in  tax  exempt securities  while  maintaining the
necessary liquidity  to purchase  securities  on a  when-issued basis,  to  meet
unusually  large withdrawals, to purchase at  a later date securities other than
those subject to the put and to  facilitate the Adviser's ability to manage  the
portfolio  actively.  The principal  risk of  puts  is that  the put  writer may
default on its obligation to repurchase. The Adviser will monitor each  writer's
ability to meet its obligations under puts.
 
The  Fund uses the amortized cost method  to value all municipal securities with
maturities of  less than  60 days;  when these  securities are  subject to  puts
separate  from the underlying securities, no value  is assigned to the puts. The
cost of any such put is carried as an unrealized loss from the time of  purchase
until it is exercised or expires. See 'Investment Objective and Policies' in the
SAI  for  the  valuation procedure  if  the  Fund were  to  invest  in municipal
securities with maturities of 60 days or more that are subject to separate puts.
 
SYNTHETIC VARIABLE RATE INSTRUMENTS.  The Fund may  invest in certain  synthetic
variable  rate instruments. Such instruments generally  involve the deposit of a
long-term tax exempt bond in a custody or trust arrangement and the creation  of
a  mechanism to  adjust the long-term  interest rate  on the bond  to a variable
short-term rate and a right (subject to  certain conditions) on the part of  the
purchaser  to tender it periodically  to a third party  at par. The Adviser will
review the structure of synthetic  variable rate instruments to identify  credit
and  liquidity risks (including  the conditions under which  the right to tender
the instrument would no  longer be available) and  will monitor those risks.  In
the  event that the right  to tender the instrument  is no longer available, the
risk to the Fund will be that of holding the long-term bond.
 
ILLIQUID INVESTMENTS; PRIVATELY  PLACED AND OTHER  UNREGISTERED SECURITIES.  The
Fund  may not acquire any illiquid securities if, as a result thereof, more than
15% of  the  market  value  of  the Fund's  net  assets  would  be  in  illiquid
investments  or investments  that are not  readily marketable.  In addition, the
Fund will not invest more  than 10% of the market  value of its total assets  in
restricted  securities  that cannot  be offered  for public  sale in  the United
States without first  being registered  under the  Securities Act  of 1933  (the
'Securities Act'). Subject to those non-fundamental policy limitations, the Fund
may  acquire investments  that are illiquid  or have limited  liquidity, such as
private placements or investments
 
                                      -6-
 
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<PAGE>
that are not  registered under  the Securities Act,  and cannot  be offered  for
public  sale in  the United States  without first being  registered. An illiquid
investment is any investment that cannot be disposed of within seven days in the
normal course of business at approximately the  amount at which it is valued  by
the  Fund. Repurchase agreements maturing in more than seven days are considered
illiquid and,  as  such,  are subject  to  the  limitations set  forth  in  this
paragraph.  The price  the Fund  pays for  illiquid securities  or receives upon
resale may be lower than the price paid or received for similar securities  with
a  more  liquid  market. Accordingly,  the  valuation of  these  securities will
reflect any limitations on their liquidity.
 
The Fund may also purchase Rule 144A securities sold to institutional  investors
without   registration  under  the  Securities  Act.  These  securities  may  be
determined to be liquid in accordance with guidelines established by the Adviser
and approved by the Board. The  Board will monitor the Adviser's  implementation
of these guidelines on a periodic basis.
 
FUTURES  AND  OPTIONS TRANSACTIONS.  The  Fund is  permitted  to enter  into the
futures and options transactions described below. These instruments are commonly
known as derivatives.
 
The Fund may purchase and sell exchange traded and over-the-counter ('OTC')  put
and  call  options  on  fixed  income  securities  or  indices  of  fixed income
securities, purchase  and sell  futures  contracts on  indices of  fixed  income
securities,  and purchase and sell put and  call options on futures contracts on
indices of  fixed income  securities.  The Fund  may  use these  techniques  for
hedging  or risk management purposes or, subject to certain limitations, for the
purpose of obtaining desired exposure to certain securities or markets.
 
The Fund may use  these techniques to manage  its exposure to changing  interest
rates  and/or security  prices. Some  options and  futures strategies, including
selling futures contracts and buying puts, tend to hedge the Fund's  investments
against   price  fluctuations.   Other  strategies,   including  buying  futures
contracts, writing puts and calls, and buying calls, may tend to increase market
exposure. For  example,  if  the  Portfolio  wishes  to  obtain  exposure  to  a
particular  market or market sector  but does not wish  to purchase the relevant
securities, it could, as an alternative, purchase a futures contract on an index
of such securities or related securities. Such a purchase would not constitute a
hedging transaction and could be considered speculative. However, the  Portfolio
will  use futures contracts  or options in  this manner only  for the purpose of
obtaining the same  level of exposure  to a particular  market or market  sector
that  it could have obtained by purchasing  the relevant securities and will not
use futures contracts  or options to  leverage its exposure  beyond this  level.
Options  and futures contracts may  be combined with each  other or with forward
contracts in order to adjust the  risk and return characteristics of the  Fund's
overall  strategy in a  manner deemed appropriate to  the Adviser and consistent
with the  Fund's  objective and  policies.  Because combined  positions  involve
multiple  trades,  they  result in  higher  transaction  costs and  may  be more
difficult to open and close out.
 
The Fund's use  of these transactions  is a highly  specialized activity,  which
involves  investment strategies and  risks different from  those associated with
ordinary portfolio securities transactions, and  there can be no guarantee  that
their  use  will increase  the  Fund's return.  While  the Fund's  use  of these
instruments may  reduce  certain  risks associated  with  owning  its  portfolio
securities,  these  techniques themselves  entail  certain other  risks.  If the
Adviser applies a strategy at an inappropriate time or judges market  conditions
or  trends incorrectly,  such strategies  may lower  the Fund's  return. Certain
strategies limit the Fund's opportunity to realize gains as well as its exposure
to losses. The Fund  could experience losses  if the prices  of its options  and
futures  positions were poorly  correlated with its other  investments, or if it
could not close out  its positions because of  an illiquid secondary market.  In
addition,  the Fund  will incur  costs, including  commissions and  premiums, in
connection with these  transactions and these  transactions could  significantly
increase the Fund's turnover rate.
 
The  Fund may purchase and  sell put and call  options on securities, indices of
securities and futures contracts, or purchase and sell futures contracts for the
purposes described herein.
 
In addition, in  order to assure  that the  Portfolio will not  be considered  a
'commodity  pool' for purposes of  Commodity Futures Trading Commission ('CFTC')
rules, the  Portfolio  will enter  into  transactions in  futures  contracts  or
options  on futures contracts only if (1) such transactions constitute bona fide
hedging transactions as defined under CFTC rules, or (2) no more than 5% of  the
Portfolio's net assets are
 
                                      -7-
 
<PAGE>

<PAGE>
committed as initial margin or premiums to positions that do not constitute bona
fide hedging transactions.
 
OPTIONS
 
PURCHASING  PUT AND CALL OPTIONS.  By purchasing a put  option, the Fund obtains
the right (but not the obligation) to sell the instrument underlying the  option
at  a fixed strike  price. In return for  this right, the  Fund pays the current
market price for the option (known as the option premium). Options have  various
types  of  underlying  instruments, including  specific  securities,  indices of
securities, indices of  securities prices  and futures contracts.  The Fund  may
terminate its position in a put option it has purchased by allowing it to expire
or  by exercising the option. The Fund may  also close out a put option position
by entering into an  offsetting transaction, if a  liquid market exists. If  the
option  is allowed to expire, the Fund will  lose the entire premium it paid. If
the Fund exercises  a put  option on  a security,  it will  sell the  instrument
underlying the option at the strike price. If the Fund exercises an option on an
index, settlement is in cash and does not involve the actual sale of securities.
American  style options may be exercised on any day up to their expiration date.
European style options may be exercised only on their expiration date.
 
The buyer of a typical put option can  expect to realize a gain if the price  of
the  underlying instrument  falls substantially.  However, if  the price  of the
instrument underlying the  option does  not fall enough  to offset  the cost  of
purchasing  the option, a put buyer can expect  to suffer a loss (limited to the
amount of the premium paid, plus related transaction costs).
 
The features of call options are essentially  the same as those of put  options,
except that the purchaser of a call option obtains the right to purchase, rather
than  sell, the instrument underlying the option at the option's strike price. A
call buyer typically attempts to participate in potential price increases of the
instrument underlying the option with risk limited to the cost of the option and
related transaction costs if security prices  fall. At the same time, the  buyer
can  expect to  suffer a  loss if  security prices  do not  rise sufficiently to
offset the cost of the option.
 
SELLING (WRITING) PUT AND CALL  OPTIONS. When the Fund  writes a put option,  it
takes  the  opposite side  of the  transaction from  the option's  purchaser. In
return for receipt of the  premium, the Fund assumes  the obligation to pay  the
strike  price for the instrument underlying the option if the other party to the
option chooses to exercise it. The Fund may seek to terminate its position in  a
put  option it writes before exercise by  purchasing an offsetting option in the
market at its current price.  If the market is not  liquid for a put option  the
Fund  has written,  however, the Fund  must continue  to be prepared  to pay the
strike price while the option is  outstanding, regardless of price changes,  and
must continue to post margin as discussed below.
 
If  the price of the  underlying instrument rises, a  put writer would generally
expect to  profit, although  its gain  would be  limited to  the amount  of  the
premium  it received. If security prices remain the same over time, it is likely
that the writer will  also profit, because  it should be able  to close out  the
option  at a lower price. If security prices fall, however, the put writer would
expect to suffer a loss. This loss should be less than the loss from  purchasing
and  holding the  underlying instrument  directly, however,  because the premium
received for writing the option should offset a portion of the decline.
 
Writing a  call  option obligates  the  Fund to  sell  or deliver  the  option's
underlying  instrument  in return  for  the strike  price  upon exercise  of the
option. The characteristics  of writing  call options  are similar  to those  of
writing  put  options,  except  that writing  calls  generally  is  a profitable
strategy if  prices remain  the same  or  fall. Through  receipt of  the  option
premium  a call writer  offsets part of the  effect of a  price decrease. At the
same time, because  a call  writer must be  prepared to  deliver the  underlying
instrument in return for the strike price, even if its current value is greater,
a call writer gives up some ability to participate in security price increases.
 
The  writer of a U.S. exchange traded put or call option on a security, an index
of securities or a futures contract is required to deposit cash or securities or
a letter of credit  as margin and to  make mark-to-market payments of  variation
margin if and as the position becomes unprofitable.
 
                                      -8-
 
<PAGE>

<PAGE>
OPTIONS ON INDICES. The Fund is permitted to enter into options transactions and
may  purchase and  sell put and  call options  on any securities  index based on
securities in  which the  Fund may  invest. Options  on securities  indices  are
similar  to options on securities, except  that the exercise of securities index
options is settled by cash payment and  does not involve the actual purchase  or
sale  of securities.  In addition, these  options are designed  to reflect price
fluctuations in a group of securities or segment of the securities market rather
than price fluctuations in a single security. The Fund, in purchasing or selling
index options, is subject to the risk that the value of its portfolio securities
may not change as much as an index because the Fund's investments generally will
not match the composition of an index.
 
For a number of reasons, a liquid market may not exist and thus the Fund may not
be able to close  out an option  position that it  has previously entered  into.
When the Fund purchases an OTC option, it will be relying on its counterparty to
perform  its  obligations,  and the  Fund  may  incur additional  losses  if the
counterparty is unable to perform.
 
FUTURES CONTRACTS
 
When the Fund purchases  a futures contract, it  agrees to purchase a  specified
quantity  of an underlying instrument at a specified future date and price or to
make or receive a cash  payment based on the value  of a securities index.  When
the Fund sells a futures contract, it agrees to sell a specified quantity of the
underlying instrument at a specified future date and price or to receive or make
a  cash payment based on the value of a securities index. The price at which the
purchase and  sale will  take  place is  fixed when  the  Fund enters  into  the
contract. Futures can be held until their delivery dates or the positions can be
(and  normally are) closed out before then. There is no assurance, however, that
a liquid  market  will exist  when  a Fund  wishes  to close  out  a  particular
position.
 
When  the Fund purchases or  sells a futures contract,  the value of the futures
contract tends  to  increase  and decrease  in  tandem  with the  value  of  its
underlying  instrument. Purchasing  futures contracts  may tend  to increase the
Fund's exposure to positive  and negative price  fluctuations in the  underlying
instrument,  much as if it had  purchased the underlying instrument directly, as
discussed above. When the Fund sells a futures contract, by contrast, the  value
of  its futures position will tend to move  in a direction contrary to the value
of the underlying instrument. Selling futures contracts on securities similar to
those held  by  the Fund,  therefore,  will tend  to  offset both  positive  and
negative  market price  changes, much as  if the underlying  instrument had been
sold. Because there are a limited number of types of exchange-traded options and
futures contracts, it  is likely  that these standardized  instruments will  not
exactly match the Fund's current or anticipated investments. The Fund may invest
in  futures contracts  and options  thereon based  on securities  with different
issuers, maturities, or other  characteristics from the  securities in which  it
typically  invests, which involves  a risk that the  options or futures position
will not track the  performance of the Fund's  other investments. The  Portfolio
may   also  enter  into  transactions  in  futures  contracts  and  options  for
non-hedging purposes, as discussed above.
 
The purchaser or seller of a futures contract is not required to deliver or  pay
for  the underlying  instrument unless the  contract is held  until the delivery
date. However,  when the  Fund  buys or  sells a  futures  contract it  will  be
required  to deposit 'initial margin' with the Custodian in a segregated account
in the  name of  its futures  broker,  known as  a futures  commission  merchant
('FCM').  Initial margin deposits  are typically equal to  a small percentage of
the contract's value.  If the value  of either party's  position declines,  that
party  will be required to make  additional 'variation margin' payments equal to
the change in value on a daily basis. The party that has a gain may be  entitled
to  receive all or a portion  of this amount. The Fund  may be obligated to make
payments of variation  margin at a  time when  it is disadvantageous  to do  so.
Furthermore, it may not always be possible for the Fund to close out its futures
positions. Until it closes out a futures position, the Fund will be obligated to
continue  to pay variation margin. Initial  and variation margin payments do not
constitute  purchasing  on  margin  for   purposes  of  the  Fund's   investment
restrictions.  In the  event of the  bankruptcy of  an FCM that  holds margin on
behalf of the Fund, the Fund may be entitled to return of margin owed to it only
in proportion to the amount received  by the FCM's other customers,  potentially
resulting in losses to the Fund.
 
The  Fund will segregate  liquid, high grade debt  securities in connection with
its use of  options and futures  contracts to  the extent required  by the  SEC.
Securities held in a segregated account cannot be sold
 
                                      -9-
 
<PAGE>

<PAGE>
while  the futures contract  or option is outstanding,  unless they are replaced
with other  suitable  assets. As  a  result, there  is  a possibility  that  the
segregation  of a large  percentage of the Fund's  assets could impede portfolio
management or the Fund's  ability to meet redemption  requests or other  current
obligations.
 
For  further information about the Fund's use  of futures and options and a more
detailed discussion of associated risks, see 'Investment Objective and Policies'
in the SAI.
 
INVESTMENT RESTRICTIONS
 
The Fund's  investment  objective,  together with  the  investment  restrictions
described  below  and  in  the  SAI, except  as  noted,  are  deemed fundamental
policies, i.e., they  may be  changed only  by the 'vote  of a  majority of  the
outstanding voting securities' (as defined in the Investment Company Act of 1940
(the '1940 Act')) of the Fund.
 
As  a diversified investment company, 75% of the Fund's total assets are subject
to the following fundamental limitations: (a) the Fund may not invest more  than
5%  of  its  total assets  in  the securities  of  any one  issuer,  except U.S.
Government securities;  and (b)  the  Fund may  not own  more  than 10%  of  the
outstanding  voting securities of any one  issuer. See 'Investment Objective and
Policies -- Quality and Diversification Requirements' in the SAI.
 
The Fund may not: (i) purchase  the securities of governmental units located  in
any  one state, territory  or possession of  the United States  if, as a result,
more than 25% of the Fund's assets would be so invested; (ii) enter into reverse
repurchase agreements  or  other  permitted borrowings  that  constitute  senior
securities under the 1940 Act, exceeding in the aggregate one-third of the value
of the Fund's assets; or (iii) borrow money, except from banks for extraordinary
or  emergency purposes, or mortgage, pledge  or hypothecate any assets except in
connection with any such borrowings  or permitted reverse repurchase  agreements
in amounts up to one-third of the value of the Fund's assets at the time of such
borrowing  or purchase securities  while borrowings and  other senior securities
exceed 5%  of its  total assets.  Currently, however,  it is  expected that  the
Adviser  will  limit  aggregate Fund  borrowings,  including  reverse repurchase
agreements, to 10% of the Fund's total assets.
 
For a more detailed discussion of the above investment restrictions, as well  as
a   description  of  certain  other  investment  restrictions,  see  'Investment
Restrictions' in the SAI.
 
MANAGEMENT
 
DIRECTORS. The  Board  establishes  the  general policies  of  the  Company,  is
responsible   for  the  overall  management  of  the  Company  and  reviews  the
performance  of  the  Fund's  Adviser,  Administrator,  Custodian,  Distributor,
Shareholder  Servicing Agent and other service providers. Additional information
about the Company's Board of Directors and officers appears in the SAI under the
heading 'Directors'. The officers of the Company are also employees of Signature
or its affiliates.
 
ADVISER. The Fund has retained the services of the Branch as investment adviser.
The Branch, which operates out of offices located at 299 Park Avenue, New  York,
New  York, is licensed by  the Superintendent of Banks of  the State of New York
under the banking  laws of the  State of New  York and is  subject to state  and
federal  banking laws and regulations applicable to a foreign bank that operates
a state licensed branch in the United States.
 
The Bank  has branches,  agencies, representative  offices and  subsidiaries  in
Switzerland  and in more  than 40 cities outside  Switzerland, including, in the
United States, New York City, Chicago,  Houston, Los Angeles and San  Francisco.
In addition to the receipt of deposits and the making of loans and advances, the
Bank through its offices and subsidiaries engages in a wide range of banking and
financial activities typical of the world's major international banks, including
fiduciary,  investment advisory and  custodial services and  foreign exchange in
the United States, Swiss, Asian and Euro-capital markets. The Bank is one of the
world's leading asset managers and has been active in New York City since  1946.
At  June 30, 1995, the Bank  (including its consolidated subsidiaries) had total
assets of $307.4 billion  (unaudited) and equity capital  and reserves of  $19.7
billion (unaudited).
 
The  Branch provides  investment advice  and portfolio  management to  the Fund.
Subject to  the  supervision of  the  Directors,  the Branch  makes  the  Fund's
day-to-day investment decisions, arranges for the execution
 
                                      -10-
 
<PAGE>

<PAGE>
of  portfolio  transactions and  generally  manages the  Fund's  investments and
operations. See 'Investment Adviser and Funds Services Agent' in the SAI.
 
Ronald W. Fleming  is primarily  responsible for the  day-to-day management  and
implementation  of the Adviser's  process for the  Fund. Mr. Fleming  has been a
Vice President  of the  Adviser since  July 1994  and is  responsible for  asset
allocation  and security selection  for other domestic  fixed income portfolios,
including several tax exempt  portfolios. From 1988 to  1994, Mr. Fleming was  a
Senior  Portfolio Manager for IBM Credit  Corp. and was responsible for managing
$7 billion in domestic and international fixed income products. Mr. Fleming  has
previously managed various national and state-specific tax exempt portfolios and
has  previously managed  the investments of  mutual funds. Mr.  Fleming holds an
undergraduate degree from Kent State University and has done post graduate  work
at  the Wharton  School of the  University of  Pennsylvania and has  19 years of
investment experience. The Branch has not previously advised a mutual fund. This
may be viewed as a risk of investing in this Fund.
 
In addition to the above-listed  investment advisory services, the Adviser  also
provides  the Fund with certain related  administrative services. Subject to the
supervision  of  the  Board,  the  Adviser  is  responsible  for:   establishing
performance   standards  for  the  Fund's   third-party  service  providers  and
overseeing and  evaluating  the  performance of  such  entities;  providing  and
presenting  quarterly  management  reports  to  the  Directors;  supervising the
preparation of  reports for  Fund shareholders;  establishing voluntary  expense
limitations  for the Fund  and providing any  resultant expense reimbursement to
the Fund; and such other related services as the Company may reasonably request.
 
Under the  Investment Advisory  Agreement,  the Fund  pays  the Adviser  a  fee,
calculated  daily and payable monthly, at an  annual rate of 0.45% of the Fund's
average net assets.  The Branch  has voluntarily agreed  to waive  its fees  and
reimburse  the Fund for any of its expenses  to the extent that the Fund's total
operating expenses exceed, on an annual basis, 0.80% of the Fund's average daily
net assets. The Branch may modify or discontinue this expense limitation at  any
time in the future with 30 days' notice to the Fund. See 'Expenses'.
 
INVESTMENTS  IN THE FUND ARE NOT DEPOSITS  WITH OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, THE BRANCH OR ANY OTHER BANK.
 
ADMINISTRATOR. Under  the Administrative  Services Agreement  with the  Company,
Signature  serves  as  the  Fund's administrator.  In  this  capacity, Signature
administers all  aspects of  the Fund's  day-to-day operations,  subject to  the
supervision  of the Adviser and the Board,  except as set forth under 'Adviser',
'Distributor',  'Custodian'  and   'Shareholder  Services'.  As   administrator,
Signature:  (i) furnishes  general office  facilities and  ordinary clerical and
related   services   for    day-to-day   operations   including    recordkeeping
responsibilities;  (ii) takes responsibility for  compliance with all applicable
federal and  state securities  and other  regulatory requirements;  (iii)  takes
responsibility  for  monitoring the  Fund's  status as  a  'regulated investment
company' under the Internal Revenue Code  of 1986, as amended (the 'Code');  and
(iv)  performs administrative and managerial oversight  of the activities of the
Fund's custodian, transfer agent and other agents or independent contractors.
 
Under the  Administrative  Services  Agreement,  the  Fund  has  agreed  to  pay
Signature  an administrative  fee, calculated daily  and payable  monthly, at an
annual rate of 0.10%  of the Fund's  first $100 million  of average net  assets,
plus 0.075% of the Fund's next $100 million of average net assets, plus 0.05% of
the Fund's average net assets in excess of $200 million.
 
DISTRIBUTOR. Under the Distribution Agreement, Signature, located at 6 St. James
Avenue,  Boston, MA  02116, serves  as the distributor  of Fund  shares (in such
capacity,  the  'Distributor').  The   Distributor  is  a  wholly-owned   direct
subsidiary   of   Signature  Financial   Group,  Inc.,   and  is   a  registered
broker-dealer. The Distributor does not receive  a fee pursuant to the terms  of
the Distribution Agreement.
 
CUSTODIAN.  Investors Bank & Trust Company,  whose principal offices are located
at 89 South Street, Boston, Massachusetts 02111, serves as the Fund's  custodian
and transfer and dividend disbursing agent. See 'Custodian' in the SAI.
 
                                      -11-
 
<PAGE>

<PAGE>
SHAREHOLDER SERVICES
 
The  Company has entered into a  Shareholder Servicing Agreement with the Branch
under which the Branch provides shareholder services to Fund shareholders, which
include coordinating  shareholder  accounts  and  records,  assisting  investors
seeking  to purchase  or redeem  Fund shares,  providing performance information
relating to the Fund, and responding  to shareholder inquiries. The Company  has
agreed  to pay the Branch for  these services at an annual  rate of 0.25% of the
average daily  net  assets of  the  Fund. Under  the  terms of  the  Shareholder
Servicing Agreement, the Branch may delegate one or more of its responsibilities
to other entities at its expense.
 
EXPENSES
 
In  addition to the  fees of the  Branch, Signature, and  Investors Bank & Trust
Company, the Fund  will be  responsible for other  expenses including  brokerage
costs  and litigation and extraordinary expenses. The Branch has agreed to waive
fees as  necessary, if,  in any  fiscal year,  the sum  of the  Fund's  expenses
exceeds   the  limits  set   by  applicable  regulations   of  state  securities
commissions. Such annual limits are currently  2.5% of the first $30 million  of
average  net assets, 2% of the  next $70 million of such  net assets and 1.5% of
such net  assets in  excess of  $100 million.  The Branch  has also  voluntarily
agreed   to  limit  the   total  operating  expenses   of  the  Fund,  excluding
extraordinary expenses, to an annual rate  of 0.80% of the Fund's average  daily
net  assets.  The  Branch  may  modify  or  discontinue  this  voluntary expense
limitation at any time in the future with 30 days' notice to the Fund.
 
The Fund may allocate brokerage transactions to its affiliates and the Adviser's
affiliates. Brokerage transactions may be allocated to these affiliates only  if
the  commissions  received  by  such affiliates  are  fair  and  reasonable when
compared to  the commissions  paid to  unaffiliated brokers  in connection  with
comparable transactions. See 'Portfolio Transactions' in the SAI.
 
PURCHASE OF SHARES
 
GENERAL  INFORMATION  ON  PURCHASES.  Investors may  purchase  Fund  shares only
through  the  Distributor.  All  purchase   orders  must  be  accepted  by   the
Distributor.  The  Company also  reserves the  right  to determine  the purchase
orders that it  will accept  and it  reserves the  right to  cease offering  its
shares at any time. The shares of the Fund may be purchased only in those states
where they may be lawfully sold.
 
The  business days  of the Fund  are the days  the New York  Stock Exchange (the
'NYSE') is open for regular trading.
 
The shares of the Fund are sold on a continuous basis without a sales charge  at
the  net asset value per share next determined after receipt and acceptance of a
purchase order by the  Distributor. The Fund calculates  its net asset value  at
the  close of business. See 'Net Asset Value'. The minimum initial investment in
the Fund is $25,000, except that  the minimum initial investment is $10,000  for
shareholders of another series of the Company. The minimum subsequent investment
in  the Fund  for all  investors is $5,000.  The minimum  initial investment for
employees of  the Bank  or  its affiliates  is  $5,000. The  minimum  subsequent
investment  is $1,000. These  minimum investment requirements  may be waived for
certain accounts  for  the  benefit  of minors.  For  purposes  of  the  minimum
investment   requirements,  the  Fund  may   aggregate  investments  by  related
shareholders. Investors will receive the number of full and fractional shares of
the Fund equal to  the dollar amount  of their subscription  divided by the  net
asset  value  per share  of the  Fund as  next  determined on  the day  that the
investor's subscription is accepted. See 'Purchase of Shares' in the SAI.
 
Purchase orders in proper  form received by the  Distributor prior to 4:00  p.m.
New York time or the close of regular trading on the NYSE, whichever is earlier,
are  effective and  executed at  the net asset  value next  determined that day.
Purchase orders received after 4:00 p.m. New York time or the close of the NYSE,
whichever is earlier, will be executed at the net asset value determined on  the
next  business day. Investors become record shareholders of the Fund on the next
business day ('day two') after they place their subscription order, provided the
Custodian receives payment for  the shares on day  two. As record  shareholders,
investors are entitled to earn dividends.
 
                                      -12-
 
<PAGE>

<PAGE>
Fund shares may be purchased in the following methods:
 
BRANCH  CLIENTS:  Private Bank  Clients of  the Branch  should request  a Branch
representative to assist them in placing a purchase order with the Distributor.
 
THROUGH THE DISTRIBUTOR: Shareholders  who do not  currently maintain a  private
banking  relationship with the  Branch may purchase shares  of the Fund directly
from the Distributor by wire transfer or mail.
 
The Transfer Agent will maintain the accounts for all shareholders who  purchase
Fund  shares directly through  the Distributor. For  account balance information
and shareholder services, such shareholders should contact the Transfer Agent at
(888) UBS-FUND or in writing at UBS Private Investor Funds, Inc., c/o  Investors
Bank & Trust Company, P.O. Box 1537 MFD 23, Boston, MA 02205-1537.
 
By  wire: Purchases may be made by federal funds wire. To place a purchase order
with the  Fund, the  shareholder  must telephone  the  Transfer Agent  at  (888)
UBS-FUND for specific instructions.
 
Subject  to the minimum purchase  requirements discussed above, shares purchased
by federal funds wire  will be effected  at the net asset  value per share  next
determined after acceptance of the order.
 
A  completed  account application  must promptly  follow any  wire order  for an
initial purchase. No account application  is required for subsequent  purchases.
Completed   account  applications  should  be  mailed  or  sent  via  facsimile.
Shareholders  should  contact  the  Transfer  Agent  for  further   instructions
regarding account applications.
 
By   mail:  Subject  to  the  minimum  purchase  requirements  discussed  above,
shareholders may  purchase  shares  of  the  Fund  through  the  Distributor  by
completing  an account application and mailing it, together with a check payable
to 'UBS Private Investor Funds, Inc.', to UBS Private Investor Funds, Inc.,  c/o
Investors Bank & Trust Company, P.O. Box 1537 MFD 23, Boston, MA 02205-1537.
 
Account  applications are  not required  for subsequent  purchases; however, the
shareholder's account  number must  be clearly  marked on  the check  to  ensure
proper credit.
 
Checks  are subject to collection at full  value. For shares purchased by check,
dividend payments and redemption  proceeds, if any, will  be delayed until  such
funds are collected, which may take up to 15 days from the date of purchase.
 
REDEMPTION OF SHARES
 
GENERAL  INFORMATION ON REDEMPTIONS. A shareholder  may redeem all or any number
of the shares registered  in its name at  any time at the  net asset value  next
determined  after  a  redemption  request  in proper  form  is  received  by the
Distributor. The Fund calculates its net  asset value at the close of  business.
See 'Net Asset Value'.
 
A  redemption order will  be effected provided the  Distributor receives such an
order prior to 4:00 p.m.  New York time or the  close of regular trading on  the
NYSE,  whichever is earlier. The  redemption of Fund shares  is effective and is
executed at the  net asset  value next  determined that  day. Redemption  orders
received  after 4:00 p.m. New  York time or the close  of regular trading on the
NYSE, whichever is earlier, will be  executed at the net asset value  determined
on  the next  business day.  Proceeds of  an effective  redemption are generally
deposited the next business  day in immediately available  funds to the  account
designated  by the redeeming shareholder or  mailed to the shareholder's address
of record, in accordance with the shareholder's instructions.
 
Shareholders will continue to earn dividends through the day of redemption.
 
Fund shares may be redeemed in the following methods:
 
BRANCH CLIENTS: Shareholders who are Private  Bank Clients of the Branch  should
request a Branch representative to assist them in placing a redemption order.
 
THROUGH THE DISTRIBUTOR: Shareholders who are not Branch clients may redeem Fund
shares by telephone or mail.
 
By telephone: Telephone redemptions may be made by calling the Transfer Agent at
(888) UBS-FUND. Redemption orders will be accepted until 4:00 p.m. New York time
or  the close of  regular trading on  the NYSE, whichever  is earlier. Telephone
redemption   requests   are   limited    to   those   shareholders   who    have
 
                                      -13-
 
<PAGE>

<PAGE>
previously  elected  this  service.  Such  shareholders  risk  possible  loss of
principal and income in  the event of a  telephone redemption not authorized  by
them.  The  Fund and  the Transfer  Agent will  employ reasonable  procedures to
verify that telephone redemption instructions are genuine and will require  that
shareholders  electing such an option provide a form of personal identification.
The failure by  the Fund or  the Transfer  Agent to employ  such procedures  may
cause  the Fund or  the Transfer Agent to  be liable for  any losses incurred by
investors due to  telephone redemptions  based upon  unauthorized or  fraudulent
instructions. The telephone redemption option may be modified or discontinued at
any time upon 60 days' notice to shareholders.
 
By  mail:  Redemption  requests  may  also  be  mailed  to  the  Transfer Agent,
identifying the Fund, the dollar amount or  number of shares to be redeemed  and
the shareholder's account number. The request must be signed in exactly the same
manner  as the account is  registered (e.g., if there is  more than one owner of
the shares, all must sign). In all cases, all signatures on a redemption request
must be signature guaranteed by an eligible guarantor institution which includes
a domestic bank,  a domestic  savings and  loan institution,  a domestic  credit
union,  a  member bank  of the  Federal Reserve  System  or a  member firm  of a
national securities exchange, pursuant to  the Fund's standards and  procedures;
if the guarantor institution belongs to one of the Medallion Signature programs,
it  must use the  specific 'Medallion Guaranteed'  stamp (guarantees by notaries
public are not acceptable). Further  documentation, such as copies of  corporate
resolutions  and instruments of  authority, may be  requested from corporations,
administrators, executors, personal representatives,  trustees or custodians  to
evidence  the authority of  the person or entity  making the redemption request.
The redemption request  in proper form  should be sent  to UBS Private  Investor
Funds,  Inc., c/o Investors Bank & Trust  Company, P.O. Box 1537 MFD 23, Boston,
MA 02205-1537.
 
MANDATORY REDEMPTION. If the value of a shareholder's holdings in the Fund falls
below $10,000 because  of a  redemption of shares,  the shareholder's  remaining
shares  may  be redeemed  60 days  after  written notice  unless the  account is
increased to $10,000 or more. For example, a shareholder whose initial and  only
investment  is $10,000 may be subject to mandatory redemption resulting from any
redemption that causes his or her investment to fall below $10,000.
 
FURTHER REDEMPTION INFORMATION. Investors should  be aware that redemptions  may
not  be processed unless the redemption request  is submitted in proper form. To
be in  proper form,  the  Fund must  have  received the  shareholder's  taxpayer
identification  number and address.  As discussed under  'Taxes' below, the Fund
may be  required  to impose  'back-up'  withholding  of federal  income  tax  on
dividends,  distributions and redemptions when  non-corporate investors have not
provided a certified taxpayer identification number. In addition, if an investor
sends a check to the Distributor for the purchase of Fund shares and shares  are
purchased  with funds  made available  by the  Distributor before  the check has
cleared, the transmittal of  redemption proceeds from the  sale of those  shares
will  not occur until the check used  to purchase such shares has cleared, which
may take up to 15 days. Redemption delays may be avoided by purchasing shares by
federal funds wire.
 
The right of redemption of Fund shares  may be suspended or the date of  payment
postponed  for  such periods  as the  1940  Act or  the Securities  and Exchange
Commission (the 'SEC') may permit. See 'Redemption of Shares' in the SAI.
 
EXCHANGE OF SHARES
 
An investor may  exchange Fund  shares for  shares of  any other  series of  the
Company,  without charge. An exchange may be  made so long as after the exchange
the investor has shares, in each series in which it remains an investor, with  a
value  equal to or greater than each such series' minimum investment amount. See
'Purchase of Shares'  in the prospectuses  of the other  Company series for  the
minimum  investment amounts for each of those funds. Shares are exchanged on the
basis of relative net asset value per share. Exchanges are in effect redemptions
from one  fund  and  purchases  of  another fund  and  the  usual  purchase  and
redemption   procedures  and  requirements  are  applicable  to  exchanges.  See
'Purchase of Shares' and  'Redemption of Shares' in  this Prospectus and in  the
prospectuses  of  the other  Company series.  See also  'Additional Information'
below for an explanation of the telephone exchange policy.
 
Shareholders subject to federal income tax  who exchange shares in one fund  for
shares in another fund may recognize capital gain or loss for federal income tax
purposes. The Fund reserves the right to
 
                                      -14-
 
<PAGE>

<PAGE>
discontinue, alter or limit its exchange privilege at any time. For investors in
certain  states,  state securities  laws may  restrict  the availability  of the
exchange privilege.
 
DIVIDENDS AND DISTRIBUTIONS
 
The Fund will declare daily, and pay monthly, dividends from its net  investment
income.  The  Fund may  also declare  an additional  dividend of  net investment
income in  a given  year to  the extent  necessary to  avoid the  imposition  of
federal excise taxes on the Fund.
 
Substantially  all of  the Fund's  net realized capital  gains, if  any, will be
declared and paid on  an annual basis, except  that an additional capital  gains
distribution  may be made in  a given year to the  extent necessary to avoid the
imposition  of  federal  excise  taxes  on  the  Fund.  Declared  dividends  and
distributions  are payable on the payment date  to shareholders of record on the
record date.
 
Dividends and capital  gains distributions  paid by the  Fund are  automatically
reinvested  in  additional Fund  shares unless  the  shareholder has  elected in
writing to have them  paid in cash.  Dividends and distributions  to be paid  in
cash  are credited to the account designated by the shareholder or sent by check
to the shareholder's  address of  record, in accordance  with the  shareholder's
instructions.  The Fund  reserves the right  to discontinue, alter  or limit the
automatic reinvestment privilege at any time.
 
To the extent that shareholders of the Fund elect to receive their dividends  in
cash,  rather than electing to reinvest such dividends in additional shares, the
cash used to make these distributions  must be provided from the Fund's  assets.
The  Fund will be required to use its own cash or the proceeds from the sales of
its securities in  order to fund  such distributions. Moreover,  in the case  of
zero coupon bonds, the Fund generally will not have received any income from the
issuer  of such a  security. Consequently, the  Fund must rely  on other sources
(e.g., proceeds  from  the  sales  of  assets or  other  income)  to  meet  such
distribution requirements. To the extent the Fund makes such cash distributions,
the  Fund will not be  able to invest that  cash in income producing securities.
Consequently, the current income of the Fund may ultimately be reduced.
 
NET ASSET VALUE
 
The Fund's net asset value per share equals the value of the Fund's total assets
less the amount  of its liabilities,  divided by the  number of its  outstanding
shares, rounded to the nearest cent. Expenses, including the fees payable to the
Fund's  service  providers,  are  accrued  daily.  Securities  for  which market
quotations  are  readily  available  are  valued  at  market  value.  All  other
securities  will be valued at 'fair value'. See 'Net Asset Value' in the SAI for
information on the valuation of the Fund's portfolio securities.
 
The Fund computes its  net asset value  once daily at the  close of business  on
Monday  through Friday, except that the net  asset value is not computed for the
Fund on a day  in which no orders  to purchase or redeem  Fund shares have  been
received  or on  the following holidays:  New Year's Day,  Presidents' Day, Good
Friday,  Memorial  Day,  Independence  Day,  Labor  Day,  Thanksgiving  Day  and
Christmas  Day. On days when  U.S. trading markets close  early in observance of
these holidays, the Fund expects to  close for purchases and redemptions at  the
same time.
 
ORGANIZATION
 
UBS  Private  Investor  Funds,  Inc.,  a  Maryland  corporation  incorporated on
November 16, 1995, is an open-end management investment company registered under
the 1940 Act and organized as a  series fund. The Company has no prior  history.
The Company is currently authorized to issue shares in four series: The UBS Bond
Fund  Series; The UBS Tax Exempt Bond  Fund Series; The UBS International Equity
Fund Series; and The UBS U.S. Equity Fund Series. Each outstanding share of  the
Company  will have a pro rata interest in  the assets of its series, but it will
have no interest in the assets of  any other Company series. Only shares of  The
UBS Tax Exempt Bond Fund Series are offered through this Prospectus.
 
Shareholder inquiries by clients of the Branch should be directed to the Branch,
while other shareholders should address their inquiries to the Transfer Agent.
 
Shareholders  of the  Fund are entitled  to one vote  for each share  and to the
appropriate fractional vote for  each fractional share.  There is no  cumulative
voting.  Shares have no  preemptive or conversion rights.  Shares are fully paid
and nonassessable when  issued by the  Company. The Company  does not intend  to
 
                                      -15-
 
<PAGE>

<PAGE>
hold  meetings  of  shareholders  annually.  The  Board  may  call  meetings  of
shareholders for action by shareholder vote as  may be required by the 1940  Act
or   the  Company's  Articles  of   Incorporation.  For  further  organizational
information, including  certain shareholder  rights, see  'Organization' in  the
SAI.
 
The  Company expects that,  immediately prior to the  initial public offering of
its shares, the sole holder of its capital stock will be Signature.
 
TAXES
 
The Fund  intends to  invest at  least  80% of  its net  assets in  'tax  exempt
securities'. Municipal obligations that are tax preference items for purposes of
the  alternative minimum tax will not  be considered 'tax exempt securities' for
this purpose.
 
The Company  intends  that  the  Fund  will  qualify  as  a  separate  regulated
investment  company under  Subchapter M of  the Code. As  a regulated investment
company, the Fund will not be subject to federal income taxes if at least 90% of
its net investment income  and net short-term capital  gains less any  available
capital loss carryforwards are distributed to shareholders within allowable time
limits.  In  addition,  the  Fund  intends  to  qualify  to  pay exempt-interest
dividends to its shareholders by ensuring that, at the close of each quarter  of
each  of its taxable years, at  least 50% of the value  of its total assets will
consist of tax exempt securities. An exempt-interest dividend is that part of  a
distribution  made by the Fund that consists of interest received by the Fund on
tax exempt securities  less any  expenses allocable to  such interest,  provided
that  the  50% test  described above  is  met. Shareholders  will not  incur any
federal income tax liability on the amount of exempt-interest dividends received
by them from  the Fund.  In view of  the investment  policy of the  Fund, it  is
expected  that a  substantial portion of  its dividends  will be exempt-interest
dividends, although  the Fund  may  from time  to  time realize  and  distribute
ordinary income and net capital gains.
 
Distributions of net long-term capital gains in excess of net short-term capital
losses are taxable to Fund shareholders as long-term capital gains regardless of
how  long a shareholder  has held shares  in the Fund  and regardless of whether
received in the form of cash  or reinvested in additional shares.  Distributions
of  taxable income and  realized net short-term  capital gains in  excess of net
long-term capital  losses,  if any,  are  taxable  as ordinary  income  to  Fund
shareholders,  whether such  distributions are received  in the form  of cash or
reinvested in additional shares. Annual statements as to the current federal tax
status of distributions  will be  mailed to shareholders  after the  end of  the
taxable  year for the Fund. Distributions  to corporate shareholders of the Fund
will not qualify for the dividends-received deduction because the income of  the
Fund will not consist of dividends paid by United States corporations.
 
Interest  on indebtedness incurred  or continued to purchase  or carry shares of
the Fund will not be  deductible for Federal income  tax purposes to the  extent
that the Fund's distributions are exempt from Federal income tax.
 
Any  gain or  loss realized on  the redemption or  exchange of Fund  shares by a
shareholder who  is not  a dealer  in securities  generally will  be treated  as
long-term  capital gain or loss  if the shares have been  held for more than one
year, and  otherwise as  short-term  capital gain  or  loss. However,  any  loss
realized  by a shareholder upon the redemption or exchange of shares in the Fund
held for six months or less will be  treated as a long-term capital loss to  the
extent  of any long-term capital gain  distributions received by the shareholder
with respect to such shares. Moreover,  any loss realized by a shareholder  upon
the sale of shares of the Fund held for six months or less will be disallowed to
the  extent of  any exempt-interest dividends  received by  the shareholder with
respect to such shares.
 
In addition, no loss will be allowed on the sale or other disposition of  shares
of  the Fund if, within a period beginning  30 days before the date of such sale
or disposition and ending 30 days after such date, the holder acquires (such  as
through  dividend reinvestment)  securities that are  substantially identical to
the shares of the Fund.
 
Distributions of net investment income or net long-term capital gains will  have
the effect of reducing the net asset value of the Fund's shares by the amount of
the  distribution. If the net asset value is reduced below a shareholder's cost,
the distribution will  nonetheless be taxable  as described above,  even if  the
distribution  represents a return of invested capital. Investors should consider
the tax implications  of buying shares  just prior to  a distribution, when  the
price of shares may reflect the amount of the forthcoming distribution.
 
                                      -16-
 
<PAGE>

<PAGE>
This  discussion of tax consequences is based on U.S. federal tax laws in effect
on the date of this Prospectus. These laws and regulations are subject to change
by legislative  or  administrative  action, possibly  with  retroactive  effect.
Shareholders  are urged to  consult their tax advisors  concerning the effect of
Federal taxes  on  their  individual  circumstances  and  with  respect  to  the
applicability  of state and local taxes. See  'Taxes' in the SAI. In particular,
shareholders should  be aware  that  interest on  certain tax  exempt  municipal
obligations issued after August 7, 1986 is a preference item for purposes of the
alternative minimum tax applicable to individuals and corporations. In addition,
the Treasury has been granted authority under the Code to issue regulations that
would  require  the  portion  of  an  exempt-interest  dividend  of  a regulated
investment company that  is allocable to  these obligations to  be treated as  a
preference  item  for  purposes  of the  alternative  minimum  tax. Furthermore,
additional or  special  tax  provisions may  apply  to  corporations,  financial
institutions  and  property and  casualty insurance  companies, and  they should
consult their tax advisors before purchasing shares of the Fund.
 
If a correct and  certified taxpayer identification number  is not on file,  the
Fund  is  required to  withhold 31%  of  taxable distributions  to non-corporate
shareholders. Shareholders should be  aware that, under applicable  regulations,
the  Fund may be fined up to $50 annually for each account for which a certified
taxpayer identification number is not provided. In the event that such a fine is
imposed with respect  to any uncertified  account in any  year, a  corresponding
charge may be made against that account.
 
ADDITIONAL INFORMATION
 
The  Fund  will  send  its  shareholders  annual  and  semi-annual  reports. The
financial statements appearing in annual reports will be audited by  independent
accountants.  Shareholders will also be sent  confirmations of each purchase and
redemption and  monthly statements  reflecting all  account activity,  including
dividends  and any distributions whether reinvested in additional shares or paid
in cash.
 
All shareholders are given the privilege to initiate transactions  automatically
by  telephone upon opening an account. However, an investor should be aware that
a transaction authorized by telephone and  reasonably believed to be genuine  by
the  Company, the Branch, the Transfer Agent  or the Distributor may subject the
investor to risk of  loss if such  instruction is subsequently  found not to  be
genuine.   The  Company  and  its   service  providers  will  employ  reasonable
procedures,  including  requiring   investors  to  give   a  form  of   personal
identification  and tape recording  of telephonic instructions,  to confirm that
telephonic instructions by  investors are  genuine; if it  does not,  it or  the
service  provider may be liable for any losses due to unauthorized or fraudulent
instructions.
 
The Fund may make historical  performance information available and may  compare
its  performance to other  investments or relevant  indices, including data from
Lipper Analytical  Services, Morningstar,  Inc., Lehman  5 Year  Municipal  Bond
Index and other industry publications.
 
The  Fund may advertise 'yield' and 'tax  equivalent yield'. Yield refers to the
net income generated by an investment in  the Fund over a stated 30-day  period.
This  income is  then  annualized--i.e., the amount  of income generated by  the
investment during  the 30-day  period is  assumed to  be generated  each  30-day
period for 12 periods and is shown as a percentage of the investment. The income
earned  on the  investment is also  assumed to be  reinvested at the  end of the
sixth 30-day period.  The tax equivalent  yield is calculated  similarly to  the
yield for the Fund, except that the yield is increased using a stated income tax
rate  to demonstrate the  taxable yield necessary to  produce an after-tax yield
equivalent to that of the Fund's.
 
The Fund  may also  advertise 'total  return'. The  total return  shows what  an
investment  in the Fund would have earned  over a specified period of time (one,
five or ten years  or since commencement of  operations, if less) assuming  that
all  Fund distributions and dividends were  reinvested on the reinvestment dates
and less all  recurring fees during  the period and  assuming the redemption  of
such investment at the end of each period.
 
These  methods of calculating  yield, tax equivalent yield  and total return are
required by SEC regulations. Yield, tax  equivalent yield and total return  data
similarly  calculated, unless otherwise indicated,  over other specified periods
of time  may also  be used.  All  performance figures  are based  on  historical
earnings  and  are  not  intended to  indicate  future  performance. Performance
information may be  obtained by  clients of the  Branch by  calling the  Branch,
while other shareholders may address their inquiries to the Transfer Agent.
 
                                      -17-

<PAGE>

<PAGE>
TABLE OF CONTENTS
 
<TABLE>
<S>                                                                                                 <C>
Investors for Whom the Fund is Designed..........................................................     2
Investment Objective and Policies................................................................     3
Additional Investment Information and Risk Factors...............................................     5
Options..........................................................................................     8
Futures Contracts................................................................................     9
Investment Restrictions..........................................................................    10
Management.......................................................................................    10
Shareholder Services.............................................................................    12
Expenses.........................................................................................    12
Purchase of Shares...............................................................................    12
Redemption of Shares.............................................................................    13
Exchange of Shares...............................................................................    14
Dividends and Distributions......................................................................    15
Net Asset Value..................................................................................    15
Organization.....................................................................................    15
Taxes............................................................................................    16
Additional Information...........................................................................    17
</TABLE>
 
- --------------------------------------------------------------------------------
 
         INVESTMENT ADVISER
 
                                          Union Bank of Switzerland,
                                          New York Branch
                                          299 Park Avenue
                                          New York, NY 10171
 
         ADMINISTRATOR AND DISTRIBUTOR
 
                                          Signature Broker-Dealer Services, Inc.
                                          6 St. James Avenue
                                          Boston, Massachusetts 02116
 
         CUSTODIAN AND TRANSFER AGENT
 
                                          Investors Bank & Trust Company
                                          89 South Street
                                          Boston, Massachusetts 02111
 
- --------------------------------------------------------------------------------
 
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, BY THE FUND IN ANY JURISDICTION
IN WHICH SUCH OFFER TO SELL OR SOLICITATION MAY NOT LAWFULLY BE MADE.
 
[LOGO]


<PAGE>

<PAGE>
                        UBS PRIVATE INVESTOR FUNDS, INC.
                      STATEMENT OF ADDITIONAL INFORMATION
                              DATED MARCH 1, 1996
                            UBS TAX EXEMPT BOND FUND
 
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND SHOULD BE READ
IN  CONJUNCTION WITH THE PROSPECTUS DATED  MARCH 1, 1996 (THE 'PROSPECTUS'), FOR
THE FUND  LISTED  ABOVE,  AS SUPPLEMENTED  FROM  TIME  TO TIME.  COPIES  OF  THE
PROSPECTUS MAY BE OBTAINED WITHOUT CHARGE FROM SIGNATURE BROKER-DEALER SERVICES,
INC. AT THE ADDRESS AND PHONE NUMBER SET FORTH HEREIN.


<PAGE>
<PAGE>
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                                                       PAGE
                                                                                                      ------
 
<S>                                                                                                   <C>
GENERAL............................................................................................    SAI-1
INVESTMENT OBJECTIVE AND POLICIES..................................................................    SAI-1
INVESTMENT RESTRICTIONS............................................................................    SAI-9
DIRECTORS..........................................................................................   SAI-13
INVESTMENT ADVISER.................................................................................   SAI-14
ADMINISTRATOR......................................................................................   SAI-15
DISTRIBUTOR........................................................................................   SAI-16
CUSTODIAN..........................................................................................   SAI-16
SHAREHOLDER SERVICES...............................................................................   SAI-17
INDEPENDENT ACCOUNTANTS............................................................................   SAI-17
EXPENSES...........................................................................................   SAI-17
PURCHASE OF SHARES.................................................................................   SAI-18
REDEMPTION OF SHARES...............................................................................   SAI-18
EXCHANGE OF SHARES.................................................................................   SAI-19
DIVIDENDS AND DISTRIBUTIONS........................................................................   SAI-19
NET ASSET VALUE....................................................................................   SAI-19
PERFORMANCE DATA...................................................................................   SAI-20
PORTFOLIO TRANSACTIONS.............................................................................   SAI-20
ORGANIZATION.......................................................................................   SAI-21
TAXES..............................................................................................   SAI-22
ADDITIONAL INFORMATION.............................................................................   SAI-23
FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS.........................................      F-1
</TABLE>
 
                                       ii

<PAGE>
<PAGE>
GENERAL
 
     UBS Private Investor Funds, Inc. (the 'Company') currently issues shares in
four  series: UBS Bond Fund; UBS Tax  Exempt Bond Fund; UBS International Equity
Fund; and UBS  U.S. Equity  Fund. Each  series is a  series of  the Company,  an
open-end  management investment company organized as a Maryland corporation. The
Company was  organized  on  November  16, 1995.  This  Statement  of  Additional
Information  ('SAI') describes the investment objective and policies, management
and operation of UBS Tax  Exempt Bond Fund (the  'Fund') to enable investors  to
determine  if the  Fund suits  their investment  needs. As  more fully described
herein, the  Fund invests  primarily in  securities of  states, territories  and
possessions  of the United States and their political subdivisions, agencies and
instrumentalities, the interest of which is exempt from federal income tax.
 
     This SAI  provides additional  information with  respect to  the Fund,  and
should be read in conjunction with its current Prospectus. Capitalized terms not
otherwise  defined in this SAI have the  meanings accorded to them in the Fund's
Prospectus. The Company's executive offices are  located at 6 St. James  Avenue,
Boston, Massachusetts 02116.
 
INVESTMENT OBJECTIVE AND POLICIES
 
     The  Fund is designed for investors who seek tax exempt yields greater than
those generally available from a portfolio of short-term tax exempt  obligations
and  who  are willing  to  incur the  greater  price fluctuation  of longer-term
investments. The  Fund's investment  objective is  to provide  a high  level  of
current  income exempt from federal income  tax consistent with moderate risk of
capital and maintenance of liquidity. See 'Taxes'. The Fund attempts to  achieve
this  investment  objective  by  investing primarily  in  securities  of states,
territories  and  possessions   of  the  United   States  and  their   political
subdivisions,  agencies and instrumentalities,  the interest on  which is exempt
from federal income tax in the opinion of bond counsel for the issuer.  However,
the  Fund may  invest up  to 20% of  its net  assets in  securities the interest
income on  which may  be subject  to federal,  as well  as state  and local  and
foreign  taxes. The Fund seeks to maintain  a current yield that is greater than
that obtainable from a portfolio  of short-term tax exempt obligations,  subject
to  certain  quality restrictions.  See  'Investment Objective  and  Policies --
Quality and Diversification Requirements'.
 
MONEY MARKET INSTRUMENTS
 
     As discussed  in  the Prospectus,  the  Fund  may invest  in  money  market
instruments to the extent consistent with its investment objective and policies.
A  description of  the various  types of  money market  instruments that  may be
purchased appears below. See 'Investment  Objective and Policies -- Quality  and
Diversification Requirements'.
 
     U.S.  TREASURY SECURITIES. The Fund may invest in direct obligations of the
U.S. Treasury,  including Treasury  Bills, Notes  and Bonds,  all of  which  are
backed as to principal and interest payments by the full faith and credit of the
United States.
 
     ADDITIONAL  U.S. GOVERNMENT OBLIGATIONS. The Fund may invest in obligations
issued or guaranteed  by U.S.  Government agencies  or instrumentalities.  These
obligations  may or  may not  be backed by  the 'full  faith and  credit' of the
United States. In the case of securities not backed by the full faith and credit
of the  United States,  the Fund  must look  principally to  the federal  agency
issuing  or guaranteeing the  obligation for ultimate repayment,  and may not be
able to assert a claim against the United States itself in the event the  agency
or  instrumentality does not meet its  commitments. Securities in which the Fund
may invest that are not backed by the full faith and credit of the United States
include, but are not limited to, obligations of the Tennessee Valley  Authority,
the  Federal Home Loan Mortgage Corporation and the U.S. Postal Service, each of
which has the right to  borrow from the U.S.  Treasury to meet its  obligations,
and  the  obligations  of  the  Federal  Farm  Credit  System  and  the  Federal
 
                                     SAI-1
 

<PAGE>
<PAGE>
Home Loan  Banks,  both  of whose  obligations  may  be satisfied  only  by  the
individual  credits of  each issuing agency.  Securities that are  backed by the
full faith and credit of the United States include obligations of the Government
National  Mortgage  Association,  the  Farmers  Home  Administration,  and   the
Export-Import Bank.
 
     BANK  OBLIGATIONS. The  Fund, unless otherwise  noted in  the Prospectus or
below, may  invest in  negotiable  certificates of  deposit, time  deposits  and
bankers'  acceptances of  (i) banks, savings  and loan  associations and savings
banks that have more than $2 billion in total assets and are organized under the
laws of the United States or any state, (ii) foreign branches of these banks and
(iii) U.S. branches of foreign banks of equivalent size (Yankees). The Fund  may
not  invest in obligations of  foreign branches of foreign  banks. The Fund will
not invest in obligations  for which the  New York Branch  (the 'Branch' or  the
'Adviser')  of Union Bank of Switzerland (the  'Bank'), or any of its affiliated
persons, is the ultimate obligor or accepting  bank. The Fund may not invest  in
obligations  of international  banking institutions  designated or  supported by
national governments to  promote economic reconstruction,  development or  trade
between   nations  (e.g.,  the  European  Investment  Bank,  the  Inter-American
Development Bank or the World Bank).
 
     COMMERCIAL PAPER. The Fund may invest in commercial paper, including Master
Demand obligations. Master Demand obligations are obligations that provide for a
periodic adjustment in the  interest rate paid and  permit daily changes in  the
amount  borrowed. Master Demand  obligations are governed  by agreements between
the issuer  and the  Adviser acting  as agent,  for no  additional fee,  in  its
capacity  as investment adviser to the Fund and as a fiduciary for other clients
for whom it exercises investment discretion.  The monies loaned to the  borrower
come  from  accounts  managed by  the  Adviser  or its  affiliates,  pursuant to
arrangements with such accounts. Interest and principal payments are credited to
such accounts. The Adviser, acting as a fiduciary on behalf of its clients,  has
the  right to increase or decrease the  amount provided to the borrower under an
obligation. The borrower has the right to pay without penalty all or any part of
the principal amount then outstanding on an obligation together with interest to
the date  of  payment. Because  these  obligations typically  provide  that  the
interest  rate is tied  to the Federal Reserve  commercial paper composite rate,
the rate  on Master  Demand obligations  is subject  to change.  Repayment of  a
Master Demand obligation to participating accounts depends on the ability of the
borrower  to pay the accrued interest and principal of the obligation on demand,
which  is  continuously  monitored  by   the  Adviser.  Because  Master   Demand
obligations  typically are  not rated  by credit  rating agencies,  the Fund may
invest in such  unrated obligations only  if at  the time of  an investment  the
obligation is determined by the Adviser to have a credit quality which satisfies
the    Fund's    quality   restrictions.    See   'Investment    Objective   and
Policies --  Quality and  Diversification Requirements'.  Although there  is  no
secondary  market for Master Demand obligations, such obligations are considered
to be liquid because they  are payable upon demand. The  Fund does not have  any
specific percentage limitation on investments in Master Demand obligations.
 
     REPURCHASE  AGREEMENTS. The Fund may  enter into repurchase agreements with
brokers, dealers  or banks  that  meet the  credit  guidelines approved  by  the
Company's  Board of Directors (the 'Directors'  or the 'Board'). In a repurchase
agreement, the Fund buys a security from a seller that has agreed to  repurchase
the  same security at  a mutually agreed  upon date and  price. The resale price
normally is in excess of the purchase price, reflecting an agreed upon  interest
rate.  This  interest rate  is  effective for  the period  of  time the  Fund is
invested in  the  agreement  and is  not  related  to the  coupon  rate  on  the
underlying  security.  A repurchase  agreement  may also  be  viewed as  a fully
collateralized loan of  money by the  Fund to  the seller. The  period of  these
repurchase  agreements will usually be short, from overnight to one week, and at
no time will  the Fund invest  in repurchase agreements  for more than  thirteen
months.  The securities that are subject  to repurchase agreements, however, may
have maturity dates in excess of thirteen months from the effective date of  the
repurchase  agreement.  The Fund  will always  receive securities  as collateral
whose market value is, and during the  entire term of the agreement remains,  at
least  equal to 100% of the dollar amount invested by the Fund in each agreement
plus accrued interest, and the Fund  will make payment for such securities  only
upon physical delivery or upon evidence of book entry transfer to the account of
the  Custodian.  If the  seller defaults,  the Fund  might incur  a loss  if the
 
                                     SAI-2
 

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<PAGE>
value of the  collateral securing  the repurchase agreement  declines and  might
incur  disposition  costs  in  connection with  liquidating  the  collateral. In
addition, if bankruptcy proceedings are commenced with respect to the seller  of
the  security, realization of proceeds upon the disposition of the collateral by
the Fund may be delayed or limited.
 
CORPORATE BONDS AND OTHER DEBT SECURITIES
 
     The Fund may invest up to 20% of its net assets in U.S.  dollar-denominated
debt securities of domestic and foreign issuers the interest income on which may
be  subject  to federal,  as  well as  state and  local  and foreign  taxes. See
'Investment Objective and Policies' in the Prospectus.
 
TAX EXEMPT OBLIGATIONS
 
     As discussed  in  the  Prospectus,  the Fund  will  invest  in  tax  exempt
obligations to the extent consistent with its investment objective and policies.
The  various types  of tax  exempt obligations  that the  Fund may  purchase are
described in the Prospectus and below. See 'Investment Objective and Policies --
Quality and Diversification Requirements'.
 
     MUNICIPAL BONDS. Municipal bonds are debt obligations issued by the states,
territories and possessions of the United  States and the District of  Columbia,
by  their  political  subdivisions  and  by  duly  constituted  authorities  and
corporations. For example, states,  territories, possessions and  municipalities
may  issue municipal bonds  to raise funds  for various public  purposes such as
airports, housing,  hospitals, mass  transportation,  schools, water  and  sewer
works. They may also issue municipal bonds to refund outstanding obligations and
to  meet general operating expenses. Public authorities issue municipal bonds to
obtain funding for privately operated facilities, such as housing and  pollution
control  facilities,  for  industrial  facilities  or  for  water  supply,  gas,
electricity or waste disposal facilities.
 
     Municipal bonds  may  be  general  obligation  or  revenue  bonds.  General
obligation  bonds are secured by  the issuer's pledge of  its full faith, credit
and taxing power for  the payment of principal  and interest. Revenue bonds  are
payable from revenues derived from particular facilities, from the proceeds of a
special  excise  tax  or  from  other specific  revenue  sources.  They  are not
generally payable from the general taxing power of a municipality.
 
     MUNICIPAL NOTES.  Municipal  Notes are  divided  into three  categories  of
short-term   obligations:  municipal  notes,   municipal  commercial  paper  and
municipal demand obligations.
 
     Municipal Notes are short-term obligations with  a maturity at the time  of
issuance ranging from six months to five years. The principal types of municipal
notes   include  tax  anticipation  notes,   bond  anticipation  notes,  revenue
anticipation notes, grant anticipation  notes and project  notes. Notes sold  in
anticipation  of collection of taxes, a bond  sale, or receipt of other revenues
are usually general obligations of the issuing municipality or agency.
 
     Municipal  commercial  paper   typically  consists   of  very   short-term,
unsecured,  negotiable  promissory  notes that  are  sold to  meet  the seasonal
working capital or  interim construction  financing needs of  a municipality  or
agency. While these obligations are intended to be paid from general revenues or
refinanced with long-term debt, they frequently are backed by letters of credit,
lending   agreements,  note  repurchase  agreements  or  other  credit  facility
agreements offered by banks or institutions.
 
     Municipal demand obligations are subdivided  into two types: Variable  Rate
Demand Notes and Master Demand obligations.
 
     Variable  Rate  Demand  Notes  are  tax  exempt  municipal  obligations  or
participation interests that provide for  a periodic adjustment in the  interest
rate paid on the notes. They permit the holder to
 
                                     SAI-3
 

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<PAGE>
demand  payment of the notes,  or to demand purchase of  the notes at a purchase
price equal  to  the unpaid  principal  balance, plus  accrued  interest  either
directly  by the issuer or  by drawing on a bank's  letter of credit or guaranty
issued with respect  to such note.  The issuer of  the municipal obligation  may
have a corresponding right to prepay at its discretion the outstanding principal
of  the note plus accrued  interest upon notice comparable  to that required for
the holder to demand payment. The Variable  Rate Demand Notes in which the  Fund
may  invest are payable, or are subject to purchase, on demand usually on notice
of seven calendar days  or less. The  terms of the  notes provide that  interest
rates  are adjustable  at intervals  ranging from daily  to six  months, and the
adjustments are  based  upon the  prime  rate of  a  bank or  other  appropriate
interest  rate index  specified in  the respective  notes. Variable  Rate Demand
notes are valued at  amortized cost; no  value is assigned to  the right of  the
holder to receive the par value of the obligation upon demand or notice.
 
     Master Demand obligations are tax exempt municipal obligations that provide
for  a periodic adjustment in the interest rate paid and permit daily changes in
the amount borrowed.  The interest  on such obligations  is, in  the opinion  of
counsel  for the borrower, exempt from federal  income tax. For a description of
the attributes  of Master  Demand obligations,  see 'Money  Market  Instruments'
above. Although there is no secondary market for Master Demand obligations, such
obligations  are considered to  be liquid because they  are payable upon demand.
The Fund has no specific percentage limitations on investments in Master  Demand
obligations.
 
     PUTS.  The  Fund  may purchase,  without  limit, municipal  bonds  or notes
together with the right to resell the bonds or notes to the seller at an  agreed
price or yield within a specified period prior to the maturity date of the bonds
or  notes. Such a  right to resell is  commonly known as  a 'put'. The aggregate
price for bonds or  notes with puts may  be higher than the  price for bonds  or
notes  without puts. Consistent with its investment objective and subject to the
supervision of the Board, the purpose of this practice is to permit the Fund  to
be  fully  invested  in tax  exempt  securities while  preserving  the necessary
liquidity to purchase securities on a when-issued basis, to meet unusually large
redemptions, and to purchase at a later date securities other than those subject
to the put. The principal risk of puts is that the writer of the put may default
on its obligation to repurchase. The Adviser will monitor each writer's  ability
to meet its obligations under puts.
 
     Puts  may  be exercised  prior  to the  expiration  date in  order  to fund
obligations to purchase other securities  or to meet redemption requests.  These
obligations  may arise during periods in  which proceeds from sales of interests
in the Fund and  from recent sales of  portfolio securities are insufficient  to
meet  such obligations or  when the funds available  are otherwise allocated for
investment. In addition, puts may be  exercised prior to the expiration date  in
order  to  take  advantage of  alternative  investment opportunities  or  if the
Adviser revises its  evaluation of  the creditworthiness  of the  issuer of  the
underlying  security. In  determining whether  to exercise  puts prior  to their
expiration date and in selecting which  puts to exercise, the Adviser  considers
the  amount of cash available to the Fund, the expiration dates of the available
puts, any future  commitments for securities  purchases, alternative  investment
opportunities,  the desirability of retaining  the underlying securities and the
yield, quality and maturity dates of the underlying securities.
 
     The Fund values municipal  bonds and notes subject  to puts with  remaining
maturities  of  less than  60 days  by the  amortized cost  method. If  the Fund
invests in municipal bonds and notes with maturities of 60 days or more that are
subject to  puts separate  from  the underlying  securities,  the puts  and  the
underlying  securities will be valued at  fair value as determined in accordance
with procedures established  by the Board.  The Board will,  in determining  the
value  of  a put,  consider, among  other factors,  the creditworthiness  of the
writer of the put, the  duration of the put, the  dates on which or the  periods
during  which the put may be exercised  and the applicable rules and regulations
of the Securities and  Exchange Commission ('SEC'). Prior  to investing in  such
securities, the Fund, if deemed necessary based upon the advice of counsel, will
apply  to the SEC for an exemptive order,  which may not be granted, relating to
the valuation of such securities.
 
                                     SAI-4
 

<PAGE>
<PAGE>
     Because the value of the put is partly dependent on the ability of the  put
writer  to meet its obligation to repurchase, the Fund's policy is to enter into
put transactions only with municipal securities dealers who are approved by  the
Adviser.  Each dealer will  be approved on its  own merits and  it is the Fund's
general policy  to enter  into put  transactions only  with those  dealers  that
present  a minimal  credit risk.  In connection  with such  a determination, the
Board will regularly review the Adviser's  list of approved dealers, which  will
reflect  the Adviser's  consideration of,  among other  things, the  ratings, if
available,  of  their  debt  securities,  their  reputation  in  the   municipal
securities   markets,  their   net  worth,  their   efficiency  in  consummating
transactions and  any  collateral  arrangements,  such  as  letters  of  credit,
securing  the puts  written by  them. Commercial  bank dealers  normally will be
members of the Federal Reserve System, and other dealers will be members of  the
National  Association  of  Securities Dealers,  Inc.  or members  of  a national
securities exchange. The Fund intends to limit  its use of put writers to  those
entities  having an outstanding debt rating of Aa or better by Moody's Investors
Service, Inc.  ('Moody's') or  AA or  better by  Standard &  Poor's  Corporation
('Standard & Poor's'), or will be of comparable quality in the Adviser's opinion
or  such  put  writers' obligations  will  be collateralized  and  of comparable
quality in the  Adviser's opinion.  The Board has  directed the  Adviser not  to
enter  into put transactions with any dealer that in the judgment of the Adviser
presents more than a minimal credit risk. If a dealer defaults on its obligation
to repurchase an underlying security, the Fund is unable to predict whether  all
or  any portion of any loss sustained  could subsequently be recovered from such
dealer.
 
     The Fund may also invest up to 20%  of the value of its net assets in  U.S.
dollar-denominated debt instruments of domestic and foreign issuers the interest
income  on which  may be  subject to  federal, as  well as  state and  local and
foreign taxes.  In  abnormal market  conditions,  the Fund  may,  for  defensive
purposes  only,  temporarily invest  more than  20%  of its  net assets  in debt
securities the interest on which is subject to federal income taxes. In no event
will the Fund  invest more  than 5%  of its total  assets in  the securities  of
foreign  issuers. The Fund  intends to limit its  purchase of non-municipal debt
securities to those issuers rated at least Baa by Moody's or BBB by Standard and
Poor's or, if unrated, issuers of equal creditworthiness.
 
ADDITIONAL INVESTMENTS
 
     WHEN-ISSUED  AND  DELAYED  DELIVERY  SECURITIES.  The  Fund  may   purchase
securities  on a when-issued or delayed delivery basis. For example, delivery of
and payment for these securities can take  place a month or more after the  date
of the purchase commitment. The purchase price and the interest rate payable, if
any,  on the securities are fixed on the purchase commitment date or at the time
the settlement date is fixed. The value of such securities is subject to  market
fluctuation and no interest accrues to the Fund until settlement takes place. At
the  time the Fund  commits to purchase  securities on a  when-issued or delayed
delivery basis,  it will  record  the transaction,  reflect  the value  of  such
securities  each  day in  determining its  net asset  value and,  if applicable,
calculate the maturity for the purposes  of average maturity from that date.  At
the  time of settlement, a  when-issued security may be  valued at less than the
purchase price. To facilitate such acquisitions, the Fund will maintain with the
Custodian a  segregated account  with liquid  assets, consisting  of cash,  U.S.
Government  securities or other  high-grade, liquid securities,  in an amount at
least equal  to  the value  of  such commitments.  On  delivery dates  for  such
transactions, the Fund will meet its obligations from maturities or sales of the
securities  held in the  segregated account and/or  from cash flow.  If the Fund
chooses to dispose of the right to  acquire a when-issued security prior to  its
acquisition,   it  could,  as  with  the  disposition  of  any  other  portfolio
obligation, incur a gain  or loss due  to market fluctuation.  It is the  Fund's
current  policy  not  to enter  into  when-issued commitments  exceeding  in the
aggregate 15%  of  the  market  value of  its  total  assets,  less  liabilities
(excluding the obligations created by when-issued commitments).
 
     INVESTMENT COMPANY SECURITIES. Securities of other investment companies may
be  acquired by the Fund  to the extent that  such purchases are consistent with
its  investment  objectives  and  restrictions  and  are  permitted  under   the
Investment  Company  Act of  1940, as  amended  (the '1940  Act'). The  1940 Act
requires that, as determined immediately after a purchase is made, (i) not  more
than 5% of the value of
 
                                     SAI-5
 

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<PAGE>
the Fund's total assets will be invested in the securities of any one investment
company,  (ii) not more than 10% of the value of the Fund's total assets will be
invested in securities  of investment companies  as a group  and (iii) not  more
than  3% of the outstanding  voting stock of any  one investment company will be
owned by the  Fund. As  a shareholder of  another investment  company, the  Fund
would  bear, along with  other shareholders, its  pro rata portion  of the other
investment company's expenses, including advisory fees. These expenses would  be
in  addition to  the advisory  and other  expenses that  the Fund  would bear in
connection with its own operations.
 
     REVERSE REPURCHASE AGREEMENTS. The Fund  may enter into reverse  repurchase
agreements.  In a  reverse repurchase agreement,  the Fund sells  a security and
agrees to repurchase the same security at a mutually agreed upon date and price.
For purposes  of the  1940  Act, reverse  repurchase agreements  are  considered
borrowings  by the Fund and, therefore, a form of leverage. The Fund will invest
the proceeds of borrowings under reverse repurchase agreements. In addition, the
Fund will  enter into  a reverse  repurchase agreement  only when  the  interest
income  to be  earned from the  investment of  the proceeds is  greater than the
interest expense  of the  repurchase agreement.  The Fund  will not  invest  the
proceeds of a reverse repurchase agreement for a period that exceeds the term of
the reverse repurchase agreement. The Fund may not enter into reverse repurchase
agreements  if  such  repurchase  agreements,  together  with  the  Fund's other
borrowings, would  exceed  10% of  the  Fund's total  assets,  less  liabilities
(excluding  obligations  created  by  such  borrowings  and  reverse  repurchase
agreements). See 'Investment Restrictions'. The Fund will establish and maintain
with the  Custodian a  separate account  with a  portfolio of  securities in  an
amount   at  least  equal  to  its  obligations  under  its  reverse  repurchase
agreements.
 
     SECURITIES LENDING. The  Fund may  lend its  securities if  such loans  are
secured  continuously by cash or equivalent collateral  or by a letter of credit
in favor of the Fund at least equal at all times to 100% of the market value  of
the securities loaned, plus accrued interest. While such securities are on loan,
the  borrower  will pay  the Fund  any  income accruing  thereon. Loans  will be
subject to termination  by the  Fund in  the normal  settlement time,  generally
three  business  days after  notice, or  by  the borrower  on one  day's notice.
Borrowed securities must be  returned when the loan  is terminated. Any gain  or
loss  in the market price of the borrowed securities that occurs during the term
of the loan  inures to  the benefit  of the Fund.  The Fund  may pay  reasonable
finders'  and custodial fees  in connection with  a loan. In  addition, the Fund
will consider all facts and circumstances including the creditworthiness of  the
borrowing  financial institution and the Fund will  not make any loans in excess
of one year. The  Fund will not  lend its securities  to any officer,  Director,
employee,  or  affiliate or  placement  agent of  the  Company, or  the Adviser,
Administrator or Distributor, unless otherwise permitted by applicable law.
 
     PRIVATELY PLACED AND CERTAIN UNREGISTERED  SECURITIES. The Fund may  invest
in  privately placed, restricted, Rule 144A  or other unregistered securities as
described in the Prospectus.
 
     As to illiquid investments, the Fund is subject to a risk that it might not
be able to sell  such securities at  a price that the  Fund deems reflective  of
their  value. Where an illiquid security must be registered under the Securities
Act of 1933, as  amended (the 'Securities  Act'), before it  may be resold,  the
Fund  may be  obligated to pay  all or part  of the registration  expenses and a
considerable period may elapse between the time the Fund decides to sell and the
time the Fund is  permitted to sell under  an effective registration  statement.
If,  during such  a period,  adverse market  conditions develop,  the Fund might
obtain a less favorable price than that which prevailed when it decided to sell.
 
     SYNTHETIC VARIABLE  RATE  INSTRUMENTS.  The  Fund  may  invest  in  certain
synthetic  variable rate instruments as described in the Prospectus. In the case
of some  types of  instruments,  credit enhancements  are  not provided  and  if
certain  events  occur,  including a  default  in  the payment  of  principal or
interest on the  underlying bond,  a downgrading  of the  bond below  investment
grade  or a loss of the bond's tax exempt status then the put will terminate and
the Fund will bear the risk of holding a long-term bond.
 
                                     SAI-6
 

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QUALITY AND DIVERSIFICATION REQUIREMENTS
 
     The Fund intends to meet the diversification requirements of the 1940  Act.
To  meet  these  requirements, 75%  of  the  Fund's assets  are  subject  to the
following fundamental limitation: the  Fund may not invest  more than 5% of  its
total assets in the securities of any one issuer, except obligations of the U.S.
Government,  its agencies  and instrumentalities. As  for the 25%  of the Fund's
assets not subject to the limitation described above, there is no limitation  on
investment of these assets under the 1940 Act, so that all of such assets may be
invested  in securities  of any  one issuer,  subject to  the limitation  of any
applicable state securities  laws. Investments  not subject  to the  limitations
described above could involve an increased risk to the Fund should an issuer, or
a  state  or its  related  entities, be  unable  to make  interest  or principal
payments or should the market value of such securities decline.
 
     For purposes  of  diversification and  concentration  under the  1940  Act,
identification  of the issuer of  municipal bonds or notes  depends on the terms
and conditions  of the  obligation. If  the assets  and revenues  of an  agency,
authority,  instrumentality  or other  political  subdivision are  separate from
those of the government  creating the subdivision and  the obligation is  backed
only by the assets and revenues of the subdivision, such subdivision is regarded
as  the sole issuer. Similarly, in the case of an industrial development revenue
bond or pollution control revenue bond, if the bond is backed only by the assets
and revenues of the nongovernmental  user, the nongovernmental user is  regarded
as  the sole issuer. If in either case the creating government or another entity
guarantees an obligation, the  guaranty is regarded as  a separate security  and
treated  as an issue of such  guarantor. Because securities issued or guaranteed
by states or municipalities are not voting securities, there is no limitation on
the percentage of a single issuer's securities that the Fund may own so long  as
it  does not invest  more than 5%  of its total  assets that are  subject to the
diversification limitation in the securities of such issuer, except  obligations
issued  or guaranteed by the U.S.  Government. Consequently, the Fund may invest
in a greater percentage  of the outstanding securities  of a single issuer  than
would  an investment company that invests  in voting securities. See 'Investment
Restrictions'.
 
     The Fund invests principally in a diversified portfolio of 'high grade' and
'investment grade'  tax  exempt  securities.  On  the  date  of  investment  (i)
municipal  bonds  must be  rated  within the  four  highest ratings  of Moody's,
currently Aaa, Aa, A, and  Baa, or of Standard &  Poor's, currently AAA, AA,  A,
and BBB, (ii) municipal notes must be rated MIG-1 by Moody's or SP-1 by Standard
&  Poor's (or, in the case of New  York State municipal notes, MIG-1 or MIG-2 by
Moody's or SP-1  or SP-2 by  Standard & Poor's)  and (iii) municipal  commercial
paper  must be rated  Prime-1 by Moody's or  A1 by Standard &  Poor's or, if not
rated by either Moody's  or Standard &  Poor's, issued by  an issuer either  (a)
having  an outstanding  debt issue rated  A or  higher by Moody's  or Standard &
Poor's or (b) having comparable quality in the opinion of the Adviser. The  Fund
may  invest in other tax exempt securities that are not rated if, in the opinion
of the  Adviser,  such  securities  are  of  comparable  quality  to  the  rated
securities  discussed above. In  addition, at the  time the Fund  invests in any
commercial  paper,  bank  obligation,   repurchase  agreement,  or  other   debt
obligations, the issuer must have outstanding debt rated Baa or BBB or higher by
Moody's  or Standard & Poor's, respectively, the issuer's parent corporation, if
any, must have outstanding commercial paper  rated Prime-1 by Moody's or A-1  by
Standard  & Poor's, or if no such  ratings are available, the investment must be
of comparable quality in the Adviser's opinion.
 
OPTIONS AND FUTURES TRANSACTIONS
 
     EXCHANGE TRADED AND OVER THE COUNTER OPTIONS. All options purchased or sold
by the Fund will be exchange traded  or will be purchased or sold by  securities
dealers   ('over-the-counter'  or  'OTC  options')  that  meet  creditworthiness
standards approved by the Board. Exchange-traded options are obligations of  the
Options Clearing Corporation. In OTC options, the Fund relies on the dealer from
which  it purchased the option to perform if the option is exercised. Thus, when
a Fund purchases an OTC option, it relies on the dealer from which it  purchased
the option to make or take delivery of the
 
                                     SAI-7
 

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underlying  securities. Failure by the dealer to  do so would result in the loss
of the premium paid by the Fund as  well as loss of the expected benefit of  the
transaction.
 
     The staff of the SEC has taken the position that, in general, purchased OTC
options  and the  underlying securities  used to  cover written  OTC options are
illiquid securities.  However,  the Fund  may  treat as  liquid  the  underlying
securities  used to cover written OTC options, provided it has arrangements with
certain qualified dealers who agree that  the Fund may repurchase any option  it
writes for a maximum price to be calculated by a predetermined formula. In these
cases,  the OTC option  itself would only  be considered illiquid  to the extent
that the maximum repurchase price under the formula exceeds the intrinsic  value
of the option.
 
     FUTURES  CONTRACTS AND OPTIONS ON FUTURES  CONTRACTS. The Fund is permitted
to enter into futures and options transactions and may purchase or sell  futures
contracts  and purchase  or sell  put and call  options, including  put and call
options on futures contracts. Futures contracts  obligate the buyer to take  and
the  seller to  deliver at  a future  date a  specified quantity  of a financial
instrument or an  amount of cash  based on the  value of a  securities index  or
financial  instrument.  Currently, futures  contracts  are available  on various
types of fixed-income  securities, including  but not limited  to U.S.  Treasury
bonds,  notes and  bills, Eurodollar certificates  of deposit and  on indices of
fixed income securities.
 
     Unlike a futures  contract, which requires  the parties to  buy and sell  a
security  or make  a cash  settlement payment  based on  changes in  a financial
instrument or  securities  index on  an  agreed date,  an  option on  a  futures
contract  entitles its holder  to decide on  or before a  future date whether to
enter into such a contract.  If the holder decides  not to exercise its  option,
the  holder may  close out  the option position  by entering  into an offsetting
transaction or  may decide  to let  the option  expire and  forfeit the  premium
thereon. The purchaser of an option on a futures contract pays a premium for the
option  but makes no  initial margin payments  or daily payments  of cash in the
nature of 'variation' margin payments to reflect the change in the value of  the
underlying contract as does a purchaser or seller of a futures contract.
 
     The  seller of an option on a futures contract receives the premium paid by
the purchaser and may be  required to pay initial  margin. Amounts equal to  the
initial  margin and any additional collateral  required on futures contracts and
on any options on futures contracts sold by the Fund are paid by the Fund into a
segregated account, in the name of the Futures Commission Merchant, as  required
by the 1940 Act and the SEC's interpretations thereunder.
 
     COMBINED  POSITIONS. The Fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to  adjust
the  risk and return  characteristics of the overall  position. For example, the
Fund may write a  call option at  one strike price  and buy a  call option at  a
lower price, in order to reduce the risk of the written call option in the event
of  a  substantial price  increase. Because  combined options  positions involve
multiple trades,  they  result in  higher  transaction  costs and  may  be  more
difficult to open and close out.
 
     CORRELATION  OF PRICE CHANGES. Because there  are a limited number of types
of exchange-traded  options  and  futures  contracts,  it  is  likely  that  the
standardized  options and futures contracts available will not exactly match the
Fund's current or anticipated  investments. The Fund may  invest in options  and
futures  contracts based  on securities  with different  issuers, maturities, or
other characteristics from the securities  in which it typically invests,  which
involves  a  risk  that the  options  or  futures position  will  not  track the
performance of the Fund's other investments.
 
     Options and futures  contract prices can  also diverge from  the prices  of
their  underlying  instruments, even  if  the underlying  instruments  match the
Fund's investments well. Options  and futures contracts  prices are affected  by
such  factors as current  and anticipated short-term  interest rates, changes in
volatility of the underlying instrument, and the time remaining until expiration
of the contract, which  may not affect security  prices the same way.  Imperfect
correlation  may also result from differing levels  of demand in the options and
futures markets and the securities  markets, from structural differences in  how
options
 
                                     SAI-8
 

<PAGE>
<PAGE>
and  futures  and  securities are  traded,  or  from imposition  of  daily price
fluctuation limits or trading halts. The  Fund may purchase or sell options  and
futures  contracts with a greater or lesser  value than the securities it wishes
to hedge  or  intends  to  purchase  in  order  to  attempt  to  compensate  for
differences in volatility between the contract and the securities, although this
may  not be successful in  all cases. If price changes  in the Fund's options or
futures  positions  are  poorly  correlated  with  its  other  investments,  the
positions may fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.
 
     LIQUIDITY  OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
market will  exist  for  any  particular  option  or  futures  contract  at  any
particular  time even  if the  contract is traded  on an  exchange. In addition,
exchanges may establish daily price  fluctuation limits for options and  futures
contracts  and may halt trading if a contract's price moves up or down more than
the limit in a given  day. On volatile trading  days when the price  fluctuation
limit is reached or a trading halt is imposed, it may be impossible for the Fund
to enter into new positions or close out existing positions. If the market for a
contract  is not  liquid because  of price  fluctuation limits  or otherwise, it
could prevent prompt liquidation of unfavorable positions, and could potentially
require the Fund  to continue to  hold a position  until delivery or  expiration
regardless  of changes  in its value.  As a  result, the Fund's  access to other
assets held to cover  its options or futures  positions could also be  impaired.
See 'Exchange Traded and Over the Counter Options' above for a discussion of the
liquidity of options not traded on an exchange.
 
     POSITION  LIMITS. Futures  exchanges can  limit the  number of  futures and
options on futures contracts that can be held or controlled by an entity. If  an
adequate  exemption cannot be obtained, the Fund  or the Adviser may be required
to reduce the size of  its futures and options positions  or may not be able  to
trade  a certain futures  or options contract  in order to  avoid exceeding such
limits.
 
     ASSET COVERAGE  FOR  FUTURES  CONTRACTS AND  OPTIONS  POSITIONS.  The  Fund
intends  to  comply with  Section  4.5 of  the  regulations under  the Commodity
Exchange Act, which limits  the extent to  which the Fund  can commit assets  to
initial  margin deposits and option premiums.  In addition, the Fund will comply
with SEC guidelines with respect to coverage of options and futures contracts by
mutual funds,  and if  the guidelines  so require,  will set  aside  appropriate
liquid  assets  in  a segregated  custodial  account in  the  amount prescribed.
Securities held in a  segregated account cannot be  sold and will be  considered
illiquid  while the futures  contract or option is  outstanding, unless they are
replaced with other suitable  assets. As a result,  there is a possibility  that
the  segregation  of  a  large  percentage of  the  Fund's  assets  could impede
portfolio management or the Fund's ability to meet redemption requests or  other
current obligations.
 
INVESTMENT RESTRICTIONS
 
     The   Fund  has  adopted  the  following  fundamental  and  non-fundamental
investment restrictions (as defined and distinguished below); to the extent that
a fundamental  policy and  non-fundamental policy  apply to  a given  investment
activity or strategy, the more restrictive policy shall govern.
 
     FUNDAMENTAL INVESTMENT RESTRICTIONS. The investment restrictions below have
been  adopted by the Directors with respect  to the Fund. Except where otherwise
noted, these investment restrictions are 'fundamental' policies which, under the
1940 Act, may not be changed without the 'vote of a majority of the  outstanding
voting  securities' of  the Fund.  The 'vote  of a  majority of  the outstanding
voting securities' under the 1940  Act is the lesser of  (a) 67% or more of  the
Fund's  voting shares present at a shareholders'  meeting if the holders of more
than 50% of the outstanding voting  shares are present or represented by  proxy,
or  (b) more than 50%  of the Fund's outstanding  voting shares. The limitations
described below apply at the time the Fund purchases the securities.
 
                                     SAI-9
 

<PAGE>
<PAGE>
     The Fund may not:
 
1. Borrow money, except from banks  for extraordinary or emergency purposes  and
   then  only  in amounts  up  to one-third  of the  value  of its  total assets
   (including the amount borrowed) taken at cost at the time of such  borrowing,
   less liabilities (not including the amount borrowed), or mortgage, pledge, or
   hypothecate  any assets, except in connection with any permitted borrowing or
   reverse repurchase agreements (see Investment Restriction No. 7). It will not
   purchase  securities   while   borrowings   (including   reverse   repurchase
   agreements)  exceed  5% of  its net  assets; provided,  however, that  it may
   increase its interest in an  open-end management investment company with  the
   same   investment  objective  and  restrictions  while  such  borrowings  are
   outstanding and  provided  further that  for  purposes of  this  restriction,
   short-term  credits  necessary  for  the clearance  of  transactions  are not
   considered borrowings. This borrowing provision facilitates the orderly  sale
   of  portfolio  securities,  for example,  in  the event  of  abnormally heavy
   redemption  requests  and   is  not  for   investment  purposes.   Collateral
   arrangements  for premium and margin payments  in connection with its hedging
   activities are not deemed to be a pledge of assets;
 
2. Purchase the securities of an issuer if, immediately after such purchase,  it
   owns  more than 10% of  the outstanding voting securities  of such an issuer.
   This limitation shall  not apply to  investments of  up to 25%  of its  total
   assets;
 
3. Purchase   the  securities  or  other  obligations  of  any  one  issuer  if,
   immediately after  such purchase,  more than  5% of  the value  of its  total
   assets  would be invested in securities or  other obligations of any one such
   issuer. Each state and each political subdivision, agency or  instrumentality
   of  such state and  each multi-state agency  of which such  state is a member
   will be a separate issuer  if the security is backed  only by the assets  and
   revenue  of that issuer. If the security is guaranteed by another entity, the
   guarantor will be deemed to be  the issuer.* This limitation shall not  apply
   to  securities issued or  guaranteed by the U.S.  Government, its agencies or
   instrumentalities or to investments of up to 25% of the Fund's total assets;
 
4. Invest more than 25% of its total assets in securities of governmental  units
   located in any one state, territory, or possession of the United States;
 
5. Make  loans,  except  through the  purchase  or holding  of  debt obligations
   (including privately placed  securities) or the  entering into of  repurchase
   agreements or loans of portfolio securities;
 
6. Purchase  or sell real estate, commodities  or commodity contracts or options
   thereon (except  for its  interest in  hedging activities  and certain  other
   activities as described under 'Investment Objective and Policies'), interests
   in  oil,  gas,  or  mineral exploration  or  development  programs (including
   limited  partnerships).  However,  purchases   of  municipal  bonds,   notes,
   commercial paper or other obligations secured by interests in real estate are
   permitted;
 
7. Issue  any senior  security, except  as appropriate  to evidence indebtedness
   that it is permitted  to incur pursuant to  Investment Restriction No. 1  and
   except  that it may  enter into reverse  repurchase agreements, provided that
   the  aggregate  of  all  senior  securities,  including  reverse   repurchase
   agreements,  shall  not exceed  one-third of  the market  value of  its total
   assets  (including  the  amounts   borrowed),  less  liabilities   (excluding
   obligations  created by  such borrowings and  reverse repurchase agreements).
   Hedging activities as described in 'Investment Objective and Policies'  shall
   not be considered senior securities for purposes hereof; or
 
- ------------------------------------
     *For   purposes  of   interpretation  of  Investment   Restriction  No.  3,
'guaranteed by another entity' includes credit substitutions, such as letters of
credit or insurance, unless the Adviser  determines that the security meets  the
relevant credit standards without regard to the credit substitution.
 
                                     SAI-10
 

<PAGE>
<PAGE>
8. Act as an underwriter of securities.
 
     NON-FUNDAMENTAL   INVESTMENT  RESTRICTIONS.   The  investment  restrictions
described below are not fundamental policies of  the Fund and may be changed  by
the  Directors. These non-fundamental investment  policies provide that the Fund
may not:
 
       i.      borrow money  (including through  reverse repurchase  or  forward
               roll  transactions) for any purpose in excess of 5% of the Fund's
               total assets (taken at cost), except that the Fund may borrow for
               temporary or emergency purposes up to one-third of its assets;
 
      ii.      pledge, mortgage or hypothecate for any purpose in excess of  10%
               of the Fund's total assets (taken at market value), provided that
               collateral  arrangements  with  respect to  options  and futures,
               including deposits of initial  deposit and variation margin,  and
               reverse  repurchase  agreements are  not  considered a  pledge of
               assets for purposes of this restriction;
 
      iii.     purchase  any security or evidence of interest therein on margin,
               except  that such short-term credit  as may be necessary for  the
               clearance  of  purchases and sales  of securities may be obtained
               and except  that deposits of initial deposit and variation margin
               may be made  in connection with the purchase, ownership,  holding
               or sale of futures;
 
      iv.      sell  securities it does  not own such that  the dollar amount of
               such short sales at any one time exceeds 25% of the net equity of
               the Fund, and the value of securities of any one issuer in  which
               the  Fund is short exceeds the lesser of 2.0% of the value of the
               Fund's net assets or 2.0% of  the securities of any class of  any
               U.S.  issuer, and provided  that short sales may  be made only in
               those securities which are fully listed on a national  securities
               exchange  or a foreign exchange  (This provision does not include
               the sale of securities the  Fund contemporaneously owns or  where
               the  Fund has the  right to obtain  securities equivalent in kind
               and amount to  those sold,  i.e., short sales  against the  box.)
               (The Fund has no current intention to engage in short selling.);
 
       v.      invest for the purpose of exercising control or management;
 
      vi.      purchase  securities issued  by any investment  company except by
               purchase in the open  market where no commission  or profit to  a
               sponsor  or  dealer results  from  such purchase  other  than the
               customary broker's  commission,  or except  when  such  purchase,
               though  not made in the open market,  is part of a plan of merger
               or consolidation;  provided,  however,  that  securities  of  any
               investment  company will  not be purchased  for the  Fund if such
               purchase at the time thereof would cause (a) more than 10% of the
               Fund's total  assets (taken  at  the greater  of cost  or  market
               value) to be invested in the securities of such issuers; (b) more
               than  5% of the Fund's total assets (taken at the greater of cost
               or market value) to be invested in any one investment company; or
               (c) more than 3% of the outstanding voting securities of any such
               issuer to be held for the Fund; provided further that, except  in
               the  case  of  a  merger or  consolidation,  the  Fund  shall not
               purchase any securities of any open-end investment company unless
               (1) the Fund's investment adviser waives the investment  advisory
               fee  with respect to assets invested in other open-end investment
               companies and (2) the Fund  incurs no sales charge in  connection
               with that investment;
 
      vii.     invest  more  than 10%  of the Fund's total  assets (taken at the
               greater  of cost or market  value) in securities (excluding  Rule
               144A  securities) that are restricted as to resale under the 1933
               Act;
 
     viii.     invest  more  than 15%  of the Fund's total  assets (taken at the
               greater of  cost  or market value)  in (a) securities  (excluding
               Rule 144A  securities) that are restricted as to resale under the
               1933  Act,  and (b)  securities that are  issued by issuers which
               (including
 
                                     SAI-11
 

<PAGE>
<PAGE>
               predecessors)  have  been  in  operation less  than  three  years
               (other than U.S.  Government securities), provided, however, that
               no  more  than  5%  of the  Fund's total  assets are  invested in
               securities  issued by issuers which (including predecessors) have
               been in operation less than three years;
 
      ix.      invest more  than 15%  of the  Fund's net  assets (taken  at  the
               greater  of cost or market value) in securities that are illiquid
               or not readily marketable (excluding Rule 144A securities  deemed
               by the Board of Directors of the Fund to be liquid);
 
       x.      invest  in securities issued by an  issuer any of whose officers,
               directors, trustees or security holders is an officer or Director
               of the Fund,  or is  an officer or  director of  the Adviser,  if
               after  the purchase of the securities of such issuer for the Fund
               one or more of such persons own beneficially more than 1/2 of  1%
               of  the shares or securities, or both, all taken at market value,
               of such issuer, and  such persons owning more  than 1/2 of 1%  of
               such  shares or securities together own beneficially more than 5%
               of such shares or securities, or both, all taken at market value;
 
      xi.      invest in warrants (other than  warrants acquired by the Fund  as
               part of a unit or attached to securities at the time of purchase)
               if,  as a result, the investments (valued at the lower of cost or
               market) would exceed 5% of the value of the Fund's net assets  or
               if,  as a result, more than 2%  of the Fund's net assets would be
               invested in warrants not listed on a recognized United States  or
               foreign  stock exchange,  to the  extent permitted  by applicable
               state securities laws;
 
      xii.      write puts and calls on securities unless each of the  following
                conditions  are met: (a) the security underlying the put or call
                is within the investment policies of the Fund and the option  is
                issued  by the Options Clearing  Corporation, except for put and
                call options issued by non-U.S.  entities or listed on  non-U.S.
                securities  or commodities exchanges; (b) the aggregate value of
                the obligations underlying  the puts determined  as of the  date
                the  options  are sold  shall not  exceed 5%  of the  Fund's net
                assets; (c) the securities subject  to the exercise of the  call
                written  by the Fund must  be owned by the  Fund at the time the
                call is sold and must continue to be owned by the Fund until the
                call has been exercised, has lapsed, or the Fund has purchased a
                closing call,  and such  purchase  has been  confirmed,  thereby
                extinguishing   the  Fund's  obligation  to  deliver  securities
                pursuant to the call it has sold;  and (d) at the time a put  is
                written,  the  Fund establishes  a  segregated account  with its
                custodian consisting  of  cash  or  short-term  U.S.  Government
                securities  equal  in  value  to the  amount  the  Fund  will be
                obligated to pay upon exercise of the put (this account must  be
                maintained  until the put is exercised, has expired, or the Fund
                has purchased a closing put, which  is a put of the same  series
                as the one previously written);
 
     xiii.      buy  and sell puts and calls  on securities, stock index futures
                or options  on  stock index  futures,  or financial  futures  or
                options  on financial futures unless: (a) the options or futures
                are offered  through the  facilities  of a  national  securities
                association   or  are   listed  on  a   national  securities  or
                commodities exchange, except for put and call options issued  by
                non-U.S.   entities   or  listed   on  non-U.S.   securities  or
                commodities exchanges; (b)  the aggregate premiums  paid on  all
                such options which are held at any time do not exceed 20% of the
                Fund's  total  net  assets; (c)  the  aggregate  margin deposits
                required on all such futures or options thereon held at any time
                do not  exceed 5%  of  the Fund's  total  assets; and  (d)  such
                activities  are permitted by Regulation  4.5 under the Commodity
                Exchange Act, and
 
      xiv.      distribute  securities  that  are  not  readily  marketable   to
                residents  of the State of Arizona when effecting redemptions in
                kind.
 
     There will be no violation of any investment restriction if that investment
restriction  is  complied  with  at  the  time  the  relevant  action  is  taken
notwithstanding a later change in market value of an investment, in net or total
assets, in the securities rating of the investment or any other later change.
 
                                     SAI-12
 

<PAGE>
<PAGE>
DIRECTORS
 
     The  Company's Board consists of three  directors. The Board is responsible
for the overall management  of the Fund, including  the general supervision  and
review  of its investment activities. The Board, in turn, elects the officers of
the Company. The addresses and principal occupations of the Company's  Directors
and  officers  are listed  below.  As of  February  1, 1996,  the  Directors and
officers of  the Company  owned of  record,  as a  group, less  than 1%  of  the
outstanding  shares of the Company. None  of the Company's Directors or officers
receives compensation from the Company exceeding $60,000 per fiscal year.
 
<TABLE>
<CAPTION>
                                    POSITION
                                    WITH THE
     NAME, ADDRESS AND AGE          COMPANY           PRINCIPAL OCCUPATIONS DURING THE LAST FIVE YEARS
- -------------------------------   ------------  -------------------------------------------------------------
<S>                               <C>           <C>
Dr. HansPeter Lochmeier*          Chairman of   UBS  Investor   Portfolios  Trust   (mutual  fund),   Trustee
299 Park Avenue                   the Board     (February    1996-Present);   Union   Bank   of   Switzerland
New York, NY 10171                              (Investment Services Department), Department Head.
Age: 54

Timothy M. Spicer, CPA            Director      UBS  Investor  Portfolios  Trust,  Trustee  (February   1996-
299 Park Avenue                                 Present);   Ensemble   Information   Systems   (software  and
New York, NY 10171                              electronic information provider), Co-Founder, Chairman of the
Age: 46                                         Board and  Chief  Executive  Officer  (1990-Present);  Amanda
                                                Venture  Investors  (AVI)  (a  San  Francisco  based  venture
                                                capital  firm),  Managing  Partner  (1995-Present);  CoreLink
                                                Resources (provides mutual fund related services to small and
                                                medium  sized banks), Director (1993-Present); Smith & Hawken
                                                (mail  order  supplier  of  gardening  tools  and  clothing),
                                                Director  and  Chief Financial  Officer  (1990-1992); Concord
                                                Holding Corporation (provides distribution and administrative
                                                services to mutual  funds), Director  (1989-1995); active  in
                                                civic/charitable   organizations   in   the   San  Francisco,
                                                California  area,  including  Big  Brothers/Big  Sisters  and
                                                United Way.
 
Peter Lawson-Johnston             Director      UBS   Investor  Portfolios  Trust,  Trustee  (February  1996-
299 Park Avenue                                 Present); Zemex Corporation (mining),  Chairman of the  Board
New York, NY 10171                              and  Director (1990-Present); McGraw-Hill, Inc. (publishing),
Age: 69                                         Director (1990-Present); National Review, Inc.  (publishing),
                                                Director    (1990-Present);    Guggenheim    Brothers   (real
                                                estate  --  venture  capital  partnership),  Partner   (1990-
                                                Present);  Elgerbar Corporation  (holding company), President
                                                and  Director  (1990-Present);  The  Solomon  R.   Guggenheim
                                                Foundation  (operates the Solomon R. Guggenheim Museum in New
                                                York and the Peggy  Guggenheim Collection in Venice,  Italy),
                                                Chairman   and  Trustee   (1990-Present);  The   Harry  Frank
                                                Guggenheim Foundation (charitable organization), Chairman  of
                                                the Board and Trustee (1990-Present).
 
Timothy P. Sullivan               President     UBS  Investor  Portfolios  Trust,  Vice  President  (February
437 Madison Avenue                              1996-Present); Signature  Financial Group,  Inc.**  (provides
New York, NY 10022                              distribution  and administrative  services to  mutual funds),
Age: 34                                         Vice President (1995-Present);  Swiss Bank Corporation,  Vice
                                                President/Associate  Director  (1992-1995);  EquitiLink  USA,
                                                Inc. (1989-1991).
 
John R. Elder, CPA                Treasurer     UBS Investor  Portfolios  Trust,  Treasurer  (February  1996-
6 St. James Avenue                              Present);  Signature Financial Group,  Inc.**, Vice President
Boston, MA 02116                                (April 1995-Present);  Phoenix  Home  Life  Mutual  Insurance
Age: 47                                         Company (mutual funds division), Treasurer (1983-1995).
</TABLE>
 
                                                  (table continued on next page)
 
                                     SAI-13
 

<PAGE>
<PAGE>
(table continued from previous page)
 
<TABLE>
<CAPTION>
                                    POSITION
                                    WITH THE
     NAME, ADDRESS AND AGE          COMPANY           PRINCIPAL OCCUPATIONS DURING THE LAST FIVE YEARS
- -------------------------------   ------------  -------------------------------------------------------------
<S>                               <C>           <C>
Thomas M. Lenz, Esq.              Secretary     UBS  Investor  Portfolios  Trust,  Secretary  (February 1996-
6 St. James Avenue                              Present); Signature Financial  Group, Inc.**, Vice  President
Boston, MA 02116                                and Associate General Counsel (1989-Present).
Age: 37
</TABLE>
 
- ------------------------------------
      *'Interested Person' within the meaning of the 1940 Act.
 
     **Signature   Broker-Dealer   Services,  Inc.,   the   Company's  principal
underwriter and  administrator,  is  a  wholly  owned  subsidiary  of  Signature
Financial Group, Inc.
 
                              COMPENSATION TABLE*
 
<TABLE>
<CAPTION>
                                                         PENSION OR                            TOTAL COMPENSATION
                                      AGGREGATE      RETIREMENT BENEFITS       ESTIMATED        FROM COMPANY AND
                                     COMPENSATION    ACCRUED AS PART OF     ANNUAL BENEFITS    FUND COMPLEX PAID
     NAME OF PERSON, POSITION        FROM COMPANY       FUND EXPENSES       UPON RETIREMENT       TO DIRECTORS
- ----------------------------------   ------------    -------------------    ---------------    ------------------
 
<S>                                  <C>             <C>                    <C>                <C>
Dr. Lochmeier                                 0               0                    0                       0
Director

Mr. Spicer                             $ 13,000               0                    0                $ 25,000**
Director

Mr. Lawson-Johnston                    $ 13,000               0                    0                $ 25,000**
Director
</TABLE>
 
- ------------------------------------
      *The   Company  has  not  completed  its   first  fiscal  year  since  its
organization, and the noted amounts are estimates for the period January 1, 1996
through December 31, 1996. The Directors are also reimbursed for all  reasonable
expenses incurred during the execution of their duties.
 
     **The other entity in the Fund Complex is UBS Investor Portfolios Trust.
 
INVESTMENT ADVISER
 
     Pursuant  to an Investment  Advisory Agreement between  the Company and the
Branch, the  Branch serves  as the  Fund's investment  adviser. Subject  to  the
supervision of the Directors, the Adviser makes the Fund's day-to-day investment
decisions,  arranges  for  the execution  of  portfolio  transactions, generally
manages the Fund's investments and provides certain administrative services.
 
     The investment advisory services provided by the Branch to the Fund are not
exclusive under the terms  of the Investment Advisory  Agreement. The Branch  is
free  to and  does render  similar investment  advisory services  to others. The
Branch serves as investment adviser to personal investors and acts as  fiduciary
for  trusts, estates and employee benefit plans. Certain of the assets of trusts
and estates under management  are invested in common  trust funds for which  the
Branch  serves as trustee.  The accounts managed  or advised by  the Branch have
varying investment objectives and the Branch invests assets of such accounts  in
investments  substantially similar to, or the same as, the Fund's. Such accounts
are supervised by officers and employees of the Branch who may also be acting in
similar capacities for the Fund. See 'Portfolio Transactions'.
 
     The Bank has branches, agencies, representative offices and subsidiaries in
Switzerland and in more  than 40 cities outside  Switzerland, including, in  the
United  States, New York City, Chicago,  Houston, Los Angeles and San Francisco.
In addition to the receipt of deposits and the making of loans and advances, the
Bank, through its offices and subsidiaries,  engages in a wide range of  banking
and  financial  activities typical  of  the world's  major  international banks,
including fiduciary,  investment advisory  and  custodial services  and  foreign
exchange  in the United States, Swiss,  Asian and Euro-capital markets. The Bank
is one of the  world's leading asset  managers and has been  active in New  York
City since 1946. At
 
                                     SAI-14
 

<PAGE>
<PAGE>
June  30, 1995,  the Bank  (including its  consolidated subsidiaries)  had total
assets of $307.4 billion  (unaudited) and equity capital  and reserves of  $19.7
billion (unaudited).
 
     In  addition to  the above  discussed advisory  services, the  Adviser also
provides certain  administrative services  to the  Fund. In  this capacity,  the
Adviser,  subject  to the  supervision of  the Board,  is also  responsible for:
establishing performance standards for the Fund's third-party service  providers
and  overseeing and evaluating  the performance of  such entities; providing and
presenting quarterly  management  reports  to  the  Directors;  supervising  the
preparation  of reports  for Fund  shareholders; establishing  voluntary expense
limitations for the Fund  and providing any  resultant expense reimbursement  to
the Fund; and such other related services as the Company may reasonably request.
 
     Under  the Investment Advisory  Agreement, the Fund will  pay the Adviser a
fee, calculated daily and  payable monthly, at  an annual rate  of 0.45% of  the
Fund's  average net assets. The Branch has  voluntarily agreed to waive its fees
and reimburse the Fund  for any of  its expenses to the  extent that the  Fund's
total operating expenses exceed, on an annual basis, 0.80% of the Fund's average
daily  net assets.  The Branch  may modify  or discontinue  this fee  waiver and
expense limitation at any time in the  future with 30 days' notice to the  Fund.
See 'Expenses'.
 
     The  Investment Advisory Agreement  will continue in  effect until February
1998, and thereafter will be subject to annual approval by the Directors or  the
vote  of a majority of  the Fund's outstanding voting  securities (as defined in
the 1940 Act), provided that in either case the continuance also is approved  by
a  majority of the Directors  who are not interested  persons (as defined in the
1940 Act) of  the Company by  vote cast in  person at a  meeting called for  the
purpose  of  voting on  such approval.  The  Investment Advisory  Agreement will
terminate automatically  if  assigned and  is  terminable at  any  time  without
penalty  by a vote of a majority of the Directors or by a vote of the holders of
a majority (as defined in the 1940  Act) of the Fund's outstanding shares on  60
days'  written notice to the Adviser.  The Investment Advisory Agreement is also
terminable by  the  Adviser  on  60  days'  written  notice  to  the  Fund.  See
'Additional Information'.
 
     The  Glass-Steagall Act and other applicable laws generally prohibit banks,
such as Union Bank of Switzerland, from engaging in the business of underwriting
or distributing securities, and  the Board of Governors  of the Federal  Reserve
System  has issued an interpretation to the  effect that under these laws a bank
holding company registered under the federal Bank Holding Company Act or certain
subsidiaries thereof may not sponsor, organize, or control a registered open-end
investment company continuously engaged in the  issuance of its shares, such  as
the  Company.  The  interpretation does  not  prohibit  a holding  company  or a
subsidiary thereof from acting  as investment adviser and  custodian to such  an
investment  company. The Adviser  believes that it may  perform the services for
the Fund contemplated by the Investment Advisory Agreement without violating the
Glass-Steagall Act or other applicable  banking laws or regulations. State  laws
on  this issue may differ  from the interpretation of  relevant federal law, and
banks and financial institutions may be required to register as dealers pursuant
to state securities laws. However, it is possible that future changes in  either
federal  or state statutes and regulations concerning the permissible activities
of banks  or trust  companies, as  well as  further judicial  or  administrative
decisions  and interpretations of  present and future  statutes and regulations,
might prevent the Adviser from continuing to perform such services for the Fund.
 
     If the  Adviser  were  prohibited  from acting  as  the  Fund's  investment
adviser,  it is expected that the Directors would recommend to shareholders that
they approve the Fund's entering into  a new investment advisory agreement  with
another qualified investment adviser selected by the Board.
 
ADMINISTRATOR
 
     Under  the Administrative  Services Agreement  with the  Company, Signature
Broker-Dealer  Services,   Inc.  ('Signature'   or,   in  this   capacity,   the
'Administrator'),  serves as the Fund's administrator. Signature administers all
aspects of the Fund's day-to-day operations,  subject to the supervision of  the
Directors,
 
                                     SAI-15
 

<PAGE>
<PAGE>
except   as  set  forth  under  the  sections  captioned  'Investment  Adviser',
'Distributor',  'Custodian'  and   'Shareholder  Services'.  As   Administrator,
Signature  (i)  furnishes general  office facilities  and ordinary  clerical and
related   services   for   day-to-day   operations,   including    recordkeeping
responsibilities;  (ii) is responsible for complying with all applicable federal
and state  securities  and  other  regulatory  requirements  including,  without
limitation,  preparing,  mailing and  filing (but  not paying  for) registration
statements, prospectuses, statements of additional information, proxy statements
and all  required  reports  to  the  Fund's  shareholders,  the  SEC  and  state
securities  commissions; (iii)  takes responsibility  for monitoring  the Fund's
status as a  'regulated investment company'  under the Code;  and (iv)  performs
administrative  and  managerial  oversight  of  the  activities  of  the  Fund's
custodian, transfer agent and other agents or independent contractors.
 
     Under the Administrative  Services Agreement,  the Fund has  agreed to  pay
Signature  an administration  fee, calculated daily  and payable  monthly, at an
annual rate of 0.10% of the first $100 million of the Fund's average net assets,
plus 0.075% of  the next $100  million of  the Fund's average  net assets,  plus
0.05% of the Fund's average net assets in excess of $200 million.
 
     The  Administrative Services  Agreement may  be renewed  or amended  by the
Directors without shareholder  vote. This  agreement is terminable  at any  time
without penalty by a vote of a majority of the Directors or the Administrator on
not  less than 60 days' written notice to the other party. The Administrator may
subcontract for  the performance  of its  obligations under  the  Administrative
Services  Agreement  with the  prior written  consent of  the Directors.  If the
Administrator subcontracts all or a portion of its duties to another party,  the
Administrator  shall be as fully  responsible for the acts  and omissions of any
such subcontractor(s) as it would be for its own acts or omissions.
 
DISTRIBUTOR
 
     Signature also serves as the exclusive distributor of the Fund's shares (in
such capacity, the 'Distributor') and holds itself available to receive purchase
orders for such shares. In this  capacity, the Distributor has been granted  the
right,  as the Fund's  agent, to solicit  and accept orders  for the purchase of
Fund shares in accordance with the  terms of the Distribution Agreement  between
the  Company,  on behalf  of  the Fund,  and  the Distributor.  The Distribution
Agreement shall continue in effect with respect to the Fund until February 1997,
and thereafter will be subject to annual  approval (i) by a vote of the  holders
of  a majority of the  Fund's outstanding voting securities  or by the Directors
and (ii) by a  vote of a majority  of the Directors who  are not parties to  the
Distribution Agreement or interested persons (as defined by the 1940 Act) of the
Company  cast in person  at a meeting called  for the purpose  of voting on such
approval. The Distribution Agreement will terminate automatically if assigned by
either party thereto and is terminable at  any time, without penalty, by a  vote
of  a majority of the Directors, a vote  of a majority of such Directors who are
not 'interested persons' of  the Company (as  defined in the 1940  Act) or by  a
vote  of the holders of a majority of the Fund's outstanding shares, in any case
on not less than  60 days' written  notice to the  other party. The  Distributor
does  not receive a fee pursuant to the terms of the Distribution Agreement. The
principal offices of the Distributor are located at 6 St. James Avenue,  Boston,
Massachusetts 02116.
 
CUSTODIAN
 
     Investors  Bank  & Trust  Company (the  'Custodian'),  located at  89 South
Street, Boston, Massachusetts 02111,  serves as the  custodian and transfer  and
dividend  disbursing agent  for the  Fund. Pursuant  to the  Custodian Agreement
between the Custodian and the Company, on  behalf of the Fund, the Custodian  is
responsible  for maintaining the books and records of portfolio transactions and
holding portfolio securities and cash. As transfer agent and dividend disbursing
agent, the Custodian  is responsible for  maintaining account records  detailing
the  ownership of Fund shares and for  crediting income, capital gains and other
changes in share ownership to investors' accounts.
 
                                     SAI-16
 

<PAGE>
<PAGE>
     The Custodian will  perform its  duties as  the Fund's  transfer agent  and
dividend  disbursing agent from its offices  located at 89 South Street, Boston,
Massachusetts 02111.
 
SHAREHOLDER SERVICES
 
     The Company,  on  behalf  of  the Fund,  has  entered  into  a  Shareholder
Servicing  Agreement with the Branch under which the Branch provides shareholder
services to  Fund shareholders,  which  include performing  shareholder  account
administrative  and servicing  functions such  as answering  inquiries regarding
account status and  history, the manner  in which purchases  and redemptions  of
shares  may be made and certain other  matters pertaining to the Fund, assisting
customers in designating and changing dividend options, account designations and
addresses, providing  necessary  personnel  and  facilities  to  coordinate  the
establishment  and  maintenance of  shareholder  accounts and  records  with the
Fund's Distributor and transfer agent,  assisting investors seeking to  purchase
or  redeem Fund shares, arranging  for the wiring or  other transfer of funds to
and from customer accounts in connection with orders to purchase or redeem  Fund
shares, verifying purchase and redemption orders, transfers among and changes in
accounts and providing other related services. In return for these services, the
Company  has agreed to pay the  Branch a fee, at an  annual rate of 0.25% of the
average daily net assets of the Fund.
 
     As discussed under 'Investment Adviser',  the Glass-Steagall Act and  other
applicable  laws and regulations limit the  activities of bank holding companies
and certain  of  their  subsidiaries  in  connection  with  registered  open-end
investment  companies. The activities  of the Branch  as a shareholder servicing
agent under a Shareholder Servicing Agreement  and as adviser to the Fund  under
the  Investment Advisory Agreement  may raise issues  under these laws. However,
the Branch believes that  it may properly perform  these services and the  other
activities  described  herein  and  in  the  Prospectus  without  violating  the
Glass-Steagall Act or other applicable banking laws or regulations.
 
     If the Branch were prohibited from providing its respective services  under
the  above noted agreements, the Directors would seek an alternative provider of
such services. In  such an event,  changes in  the operation of  the Fund  might
occur  and shareholders might  not receive the same  level of service previously
provided by the Branch.
 
INDEPENDENT ACCOUNTANTS
 
     The Company's independent  accounting firm  is Price  Waterhouse LLP,  1177
Avenue  of  the Americas,  New  York, New  York 10036.  The  U.S. Firm  of Price
Waterhouse is a Registered Limited Liability Partnership (LLP) under the laws of
the State of Delaware. Price Waterhouse LLP will conduct an annual audit of  the
financial  statements of the Fund, assist in the review of the federal and state
income tax  returns of  the Fund  and consult  with the  Fund as  to matters  of
accounting and federal and state income taxation.
 
EXPENSES
 
     The Fund is responsible for the fees and expenses attributable to it.
 
     The  Branch has agreed that  if, in any fiscal year,  the sum of the Fund's
expenses exceeds the limits  set by applicable  regulations of state  securities
commissions,  the Branch  shall waive  its fees  as necessary  to eliminate such
excess. Currently,  the  Branch  believes  that  the  most  restrictive  expense
limitation  of state securities commissions limits expenses to an annual rate of
2.5% of the first $30 million of average net assets, 2% of the next $70  million
of  such net assets and 1.5%  of such net assets in  excess of $100 million. For
additional information  regarding fee  waivers  or expense  reimbursements,  see
'Management'  in the Prospectus. The Branch has also voluntarily agreed to limit
the total operating expenses of  the Fund, excluding extraordinary expenses,  to
an   annual   rate  of   0.80%  of   the  Fund's   average  daily   net  assets.
 
                                     SAI-17
 

<PAGE>
<PAGE>
The Branch may modify or discontinue  this fee waiver and expense limitation  at
any time in the future with 30 days' notice to the Fund.
 
PURCHASE OF SHARES
 
     Investors  may purchase  Fund shares as  described in  the Prospectus under
'Purchase of Shares'. Fund shares are sold on a continuous basis without a sales
charge at the  net asset  value per  share next  determined after  receipt of  a
purchase order.
 
     The minimum investment requirement for accounts established for the benefit
of  minors  under  the 'Uniform  Gift  to  Minors Act'  is  $5,000.  The minimum
subsequent  investment  is  $1,000.  The  minimum  investment  requirement   for
employees  of  the Bank  and its  affiliates is  $5,000. The  minimum subsequent
investment is $1,000.
 
     In addition, the minimum investment requirements may be met by  aggregating
the  investments of related shareholders. A  'related shareholder' is limited to
an immediate family  member, including mother,  father, spouse, child,  brother,
sister and grandparent, and includes step and adoptive relationships.
 
     The  Fund may, at its own option,  accept securities in payment for shares.
The securities tendered are valued by the methods described in 'Net Asset Value'
as of the day the  Fund shares are purchased. This  is a taxable transaction  to
the investor. Securities may be accepted in payment for shares only if they are,
in  the  judgment  of the  Adviser,  appropriate  investments for  the  Fund. In
addition, securities accepted in  payment for shares must:  (i) meet the  Fund's
investment  objective and policies; (ii) be  acquired by the Fund for investment
and not for resale;  (iii) be liquid  securities that are  not restricted as  to
transfer  either by law  or by market liquidity;  and (iv) have  a value that is
readily  ascertainable,  as  evidenced  by  a  listing  on  a  stock   exchange,
over-the-counter  market or by readily available market quotations from a dealer
in such securities. The Fund reserves the  right to accept or reject at its  own
option any and all securities offered in payment for its shares.
 
REDEMPTION OF SHARES
 
     Investors  may  redeem Fund  shares as  described  in the  Prospectus under
'Redemption of Shares'.
 
     If the  Directors  determine that  it  would  be detrimental  to  the  best
interest  of the remaining shareholders of the Fund to effect redemptions wholly
or partly in cash, payment  of the redemption price may  be made in whole or  in
part  by an in-kind distribution  of securities, in lieu  of cash, in conformity
with applicable  SEC  rules.  If  shares are  redeemed  in-kind,  the  redeeming
shareholder  might  incur transaction  costs in  converting the  securities into
cash. The methods of valuing  portfolio securities distributed to a  shareholder
are  described under 'Net Asset Value', and  such valuations will be made at the
same time the redemption price is determined.
 
     FURTHER REDEMPTION INFORMATION. The right of redemption may be suspended or
the date  of payment  postponed: (i)  during  periods when  the New  York  Stock
Exchange  (the 'NYSE') is  closed for other  than weekends and  holidays or when
trading on the NYSE is suspended or restricted; (ii) during periods in which  an
emergency  exists, as determined  by the SEC,  which causes the  disposal of, or
evaluation of the net asset value  of, the Fund's securities to be  unreasonable
or impracticable; or (iii) for such other periods as the 1940 Act or the SEC may
permit.
 
                                     SAI-18
 

<PAGE>
<PAGE>
EXCHANGE OF SHARES
 
     An  investor may exchange Fund shares for shares of any other series of the
Company as described under 'Exchange of Shares' in each such series' prospectus.
Investors considering an exchange of Fund  shares for shares of another  Company
series should read the prospectus of the series into which the transfer is being
made  prior to such  exchange (see 'Purchase of  Shares'). Requests for exchange
are made in  the same  manner as requests  for redemptions  (see 'Redemption  of
Shares').  Shares of the  acquired series are purchased  for settlement when the
proceeds from redemption  become available.  Certain state  securities laws  may
restrict  the availability of  the exchange privilege.  The Company reserves the
right to discontinue, alter or limit this exchange privilege at any time.
 
DIVIDENDS AND DISTRIBUTIONS
 
     The Fund  will declare  and pay  dividends and  distributions as  described
under 'Dividends and Distributions' in the Prospectus.
 
     Determination of the net income for the Fund is made at the times described
in  the  Prospectus; in  addition,  net investment  income  for days  other than
business days is determined  at the time  net asset value  is determined on  the
prior business day.
 
NET ASSET VALUE
 
     The  Fund computes its net asset value  once daily at the close of business
on Monday through Friday as described under 'Net Asset Value' in the Prospectus.
The net asset value will not be computed on a day in which no orders to purchase
or redeem Fund shares have been received or on the following legal holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,  Labor
Day, Thanksgiving Day and Christmas Day. On days when U.S. trading markets close
early  in observance of these holidays, the  Fund expects to close for purchases
and redemptions at the same time.
 
     The net asset value per  share of the Fund  equals the Fund's total  assets
less  its total liabilities, divided by the  number of outstanding shares of the
Fund.
 
     Securities with a maturity  of 60 days or  more, including securities  that
are  listed on an exchange or traded over-the-counter, are valued by the Fund by
using prices supplied daily by  an independent pricing service(s). These  prices
are  based on the last  sale price on a national  securities exchange or, in the
absence of recorded sales, at the  average of readily available closing bid  and
asked prices, or in the absence of such prices, at the readily available closing
bid  price on such exchange  or at the quoted  bid price in the over-the-counter
market,  if  such  exchange  or   market  constitutes  the  broadest  and   most
representative  market for  the security.  In other  cases, the  pricing service
values the  security by  taking into  account various  factors affecting  market
value,  including yields and  prices of comparable  securities, indication as to
value from dealers and general market conditions. All portfolio securities  with
a  remaining maturity  of less  than 60  days are  valued by  the amortized cost
method, whereby such securities are valued  at acquisition cost as adjusted  for
amortization  of premium  or accretion of  discount to maturity.  Because of the
large number of  municipal bond  issues outstanding and  their varying  maturity
dates,  coupons and risk  factors applicable to each  issuer's books, no readily
available market quotations exist for most municipal securities.
 
     Trading in  securities  on  most  foreign  exchanges  and  over-the-counter
markets  is normally completed  before the close  of the NYSE  and may also take
place on days on which  the NYSE is closed.  If events materially affecting  the
value  of securities occur between the time  when the exchange on which they are
traded closes and the time when the  Fund's net asset value is calculated,  such
securities   will  be  valued  at  fair  value  in  accordance  with  procedures
established by and under the general supervision of the Directors.
 
                                     SAI-19
 

<PAGE>
<PAGE>
     If market quotations for the  Fund's securities are not readily  available,
such  securities will be valued  at 'fair value' as  determined in good faith by
the Directors.
 
PERFORMANCE DATA
 
     From time to time, the Fund may quote performance in terms of yield, actual
distributions, total return or capital appreciation in reports, sales literature
and advertisements published  by the Fund.  Current performance information  for
the  Fund  may be  obtained  by calling  your  Shareholder Servicing  Agent. See
'Additional Information' in the Prospectus.
 
     YIELD QUOTATIONS. As  required by  SEC regulations,  the Fund's  annualized
yield  is computed by dividing the Fund's net investment income per share earned
during a 30-day period by its net asset value on the last day of the period. The
average daily  number of  Fund shares  outstanding during  the period  that  are
eligible  to receive dividends is used  in determining the net investment income
per share.  Income is  computed by  totaling  the interest  earned on  all  debt
obligations  during the period and subtracting from that amount the total of all
recurring expenses  incurred  during  the  period.  The  30-day  yield  is  then
annualized  on  a bond-equivalent  basis  assuming semi-annual  reinvestment and
compounding  of   net  investment   income,  as   described  under   'Additional
Information' in the Prospectus.
 
     TAX  EQUIVALENT  YIELD QUOTATION.  The tax  equivalent annualized  yield is
computed by first computing  the annualized yield as  discussed above. Then  the
portion  of the yield attributable  to securities the income  of which is exempt
for federal income tax purposes is determined. This portion of the yield is then
divided by one minus 39.6% (39.6% being the 1995 maximum marginal federal income
tax rate for married taxpayers filing jointly) and then added to the portion  of
the  yield that was not attributable to  securities, the income of which was not
tax-exempt.
 
     TOTAL RETURN QUOTATIONS. As required by SEC regulations, the Fund's average
annual total return for a period is computed by assuming a hypothetical  initial
payment  of $1,000.  It is  then assumed  that all  of the  Fund's dividends and
distributions over the relevant period are  reinvested. It is then assumed  that
at  the end  of the period,  the entire  amount is redeemed.  The average annual
total return is then calculated by determining the annual rate required for  the
initial  payment  to grow  to the  amount  which would  have been  received upon
redemption (i.e., the average annual compound rate of return).
 
     Aggregate total returns, reflecting the cumulative percentage change over a
measuring period, may also be calculated.
 
     GENERAL. The Fund's performance will vary from time-to-time depending  upon
market  conditions, the composition of its portfolio and its operating expenses.
Consequently,  any  given  performance   quotation  should  not  be   considered
representative  of the Fund's  performance for the  future. In addition, because
performance will  fluctuate,  it  may  not provide  a  basis  for  comparing  an
investment  in the Fund with certain bank deposits or other investments that pay
a fixed yield or return for a stated period of time.
 
     Comparative performance  information  may  be  used  from  time-to-time  in
advertising  the Fund's  shares, including  data from  Lipper Analytic Services,
Morningstar Inc. and other industry publications.
 
PORTFOLIO TRANSACTIONS
 
     The Adviser places  orders for  all purchases  and sales  of securities  on
behalf  of the Fund.  The Adviser enters into  repurchase agreements and reverse
repurchase agreements and effects loans of portfolio securities on behalf of the
Fund. See 'Investment Objective and Policies'.
 
                                     SAI-20
 

<PAGE>
<PAGE>
     Fixed income  and  debt  securities  and  municipal  bonds  and  notes  are
generally  traded at a net price with  dealers acting as principal for their own
accounts without a stated commission. The price of the security usually includes
profit to the dealers. In underwritten offerings, securities are purchased at  a
fixed  price  that  includes  an  amount  of  compensation  to  the underwriter,
generally referred to as the underwriter's concession or discount. Occasionally,
certain securities may be  purchased directly from an  issuer, in which case  no
commissions or discounts are paid.
 
     The  Fund's  portfolio  transactions  will  be  undertaken  principally  to
accomplish the Fund's objective in relation to expected movements in the general
level of interest  rates. The Fund  may, however, engage  in short-term  trading
consistent  with  this  objective.  In  connection  with  the  Fund's  portfolio
transactions, the  Adviser  intends  to  seek best  price  and  execution  on  a
competitive basis for both purchases and sales of securities. Portfolio turnover
may  vary from  year to  year, as well  as within  a year.  The annual portfolio
turnover rate for the Fund is expected to be under 100%.
 
     Portfolio securities will not  be purchased from or  through or sold to  or
through  the Distributor or an 'affiliated person' of the Fund or an 'affiliated
person' thereof (as defined in  the 1940 Act) when  such entities are acting  as
principals,  except to the extent  permitted by law. In  addition, the Fund will
not purchase securities during the existence of any underwriting group  relating
thereto  of which the Adviser or an affiliate of the Adviser is a member, except
to the extent permitted by law.
 
     On those  occasions  when the  Adviser  deems the  purchase  or sale  of  a
security  to be  in the Fund's  best interests  as well as  other customers, the
Adviser to the extent permitted by  applicable laws and regulations may, but  is
not  obligated to, aggregate the securities to be sold or purchased for the Fund
with those to be sold or purchased  for other customers in order to obtain  best
execution,  including  lower brokerage  commissions if  appropriate. In  such an
event, the securities so purchased or sold  as well as any expenses incurred  in
the  transaction will be allocated by the  Adviser in the manner it considers to
be  most  equitable  and  consistent  with  its  fiduciary  obligations  to  its
customers. In some instances, this procedure might adversely affect the Fund.
 
     If  the Fund  writes an option  and effects a  closing purchase transaction
with respect to such an option, the transaction will normally be executed by the
same broker-dealer who executed the sale  of the option. The writing of  options
by  the Fund will be subject to limitations established by each of the exchanges
governing the maximum number of options in  each class that may be written by  a
single  investor or group of investors  acting in concert, regardless of whether
the options  are written  on the  same or  different exchanges  or are  held  or
written  in one or more  accounts or through one or  more brokers. The number of
options that  the Fund  may write  may be  affected by  options written  by  the
Adviser  for  other  investment  advisory clients.  An  exchange  may  order the
liquidation of positions found to be in excess of these limits and it may impose
certain other sanctions.
 
ORGANIZATION
 
UBS PRIVATE INVESTOR FUNDS, INC.
 
     UBS Private Investor Funds, Inc. is a Maryland corporation and is currently
issuing shares of common stock, par value $0.001 per share, in four series:  The
UBS  Bond Fund Series; The UBS Tax Exempt  Bond Fund Series; The UBS U.S. Equity
Fund Series; and The UBS International Equity Fund Series.
 
     Each share of a series issued by the Company will have a pro rata  interest
in  the assets  of that  series. The  Company is  currently authorized  to issue
500,000,000 shares of common stock, including  10,000,000 shares of each of  the
four current series. Under Maryland law, the Board has the authority to increase
the  number of shares of stock that the Company has the authority to issue. Each
share has one vote (and fractional shares have a corresponding fractional  vote)
with  respect to matters  upon which shareholder  vote is required; stockholders
have   no   cumulative   voting   rights   with   respect   to   their   shares.
 
                                     SAI-21
 

<PAGE>
<PAGE>
Shares  of all series vote together as a  single class except that if the matter
being voted upon affects only a particular series then it will be voted on  only
by  that series. If a matter affects  a particular series differently from other
series, that series will vote separately on such matter. Each share is  entitled
to  participate equally in dividends and distributions declared by the Directors
with respect to the relevant series, and in the net distributable assets of such
series on liquidation.
 
     Under Maryland law, the Company is  not required to hold an annual  meeting
of stockholders unless required to do so under the 1940 Act. It is the Company's
policy  not to hold  an annual meeting  of stockholders unless  so required. All
shares of the Company  (regardless of series)  have noncumulative voting  rights
for  the election of Directors. Under  Maryland law, the Company's Directors may
be removed  by vote  of  stockholders. The  Board  currently consists  of  three
directors.
 
     CONTROL PERSONS. The Company expects that, immediately prior to the initial
public  offering of its shares, the sole holder  of the capital stock of each of
its series will be Signature. Upon the offering of the Fund shares, the Fund may
have a number of shareholders each holding 5% or more of the Fund's  outstanding
shares.  In such an  event, the Company  cannot predict the  length of time that
such persons will own such amounts or  whether one or more of such persons  will
become 'control' persons of the Fund.
 
TAXES
 
     The  Fund intends to qualify and intends to remain qualified as a regulated
investment company (a 'RIC') under Subchapter M of the Code. As a RIC, the  Fund
must,  among other  things: (a)  derive at  least 90%  of its  gross income from
dividends, interest, payments  with respect  to loans of  stock and  securities,
gains from the sale or other disposition of stock or securities and other income
(including  but  not  limited  to  gains  from  options,  futures,  and  forward
contracts) derived with respect  to its business of  investing in such stock  or
securities;  (b) derive less than 30% of its gross income from the sale or other
disposition of stock,  securities, options,  futures or  forward contracts  held
less  than three months; and  (c) diversify its holdings so  that, at the end of
each fiscal quarter, (i) at least 50% of the value of the Fund's total assets is
represented by cash, U.S. Government  securities, investments in other RICs  and
other  securities limited in respect of any  one issuer to an amount not greater
than 5% of the Fund's total assets and 10% of the outstanding voting  securities
of  such issuer and (ii) not  more than 25% of the  value of its total assets is
invested in  the  securities of  any  one  issuer (other  than  U.S.  Government
securities  or the securities of other RICs). As  a RIC, the Fund (as opposed to
its shareholders)  will  not be  subject  to federal  income  taxes on  the  net
investment  income and  capital gains that  it distributes  to its shareholders,
provided that  at  least 90%  of  its net  investment  income and  realized  net
short-term  capital  gains in  excess of  net long-term  capital losses  for the
taxable year is distributed.
 
     For federal income tax purposes, dividends that are declared by the Fund in
October, November or December  as of a  record date in  such month and  actually
paid  in January of the following  year will be treated as  if they were paid on
December 31 of the  year declared. Therefore, such  dividends will generally  be
taxable to a shareholder in the year declared rather than the year paid.
 
     The  Fund  intends  to  qualify to  pay  exempt-interest  dividends  to its
shareholders by ensuring  that, at  the close  of each  quarter of  each of  its
taxable years, at least 50% of the value of its total assets will consist of tax
exempt securities. An exempt-interest dividend is that part of distribution made
by  the  Fund that  consists  of interest  received by  the  Fund on  tax exempt
securities less any expenses allocable to  such interest, provided the 50%  test
described  above  is met.  Shareholders will  not incur  any federal  income tax
liability on the amount of exempt-interest  dividends received by them from  the
Fund.  In view  of the  investment policy  of the  Fund, it  is expected  that a
substantial portion of its dividends will be exempt-interest dividends, although
the Fund  may  from time  to  time realize  and  distribute net  short-term  and
long-term capital gains and may invest limited amounts in taxable securities.
 
     Gains  or losses  on sales  of securities  by the  Fund will  be treated as
long-term capital gains or  losses if the  securities have been  held by it  for
more  than  one year  except in  certain  cases where,  if applicable,  the Fund
acquires a put or writes a call with respect to such securities. Other gains  or
losses  on the sale  of securities will  be short-term capital  gains or losses.
Gains and losses on the sale, lapse or other
 
                                     SAI-22
 

<PAGE>
<PAGE>
termination of options on  securities will be treated  as gains and losses  from
the sale of securities. If an option written by the Fund lapses or is terminated
through  a closing transaction, such  as a repurchase by  the Fund of the option
from its  holder, the  Fund will  realize  a short-term  capital gain  or  loss,
depending  on whether the premium income is greater or less than the amount paid
by the Fund in the closing transaction. If securities are purchased by the  Fund
pursuant to the exercise of a put option written by it, the Fund's cost basis in
the securities purchased will be reduced by the premium received.
 
     Options  and  futures  contracts  entered  into  by  the  Fund  may  create
'straddles' for U.S. federal income tax  purposes that may affect the  character
and  timing  of gains  or losses  realized by  the Fund  on options  and futures
contracts or on the  underlying securities. 'Straddles' may  also result in  the
loss  of the holding period of underlying  securities for purposes of the 30% of
gross income test described  above, and therefore, the  Fund's ability to  enter
into options and futures contracts may be limited.
 
     Certain  options and futures contracts held by  the Fund at the end of each
fiscal year will be  required to be  'marked to market'  for federal income  tax
purposes i.e., treated as having been sold at market value. For such options and
futures  contracts, 60% of any gain or loss recognized on these deemed sales and
on actual dispositions will  be treated as long-term  capital gain or loss,  and
the  remainder will be treated as short-term  capital gain or loss regardless of
how long the Fund has held such options or futures.
 
     STATE AND LOCAL TAXES. The Fund may  be subject to state or local taxes  in
jurisdictions in which the Fund is deemed to be doing business. In addition, the
treatment  of the Fund and its shareholders in those states that have income tax
laws might differ from treatment under the federal income tax laws. For example,
a portion of  the dividends  received by shareholders  may be  subject to  state
income  tax. Shareholders should consult their  own tax advisors with respect to
any state or local taxes.
 
ADDITIONAL INFORMATION
 
     This SAI does not contain all the information included in the  Registration
Statement  filed with  the SEC under  the Securities  Act and the  1940 Act with
respect to the securities offered hereby. Certain portions of this SAI have been
omitted pursuant  to the  rules and  regulations of  the SEC.  The  Registration
Statement,  including the exhibits filed therewith,  the Prospectus and the SAI,
may be examined at the office of the SEC, Room 1024, Judiciary Plaza, 450  Fifth
Street, N.W., Washington D.C. 20549.
 
     Statements  contained in this  SAI as to  the contents of  any agreement or
other document referred to are not necessarily complete, and, in each  instance,
reference  is made to the  copy of such agreement or  other document filed as an
exhibit to the Registration Statement of which this document forms a part,  each
such statement being qualified in all respects by such reference.
 
                                     SAI-23



<PAGE>
<PAGE>
UBS PRIVATE INVESTOR FUNDS, INC.- UBS TAX EXEMPT BOND FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1996
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
ASSETS
<S>                                                                                                 <C>
     Cash........................................................................................   $25,000
     Deferred organization costs.................................................................    72,500
                                                                                                    -------
          Total Assets...........................................................................    97,500
                                                                                                    -------
LIABILITIES
     Organization costs payable..................................................................    72,500
                                                                                                    -------
NET ASSETS.......................................................................................   $25,000
                                                                                                    -------
                                                                                                    -------
Shares Outstanding ($0.001 par value)............................................................       250
                                                                                                    -------
                                                                                                    -------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE...................................   $100.00
                                                                                                    -------
                                                                                                    -------
COMPOSITION OF NET ASSETS:
     Shares of common stock, at par..............................................................   $     0
     Additional paid-in capital..................................................................    25,000
                                                                                                    -------
                                                                                                    -------
Net Assets, January 31, 1996.....................................................................   $25,000
                                                                                                    -------
                                                                                                    -------
</TABLE>
 
                       See Notes to Financial Statements.
 
                                      F-1

<PAGE>
<PAGE>
UBS PRIVATE INVESTOR FUNDS, INC.-UBS TAX EXEMPT BOND FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1996
- --------------------------------------------------------------------------------
 
NOTE 1 -- GENERAL
 
UBS  Private Investor  Funds, Inc. (the  'Company') was organized  as a Maryland
corporation on  November 16,  1995.  The Company  consists  of four  series,  as
follows:  UBS Bond Fund, UBS Tax Exempt Bond  Fund, UBS U.S. Equity Fund and UBS
International Equity  Fund.  The  accompanying financial  statements  and  notes
relate only to UBS Tax Exempt Bond Fund (the 'Fund').
 
Union  Bank  of  Switzerland,  New  York Branch  (the  'Branch')  will  serve as
investment  adviser  to  the   Fund.  Signature  Broker-Dealer  Services,   Inc.
('Signature')  will serve as the Fund's administrator, principal underwriter and
distributor of the Fund's shares.
 
The Fund has had no operations through January 31, 1996, other than the sale  to
Signature of 250 shares of the Fund for $25,000.
 
Organization  costs  incurred in  connection with  the organization  and initial
registration of the Fund will be paid initially by the Branch and reimbursed  by
the  Fund.  Such organization  costs have  been deferred  and will  be amortized
ratably over a period of sixty  months from the commencement of operations.  The
amount  paid  by the  Fund on  any  redemption by  Signature (or  any subsequent
holder) of the Fund's initial shares will be reduced by the pro-rata portion  of
any unamortized organization expenses of the Fund.
 
NOTE 2 -- AGREEMENTS
 
The  Branch is expected to enter into  an Investment Advisory Agreement with the
Fund. Pursuant to the  terms of this agreement,  the Branch will be  responsible
for  the  provision  of  investment  advice,  portfolio  management  and certain
administrative services  to the  Fund.  For its  services,  the Branch  will  be
entitled to a fee, accrued daily and payable monthly, at an annual rate of 0.45%
of the average net assets of the Fund.
 
Signature  expects to enter  into an Administrative  Services Agreement with the
Company pursuant to which it will agree to administer the day-to-day  operations
of  the Fund subject to  the direction and control of  the Board of Directors of
the Company. For  the services provided  to the Fund,  Signature will receive  a
fee, accrued daily and payable monthly, at an annual rate of 0.10% of the Fund's
first  $100 million average net assets, 0.075%  of the next $100 million of such
assets and 0.05% of such assets in excess of $200 million.
 
Signature expects to enter into a  Distribution Agreement with the Company.  The
Distributor  will not receive  a fee pursuant  to the terms  of the Distribution
Agreement.
 
The Company expects to enter into separate Shareholder Servicing Agreements (the
'SSA') with the  Branch and Signature.  Pursuant to  the terms of  the SSA,  the
Branch  will agree to provide shareholder support  to their clients who are also
shareholders of the Fund while Signature will agree to provide support  services
to  all other shareholders  of the Fund.  Both Signature and  the Branch will be
entitled to a fee under the SSA, accrued daily and payable monthly, at an annual
rate of 0.25% of the average balance of the accounts so serviced. Services to be
provided may include, but are not limited to, any of the following: establishing
and/or maintaining shareholder accounts and records, assisting investors seeking
to purchase or redeem Fund shares, providing performance information relating to
the Fund and responding to shareholder inquiries.
 
The Branch has voluntarily agreed to waive a portion of its fees and reimburse a
portion of Fund expenses to the  extent that the ordinary operating expenses  of
the Fund exceed an annual rate of 0.80% of the Fund's average net assets.
 
                                      F-2




<PAGE>
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Shareholder and Board of Directors of
UBS PRIVATE INVESTOR FUNDS, INC.
 
In  our opinion, the  accompanying statement of  assets and liabilities presents
fairly, in all material respects, the financial position of UBS Tax Exempt  Bond
Fund  (one of  the four  series constituting  UBS Private  Investor Funds, Inc.,
hereafter referred to as  the 'Funds') at January  31, 1996, in conformity  with
generally  accepted  accounting  principles.  This  financial  statement  is the
responsibility of the  Funds' management;  our responsibility is  to express  an
opinion  on this financial statement based on  our audit. We conducted our audit
of this  financial  statement in  accordance  with generally  accepted  auditing
standards  which require that we plan and perform the audit to obtain reasonable
assurance  about  whether   the  financial   statement  is   free  of   material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We  believe that our audit provides  a
reasonable basis for the opinion expressed above.
 
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
January 31, 1996
 
                                      F-3



<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

                         UBS PRIVATE INVESTOR FUNDS, INC.

                                   UBS BOND FUND

- --------------------------------------------------------------------------------



<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
PROSPECTUS
 
UBS BOND FUND
6 ST. JAMES AVENUE
BOSTON, MASSACHUSETTS 02116
FOR INFORMATION CALL (800) 914-8566
 
UBS  Bond Fund  (the 'Fund')  is designed for  investors seeking  a higher total
return from  a portfolio  of  debt securities  issued  by foreign  and  domestic
companies   than  that  generally  available  from  a  portfolio  of  short-term
obligations in exchange for some risk of capital.
 
The Fund is  a diversified, no-load  mutual fund  for which there  are no  sales
charges or exchange or redemption fees. The Fund is one of several series of UBS
Private  Investor Funds, Inc. (the 'Company'), an open-end management investment
company organized as a corporation under Maryland law.
 
UNLIKE OTHER MUTUAL FUNDS THAT DIRECTLY  ACQUIRE AND MANAGE THEIR OWN  PORTFOLIO
OF  SECURITIES, THE FUND SEEKS TO  ACHIEVE ITS INVESTMENT OBJECTIVE BY INVESTING
ALL OF  ITS  INVESTABLE  ASSETS  IN UBS  BOND  PORTFOLIO  (THE  'PORTFOLIO'),  A
CORRESPONDING  OPEN-END MANAGEMENT INVESTMENT COMPANY HAVING THE SAME INVESTMENT
OBJECTIVE AS THE FUND. THE FUND EMPLOYS A TWO-TIER MASTER-FEEDER STRUCTURE  THAT
IS MORE FULLY DESCRIBED UNDER THE SECTION CAPTIONED 'MASTER-FEEDER STRUCTURE'.
 
The  Portfolio is advised by the New York Branch (the 'Branch' or the 'Adviser')
of Union Bank of Switzerland (the 'Bank').
 
This Prospectus  sets forth  concisely the  information about  the Fund  that  a
prospective  investor  ought to  know before  investing. It  should be  read and
retained for  future reference.  A Statement  of Additional  Information,  dated
March 1, 1996, provides further discussion of certain topics referred to in this
Prospectus and other matters that may be of interest to investors. The Statement
of  Additional  Information  has been  filed  with the  Securities  and Exchange
Commission and  is incorporated  herein by  reference and  is available  without
charge  upon written  request from  the Company  or the  Distributor (as defined
herein) at the addresses  set forth on  the back cover of  the Prospectus or  by
calling (800) 914-8566.
 
INVESTMENTS  IN THE FUND ARE NOT DEPOSITS  WITH OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, UNION BANK OF SWITZERLAND OR ANY OTHER BANK. SHARES OF THE  FUND
ARE  NOT  INSURED  BY THE  FEDERAL  DEPOSIT INSURANCE  CORPORATION,  THE FEDERAL
RESERVE BOARD, OR ANY  OTHER GOVERNMENTAL AGENCY. AN  INVESTMENT IN THE FUND  IS
SUBJECT  TO RISKS THAT MAY CAUSE THE  VALUE OF THE INVESTMENT TO FLUCTUATE. WHEN
THE INVESTMENT IS REDEEMED,  THE VALUE MAY  BE HIGHER OR  LOWER THAN THE  AMOUNT
ORIGINALLY INVESTED BY THE INVESTOR.
 
THESE  SECURITIES HAVE  NOT BEEN APPROVED  OR DISAPPROVED BY  THE SECURITIES AND
EXCHANGE COMMISSION OR ANY  STATE SECURITIES COMMISSION  NOR HAS THE  SECURITIES
AND  EXCHANGE  COMMISSION OR  ANY STATE  SECURITIES  COMMISSION PASSED  UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
 
PROSPECTUS DATED MARCH 1, 1996. 



<PAGE>
<PAGE>
UBS BOND FUND
INVESTORS FOR WHOM THE FUND IS DESIGNED
 
UBS  Bond Fund  (the 'Fund')  is designed for  investors seeking  a higher total
return from  a portfolio  of  debt securities  issued  by foreign  and  domestic
companies   than  that  generally  available  from  a  portfolio  of  short-term
obligations in exchange for some risk of capital. The Fund seeks to achieve  its
investment  objective  by investing  all of  its investable  assets in  UBS Bond
Portfolio (the 'Portfolio'),  an open-end management  investment company  having
the   same   investment  objective   as   the  Fund.   Because   the  investment
characteristics and experience of the  Fund will correspond directly with  those
of  the Portfolio, the discussion in  this Prospectus focuses on the investments
and investment policies of the Portfolio. The  net asset value of shares of  the
Fund  fluctuates with changes in the value  of the investments in the Portfolio.
See 'Investment Objective and Policies -- Quality Information.'
 
The Portfolio may make  various types of investments  in seeking its  objective.
Among  the  permissible  investments  for  the  Portfolio  are  bonds  and  debt
instruments of foreign and domestic companies. The Portfolio may also invest  in
futures  contracts, options, forward contracts on foreign currencies and certain
privately placed securities. For further information about these investments and
related investment techniques, see 'Investment Objective and Policies' discussed
below.
 
The minimum initial investment in the  Fund is $25,000, except that the  minimum
initial  investment is $10,000 for shareholders of another series of UBS Private
Investor Funds, Inc. (the 'Company'). The minimum subsequent investment for  all
investors  is $5,000.  These minimums  may be  waived for  certain accounts. See
'Purchase of Shares.' If shareholders reduce their total investment in shares of
the Fund to  less than $10,000,  their investment will  be subject to  mandatory
redemption.  See 'Redemption of Shares -- Mandatory Redemption.' The Fund is one
of several  series of  the Company,  an open-end  management investment  company
organized as a Maryland corporation.
 
This   Prospectus  describes  the  Fund's  investment  objective  and  policies,
management and operations to enable investors to decide if the Fund suits  their
investment  needs. The Fund operates through a two-tier master-feeder structure.
The Company's Board of Directors (the 'Directors' or the 'Board') believes  that
this  structure  provides  Fund  shareholders with  the  opportunity  to achieve
certain  economies  of  scale  that  would  otherwise  be  unavailable  if   the
shareholders'  investments were not pooled  with other investors sharing similar
investment objectives.
 
The following  table  illustrates  that  Fund  investors  incur  no  shareholder
transaction  expenses: their  investments in  the Fund  are subject  only to the
operating expenses  set  forth  below for  the  Fund  and the  Portfolio,  as  a
percentage  of average  daily net assets  of the Fund.  These operating expenses
include expenses incurred  by the Fund  and expenses incurred  by the  Portfolio
that  are allocable to  the Fund. The  Directors believe that  the aggregate per
share expenses of the Fund and the Portfolio will be approximately equal to  and
may  be less  than the  expenses that the  Fund would  incur if  it retained the
services of an investment adviser and invested its assets directly in  portfolio
securities.  Fund and Portfolio expenses are  discussed below under the headings
'Management', 'Expenses' and 'Shareholder Services.'
 
<TABLE>
<S>                                                                                                    <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases.....................................................................   None
Sales Load Imposed on Reinvested Dividends..........................................................   None
Deferred Sales Load.................................................................................   None
Redemption Fees.....................................................................................   None
Exchange Fees.......................................................................................   None
</TABLE>
 
                                      -2-
 
<PAGE>

<PAGE>
 
<TABLE>
<S>                                                                                                  <C>
EXPENSE TABLE
ANNUAL OPERATING EXPENSES*
Advisory Fees, After Fee Waiver**.................................................................   0.00%
Rule 12b-1 Fees...................................................................................   None
Other Expenses, After Expense Reimbursements***...................................................   0.80%
                                                                                                     ----
Total Operating Expenses, After Fee Waivers and Expense Reimbursements*...........................   0.80%
                                                                                                     ----
                                                                                                     ----
</TABLE>
 
*   Expenses are expressed as a percentage of the Fund's projected average daily
net assets and are based on estimates of the expenses to be incurred during  the
current   fiscal   year,  after   any   applicable  fee   waivers   and  expense
reimbursements. Without  such  fee  waivers and  expense  reimbursements,  Total
Operating  Expenses would be equal,  on an annual basis,  to 6.00% of the Fund's
projected average daily net assets. See 'Management.'
 
**   The New  York Branch  (the  'Branch' or  the 'Adviser')  of Union  Bank  of
Switzerland (the 'Bank') has agreed to waive fees and reimburse the Fund for any
of  its operating expenses  (including those the  Fund incurs indirectly through
the Portfolio) to the extent that the Fund's total operating expenses exceed, on
an annual basis, 0.80% of  the Fund's average daily  net assets. The Branch  may
modify  or discontinue this undertaking at any  time in the future with 30 days'
notice to the Fund. The advisory fee would be 0.45% if there were no fee waiver.
See 'Management -- Adviser and Funds Services Agent' and 'Expenses.'
 
*** The  fees  and expenses  in  Other Expenses,  After  Expense  Reimbursements
include  fees payable  to Signature  Broker-Dealer Services,  Inc. ('Signature')
under an  Administrative  Services Agreement  with  the Fund,  fees  payable  to
Signature  Financial Group (Grand Cayman)  Limited ('Signature-Cayman') under an
Administrative Services Agreement with the Portfolio, fees payable to  Investors
Bank  & Trust Company (the 'Custodian' or  the 'Transfer Agent') as custodian of
the Fund and the Portfolio, and fees payable to the Branch under the Shareholder
Servicing  Agreement.  For  a  more  detailed  description  of  contractual  fee
arrangements,  including fee waivers and expense reimbursements, and of the fees
and expenses  included  in Other  Expenses,  see 'Management'  and  'Shareholder
Services.'
 
EXAMPLE
 
An  investor would pay the following expenses on a $1,000 investment, assuming a
5% annual return and a redemption at the end of each time period:
 
<TABLE>
<S>                                                            <C>
1 Year......................................................   $ 8
3 Years.....................................................   $26
</TABLE>
 
The above Expense  Table is designed  to assist investors  in understanding  the
various  direct and indirect costs and expenses that Fund investors are expected
to bear  and reflects  the expenses  of the  Fund and  the Fund's  share of  the
Portfolio's  expenses. In  connection with the  above Example,  please note that
$1,000 is less than the Fund's minimum investment requirement and that there are
no redemption or exchange fees of any kind. See 'Purchase of Shares',  'Exchange
of  Shares'  and 'Redemption  of  Shares.' THE  EXAMPLE  IS HYPOTHETICAL;  IT IS
INCLUDED SOLELY FOR ILLUSTRATIVE PURPOSES,  AND ASSUMES THE CONTINUATION OF  THE
FEE WAIVERS AND EXPENSE REIMBURSEMENTS REPRESENTED IN THE ABOVE 'EXPENSE TABLE.'
IT  SHOULD  NOT BE  CONSIDERED A  REPRESENTATION  OF FUTURE  PERFORMANCE; ACTUAL
EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
 
HISTORICAL PERFORMANCE OF COMPARABLE DISCRETIONARY ACCOUNTS. The following table
sets forth the composite average annual  total returns for the one, three,  five
and  ten year  periods ended  December 31,  1995 for  all discretionary accounts
described below that  have been managed  for at  least one full  quarter by  UBS
Asset  Management (New York) Inc., a wholly-owned subsidiary of the Bank ('UBSAM
NY'), and the average annual total return during the same periods for the Lehman
Government/Corporate Intermediate Bond Index.  Such accounts have  substantially
the  same  investment  objective  and  policies  and  are  managed  in  a manner
substantially the same as the Portfolio. While the Portfolio will be managed  by
the Branch, the management of the Portfolio will be substantially the same as by
UBSAM  NY and will be carried out  by personnel who performed these services for
the discretionary accounts at
 
                                      -3-
 
<PAGE>

<PAGE>
UBSAM NY, who will  be employed by  the Branch for  this purpose. The  composite
total  returns for such accounts have been  adjusted to deduct all of the Fund's
estimated annual total operating  expenses of 0.80%  of projected average  daily
net  assets as set forth in the Fee Table above. The composite total returns are
time-weighted  and  weighted  by  individual   account  size  and  reflect   the
reinvestment  of interest.  The composite  total returns  of these discretionary
accounts should  not be  viewed as  a prediction  of future  performance of  the
Portfolio.  Lehman Government/Corporate Intermediate Bond  Index is an unmanaged
composite of intermediate  duration consisting  of publicly-issued,  fixed-rate,
non-convertible, domestic bonds.
 
<TABLE>
<CAPTION>
             AVERAGE ANNUAL TOTAL RETURNS FOR                  COMPOSITE        LEHMAN GOV'T/CORP.
              PERIODS ENDED DECEMBER 31, 1995                 TOTAL RETURN    INTERMEDIATE BOND INDEX
- -----------------------------------------------------------   ------------    -----------------------
 
<S>                                                           <C>             <C>
One Year...................................................       15.63%               15.34%
Three Year.................................................        7.06                 7.16
Five Year..................................................        8.41                 8.61
Ten Year...................................................        8.44                 8.81
</TABLE>
 
MASTER-FEEDER STRUCTURE
 
Unlike  other mutual funds that directly  acquire and manage their own portfolio
of securities, the Fund seeks to  achieve its investment objective by  investing
all  of its  investable assets in  the Portfolio, a  separate investment company
with the same investment objective  as the Fund. The  Portfolio is one of  three
series  of UBS Investor Portfolios Trust  (the 'Trust'). See 'Organization.' The
investment objective of the Fund and the Portfolio may be changed only with  the
approval  of the holders of the outstanding  shares of the Fund or the investors
in the Portfolio, respectively.
 
This  master-feeder  structure  has  been  developed  relatively  recently,   so
shareholders should carefully consider this investment approach.
 
In  addition to selling an interest in  the Portfolio to the Fund, the Portfolio
may sell  interests in  the Portfolio  to other  mutual funds  or  institutional
investors.  Such investors will  invest in the  Portfolio on the  same terms and
conditions as the  Fund and will  pay a proportionate  share of the  Portfolio's
expenses.  However, other entities investing in the Portfolio may sell shares of
their own  fund  using a  different  pricing  structure than  the  Fund's.  Such
different pricing structures may result in differences in returns experienced by
investors  in  other funds  that invest  in the  Portfolio. Such  differences in
returns are  not uncommon  and  are present  in  other mutual  fund  structures.
Information  concerning other holders of interests in the Portfolio is available
from Signature at (617) 423-0800.
 
The Fund may withdraw its investment in  the Portfolio at any time if the  Board
determines  that it  is in  the Fund's best  interests to  do so.  Upon any such
withdrawal, the Board would consider what  action might be taken, including  the
investment  of all the Fund's assets  in another pooled investment entity having
the same investment objective and restrictions  as the Fund or the retaining  of
an  investment  adviser  to manage  the  Fund's  assets in  accordance  with the
investment policies described below with respect to the Portfolio.
 
Certain  changes   in  the   Portfolio's  investment   objective,  policies   or
restrictions, or a failure by the Fund's shareholders to approve a change in the
Portfolio's  investment  objective  or  restrictions, may  require  the  Fund to
withdraw its investments in the Portfolio.  Any such withdrawal could result  in
an   in-kind  distribution  of  portfolio  securities  (as  opposed  to  a  cash
distribution) by  the  Portfolio  to  the  Fund.  In  no  event,  however,  will
securities  which are not  readily marketable exceed  15% of the  total value of
such in-kind distribution. Such a distribution may result in the Fund's having a
less diversified  portfolio  of  investments  or  adversely  affect  the  Fund's
liquidity,  and  the  Fund  could  incur  brokerage,  tax  or  other  charges in
converting such securities to cash.  Notwithstanding the above, there are  other
means for meeting shareholder redemption requests, such as borrowing.
 
Smaller  funds  investing in  the Portfolio  may be  materially affected  by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the  Portfolio, the remaining  funds may subsequently  experience
higher  pro  rata operating  expenses,  thereby lowering  returns. Additionally,
because the  Portfolio would  become smaller,  it may  become less  diversified,
resulting  in potentially increased portfolio risk (however, these possibilities
also exist for traditionally structured funds that have
 
                                      -4-
 
<PAGE>

<PAGE>
large or institutional investors who may withdraw from a fund). Also, funds with
a greater  pro rata  ownership  in the  Portfolio  could have  effective  voting
control  of its operations.  Except as permitted by  the Securities and Exchange
Commission (the  'SEC'), whenever  the  Fund is  requested  to vote  on  matters
pertaining   to  the  Portfolio,  the  Company  will  hold  a  meeting  of  Fund
shareholders and will cast all of its votes proportionately as instructed by the
Fund's  shareholders.  See  'Organization'   in  the  Statement  of   Additional
Information  ('SAI').  Fund shareholders  who do  not vote  will not  affect the
Fund's votes at  the Portfolio meeting.  The percentage of  the Company's  votes
representing  Fund shareholders not voting  will be voted by  the Company in the
same proportion as the Fund shareholders who do, in fact, vote.
 
For more information  about the Portfolio's  investment objective, policies  and
restrictions,  see 'Investment  Objective and  Policies', 'Additional Investment
Information  and  Risk   Factors'  and  'Investment   Restrictions'.  For   more
information about the Portfolio's management and expenses, see 'Management'. For
more   information  about  changing  the   investment  objective,  policies  and
restrictions of the Fund or the Portfolio, see 'Investment Restrictions'.
 
INVESTMENT OBJECTIVE AND POLICIES
 
The investment  objective of  the Fund  and the  Portfolio is  described  below,
together  with  the  policies  they  employ in  their  efforts  to  achieve this
objective. Additional information about the investment policies of the Fund  and
the  Portfolio appears  in the SAI  under 'Investment  Objectives and Policies.'
There can be  no assurance  that the  investment objective  of the  Fund or  the
Portfolio will be achieved.
 
The  objective  of  the Portfolio  is  to provide  a  high total  return  from a
portfolio  of  debt  securities  issued  by  foreign  and  domestic   companies,
consistent  with moderate  risk of capital  and maintenance  of liquidity. Total
return will consist of realized and unrealized capital gains and losses plus net
income. Although  the net  asset  value of  the  Portfolio will  fluctuate,  the
Portfolio  attempts  to preserve  the  value of  its  investments to  the extent
consistent with  its investment  objective.  The Fund  attempts to  achieve  its
objective  by investing all  of its investable  assets in UBS  Bond Portfolio, a
series of an open-end  management investment company; such  series has the  same
investment objective as the Fund.
 
The  Fund is designed  for investors who seek  a total return  over time that is
higher  than  that  generally  available   from  a  portfolio  of   shorter-term
obligations  while  recognizing  the greater  price  fluctuation  of longer-term
instruments. The Fund may also be a convenient way to add fixed income  exposure
to diversify an investor's existing portfolio.
 
The  Adviser  actively manages  the  Portfolio's duration  (defined  below), the
allocation of securities  across market  sectors and the  selection of  specific
securities  within sectors.  Based on  fundamental economic  and capital markets
research, the Adviser adjusts the duration  of the Portfolio in light of  market
conditions  and  the  Adviser's  opinion regarding  future  interest  rates. For
example, if interest rates are expected to fall, the duration may be  lengthened
to  take advantage of the anticipated increase  in bond prices. The Adviser also
actively allocates the Portfolio's assets among  the broad sectors of the  fixed
income  market  including,  but  not  limited  to,  U.S.  Government  and agency
securities, corporate  securities, private  placements, asset-backed  securities
and  mortgage related securities.  The Adviser intends  to identify and purchase
specific securities that it believes  are undervalued using quantitative  tools,
analyses  of credit  risk, the  expertise of a  dedicated trading  desk, and the
judgment  of  fixed  income  portfolio  managers  and  analysts.  Under   normal
circumstances,  the  Adviser intends  to keep  at least  65% of  the Portfolio's
assets invested in bonds. Bonds are debt instruments such as debentures,  notes,
mortgage  securities,  equipment  trust  certificates  and  other collateralized
securities, zero  coupon securities,  government  obligations and  money  market
instruments. See 'Corporate Bonds' and 'Government Obligations' below.
 
Duration is a measure of a bond's price sensitivity, expressed in years. It is a
measure  of interest rate risk of a bond calculated by taking into consideration
the number  of  years until  the  average dollar,  in  present value  terms,  is
received  from principal and interest  payments. For example, for  a bond with a
duration of four years, every 1% change in  yield will result in a 4% change  in
price  in  the  opposite  direction. The  Portfolio's  benchmark  is  the Lehman
Government/Corporate Intermediate Bond Index, which currently has a duration  of
approximately  3.25 years. The Portfolio intends  to have a duration between 0.5
years shorter and  0.5 years longer  than its benchmark.  The maturities of  the
Portfolio's  individual securities may  vary widely from  its duration, however,
and may be as long as 30 years.
 
                                      -5-
 
<PAGE>

<PAGE>
The Portfolio  intends to  manage  its securities  actively  in pursuit  of  its
investment  objective.  Portfolio  transactions  are  undertaken  principally to
accomplish the Portfolio's objective  in relation to  expected movements in  the
general level of interest rates, but the Portfolio may also engage in short-term
trading  consistent with its  objective. To the extent  the Portfolio engages in
short-term trading, it may incur increased transaction costs. See 'Taxes' below.
The annual portfolio turnover rate for the Fund is expected to be under 100%.
 
CORPORATE BONDS. The Portfolio may invest in a broad range of corporate bonds of
domestic and foreign issuers. These include debt securities of various types and
maturities,  e.g.,  debentures,  notes,  mortgage  securities,  equipment  trust
certificates  and other  collateralized securities  and zero  coupon securities.
Collateralized securities  are backed  by a  pool  of assets  such as  loans  or
receivables that generate cash flow to cover the payments due on the securities.
Collateralized  securities are subject to certain  risks, including a decline in
the value of the collateral backing  the security, failure of the collateral  to
generate  the anticipated  cash flow or  in certain cases  more rapid prepayment
than anticipated because of events affecting the collateral, such as accelerated
prepayment of mortgages or other  loans backing these securities or  destruction
of  equipment subject to equipment trust certificates.  In the event of any such
prepayment,  the  Portfolio  will  be  required  to  reinvest  the  proceeds  of
prepayments  at interest rates prevailing at the time of reinvestment, which may
be lower than  the interest rates  on the prepaid  securities. In addition,  the
value  of zero coupon  securities, which do  not pay interest,  is more volatile
than that of interest bearing debt  securities with the same maturity.  Although
zero  coupon  securities do  not pay  interest to  the holders  thereof, federal
income tax law  requires the  Fund to recognize  a portion  of such  securities'
discount  as income each  year. This income must  be distributed to shareholders
along with other income earned by  the Fund. See 'Dividends and  Distributions.'
The  Portfolio does  not intend to  invest in common  stock but may  invest to a
limited degree in convertible debt or  preferred stocks. The Portfolio does  not
expect  to invest  more than 25%  of its  total assets in  securities of foreign
issuers. If the Portfolio invests in non-U.S. dollar denominated securities,  it
may  hedge its foreign currency exposure. The Portfolio may purchase nonpublicly
offered debt securities. See 'Illiquid  Investments; Privately Placed and  Other
Unregistered  Securities.'  See  'Additional  Investment  Information  and  Risk
Factors'  for  further  information  on  foreign  investments  and   convertible
securities.
 
GOVERNMENT  OBLIGATIONS.  The  Portfolio  may invest  in  obligations  issued or
guaranteed by the U.S. Government and backed by the full faith and credit of the
United States. These securities include Treasury securities, obligations of  the
Government National Mortgage Association ('GNMA Certificates'), the Farmers Home
Administration and the Export Import Bank. GNMA Certificates are mortgage-backed
securities  that  evidence  an  undivided  interest  in  mortgage  pools.  These
securities are subject to more rapid repayment than their stated maturity  would
indicate  because prepayments of  principal on mortgages in  the pool are passed
through to the holder  of the securities. During  periods of declining  interest
rates,  prepayments of mortgages  in the pool  can be expected  to increase. The
pass-through of  these  prepayments  would  have  the  effect  of  reducing  the
Portfolio's  positions  in  these  securities  and  requiring  the  Portfolio to
reinvest  the  prepayments  at  interest   rates  prevailing  at  the  time   of
reinvestment.  The Portfolio may also invest in obligations issued or guaranteed
by U.S. Government agencies or  instrumentalities where the Portfolio must  look
principally  to the issuing or guaranteeing  agency for ultimate repayment; some
examples of  agencies or  instrumentalities issuing  these obligations  are  the
Federal Farm Credit System, the Federal Home Loan Banks and the Federal National
Mortgage  Association. Although  these governmental issuers  are responsible for
payments on their  obligations, they do  not guarantee their  market value.  See
'Investment  Objectives and Policies' in the  SAI for a more detailed discussion
of the Portfolio's investments in government securities.
 
The Portfolio may  also invest in  municipal obligations, which  may be  general
obligations  of  the  issuer  or payable  only  from  specific  revenue sources.
However, the Portfolio will invest only in municipal obligations that have  been
issued   on  a  taxable  basis  or   have  an  attractive  yield  excluding  tax
considerations. In  addition, the  Portfolio may  invest in  debt securities  of
foreign  governments  and  governmental  entities.  See  'Additional  Investment
Information and Risk Factors' for further information on foreign investments.
 
MONEY MARKET INSTRUMENTS. The Portfolio may purchase money market instruments to
invest temporary cash  balances or  to maintain liquidity  to meet  withdrawals.
However, the Portfolio may also
 
                                      -6-
 
<PAGE>

<PAGE>
invest,  without limit,  in money  market instruments  as a  temporary defensive
measure taken  during, or  in anticipation  of, adverse  market conditions.  The
money  market investments permitted for the Portfolio include obligations of the
U.S. Government and its agencies  and instrumentalities, other debt  securities,
commercial  paper, bank obligations and repurchase agreements. For more detailed
information about these money market investments, see 'Investment Objectives and
Policies' in the SAI.
 
QUALITY INFORMATION. It is a current  policy of the Portfolio that under  normal
circumstances  at least sixty-five percent (65%) of its investment in bonds will
consist of securities that  are rated at least  A by Moody's Investors  Service,
Inc.  ('Moody's') or Standard & Poor's Corporation ('Standard & Poor's') or that
are unrated and in the Adviser's opinion are of comparable quality. Up to thirty
percent (30%) of the Portfolio's bonds may consist of debt securities rated  Baa
or better by Moody's or BBB or better by Standard & Poor's or are unrated and in
the  Adviser's opinion are of comparable quality. Up to five percent (5%) of the
Portfolio's bonds may be invested in debt securities that are rated Ba or better
by Moody's or  BB or  better by  Standard &  Poor's or  are unrated  and in  the
Adviser's  opinion are of comparable quality. Securities rated Baa by Moody's or
BBB by  Standard  &  Poor's  are considered  investment  grade,  but  have  some
speculative  characteristics. Securities rated Ba by Moody's or BB by Standard &
Poor's are below investment grade and  considered to be speculative with  regard
to  payment of interest and principal. These  standards must be satisfied at the
time an investment is made. If the quality of the investment later declines, the
Portfolio may continue to hold the investment.
 
The Portfolio may also purchase obligations on a when-issued or delayed delivery
basis, enter  into  repurchase  and reverse  repurchase  agreements,  engage  in
mortgage  dollar  roll  transactions, loan  its  portfolio  securities, purchase
certain privately placed securities and enter into certain hedging  transactions
that may involve options on securities and securities indices, futures contracts
and  options on  futures contracts.  For a  discussion of  these investments and
investment techniques, see 'Additional Investment Information and Risk Factors.'
 
ADDITIONAL INVESTMENT INFORMATION AND RISK FACTORS
 
CONVERTIBLE SECURITIES. The  convertible securities in  which the Portfolio  may
invest  include any  debt securities or  preferred stocks that  may be converted
into common stock or that carry the right to purchase common stock.  Convertible
securities  entitle the holder to exchange the securities for a specified number
of shares of  common stock,  usually of the  same company,  at specified  prices
within a certain period of time.
 
WHEN-ISSUED   AND  DELAYED  DELIVERY  SECURITIES.  The  Portfolio  may  purchase
securities on a when-issued or delayed  delivery basis. Delivery of and  payment
for  these securities may take as long as a  month or more after the date of the
purchase commitment.  The  value  of  these  securities  is  subject  to  market
fluctuation  during  this  period  and  no interest  or  income  accrues  to the
Portfolio until settlement. At  the time of  settlement, a when-issued  security
may  be valued at less than its purchase price. Between the trade and settlement
dates, the  Portfolio will  maintain  a segregated  account with  the  Custodian
consisting  of a portfolio of high grade, liquid debt securities with a value at
least equal to these  commitments. When entering into  a when-issued or  delayed
delivery  transaction, the Portfolio will rely  on the other party to consummate
the transaction;  if the  other  party fails  to do  so,  the Portfolio  may  be
disadvantaged.  It is  the current  policy of  the Portfolio  not to  enter into
when-issued commitments exceeding in  the aggregate 15% of  the market value  of
the Portfolio's total assets less liabilities (excluding the obligations created
by these commitments).
 
REPURCHASE   AGREEMENTS.  The  Portfolio  may  engage  in  repurchase  agreement
transactions with  brokers, dealers  or banks  that meet  the credit  guidelines
established  by the Trust's Board of  Trustees (the 'Trustees'). In a repurchase
agreement, the  Portfolio buys  a security  from  a seller  that has  agreed  to
repurchase  it at a mutually agreed upon date and price, reflecting the interest
rate effective for the term  of the agreement. The  term of these agreements  is
usually  from overnight to one  week. A repurchase agreement  may be viewed as a
fully collateralized loan of money by the Portfolio to the seller. The Portfolio
always receives securities as collateral with  a market value at least equal  to
the purchase price plus accrued interest and this value is maintained during the
term  of  the  agreement. If  the  seller  defaults and  the  collateral's value
declines, the  Portfolio  might incur  a  loss. If  bankruptcy  proceedings  are
commenced  with  respect to  the seller,  the  Portfolio's realization  upon the
disposition of collateral may be
 
                                      -7-
 
<PAGE>

<PAGE>
delayed or limited. Investments in  repurchase agreements maturing in more  than
seven  days and  certain other investments  that may be  considered illiquid are
limited. See  'Illiquid Investments;  Privately  Placed and  Other  Unregistered
Securities' below.
 
REVERSE  REPURCHASE AGREEMENTS. The Portfolio is permitted to enter into reverse
repurchase agreements. In a reverse repurchase agreement, the Portfolio sells  a
security  and agrees to repurchase it at  a mutually agreed upon date and price,
reflecting the interest  rate effective for  the term of  the agreement. It  may
also  be viewed as the borrowing of money  by the Portfolio and, therefore, is a
form of leverage. Leverage may cause any gains or losses of the Portfolio to  be
magnified.  For more  information, including limitations  on the  use of reverse
repurchase agreements, see 'Investment Objectives  and Policies' in the SAI  and
'Investment Restrictions' below.
 
SECURITIES LENDING. Subject to applicable investment restrictions, the Portfolio
may lend its securities. The Portfolio may lend its securities if such loans are
secured  continuously by cash or equivalent collateral  or by a letter of credit
in favor of  the Portfolio at  least equal at  all times to  100% of the  market
value of the securities loaned, plus accrued interest. While such securities are
on  loan, the borrower will pay the Portfolio any income accruing thereon. Loans
will be subject to termination by  the Portfolio in the normal settlement  time,
generally  three business  days after  notice, or by  the borrower  on one day's
notice. Borrowed securities must  be returned when the  loan is terminated.  Any
gain  or loss in the market price  of the borrowed securities that occurs during
the term of the loan inures to  the Portfolio and its respective investors.  The
Portfolio  may pay reasonable  finders' and custodial fees  in connection with a
loan. In addition, the Portfolio will consider all the facts and  circumstances,
including  the creditworthiness of the  borrowing financial institution, and the
Portfolio will not make any loans in excess of one year. The Portfolio will  not
lend  its securities to any officer, Trustee, Director, employee or affiliate or
placement agent of the Company, the Portfolio, or the Adviser, Administrator  or
Distributor, unless otherwise permitted by applicable law.
 
FOREIGN  INVESTMENT INFORMATION. The Portfolio may invest in foreign securities.
Investments in  securities of  foreign  issuers and  in obligations  of  foreign
branches  of  domestic banks  involve somewhat  different investment  risks from
those affecting securities of  domestic issuers. There  may be limited  publicly
available  information with respect to foreign  issuers, and foreign issuers are
not generally subject  to uniform accounting,  auditing and financial  standards
and requirements comparable to those applicable to domestic companies. Dividends
and  interest paid by  foreign issuers may  be subject to  withholding and other
foreign taxes that may decrease the net return on such investments.
 
Investors should  realize  that the  value  of the  Portfolio's  investments  in
foreign  securities may be adversely affected  by changes in political or social
conditions,  diplomatic   relations,   confiscatory   taxation,   expropriation,
nationalization,  limitation on the removal of funds or assets, or imposition of
(or change in) exchange control or  tax regulations in those foreign  countries.
In  addition,  changes in  government  administrations or  economic  or monetary
policies in  the  United  States  or abroad  could  result  in  appreciation  or
depreciation  of portfolio securities and  could favorably or unfavorably affect
the Portfolio's  operations. Furthermore,  the economies  of individual  foreign
nations  may differ  from the U.S.  economy, favorably or  unfavorably, in areas
such  as  growth  of  gross   national  product,  rate  of  inflation,   capital
reinvestment, resource self-sufficiency and balance of payments position; it may
also  be  more difficult  to obtain  and  enforce a  judgment against  a foreign
issuer. Any foreign investments made by the Portfolio must be made in compliance
with U.S. and foreign currency restrictions and tax laws restricting the amounts
and types of foreign investments.
 
In addition,  while  the  volume  of  transactions  effected  on  foreign  stock
exchanges  has increased in  recent years, in most  cases it remains appreciably
below that of domestic security exchanges. Accordingly, the Portfolio's  foreign
investments  may  be less  liquid and  their  prices may  be more  volatile than
comparable investments in securities of U.S. companies. Moreover, the settlement
periods for foreign securities, which are often longer than those for securities
of  U.S.  issuers,  may  affect  portfolio  liquidity.  In  buying  and  selling
securities  on foreign exchanges, purchasers normally pay fixed commissions that
are generally  higher than  the  negotiated commissions  charged in  the  United
States.  In  addition,  there  is  generally  less  government  supervision  and
regulation of securities  exchanges, brokers  and issuers  located in  countries
other than in the United States.
 
                                      -8-
 
<PAGE>

<PAGE>
The  Portfolio may invest  in securities of  foreign issuers directly  or in the
form of  American Depositary  Receipts  ('ADRs'), European  Depositary  Receipts
('EDRs')  or other similar  securities of foreign  issuers. These securities may
not necessarily  be denominated  in the  same currency  as the  securities  they
represent.  ADRs are receipts typically  issued by a U.S.  bank or trust company
evidencing ownership of the underlying foreign securities. Certain  institutions
issuing  ADRs  may not  be sponsored  by  the issuer  of the  underlying foreign
securities. A  non-sponsored depository  may not  provide the  same  shareholder
information  that  a  sponsored  depository is  required  to  provide  under its
contractual arrangements with the foreign issuer. EDRs are receipts issued by  a
European  financial  institution  evidencing a  similar  arrangement. Generally,
ADRs, in registered form, are designed  for use in the U.S. securities  markets,
and EDRs, in bearer form, are designed for use in European securities markets.
 
Because  investments in foreign securities involve foreign currencies, the value
of assets as measured in U.S. dollars may be affected, favorably or unfavorably,
by changes  in currency  exchange  rates and  in exchange  control  regulations,
including currency blockage. See 'Foreign Currency Exchange Transactions' below.
 
FOREIGN  CURRENCY EXCHANGE TRANSACTIONS. Because the  Portfolio may buy and sell
securities and receive interest and dividends in currencies other than the  U.S.
dollar,  the  Portfolio  may,  from time-to-time,  enter  into  foreign currency
exchange transactions. The Portfolio may enter into these transactions on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency  exchange
market,  use forward currency contracts to  purchase or sell foreign currencies,
use currency futures contracts or purchase  or sell options thereon or  purchase
or sell currency options.
 
A  forward foreign currency exchange contract  is an obligation of the Portfolio
to purchase or sell a specific currency at a future date, which may be any fixed
number of days from the  date of the contract.  Currency options give the  buyer
the  right, but  not the  obligation, to purchase  or sell  a fixed  amount of a
specific currency at a fixed price at a future date. These contracts are entered
into in the interbank  market directly between  currency traders (usually  large
commercial  banks)  and their  customers.  A forward  foreign  currency exchange
contract generally has  no deposit  requirement, and is  traded at  a net  price
without  commission. The  Portfolio will not  enter into  these foreign currency
exchange  transactions  for  speculative  purposes.  Foreign  currency  exchange
transactions  do not eliminate fluctuations in  the local currency prices of the
Portfolio's securities or  in foreign  exchange rates,  or prevent  loss if  the
local currency prices of these securities should decline.
 
A  currency futures contract is a contract involving an obligation to deliver or
acquire the specified amount of a currency  at a specified price at a  specified
future time. Futures contracts may be settled on a net cash payment basis rather
than by the sale and delivery of the underlying currency.
 
The  Portfolio  may  enter into  foreign  currency exchange  transactions  in an
attempt to protect against  changes in foreign  currency exchange rates  between
the   trade  and  settlement  dates   of  specific  securities  transactions  or
anticipated securities transactions. The Portfolio  may use these techniques  to
hedge  against a change in foreign currency exchange rates (with the U.S. dollar
or other foreign currencies) that would cause a decline in the value of existing
investments denominated or principally traded in a foreign currency.
 
Although these transactions are intended to minimize  the risk of loss due to  a
decline  in the value of the hedged  currency, these transactions also limit any
potential gain that might  be realized should the  value of the hedged  currency
increase.  Additionally,  the premiums  paid by  the  Portfolio for  currency or
futures options increase the Portfolio's transaction costs. Similarly, the  cost
of  the  Portfolio's  spot  currency  exchange  transactions  is  generally  the
difference between the bid and offer  spot rate of the currency being  purchased
or  sold.  The precise  matching  of these  transactions  and the  value  of the
securities involved will not generally be  possible because the future value  of
such  securities in  foreign currencies will  change as a  consequence of market
movements in the value of such securities between the date such a transaction is
entered into  and  the  date  it matures.  The  projection  of  currency  market
movements  is  extremely difficult  and the  successful  execution of  a hedging
strategy is highly uncertain.
 
ILLIQUID INVESTMENTS; PRIVATELY  PLACED AND OTHER  UNREGISTERED SECURITIES.  The
Portfolio  may not acquire any illiquid securities if, as a result thereof, more
than 15% of the market value of the Portfolio's net assets would be in  illiquid
investments  or  investments  that  are  not  readily  marketable.  In addition,
 
                                      -9-
 
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<PAGE>
the Portfolio will not  invest more than  10% of the market  value of its  total
assets  in restricted securities that  cannot be offered for  public sale in the
United States without first  being registered under the  Securities Act of  1933
(the 'Securities Act'). Subject to those non-fundamental policy limitations, the
Portfolio  may acquire investments that are  illiquid or have limited liquidity,
such as private  placements or  investments that  are not  registered under  the
Securities  Act, and  cannot be  offered for  public sale  in the  United States
without first being registered.  An illiquid investment  is any investment  that
cannot  be disposed  of within seven  days in  the normal course  of business at
approximately the amount  at which  it is  valued by  the Portfolio.  Repurchase
agreements  maturing in more than seven days are considered illiquid investments
and, as such, are subject  to the limitations set  forth in this paragraph.  The
price  the Portfolio pays for illiquid securities or receives upon resale may be
lower than the price paid or received for similar securities with a more  liquid
market.  Accordingly,  the  valuation  of  these  securities  will  reflect  any
limitations on their liquidity.
 
The Portfolio  may also  purchase  Rule 144A  securities sold  to  institutional
investors without registration under the Securities Act. These securities may be
determined to be liquid in accordance with guidelines established by the Adviser
and   approved  by  the  Trustees.  The  Trustees  will  monitor  the  Adviser's
implementation of these guidelines on a periodic basis.
 
FUTURES AND OPTIONS TRANSACTIONS. The Portfolio  is permitted to enter into  the
futures and options transactions described below. These instruments are commonly
known as derivatives.
 
The Portfolio may purchase and sell exchange traded and over-the-counter ('OTC')
put  and call  options on  fixed income  securities or  indices of  fixed income
securities, enter into forward contracts, purchase and sell futures contracts on
indices of fixed income  securities, purchase and sell  put and call options  on
futures  contracts on indices  of fixed income securities  and purchase and sell
options on currencies.  The Portfolio may  use these techniques  for hedging  or
risk  management purposes or, subject to certain limitations, for the purpose of
obtaining desired exposure to certain securities or markets.
 
The Portfolio  may use  these  techniques to  manage  its exposure  to  changing
interest rates, currency exchange rates and/or security prices. Some options and
futures strategies, including selling futures contracts and buying puts, tend to
hedge  the Portfolio's investments against price fluctuations. Other strategies,
including buying futures contracts,  writing puts and  calls, and buying  calls,
may  tend to increase market  exposure. For example, if  the Portfolio wishes to
obtain exposure to a  particular market or  market sector but  does not wish  to
purchase  the  relevant  securities, it  could,  as an  alternative,  purchase a
futures contract on an  index of such securities  or related securities. Such  a
purchase  would not  constitute a  hedging transaction  and could  be considered
speculative. However, the  Portfolio will  use futures contracts  or options  in
this  manner only for the  purpose of obtaining the same  level of exposure to a
particular market or market sector that it could have obtained by purchasing the
relevant securities and will  not use futures contracts  or options to  leverage
its  exposure beyond this  level. Options and futures  contracts may be combined
with each other or with forward contracts in order to adjust the risk and return
characteristics  of  the  Portfolio's  overall  strategy  in  a  manner   deemed
appropriate  to the  Adviser and consistent  with the  Portfolio's objective and
policies. Because combined  positions involve  multiple trades,  they result  in
higher transaction costs and may be more difficult to open and close out.
 
The  Portfolio's use  of these  transactions is  a highly  specialized activity,
which involves investment strategies and  risks different from those  associated
with  ordinary portfolio securities transactions, and  there can be no guarantee
that their use will increase the  Portfolio's return. While the Portfolio's  use
of  these  instruments  may  reduce certain  risks  associated  with  owning its
portfolio securities, these techniques themselves entail certain other risks. If
the Adviser  applies  a strategy  at  an  inappropriate time  or  judges  market
conditions  or  trends incorrectly,  such strategies  may lower  the Portfolio's
return. Certain strategies limit the Portfolio's opportunity to realize gains as
well as limiting its exposure to  losses. The Portfolio could experience  losses
if  the prices of its options and  futures positions were poorly correlated with
its other investments, or if it could not close out its positions because of  an
illiquid  secondary  market.  In  addition,  the  Portfolio  will  incur  costs,
including commissions and  premiums, in connection  with these transactions  and
these transactions could significantly increase the Portfolio's turnover rate.
 
The  Portfolio  may  purchase  and  sell put  and  call  options  on securities,
currencies, indices of securities  and futures contracts,  or purchase and  sell
futures contracts for the purposes described herein.
 
                                      -10-
 
<PAGE>

<PAGE>
The Commodity Exchange Act prohibits U.S. persons, such as the Fund, from buying
or  selling  certain foreign  futures contracts  or  options on  such contracts.
Accordingly, the  Portfolio  will  not  engage in  foreign  futures  or  options
transactions unless the contracts in question may lawfully be purchased and sold
by  U.S.  persons  in  accordance  with  applicable  Commodity  Futures  Trading
Commission ('CFTC') regulations or CFTC staff advisories, interpretations and no
action letters.
 
In addition, in  order to assure  that the  Portfolio will not  be considered  a
'commodity  pool'  for purposes  of CFTC  rules, the  Portfolio will  enter into
transactions in futures contracts  or options on futures  contracts only if  (1)
such  transactions constitute bona  fide hedging transactions,  as defined under
CFTC rules, or (2) no more than  5% of the Portfolio's net assets are  committed
as  initial margin  or premiums  to positions that  do not  constitute bona fide
hedging transactions.
 
OPTIONS
 
PURCHASING PUT  AND CALL  OPTIONS. By  purchasing a  put option,  the  Portfolio
obtains the right (but not the obligation) to sell the instrument underlying the
option at a fixed strike price. In return for this right, the Portfolio pays the
current  market price for the option (known as the option premium). Options have
various  types  of  underlying   instruments,  including  specific   securities,
currencies,  indices  of securities,  indices of  securities prices  and futures
contracts. The  Portfolio may  terminate its  position in  a put  option it  has
purchased  by allowing it to  expire or by exercising  the option. The Portfolio
may also  close  out  a put  option  position  by entering  into  an  offsetting
transaction,  if a liquid market exists. If the option is allowed to expire, the
Portfolio will lose the entire premium it paid. If the Portfolio exercises a put
option on a security, it will sell  the instrument underlying the option at  the
strike price. If the Portfolio exercises an option on an index, settlement is in
cash  and does not involve the actual sale of securities. American style options
may be exercised on any day up to their expiration date. European style  options
may be exercised only on their expiration date.
 
The  buyer of a typical put option can expect  to realize a gain if the price of
the underlying  instrument falls  substantially. However,  if the  price of  the
instrument  underlying the  option does  not fall enough  to offset  the cost of
purchasing the option, a put buyer can  expect to suffer a loss (limited to  the
amount of the premium paid, plus related transaction costs).
 
The  features of call options are essentially  the same as those of put options,
except that the purchaser of a call option obtains the right to purchase, rather
than sell, the instrument underlying the option at the option's strike price.  A
call buyer typically attempts to participate in potential price increases of the
instrument underlying the option with risk limited to the cost of the option and
related  transaction costs if security prices fall.  At the same time, the buyer
can expect to  suffer a  loss if  security prices  do not  rise sufficiently  to
offset the cost of the option.
 
SELLING  (WRITING) PUT AND CALL OPTIONS. When the Portfolio writes a put option,
it takes the opposite  side of the transaction  from the option's purchaser.  In
return  for receipt of the premium, the  Portfolio assumes the obligation to pay
the strike price for the instrument underlying the option if the other party  to
the  option chooses  to exercise  it. The  Portfolio may  seek to  terminate its
position in a put option it  writes before exercise by purchasing an  offsetting
option in the market at its current price. If the market is not liquid for a put
option  the Portfolio  has written, however,  the Portfolio must  continue to be
prepared to pay the strike price while the option is outstanding, regardless  of
price changes, and must continue to post margin as discussed below.
 
If  the price of the  underlying instrument rises, a  put writer would generally
expect to  profit, although  its gain  would be  limited to  the amount  of  the
premium  it received. If security prices remain the same over time, it is likely
that the writer will  also profit, because  it should be able  to close out  the
option  at a lower price. If security prices fall, however, the put writer would
expect to suffer a loss. This loss should be less than the loss from  purchasing
and  holding the  underlying instrument  directly, however,  because the premium
received for writing the option should offset a portion of the decline.
 
Writing a call option  obligates the Portfolio to  sell or deliver the  option's
underlying  instrument  in return  for  the strike  price  upon exercise  of the
option. The characteristics  of writing  call options  are similar  to those  of
writing  put  options,  except  that writing  calls  generally  is  a profitable
strategy if  prices remain  the same  or  fall. Through  receipt of  the  option
premium    a    call    writer   offsets    part    of   the    effect    of   a
 
                                      -11-
 
<PAGE>

<PAGE>
price decrease. At  the same time,  because a  call writer must  be prepared  to
deliver  the underlying instrument in  return for the strike  price, even if its
current value is greater, a call writer gives up some ability to participate  in
security price increases.
 
The  writer of a U.S. exchange traded put or call option on a security, an index
of securities or a futures contract is required to deposit cash or securities or
a letter of credit  as margin and to  make mark-to-market payments of  variation
margin if and as the position becomes unprofitable.
 
OPTIONS   ON  INDICES.  The  Portfolio  is   permitted  to  enter  into  options
transactions and may purchase  and sell put and  call options on any  securities
index  based  on  securities  in  which the  Portfolio  may  invest.  Options on
securities indices  are  similar  to  options on  securities,  except  that  the
exercise  of securities index  options is settled  by cash payment  and does not
involve the actual purchase  or sale of securities.  In addition, these  options
are  designed to reflect price fluctuations in  a group of securities or segment
of the securities market  rather than price fluctuations  in a single  security.
The  Portfolio, in purchasing or  selling index options, is  subject to the risk
that the value of its  portfolio securities may not change  as much as an  index
because  the Portfolio's investments generally will not match the composition of
an index.
 
For a number of reasons,  a liquid market may not  exist and thus the  Portfolio
may  not be able to close out an  option position that it has previously entered
into. When the  Portfolio purchases an  OTC option,  it will be  relying on  its
counterparty  to perform its obligations, and the Portfolio may incur additional
losses if the counterparty is unable to perform.
 
FUTURES CONTRACTS
 
When the  Portfolio  purchases a  futures  contract,  it agrees  to  purchase  a
specified  quantity of an  underlying instrument at a  specified future date and
price or to make or  receive a cash payment based  on the value of a  securities
index.  When  the  Portfolio sells  a  futures  contract, it  agrees  to  sell a
specified quantity of the underlying instrument  at a specified future date  and
price  or to receive or make  a cash payment based on  the value of a securities
index. The price at which  the purchase and sale will  take place is fixed  when
the Portfolio enters into the contract. Futures can be held until their delivery
dates  or the positions can be (and  normally are) closed out before then. There
is no  assurance, however,  that a  liquid market  will exist  when a  Portfolio
wishes to close out a particular position.
 
When  the Portfolio  purchases or  sells a  futures contract,  the value  of the
futures contract tends to increase and decrease in tandem with the value of  its
underlying  instrument. Purchasing  futures contracts  may tend  to increase the
Portfolio's  exposure  to  positive  and  negative  price  fluctuations  in  the
underlying  instrument, much  as if it  had purchased  the underlying instrument
directly, as discussed above.  When the Portfolio sells  a futures contract,  by
contrast,  the value of  its futures position  will tend to  move in a direction
contrary to the value of the underlying instrument. Selling futures contracts on
securities similar  to those  held by  the Portfolio,  therefore, will  tend  to
offset  both  positive  and  negative  market  price  changes,  much  as  if the
underlying instrument had been sold. Because there are a limited number of types
of exchange-traded  options  and futures  contracts,  it is  likely  that  these
standardized  instruments  will not  exactly  match the  Portfolio's  current or
anticipated investments.  The  Portfolio may  invest  in futures  contracts  and
options  thereon based  on currencies or  on securities  with different issuers,
maturities, or other characteristics from  the securities in which it  typically
invests,  which involves a  risk that the  options or futures  position will not
track the performance of  the Portfolio's other  investments. The Portfolio  may
also  enter into transactions  in futures contracts  and options for non-hedging
purposes, as discussed above.
 
The purchaser or seller of a futures contract is not required to deliver or  pay
for  the underlying  instrument unless the  contract is held  until the delivery
date. However, when the Portfolio  buys or sells a  futures contract it will  be
required  to deposit 'initial margin' with the Custodian in a segregated account
in the  name of  its futures  broker,  known as  a futures  commission  merchant
('FCM').  Initial margin deposits  are typically equal to  a small percentage of
the contract's value.  If the value  of either party's  position declines,  that
party  will be required to make  additional 'variation margin' payments equal to
the change in value on a daily basis. The party that has a gain may be  entitled
to  receive all or a  portion of this amount. The  Portfolio may be obligated to
make payments of variation margin at a time when it is disadvantageous to do so.
Furthermore, it may not always  be possible for the  Portfolio to close out  its
 
                                      -12-
 
<PAGE>

<PAGE>
futures positions. Until it closes out a futures position, the Portfolio will be
obligated  to continue  to pay  variation margin.  Initial and  variation margin
payments do not constitute purchasing on margin for purposes of the  Portfolio's
investment  restrictions. In the  event of the  bankruptcy of an  FCM that holds
margin on behalf of the  Portfolio, the Portfolio may  be entitled to return  of
margin  owed to it only in proportion to  the amount received by the FCM's other
customers, potentially resulting in losses to the Portfolio.
 
The Portfolio will segregate  liquid, high grade  debt securities in  connection
with its use of options and futures contracts to the extent required by the SEC.
Securities  held  in  a segregated  account  cannot  be sold  while  the futures
contract or option is outstanding, unless they are replaced with other  suitable
assets.  As a  result, there is  a possibility  that the segregation  of a large
percentage of the Portfolio's  assets could impede  portfolio management or  the
Portfolio's ability to meet redemption requests or other current obligations.
 
For  further information about the Portfolio's use  of futures and options and a
more detailed discussion  of associated  risks, see  'Investment Objectives  and
Policies' in the SAI.
 
INVESTMENT RESTRICTIONS
 
The  investment  objective of  the  Fund and  the  Portfolio, together  with the
investment restrictions described  below and in  the SAI, except  as noted,  are
deemed  fundamental policies, i.e., they  may be changed only  by the 'vote of a
majority of the  outstanding voting  securities' (as defined  in the  Investment
Company  Act  of  1940  (the  '1940  Act'))  of  the  Fund  and  the  Portfolio,
respectively. The Fund has  the same investment  restrictions as the  Portfolio,
except that the Fund may invest all of its investable assets in another open-end
investment  company with the same investment objective and restrictions (such as
the Portfolio), and  the Fund  may retain an  investment adviser  to manage  the
Fund's  assets in accordance  with the investment  policies and restrictions set
forth below. References below to the Fund's investment restrictions also include
the Portfolio's investment restrictions.
 
As a diversified investment company, 75% of the Fund's total assets are  subject
to  the following fundamental limitations: (a) the Fund may not invest more than
5% of  its  total assets  in  the securities  of  any one  issuer,  except  U.S.
Government  securities;  and (b)  the  Fund may  not own  more  than 10%  of the
outstanding voting securities of any one issuer.
 
The Fund may not:  (i) purchase the securities  or other obligations of  issuers
conducting  their  principal  business  activity in  the  same  industry  if its
investments in such industry would exceed 25%  of the value of the Fund's  total
assets, except this limitation shall not apply to investments in U.S. Government
securities;  (ii) enter  into reverse  repurchase agreements  or other permitted
borrowings that constitute senior  securities under the  1940 Act, exceeding  in
the  aggregate one-third  of the  value of  the Fund's  assets; or  (iii) borrow
money, except from banks for  extraordinary or emergency purposes, or  mortgage,
pledge  or hypothecate any assets except  in connection with any such borrowings
or permitted reverse  repurchase agreements in  amounts up to  one-third of  the
value  of the Fund's assets at the time of such borrowing or purchase securities
while borrowings and other senior securities exceed 5% of its total assets.  For
a  more detailed discussion of  the above investment restrictions,  as well as a
description  of   certain  other   investment  restrictions,   see   'Investment
Restrictions' and 'Additional Information' in the SAI.
 
MANAGEMENT
 
DIRECTORS  AND  TRUSTEES. Pursuant  to the  Declaration  of Trust,  the Trustees
establish the  Portfolio's general  policies, are  responsible for  the  overall
management of the Trust and review the actions of the Adviser, Administrator and
other  service  providers. Similarly,  the Directors  set the  Company's general
policies, are responsible for the overall  management of the Company and  review
the  performance  of its  service  providers. Additional  information  about the
Company's Board of Directors and officers  appears in the SAI under the  heading
'Directors  and Trustees'. The Trustees are also Directors of the Company, which
raises certain conflicts  of interest. The  Company and the  Trust have  adopted
written  procedures reasonably appropriate  to deal with  these conflicts should
they arise. The officers of the Company  are also employees of Signature or  its
affiliates.
 
                                      -13-
 
<PAGE>

<PAGE>
ADVISER  AND FUNDS SERVICES AGENT. The Fund  has not retained the services of an
investment adviser because the Fund seeks to achieve its investment objective by
investing all  of its  investable assets  in the  Portfolio. The  Portfolio  has
retained  the services  of the Branch  as investment adviser.  The Branch, which
operates out of  offices located  at 299  Park Avenue,  New York,  New York,  is
licensed  by the  Superintendent of  Banks of  the State  of New  York under the
banking laws  of the  State of  New York  and is  subject to  state and  federal
banking  laws and regulations applicable to a foreign bank that operates a state
licensed branch in the United States.
 
The Bank  has branches,  agencies, representative  offices and  subsidiaries  in
Switzerland  and in more  than 40 cities outside  Switzerland, including, in the
United States, New York City, Chicago,  Houston, Los Angeles and San  Francisco.
In addition to the receipt of deposits and the making of loans and advances, the
Bank through its offices and subsidiaries engages in a wide range of banking and
financial activities typical of the world's major international banks, including
fiduciary,  investment advisory and  custodial services and  foreign exchange in
the United States, Swiss, Asian and Euro-capital markets. The Bank is one of the
world's leading asset managers and has been active in New York City since  1946.
At  June 30, 1995, the Bank  (including its consolidated subsidiaries) had total
assets of $307.4 billion  (unaudited) and equity capital  and reserves of  $19.7
billion (unaudited).
 
The Branch provides investment advice and portfolio management to the Portfolio.
Subject  to the  supervision of the  Trustees, the Branch  makes the Portfolio's
day-to-day  investment  decisions,  arranges  for  the  execution  of  portfolio
transactions  and generally manages the  Portfolio's investments and operations.
See 'Investment Adviser' in the SAI.
 
The  Adviser  uses  a  sophisticated,  disciplined,  collaborative  process  for
managing all asset classes. Louis N. Cohen will be primarily responsible for the
day-to-day  management  and  implementation  of the  Adviser's  process  for the
Portfolio. Mr. Cohen is  also a portfolio manager  of UBS Asset Management  (New
York)  Inc., a position he has held  since March 1991. Previously, Mr. Cohen was
employed by PaineWebber, Inc. as a credit officer from April 1990 through  March
1991.  Mr. Cohen is currently managing several portfolios and is responsible for
all credit research relating  to the issuers in  which these portfolios  invest.
Mr. Cohen has previously managed the investments of an offshore mutual fund. Mr.
Cohen received both a B.A. and M.B.A. from New York University and has seventeen
years  of investment experience. The Branch  has not previously advised a mutual
fund. This may be viewed as a risk of investing in this Fund.
 
In addition to the above-listed  investment advisory services, the Adviser  also
provides  the  Fund  and  the  Portfolio  with  certain  related  administrative
services. Subject to the  supervision of the  Board and Trustees,  respectively,
the  Adviser  is responsible  for:  establishing performance  standards  for the
third-party service  providers of  the  Fund and  Portfolio and  overseeing  and
evaluating  the performance of such entities; providing and presenting quarterly
management  reports  to  the  Directors   and  the  Trustees;  supervising   the
preparation  of reports  for Fund  and Portfolio  shareholders; and establishing
voluntary expense limitations for the  Fund and providing any resultant  expense
reimbursement to the Fund.
 
The  Branch provides its administrative services to the Fund pursuant to a Funds
Services Agreement  between the  Branch and  the Company.  The Branch  does  not
receive  a fee from the Company  or the Fund pursuant to  the terms of the Funds
Services Agreement.
 
Under the Trust's Investment Advisory Agreement, the Portfolio pays the  Adviser
a  fee, calculated daily and payable monthly, at  an annual rate of 0.45% of the
Portfolio's average net assets. The Branch  has voluntarily agreed to waive  its
fees  and reimburse the Fund for any of  its direct and indirect expenses to the
extent that the  Fund's total  operating expenses  exceed, on  an annual  basis,
0.80%  of  the  Fund's  average  daily net  assets.  The  Branch  may  modify or
discontinue this fee  waiver and expense  limitation at any  time in the  future
with 30 days' notice to the Fund. See 'Expenses'.
 
INVESTMENTS  IN THE FUND ARE NOT DEPOSITS  WITH OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, THE BRANCH OR ANY OTHER BANK.
 
ADMINISTRATORS. Under Administrative Service Agreements with the Company and the
Trust, Signature and Signature-Cayman  serve as the  Administrators of the  Fund
and  the Portfolio, respectively (in  such capacities, the 'Administrators'). In
these capacities, Signature and Signature-Cayman  administer all aspects of  the
Fund's  and the Portfolio's day-to-day operations, subject to the supervision of
the Adviser, and  the Board  and Trustees, as  applicable, except  as set  forth
under 'Adviser and Funds Services Agent',
 
                                      -14-
 
<PAGE>

<PAGE>
'Distributor',  'Custodian' and  'Shareholder Services'.  The Administrators (i)
furnish general office facilities and ordinary clerical and related services for
day-to-day  operations  including  recordkeeping  responsibilities;  (ii)   take
responsibility  for compliance with all  applicable federal and state securities
and  other  regulatory  requirements;  and  (iii)  perform  administrative   and
managerial  oversight of  the activities  of the  custodian, transfer  agent and
other agents or independent contractors of the Fund and the Portfolio. Signature
is also responsible for monitoring the  Fund's status as a regulated  investment
company under the Internal Revenue Code of 1986, as amended (the 'Code').
 
Under  the Company's Administrative  Services Agreement, the  Fund has agreed to
pay Signature a fee, calculated daily and payable monthly, at an annual rate  of
0.05%  of the Fund's first $100 million of average net assets plus 0.025% of the
next $100 million of average net assets.  Signature does not receive a fee  from
the Fund on average net assets in excess of $200 million.
 
Under the Trust's Administrative Services Agreement, the Portfolio has agreed to
pay  Signature-Cayman a fee, calculated daily  and payable monthly, at an annual
rate of 0.05% of the Portfolio's average net assets.
 
DISTRIBUTOR. Under the Distribution Agreement, Signature, located at 6 St. James
Avenue, Boston, MA  02116, serves  as the distributor  of Fund  shares (in  such
capacity,   the  'Distributor').  The  Distributor   is  a  wholly-owned  direct
subsidiary of Signature Financial Group, Inc. and is a registered broker-dealer.
The Distributor does not receive a fee pursuant to the terms of the Distribution
Agreement.
 
CUSTODIAN. Investors Bank & Trust  Company, whose principal offices are  located
at  89 South  Street, Boston, Massachusetts  02111, serves as  the custodian and
transfer and  dividend disbursing  agent for  the Portfolio  and the  Fund.  See
'Custodian' in the SAI. The Custodian also maintains offices at 1 First Canadian
Place, Suite 2800, Toronto, Ontario M5X1C8.
 
SHAREHOLDER SERVICES
 
The  Company has entered into a  Shareholder Servicing Agreement with the Branch
under which the Branch provides shareholder services to Fund shareholders, which
include coordinating  shareholder  accounts  and  records,  assisting  investors
seeking  to purchase  or redeem  Fund shares,  providing performance information
relating to the Fund, and responding  to shareholder inquiries. The Company  has
agreed  to pay the Branch for  these services at an annual  rate of 0.25% of the
average daily  net  assets of  the  Fund. Under  the  terms of  the  Shareholder
Servicing Agreement, the Branch may delegate one or more of its responsibilities
to other entities at its expense.
 
EXPENSES
 
In  addition  to  the  fees  of  the  Branch,  Signature-Cayman,  Signature, and
Investors Bank  & Trust  Company, the  Fund  will be  responsible for,  or  will
indirectly  bear through its interest in the Portfolio, other expenses including
brokerage costs  and  litigation and  extraordinary  expenses. The  Adviser  has
agreed  to waive fees as necessary if, in any fiscal year, the sum of the Fund's
expenses exceeds the limits  set by applicable  regulations of state  securities
commissions.  Such annual limits are currently 2.5%  of the first $30 million of
average net assets, 2% of  the next $70 million of  such net assets and 1.5%  of
such  net assets  in excess  of $100 million.  The Adviser  has also voluntarily
agreed  to  limit  the   total  operating  expenses   of  the  Fund,   excluding
extraordinary  expenses, to an annual rate of  0.80% of the Fund's average daily
net assets.  The  Adviser  may  modify or  discontinue  this  voluntary  expense
limitation at any time in the future with 30 days' notice to the Fund.
 
The  Fund  and  the  Portfolio  may  allocate  brokerage  transactions  to their
affiliates and the Adviser's affiliates. Brokerage transactions may be allocated
to these affiliates only if the commissions received by such affiliates are fair
and reasonable when compared to the commissions paid to unaffiliated brokers  in
connection  with comparable  transactions. See  'Portfolio Transactions'  in the
SAI.
 
PURCHASE OF SHARES
 
GENERAL INFORMATION  ON  PURCHASES.  Investors may  purchase  Fund  shares  only
through   the  Distributor.  All  purchase  orders   must  be  accepted  by  the
Distributor. The  Company also  reserves  the right  to determine  the  purchase
orders  that it  will accept  and it  reserves the  right to  cease offering its
shares at any time. The shares of the Fund may be purchased only in those states
where they may be lawfully sold.
 
                                      -15-
 
<PAGE>

<PAGE>
The business days of the Fund and the Portfolio are the days the New York  Stock
Exchange (the 'NYSE') is open for regular trading.
 
The  shares of the Fund are sold on a continuous basis without a sales charge at
the net asset value per share next determined after receipt and acceptance of  a
purchase  order by the Distributor.  The Fund calculates its  net asset value at
the close of business. See 'Net Asset Value'. The minimum initial investment  in
the  Fund is $25,000, except that the  minimum initial investment is $10,000 for
shareholders of another series of the Company. The minimum subsequent investment
in the Fund  for all  investors is $5,000.  The minimum  initial investment  for
employees  of  the Bank  or  its affiliates  is  $5,000. The  minimum subsequent
investment is $1,000. These  minimum investment requirements  may be waived  for
certain  retirement plans or accounts for the benefit of minors. For purposes of
the minimum  investment  requirements, the  Fund  may aggregate  investments  by
related  shareholders. Investors will receive the  number of full and fractional
shares of the Fund equal to the  dollar amount of their subscription divided  by
the net asset value per share of the Fund as next determined on the day that the
investor's subscription is accepted. See 'Purchase of Shares' in the SAI.
 
Purchase  orders in proper form  received by the Distributor  prior to 4:00 p.m.
New York time or the close of regular trading on the NYSE, whichever is earlier,
are effective and  executed at  the net asset  value next  determined that  day.
Purchase orders received after 4:00 p.m. New York time or the close of the NYSE,
whichever  is earlier, will be executed at the net asset value determined on the
next business day. Investors become record shareholders of the Fund on the  next
business day ('day two') after they place their subscription order, provided the
Custodian  receives payment for  the shares on day  two. As record shareholders,
investors are entitled to earn dividends.
 
Fund shares may be purchased in the following methods:
 
BRANCH CLIENTS:  Private Bank  Clients of  the Branch  should request  a  Branch
representative to assist them in placing a purchase order with the Distributor.
 
THROUGH  THE DISTRIBUTOR: Shareholders  who do not  currently maintain a private
banking relationship with the  Branch may purchase shares  of the Fund  directly
from the Distributor by wire transfer or mail.
 
The  Transfer Agent will maintain the accounts for all shareholders who purchase
Fund shares directly  through the Distributor.  For account balance  information
and shareholder services, such shareholders should contact the Transfer Agent at
(888)  UBS-FUND or in writing at UBS Private Investor Funds, Inc., c/o Investors
Bank & Trust Company, P.O. Box 1537 MFD 23, Boston, MA 02205-1537.
 
By wire: Purchases may be made by federal funds wire. To place a purchase  order
with  the  Fund, the  shareholder  must telephone  the  Transfer Agent  at (888)
UBS-FUND for specific instructions.
 
Subject to the minimum purchase  requirements discussed above, shares  purchased
by  federal funds wire  will be effected at  the net asset  value per share next
determined after acceptance of the order.
 
A completed  account application  must promptly  follow any  wire order  for  an
initial  purchase. No account application  is required for subsequent purchases.
Completed  account  applications  should  be  mailed  or  sent  via   facsimile.
Shareholders   should  contact  the  Transfer  Agent  for  further  instructions
regarding account applications.
 
By  mail:  Subject  to  the  minimum  purchase  requirements  discussed   above,
shareholders  may  purchase  shares  of  the  Fund  through  the  Distributor by
completing an account application and mailing it, together with a check  payable
to  'UBS Private Investor Funds, Inc.', to UBS Private Investor Funds, Inc., c/o
Investors Bank & Trust Company, P.O. Box 1537 MFD 23, Boston, MA 02205-1537.
 
Account applications are  not required  for subsequent  purchases; however,  the
shareholder's  account  number must  be clearly  marked on  the check  to ensure
proper credit.
 
Checks are subject to collection at  full value. For shares purchased by  check,
dividend  payments and redemption  proceeds, if any, will  be delayed until such
funds are collected, which may take up to 15 days from the date of purchase.
 
REDEMPTION OF SHARES
 
GENERAL INFORMATION ON REDEMPTIONS. A shareholder  may redeem all or any  number
of  the shares registered  in its name at  any time at the  net asset value next
determined after a redemption request in
 
                                      -16-
 
<PAGE>

<PAGE>
proper form is received  by the Distributor. The  Fund calculates its net  asset
value at the close of business. See 'Net Asset Value'.
 
A  redemption order will  be effected provided the  Distributor receives such an
order prior to 4:00 p.m.  New York time or the  close of regular trading on  the
NYSE,  whichever is earlier. The  redemption of Fund shares  is effective and is
executed at the  net asset  value next  determined that  day. Redemption  orders
received  after 4:00 p.m. New  York time or the close  of regular trading on the
NYSE, whichever is earlier, will be  executed at the net asset value  determined
on  the next  business day.  Proceeds of  an effective  redemption are generally
deposited the next business  day in immediately available  funds to the  account
designated  by the redeeming shareholder or  mailed to the shareholder's address
of record, in accordance with the shareholder's instructions.
 
Shareholders will continue to earn dividends through the day of redemption.
 
Fund shares may be redeemed in the following methods:
 
BRANCH CLIENTS: Shareholders who are Private  Bank Clients of the Branch  should
request a Branch representative to assist them in placing a redemption order.
 
THROUGH THE DISTRIBUTOR: Shareholders who are not Branch clients may redeem Fund
shares by telephone or mail.
 
By telephone: Telephone redemptions may be made by calling the Transfer Agent at
(888) UBS-FUND. Redemption orders will be accepted until 4:00 p.m. New York time
or  the close of  regular trading on  the NYSE, whichever  is earlier. Telephone
redemption requests  are  limited  to those  shareholders  who  have  previously
elected  this service.  Such shareholders  risk possible  loss of  principal and
income in the event of a telephone  redemption not authorized by them. The  Fund
and  the  Transfer  Agent  will  employ  reasonable  procedures  to  verify that
telephone redemption instructions are genuine and will require that shareholders
electing such an option provide a  form of personal identification. The  failure
by  the Fund or the Transfer Agent to  employ such procedures may cause the Fund
or the Transfer Agent to be liable  for any losses incurred by investors due  to
telephone  redemptions based  upon unauthorized or  fraudulent instructions. The
telephone redemption option may be modified or discontinued at any time upon  60
days' notice to shareholders.
 
By  mail:  Redemption  requests  may  also  be  mailed  to  the  Transfer Agent,
identifying the Fund, the dollar amount or  number of shares to be redeemed  and
the shareholder's account number. The request must be signed in exactly the same
manner  as the account is  registered (e.g., if there is  more than one owner of
the shares, all must sign). In all cases, all signatures on a redemption request
must be signature guaranteed by an eligible guarantor institution which includes
a domestic bank,  a domestic  savings and  loan institution,  a domestic  credit
union,  a  member bank  of the  Federal Reserve  System  or a  member firm  of a
national securities exchange, pursuant to  the Fund's standards and  procedures;
if the guarantor institution belongs to one of the Medallion Signature programs,
it  must use the  specific 'Medallion Guaranteed'  stamp (guarantees by notaries
public are not acceptable). Further  documentation, such as copies of  corporate
resolutions  and instruments of  authority, may be  requested from corporations,
administrators, executors, personal representatives,  trustees or custodians  to
evidence  the authority of  the person or entity  making the redemption request.
The redemption request  in proper form  should be sent  to UBS Private  Investor
Funds,  Inc., c/o Investors Bank & Trust  Company, P.O. Box 1537 MFD 23, Boston,
MA 02205-01537.
 
MANDATORY REDEMPTION. If the value of a shareholder's holdings in the Fund falls
below $10,000 because  of a  redemption of shares,  the shareholder's  remaining
shares  may  be redeemed  60 days  after  written notice  unless the  account is
increased to $10,000 or more. For example, a shareholder whose initial and  only
investment  is $10,000 may be subject to mandatory redemption resulting from any
redemption that causes his or her investment to fall below $10,000.
 
FURTHER REDEMPTION INFORMATION. Investors should  be aware that redemptions  may
not  be processed unless the redemption request  is submitted in proper form. To
be in  proper form,  the  Fund must  have  received the  shareholder's  taxpayer
identification  number and address.  As discussed under  'Taxes' below, the Fund
may be  required  to impose  'back-up'  withholding  of federal  income  tax  on
dividends,  distributions and redemptions when  non-corporate investors have not
provided a certified taxpayer identification number. In addition, if an investor
sends a check to the Distributor for the purchase of Fund shares and shares  are
purchased  with funds  made available  by the  Distributor before  the check has
 
                                      -17-
 
<PAGE>

<PAGE>
cleared, the transmittal of  redemption proceeds from the  sale of those  shares
will  not occur until the check used  to purchase such shares has cleared, which
may take up to 15 days. Redemption delays may be avoided by purchasing shares by
federal funds wire.
 
The right of redemption may  be suspended or the  date of payment postponed  for
such  periods as the 1940 Act or the  SEC may permit. See 'Redemption of Shares'
in the SAI.
 
EXCHANGE OF SHARES
 
An investor may  exchange Fund  shares for  shares of  any other  series of  the
Company,  without charge. An exchange may be  made so long as after the exchange
the investor has shares, in each series in which it remains an investor, with  a
value  equal to or greater than each such series' minimum investment amount. See
'Purchase of Shares'  in the prospectuses  of the other  Company series for  the
minimum  investment amounts for each of those funds. Shares are exchanged on the
basis of relative net asset value per share. Exchanges are in effect redemptions
from one  fund  and  purchases  of  another fund  and  the  usual  purchase  and
redemption   procedures  and  requirements  are  applicable  to  exchanges.  See
'Purchase of Shares' and  'Redemption of Shares' in  this Prospectus and in  the
prospectuses  of  the other  Company series.  See also  'Additional Information'
below for an explanation of the telephone exchange policy.
 
Shareholders subject to federal income tax  who exchange shares in one fund  for
shares in another fund may recognize capital gain or loss for federal income tax
purposes.  The  Fund  reserves the  right  to  discontinue, alter  or  limit its
exchange  privilege  at  any  time.  For  investors  in  certain  states,  state
securities laws may restrict the availability of the exchange privilege.
 
RETIREMENT PLANS
 
The  Fund  has available  a form  of Individual  Retirement Account  ('IRA') for
investment in Fund shares. Subject to certain restrictions imposed by applicable
tax laws,  self-employed individuals  may purchase  shares of  the Fund  through
tax-deductible contributions to existing retirement plans known as Self-Employed
Retirement  Plans ('SERPs'). Fund  shares may also be  a suitable investment for
'401(k) Plans' which subject to certain restrictions allow their participants to
invest in qualified  pension plans on  a tax-deferred basis.  The Fund does  not
currently act as sponsor to such plans.
 
The  minimum initial  investment for  all such  retirement plans  is $2,000. The
minimum for all subsequent investments is $500.
 
Under the Code, individuals may make IRA contributions of up to $2,000 annually,
which  may   be,   depending   on  the   contributor's   participation   in   an
employer-sponsored  plan  and  income level,  wholly  or  partly tax-deductible.
However, dividends and  distributions held in  the account are  not taxed  until
withdrawn  in accordance with the  provisions of the Code.  An individual with a
non-working spouse may establish  a separate IRA for  the spouse under the  same
conditions  and contribute a combined maximum of  $2,250 annually to one or both
IRAs provided that no more than $2,000  may be contributed to the IRA of  either
spouse.  Investors should  be aware  that they  may be  subject to  penalties or
additional  taxes  on  contributions  to  or  withdrawals  from  IRAs  or  other
retirement   plans  under   certain  circumstances.   Prior  to   a  withdrawal,
shareholders may be required to  certify as to their  age and awareness of  such
restrictions   in  writing.  Branch   clients  desiring  information  concerning
investments through IRAs or other  retirement plans should contact their  Branch
representative.  Non-Branch clients may  obtain such information  by calling the
Transfer Agent at (888) UBS-FUND.
 
DIVIDENDS AND DISTRIBUTIONS
 
The Fund  will declare  daily, and  pay monthly,  dividends from  its daily  net
investment  income.  The Fund  may also  declare an  additional dividend  of net
investment income  in  a  given  year  to the  extent  necessary  to  avoid  the
imposition of federal excise taxes on the Fund.
 
Substantially  all of  the Fund's  realized net capital  gains, if  any, will be
declared and paid on  an annual basis, except  that an additional capital  gains
distribution  may be made in  a given year to the  extent necessary to avoid the
imposition  of  federal  excise  taxes  on  the  Fund.  Declared  dividends  and
distributions  are payable on the payment date  to shareholders of record on the
record date.
 
                                      -18-
 
<PAGE>

<PAGE>
Dividends and capital  gains distributions  paid by the  Fund are  automatically
reinvested  in additional  Fund shares  unless the  shareholder has  elected, in
writing, to have them paid  in cash. Dividends and  distributions to be paid  in
cash  are credited to the account designated by the shareholder or sent by check
to the shareholder's  address of  record, in accordance  with the  shareholder's
instructions.  The Fund  reserves the right  to discontinue, alter  or limit the
automatic reinvestment privilege at any time.
 
To the extent that shareholders of the Fund elect to receive their dividends  in
cash,  rather than electing to reinvest such dividends in additional shares, the
cash used to make these distributions  must be provided from the Fund's  assets,
which  may include a partial redemption of the Fund's interest in the Portfolio.
The Portfolio will be required to use its own cash or the proceeds for the sales
of its securities  in order to  fund its income  distributions and  redemptions.
Moreover,  in the case  of zero coupon  bonds, the Portfolio  generally will not
have received any income from the  issuer of such a security. Consequently,  the
Portfolio  must rely on other sources (e.g., proceeds from the sale of assets or
other income) to  meet such distribution  requirements. To the  extent the  Fund
makes  such cash distributions, the Fund, and indirectly the Portfolio, will not
be able to invest  that cash in income  producing securities. Consequently,  the
current income of the Fund and the Portfolio may ultimately be reduced.
 
NET ASSET VALUE
 
The Fund's net asset value per share equals the value of the Fund's total assets
(i.e.,  the value of its investment in the Portfolio plus its other assets) less
the amount of its liabilities, divided by the number of its outstanding  shares,
rounded to the nearest cent. Expenses, including the fees payable to the service
providers of the Fund and the Portfolio, are accrued daily. Securities for which
market  quotations are readily  available are valued at  market value. All other
securities will be valued at 'fair value'. See 'Net Asset Value' in the SAI  for
information on the valuation of the Portfolio's assets and liabilities.
 
The  Fund computes its  net asset value once  daily at the  close of business on
Monday through Friday, except that the net  asset value is not computed for  the
Fund  on a day  in which no orders  to purchase or redeem  Fund shares have been
received or on  the following holidays:  New Year's Day,  Presidents' Day,  Good
Friday,  Memorial  Day,  Independence  Day,  Labor  Day,  Thanksgiving  Day  and
Christmas Day. On days  when U.S. trading markets  close early in observance  of
these  holidays, the Fund expects to close  for purchases and redemptions at the
same time.
 
ORGANIZATION
 
UBS PRIVATE INVESTOR FUNDS, INC.
 
UBS Private  Investor  Funds,  Inc.,  a  Maryland  corporation  incorporated  on
November 16, 1995, is an open-end management investment company registered under
the  1940 Act and organized as a series  fund. The Company has no prior history.
The Company is currently authorized to issue shares in four series: The UBS Bond
Fund Series; The UBS Tax Exempt  Bond Fund Series; The UBS International  Equity
Fund  Series; and The UBS U.S. Equity Fund Series. Each outstanding share of the
Company will have a pro rata interest in  the assets of its series, but it  will
have  no interest in the assets of any  other Company series. Only shares of The
UBS Bond Fund Series are offered through this Prospectus.
 
Shareholder inquiries by clients of the Branch should be directed to the Branch,
while other shareholders should address their inquiries to the Transfer Agent.
 
Shareholders of the  Fund are entitled  to one vote  for each share  and to  the
appropriate  fractional vote for  each fractional share.  There is no cumulative
voting. Shares have no  preemptive or conversion rights.  Shares are fully  paid
and  nonassessable when issued  by the Company.  The Company does  not intend to
hold meetings  of shareholders  annually.  The Directors  may call  meetings  of
shareholders  for action by shareholder vote as  may be required by its Articles
of Incorporation  or  the  1940 Act.  For  further  organizational  information,
including certain shareholder rights, see 'Organization' in the SAI.
 
UBS INVESTOR PORTFOLIOS TRUST
 
UBS  Investor Portfolios Trust, a  master trust fund formed  under New York law,
was organized on February 9, 1996. The Declaration of Trust permits the Trustees
to issue interests divided into one or more subtrusts or series. To date,  three
series have been authorized, of which UBS Bond Portfolio is one.
 
                                      -19-
 
<PAGE>

<PAGE>
The  Declaration  of  Trust  provides  that  no  Trustee,  shareholder, officer,
employee, or agent of  the Trust shall  be held to  any personal liability,  nor
shall  resort be had to  such person's private property  for the satisfaction of
any obligation  or claim  or otherwise  in connection  with the  affairs of  the
Portfolio, but that only the Trust property shall be liable.
 
The  Declaration of Trust provides that the Fund and other entities investing in
the Portfolio  (e.g., other  investment  companies, insurance  company  separate
accounts  and common and commingled trust funds) will each be liable for all the
obligations of  the  Portfolio.  However,  the  risk  of  the  Fund's  incurring
financial loss on account of such liability is limited to circumstances in which
both  inadequate insurance existed  and the Portfolio itself  was unable to meet
its obligations. Accordingly, the Trustees believe that neither the Fund nor its
shareholders will be adversely  affected by reason of  the Fund's investment  in
the Portfolio.
 
The  Company expects that,  immediately prior to the  initial public offering of
its shares, the sole holder of its capital stock will be Signature.
 
TAXES
 
The Company  intends  that  the  Fund  will  qualify  as  a  separate  regulated
investment  company under  Subchapter M of  the Code. As  a regulated investment
company, the Fund will not be subject to federal income taxes if at least 90% of
its net investment income  and net short-term capital  gains less any  available
capital loss carryforwards are distributed to shareholders within allowable time
limits.  The  Portfolio  intends  to  qualify as  an  association  treated  as a
partnership for federal income  tax purposes. As  such, the Portfolio  generally
should  not be subject to tax. The status  of the Fund as a regulated investment
company  is  dependent  on,  among  other  things,  the  Portfolio's   continued
qualification as a partnership for federal income tax purposes.
 
Distributions of net long-term capital gains in excess of net short-term capital
losses are taxable to Fund shareholders as long-term capital gains regardless of
how  long a shareholder  has held shares  in the Fund  and regardless of whether
received in the form of cash  or reinvested in additional shares.  Distributions
of  net investment income and realized net short-term capital gains in excess of
net  long-term  capital  losses   are  taxable  as   ordinary  income  to   Fund
shareholders,  whether such  distributions are received  in the form  of cash or
reinvested in additional shares. Annual statements as to the current federal tax
status of distributions  will be  mailed to shareholders  after the  end of  the
taxable  year for the Fund. Distributions  to corporate shareholders of the Fund
will not qualify for the dividends-received deduction because the income of  the
Fund will not consist of dividends paid by United States corporations.
 
Any  gain or  loss realized on  the redemption or  exchange of Fund  shares by a
shareholder who  is not  a dealer  in securities  generally will  be treated  as
long-term  capital gain or loss  if the shares have been  held for more than one
year, and  otherwise as  short-term  capital gain  or  loss. However,  any  loss
realized  by a shareholder upon the redemption or exchange of shares in the Fund
held for six months or less will be  treated as a long-term capital loss to  the
extent  of any long-term capital gain  distributions received by the shareholder
with respect to such shares. In addition, no loss will be allowed on the sale or
other disposition of shares of  the Fund if, within  a period beginning 30  days
before  the date of such sale or disposition and ending 30 days after such date,
the holder acquires (such as through dividend reinvestment) securities that  are
substantially identical to the shares of the Fund.
 
The  Fund will generally be subject to an excise  tax of 4% on the amount of any
income  or  capital  gains,  above  certain  permitted  levels,  distributed  to
shareholders  on  a  basis such  that  such income  or  gain is  not  taxable to
shareholders in  the  calendar  year  in  which  it  was  earned  by  the  Fund.
Furthermore,  dividends declared  in October,  November, or  December payable to
shareholders of record  on a  specified date  in such a  month and  paid in  the
following  January will be treated as having  been paid by the Fund and received
by each shareholder in December. Under this rule, therefore, shareholders may be
taxed in one year on dividends or distributions actually received in January  of
the following year.
 
Distributions  of net investment income or net long-term capital gains will have
the effect of reducing the net asset value of the Fund's shares by the amount of
the distribution. If the net asset value is reduced below a shareholder's  cost,
the  distribution will  nonetheless be taxable  as described above,  even if the
distribution represents a return of invested capital. Investors should  consider
the tax implications of
 
                                      -20-
 
<PAGE>

<PAGE>
buying shares just prior to a distribution, when the price of shares may reflect
the amount of the forthcoming distribution.
 
This  discussion of tax consequences is based on U.S. federal tax laws in effect
on the date of this Prospectus. These laws and regulations are subject to change
by legislative  or  administrative  action, possibly  with  retroactive  effect.
Investors  are urged to consult their own  tax advisors with respect to specific
questions as to federal taxes and with respect to the applicability of state  or
local taxes. See 'Taxes' in the SAI.
 
If  a correct and certified  taxpayer identification number is  not on file, the
Fund is required,  subject to  certain exemptions,  to withhold  31% of  certain
payments   made  or   distributions  declared   to  non-corporate  shareholders.
Shareholders should be aware that, under applicable regulations, the Fund may be
fined up  to  $50 annually  for  each account  for  which a  certified  taxpayer
identification  number is not provided. In the event that such a fine is imposed
with respect to any uncertified account in any year, a corresponding charge  may
be made against that account.
 
ADDITIONAL INFORMATION
 
The  Fund  will  send  its  shareholders  annual  and  semi-annual  reports. The
financial statements appearing in annual reports will be audited by  independent
accountants.  Shareholders also will be sent  confirmations of each purchase and
redemption and  monthly statements  reflecting all  account activity,  including
dividends  and any distributions whether reinvested in additional shares or paid
in cash.
 
All shareholders are given the privilege to initiate transactions  automatically
by  telephone upon opening an account. However, an investor should be aware that
a transaction authorized by telephone and  reasonably believed to be genuine  by
the  Company, the Branch, the Transfer Agent  or the Distributor may subject the
investor to risk of  loss if such  instruction is subsequently  found not to  be
genuine.   The  Company  and  its   service  providers  will  employ  reasonable
procedures,  including  requiring   investors  to  give   a  form  of   personal
identification  and tape recording  of telephonic instructions,  to confirm that
telephonic instructions by  investors are  genuine; if it  does not,  it or  the
service  provider may be liable for any losses due to unauthorized or fraudulent
instructions.
 
The Fund may make historical  performance information available and may  compare
its  performance to other  investments or relevant  indices, including data from
Lipper Analytical  Services, Inc.,  Micropal  Inc., Morningstar  Inc.,  Ibbotson
Associates,  Standard &  Poor's 500 Composite  Stock Price Index,  the Dow Jones
Average, the Frank Russell  Indices, the EAFE Index,  the Financial Times  World
Stock Index and other industry publications.
 
The  Fund may advertise 'yield'. Yield refers  to the net income generated by an
investment in  the  Fund  over a  stated  30-day  period. This  income  is  then
annualized  -- i.e., the amount of income generated by the investment during the
30-day period is assumed to be generated  each 30-day period for 12 periods  and
is  shown as a percentage of the investment. The income earned on the investment
is also assumed to be reinvested at the end of the sixth 30-day period.
 
The Fund  may also  advertise 'total  return'. The  total return  shows what  an
investment  in the Fund would have earned  over a specified period of time (one,
five or ten years  or since commencement of  operations, if less) assuming  that
all  Fund distributions and dividends were  reinvested on the reinvestment dates
and less all  recurring fees during  the period and  assuming the redemption  of
such investment at the end of each period.
 
These  methods of calculating yield and total return are required by regulations
of the SEC. Yield and total  return data similarly calculated, unless  otherwise
indicated,  over  other  specified  periods  of  time  may  also  be  used.  All
performance figures are  based on historical  earnings and are  not intended  to
indicate  future performance. Performance information may be obtained by clients
of the Branch by calling the Branch, while other shareholders may address  their
inquiries to the Transfer Agent.
 
                                      -21-  
 
<PAGE>

<PAGE>
TABLE OF CONTENTS
 
<TABLE>
<S>                                                                                           <C>
Investors for Whom the Fund is Designed....................................................     2
Master-Feeder Structure....................................................................     4
Investment Objective and Policies..........................................................     5
Additional Investment Information and Risk Factors.........................................     7
Options....................................................................................    11
Futures Contracts..........................................................................    12
Investment Restrictions....................................................................    13
Management.................................................................................    13
Shareholder Services.......................................................................    15
Expenses...................................................................................    15
Purchase of Shares.........................................................................    15
Redemption of Shares.......................................................................    16
Exchange of Shares.........................................................................    18
Retirement Plans...........................................................................    18
Dividends and Distributions................................................................    18
Net Asset Value............................................................................    19
Organization...............................................................................    19
Taxes......................................................................................    20
Additional Information.....................................................................    21
</TABLE>
 
- --------------------------------------------------------------------------------
 
<TABLE>
<S>                                                  <C>
INVESTMENT ADVISER                                   Union Bank of Switzerland,
                                                     New York Branch
                                                     299 Park Avenue
                                                     New York, NY 10171
 
ADMINISTRATOR AND DISTRIBUTOR                        Signature Broker-Dealer Services, Inc.
                                                     6 St. James Avenue
                                                     Boston, Massachusetts 02116
 
CUSTODIAN AND TRANSFER AGENT                         Investors Bank & Trust Company
                                                     89 South Street
                                                     Boston, Massachusetts 02111
</TABLE>
 
- --------------------------------------------------------------------------------
 
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, BY THE FUND IN ANY JURISDICTION
IN WHICH SUCH OFFER TO SELL OR SOLICITATION MAY NOT LAWFULLY BE MADE.
 
[LOGO]
 

<PAGE>

<PAGE>
- --------------------------------------------------------------------------------
                       UBS PRIVATE INVESTOR FUNDS, INC.
                             UBS U.S. EQUITY FUND
 
- --------------------------------------------------------------------------------


<PAGE>

<PAGE>
- --------------------------------------------------------------------------------
 
PROSPECTUS
 
UBS U.S. EQUITY FUND
6 ST. JAMES AVENUE
BOSTON, MASSACHUSETTS 02116
FOR INFORMATION CALL (800) 914-8566
 
UBS   U.S.  Equity  Fund  (the  'Fund')   seeks  to  provide  long-term  capital
appreciation and the  potential for a  high level of  current income with  lower
investment  risk and  volatility than  is normally  available from  common stock
funds. It  is the  intention of  the Adviser  (defined below)  that the  average
dividend  yield of the  common stocks held by  the Fund be  at least 50% greater
than that of the Standard and Poor's  500 Composite Stock Price Index (the  'S&P
500  Index') and have less price volatility than  the S&P 500 Index. There is no
assurance that the Fund will achieve its stated objective.
 
The Fund is  a diversified, no-load  mutual fund  for which there  are no  sales
charges or exchange or redemption fees. The Fund is one of several series of UBS
Private  Investor Funds, Inc. (the 'Company'), an open-end management investment
company organized as a corporation under Maryland law.
 
UNLIKE OTHER MUTUAL FUNDS THAT DIRECTLY  ACQUIRE AND MANAGE THEIR OWN  PORTFOLIO
OF  SECURITIES, THE FUND SEEKS TO  ACHIEVE ITS INVESTMENT OBJECTIVE BY INVESTING
ALL OF ITS INVESTABLE ASSETS IN  UBS U.S. EQUITY PORTFOLIO (THE 'PORTFOLIO'),  A
CORRESPONDING  OPEN-END MANAGEMENT INVESTMENT COMPANY HAVING THE SAME INVESTMENT
OBJECTIVE AS THE FUND. THE FUND EMPLOYS A TWO-TIER MASTER-FEEDER STRUCTURE  THAT
IS MORE FULLY DESCRIBED UNDER THE SECTION CAPTIONED 'MASTER-FEEDER STRUCTURE'.
 
THE  PORTFOLIO IS ADVISED BY THE NEW YORK BRANCH (THE 'BRANCH' OR THE 'ADVISER')
OF UNION BANK OF SWITZERLAND (THE 'BANK').
 
This Prospectus  sets forth  concisely the  information about  the Fund  that  a
prospective  investor  ought to  know before  investing. It  should be  read and
retained for  future reference.  A Statement  of Additional  Information,  dated
March 1, 1996, provides further discussion of certain topics referred to in this
Prospectus and other matters that may be of interest to investors. The Statement
of  Additional  Information  has been  filed  with the  Securities  and Exchange
Commission and  is incorporated  herein by  reference and  is available  without
charge  upon written request from the Company or Distributor (as defined herein)
at the addresses set forth  on the back cover of  the Prospectus, or by  calling
(800) 914-8566.
 
INVESTMENTS  IN THE FUND ARE NOT DEPOSITS  WITH OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, UNION BANK OF SWITZERLAND OR ANY OTHER BANK. SHARES OF THE  FUND
ARE  NOT  INSURED  BY THE  FEDERAL  DEPOSIT INSURANCE  CORPORATION,  THE FEDERAL
RESERVE BOARD, OR ANY  OTHER GOVERNMENTAL AGENCY. AN  INVESTMENT IN THE FUND  IS
SUBJECT  TO RISKS THAT MAY CAUSE THE  VALUE OF THE INVESTMENT TO FLUCTUATE. WHEN
THE INVESTMENT IS REDEEMED,  THE VALUE MAY  BE HIGHER OR  LOWER THAN THE  AMOUNT
ORIGINALLY INVESTED BY THE INVESTOR.
 
THESE  SECURITIES HAVE  NOT BEEN APPROVED  OR DISAPPROVED BY  THE SECURITIES AND
EXCHANGE COMMISSION OR ANY  STATE SECURITIES COMMISSION  NOR HAS THE  SECURITIES
AND  EXCHANGE  COMMISSION OR  ANY STATE  SECURITIES  COMMISSION PASSED  UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
 
PROSPECTUS DATED MARCH 1, 1996.


<PAGE>

<PAGE>
UBS U.S. EQUITY FUND
INVESTORS FOR WHOM THE FUND IS DESIGNED
 
UBS  U.S. Equity Fund  (the 'Fund') is designed  for investors seeking long-term
capital appreciation and the potential for  a high level of current income  with
lower  investment risk  and volatility  than is  normally available  from common
stock funds. Because of the risks associated with common stock investments,  the
Fund  is intended to  be a long-term  investment vehicle and  is not intended to
provide investors with a means  for speculating on short-term market  movements.
The  Fund seeks  to achieve  its investment  objective by  investing all  of its
investable assets in UBS  U.S. Equity Portfolio  (the 'Portfolio'), an  open-end
management  investment company having the same investment objective as the Fund.
Because  the  investment  characteristics  and  experience  of  the  Fund   will
correspond  directly  with  those  of  the  Portfolio,  the  discussion  in this
Prospectus focuses on the investments and investment policies of the  Portfolio.
The  net asset value of shares of the  Fund fluctuates with changes in the value
of the investments in the Portfolio.
 
The Portfolio may make  various types of investments  in seeking its  objective.
Among  the permissible  investments for the  Portfolio are  equity securities of
domestic issuers, including common stocks  and securities which are  convertible
into  common stocks. The Portfolio may also invest in futures contracts, options
and  certain  privately  placed  securities.  The  Portfolio's  investments   in
securities  of smaller or less established issuers involve risks and may be more
volatile and  less liquid  than the  securities of  larger or  more  established
domestic  issuers. For further  information about these  investments and related
investment techniques, see 'Investment Objective and Policies' discussed below.
 
The minimum initial investment in the  Fund is $25,000, except that the  minimum
initial  investment is $10,000 for shareholders of another series of UBS Private
Investor Funds, Inc. (the 'Company'). The minimum subsequent investment for  all
investors  is $5,000.  These minimums  may be  waived for  certain accounts. See
'Purchase of Shares'. If shareholders reduce their total investment in shares of
the Fund to  less than $10,000,  their investment will  be subject to  mandatory
redemption.  See 'Redemption of Shares -- Mandatory Redemption'. The Fund is one
of several  series of  the Company,  an open-end  management investment  company
organized as a Maryland corporation.
 
This  Prospectus describes the investment objective and policies, management and
operations of the Fund  to enable investors  to decide if  the Fund suits  their
investment  needs. The Fund operates through a two-tier master-feeder structure.
The Company's Board of Directors (the 'Directors' or the 'Board') believes  that
this  structure  provides  Fund  shareholders with  the  opportunity  to achieve
certain  economies  of  scale  that  would  otherwise  be  unavailable  if   the
shareholders'  investments were not pooled  with other investors sharing similar
investment objectives.
 
The following table illustrates that investors in the Fund incur no  shareholder
transaction  expenses: their  investments in  the Fund  are subject  only to the
operating expenses  set  forth  below for  the  Fund  and the  Portfolio,  as  a
percentage  of average  daily net assets  of the Fund.  These operating expenses
include expenses incurred  by the Fund  and expenses incurred  by the  Portfolio
that  are allocable to  the Fund. The  Directors believe that  the aggregate per
share expenses of the Fund and the Portfolio will be approximately equal to  and
may  be less  than the  expenses that the  Fund would  incur if  it retained the
services of an investment adviser and invested its assets directly in  portfolio
securities.  Fund and Portfolio expenses are  discussed below under the headings
'Management,' 'Expenses' and 'Shareholder Services'.
 
SHAREHOLDER TRANSACTION EXPENSES
 
<TABLE>
<S>                                                                                                    <C>
Sales Load Imposed on Purchases.....................................................................   None
Sales Load Imposed on Reinvested Dividends..........................................................   None
Deferred Sales Load.................................................................................   None
Redemption Fees.....................................................................................   None
Exchange Fees.......................................................................................   None
</TABLE>
 
                                      -2-
 
<PAGE>

<PAGE>
 
<TABLE>
<S>                                                                                                    <C>
EXPENSE TABLE
 
ANNUAL OPERATING EXPENSES*
Advisory Fees, After Fee Waiver**...................................................................   0.00%
Rule 12b-1 Fees.....................................................................................   None
Other Expenses, After Expense Reimbursements***.....................................................   0.90%
                                                                                                       ----
Total Operating Expenses, After Fee Waivers and Expense Reimbursements*.............................   0.90%
                                                                                                       ----
                                                                                                       ----
</TABLE>
 
*   Expenses are expressed as a percentage of the Fund's projected average daily
net assets and are based on estimates of the expenses to be incurred during  the
current   fiscal   year,  after   any   applicable  fee   waivers   and  expense
reimbursements. Without  such  fee  waivers and  expense  reimbursements,  Total
Operating  Expenses would be equal,  on an annual basis,  to 4.35% of the Fund's
projected average daily net assets. See 'Management'.
 
**   The New  York Branch  (the  'Branch' or  the 'Adviser')  of Union  Bank  of
Switzerland (the 'Bank') has agreed to waive fees and reimburse the Fund for any
of  its operating expenses  (including those the  Fund incurs indirectly through
the Portfolio) to the extent that the Fund's total operating expenses exceed, on
an annual basis, 0.90% of  the Fund's average daily  net assets. The Branch  may
modify  or discontinue this undertaking at any  time in the future with 30 days'
notice to the Fund. The advisory fee would be 0.60% if there were no fee waiver.
See 'Management -- Adviser and Funds Services Agent' and 'Expenses'.
 
*** The  fees  and expenses  in  Other Expenses,  After  Expense  Reimbursements
include  fees payable  to Signature  Broker-Dealer Services,  Inc. ('Signature')
under an  Administrative  Services Agreement  with  the Fund,  fees  payable  to
Signature  Financial Group (Grand Cayman)  Limited ('Signature-Cayman') under an
Administrative Services Agreement with the Portfolio, fees payable to  Investors
Bank  & Trust Company (the 'Custodian' or  the 'Transfer Agent') as custodian of
the Fund and the Portfolio, and fees payable to the Branch under the Shareholder
Servicing  Agreement.  For  a  more  detailed  description  of  contractual  fee
arrangements,  including fee waivers and expense reimbursements, and of the fees
and expenses  included  in Other  Expenses,  see 'Management'  and  'Shareholder
Services'.
 
EXAMPLE
 
An  investor would pay the following expenses on a $1,000 investment, assuming a
5% annual return and a redemption at the end of each time period:
 
<TABLE>
<S>                                                            <C>
1 Year......................................................   $ 9
3 Years.....................................................   $29
</TABLE>
 
The above Expense  Table is designed  to assist investors  in understanding  the
various  direct and indirect costs and expenses that Fund investors are expected
to bear  and reflects  the expenses  of the  Fund and  the Fund's  share of  the
Portfolio's  expenses. In  connection with the  above Example,  please note that
$1,000 is less than the Fund's minimum investment requirement and that there are
no redemption or exchange fees of any kind. See 'Purchase of Shares',  'Exchange
of  Shares'  and 'Redemption  of  Shares'. THE  EXAMPLE  IS HYPOTHETICAL;  IT IS
INCLUDED SOLELY FOR ILLUSTRATIVE PURPOSES,  AND ASSUMES THE CONTINUATION OF  THE
FEE WAIVERS AND EXPENSE REIMBURSEMENTS REPRESENTED IN THE ABOVE 'EXPENSE TABLE'.
IT  SHOULD  NOT BE  CONSIDERED A  REPRESENTATION  OF FUTURE  PERFORMANCE; ACTUAL
EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
 
HISTORICAL PERFORMANCE OF COMPARABLE DISCRETIONARY ACCOUNTS. The following table
sets forth the composite total return for  the one year ended December 31,  1995
for  all discretionary  accounts described below  that have been  managed for at
least one full quarter by UBS  Asset Management (New York) Inc., a  wholly-owned
subsidiary of the Bank ('UBSAM NY'), and the annual total return during the same
year for the S&P 500 Index. Such accounts have substantially the same investment
objective and policies and are managed in a manner substantially the same as the
Portfolio.  While the Portfolio will be managed by the Branch, the management of
the Portfolio will be substantially the same as by UBSAM NY and will be  carried
out  by personnel who performed these services for the discretionary accounts at
UBSAM NY, who will  be employed by  the Branch for  this purpose. The  composite
total return for such accounts has
 
                                      -3-
 
<PAGE>

<PAGE>
been  adjusted  to deduct  all of  the Fund's  estimated annual  total operating
expenses of 0.90% of projected average daily net assets as set forth in the  Fee
Table  above. No such accounts  were managed by UBSAM NY  or the Branch prior to
1995. The composite  total return  is time-weighted and  weighted by  individual
account  size  and  reflects the  reinvestment  of dividends  and  interest. The
composite total return of these discretionary accounts should not be viewed as a
prediction of  future performance  of the  Portfolio. The  S&P 500  Index is  an
unmanaged  index that includes  500 U.S. stocks  and is a  common measure of the
performance of the U.S. stock market.
 
                              ANNUAL TOTAL RETURN
                      FOR THE YEAR ENDED DECEMBER 31, 1995
 
<TABLE>
<S>                                                          <C>
Composite Total Return                                       39.08%
 
S&P 500 Index                                                37.60%
</TABLE>
 
MASTER-FEEDER STRUCTURE
 
Unlike other mutual funds that directly  acquire and manage their own  portfolio
of  securities, the Fund seeks to  achieve its investment objective by investing
all of its  investable assets in  the Portfolio, a  separate investment  company
with  the same investment objective  as the Fund. The  Portfolio is one of three
series of UBS Investor Portfolios  Trust (the 'Trust'). See 'Organization'.  The
investment  objective of the Fund and the Portfolio may be changed only with the
approval of the holders of the outstanding  shares of the Fund or the  investors
in the Portfolio, respectively.
 
This   master-feeder  structure  has  been  developed  relatively  recently,  so
shareholders should carefully consider this investment approach.
 
In addition to selling an interest in  the Portfolio to the Fund, the  Portfolio
may  sell  interests in  the Portfolio  to other  mutual funds  or institutional
investors. Such investors  will invest in  the Portfolio on  the same terms  and
conditions  as the Fund  and will pay  a proportionate share  of the Portfolio's
expenses. However, other entities investing in the Portfolio may sell shares  of
their  own  fund  using a  different  pricing  structure than  the  Fund's. Such
different pricing structures may result in differences in returns experienced by
investors in  other funds  that invest  in the  Portfolio. Such  differences  in
returns  are  not uncommon  and  are present  in  other mutual  fund structures.
Information concerning other holders of interests in the Portfolio is  available
from Signature at (617) 423-0800.
 
The  Fund may withdraw its investment in the  Portfolio at any time if the Board
determines that it  is in  the Fund's  best interests to  do so.  Upon any  such
withdrawal,  the Board would consider what  action might be taken, including the
investment of all the Fund's assets  in another pooled investment entity  having
the  same investment objective and restrictions as  the Fund or the retaining of
an investment  adviser  to manage  the  Fund's  assets in  accordance  with  the
investment policies described below with respect to the Portfolio.
 
Certain   changes  in   the  Portfolio's   investment  objective,   policies  or
restrictions, or a failure by the Fund's shareholders to approve a change in the
Portfolio's investment  objective  or  restrictions, may  require  the  Fund  to
withdraw  its investments in the Portfolio.  Any such withdrawal could result in
an  in-kind  distribution  of  portfolio  securities  (as  opposed  to  a   cash
distribution)  by  the  Portfolio  to  the  Fund.  In  no  event,  however, will
securities which are  not readily marketable  exceed 15% of  the total value  of
such in-kind distribution. Such a distribution may result in the Fund's having a
less  diversified  portfolio  of  investments  or  adversely  affect  the Fund's
liquidity, and  the  Fund  could  incur  brokerage,  tax  or  other  charges  in
converting  such securities to cash. Notwithstanding  the above, there are other
means for meeting shareholder redemption requests, such as borrowing.
 
Smaller funds  investing in  the Portfolio  may be  materially affected  by  the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws  from the Portfolio,  the remaining funds  may subsequently experience
higher pro  rata operating  expenses,  thereby lowering  returns.  Additionally,
because  the Portfolio  would become  smaller, it  may become  less diversified,
resulting in potentially increased portfolio risk (however, these  possibilities
also exist for traditionally structured funds that have
 
                                      -4-
 
<PAGE>

<PAGE>
large or institutional investors who may withdraw from a fund). Also, funds with
a  greater  pro rata  ownership  in the  Portfolio  could have  effective voting
control of its operations.  Except as permitted by  the Securities and  Exchange
Commission  (the  'SEC'), whenever  the  Fund is  requested  to vote  on matters
pertaining  to  the  Portfolio,  the  Company  will  hold  a  meeting  of   Fund
shareholders and will cast all of its votes proportionately as instructed by the
Fund's   shareholders.  See  'Organization'  in   the  Statement  of  Additional
Information ('SAI').  Fund shareholders  who do  not vote  will not  affect  the
Fund's  votes at  the Portfolio meeting.  The percentage of  the Company's votes
representing Fund shareholders not  voting will be voted  by the Company in  the
same proportion as the Fund shareholders who do, in fact, vote.
 
For  more information about  the Portfolio's investment  objective, policies and
restrictions, see 'Investment  Objective and  Policies', 'Additional  Investment
Information   and  Risk   Factors'  and  'Investment   Restrictions'.  For  more
information about the Portfolio's management and expenses, see 'Management'. For
more  information  about  changing   the  investment  objective,  policies   and
restrictions of the Fund or the Portfolio, see 'Investment Restrictions'.
 
INVESTMENT OBJECTIVE AND POLICIES
 
The  investment  objective of  the Fund  and the  Portfolio is  described below,
together with  the  policies  they  employ in  their  efforts  to  achieve  this
objective.  Additional information about the investment policies of the Fund and
the Portfolio appears in the SAI under 'Investment Objectives and Policies'. The
Fund attempts  to achieve  its  investment objective  by  investing all  of  its
investable  assets  in  UBS  U.S.  Equity Portfolio,  a  series  of  an open-end
management investment company; such series has the same investment objective  as
the Fund. There can be no assurance that the investment objective of the Fund or
the Portfolio will be achieved.
 
The  Portfolio's objective is to provide  long-term capital appreciation and the
potential for a  high level  of current income  with lower  investment risk  and
volatility  than  is normally  available from  common  stock funds.  The average
dividend yield of the  Portfolio's common stocks is  expected to be higher  than
that  of the S&P 500 Index.  It is also the objective  of the Portfolio that the
Portfolio's investments have less price volatility than the S&P 500 Index.
 
Under normal circumstances, the Portfolio will invest at least 80% of its assets
in  income-producing   equity   securities  of   domestic   issuers,   including
dividend-paying  common stocks and securities  which are convertible into common
stocks. The Portfolio intends to  invest in securities that generate  relatively
high  levels of dividend income and have the potential for capital appreciation.
These  generally  include  common  stocks  of  established,  high-quality   U.S.
corporations.  In addition, the Portfolio will  seek to diversify its investment
over a carefully  selected list  of securities in  order to  moderate the  risks
inherent in equity investments.
 
The Portfolio will invest in an equity security following a fundamental analysis
of  the  issuing  company.  An  important part  of  this  analysis  will  be the
examination of  the company's  ability  to maintain  its dividend.  The  Adviser
believes  that dividend income has proved to  be an important component of total
return. For example, during the ten-year period ended September 1994, reinvested
dividend income accounted for approximately 26%  of the total return of the  S&P
500  Index. Also, the Adviser  believes that dividend income  tends to be a more
stable source of total  return than capital appreciation.  While the price of  a
company's  common stock can be significantly affected by market fluctuations and
other short-term factors, its dividend level usually has greater stability.  For
this reason, securities that pay a high level of dividend income tend to be less
volatile  in price than comparable securities that pay a lower level of dividend
income.
 
Although the Portfolio intends to invest primarily in equity securities, it  may
invest  up  to  20%  of  its assets  in  certain  cash  investments  and certain
short-term   fixed   income   securities.   See   'Investment   Objectives   and
Policies   --  Quality  and  Diversification  Requirements'  in  the  SAI.  Such
securities may  be  used  to  invest  uncommitted  cash  balances,  to  maintain
liquidity  to meet  shareholder redemptions or  to take  a temporarily defensive
position against  potential stock  market  declines. These  securities  include:
obligations   of   the   United   States   Government   and   its   agencies  or
instrumentalities; commercial paper, bank  certificates of deposit and  bankers'
acceptances; and repurchase agreements collateralized by these
 
                                      -5-
 
<PAGE>

<PAGE>
securities.  The Portfolio may purchase nonpublicly offered debt securities. See
'Illiquid Investments; Privately Placed and Other Unregistered Securities.'
 
The Portfolio may also utilize equity futures contracts and options to a limited
extent. Specifically, the Portfolio may enter into futures contracts and options
provided that  such positions  are established  for hedging  purposes only.  See
'Futures Contracts'.
 
The  Portfolio  intends to  manage  its securities  actively  in pursuit  of its
investment objective. Although it generally  seeks to invest for the  long-term,
the Portfolio retains the right to sell securities irrespective of how long they
have  been held.  It is  anticipated that the  annual portfolio  turnover of the
Portfolio will  not  exceed  100%.  To  the  extent  the  Portfolio  engages  in
short-term trading, it may incur increased transaction costs.
 
EQUITY INVESTMENTS. Under normal circumstances, the Adviser intends to invest at
least  80%  of  the Portfolio's  assets  in  the equity  securities  of domestic
issuers. These investments will  consist of common  stocks and other  securities
with  equity  characteristics  such  as preferred  stock,  warrants,  rights and
convertible securities.  The  Portfolio's  primary equity  investments  are  the
common  stocks of established domestic companies.  The common stock in which the
Portfolio may invest includes  the common stock  of any class  or series or  any
similar  equity interest  such as  trust or  limited partnership  interests. See
'Additional Investment Information and Risk  Factors'. The Portfolio invests  in
domestic  securities  listed  on domestic  securities  exchanges  and securities
traded  in  domestic  over-the-counter  markets,  and  may  invest  in   certain
restricted  or unlisted  securities. See 'Additional  Investment Information and
Risk Factors'.
 
ADDITIONAL INVESTMENT INFORMATION AND RISK FACTORS
 
CONVERTIBLE SECURITIES. The  convertible securities in  which the Portfolio  may
invest  include any  debt securities or  preferred stocks that  may be converted
into common stock or that carry the right to purchase common stock.  Convertible
securities  entitle the holder to exchange the securities for a specified number
of shares of  common stock,  usually of the  same company,  at specified  prices
within a certain period of time.
 
WHEN-ISSUED   AND  DELAYED  DELIVERY  SECURITIES.  The  Portfolio  may  purchase
securities on a when-issued or delayed  delivery basis. Delivery of and  payment
for  these securities may take as long as a  month or more after the date of the
purchase commitment.  The  value  of  these  securities  is  subject  to  market
fluctuation  during  this  period  and  no interest  or  income  accrues  to the
Portfolio until settlement. At  the time of  settlement, a when-issued  security
may  be valued at less than its purchase price. Between the trade and settlement
dates, the  Portfolio will  maintain  a segregated  account with  the  Custodian
consisting  of a portfolio of high grade, liquid debt securities with a value at
least equal to these  commitments. When entering into  a when-issued or  delayed
delivery  transaction, the Portfolio will rely  on the other party to consummate
the transaction;  if the  other  party fails  to do  so,  the Portfolio  may  be
disadvantaged.  It is  the current  policy of  the Portfolio  not to  enter into
when-issued commitments exceeding in  the aggregate 15% of  the market value  of
the Portfolio's total assets less liabilities (excluding the obligations created
by these commitments).
 
REPURCHASE   AGREEMENTS.  The  Portfolio  may  engage  in  repurchase  agreement
transactions with  brokers, dealers  or banks  that meet  the credit  guidelines
established  by the Trust's Board of  Trustees (the 'Trustees'). In a repurchase
agreement, the  Portfolio buys  a security  from  a seller  that has  agreed  to
repurchase  it at a mutually agreed upon date and price, reflecting the interest
rate effective for the term  of the agreement. The  term of these agreements  is
usually  from overnight to one  week. A repurchase agreement  may be viewed as a
fully collateralized loan of money by the Portfolio to the seller. The Portfolio
always receives securities as collateral with  a market value at least equal  to
the purchase price plus accrued interest and this value is maintained during the
term  of  the  agreement. If  the  seller  defaults and  the  collateral's value
declines, the  Portfolio  might incur  a  loss. If  bankruptcy  proceedings  are
commenced  with  respect to  the seller,  the  Portfolio's realization  upon the
disposition of collateral may be  delayed or limited. Investments in  repurchase
agreements maturing in more than seven days and certain
 
                                      -6-
 
<PAGE>

<PAGE>
other  investments that  may be considered  illiquid are  limited. See 'Illiquid
Investments; Privately Placed and Other Unregistered Securities' below.
 
REVERSE REPURCHASE AGREEMENTS. The Portfolio is permitted to enter into  reverse
repurchase  agreements. In a reverse repurchase agreement, the Portfolio sells a
security and agrees to repurchase it at  a mutually agreed upon date and  price,
reflecting  the interest rate  effective for the  term of the  agreement. It may
also be viewed as the borrowing of  money by the Portfolio and, therefore, is  a
form  of leverage. Leverage may cause any gains or losses of the Portfolio to be
magnified. For more  information, including  limitations on the  use of  reverse
repurchase agreements, see 'Investment Objectives and Policies' in the SAI.
 
SECURITIES LENDING. Subject to applicable investment restrictions, the Portfolio
may lend its securities. The Portfolio may lend its securities if such loans are
secured  continuously by cash or equivalent collateral  or by a letter of credit
in favor of  the Portfolio at  least equal at  all times to  100% of the  market
value of the securities loaned, plus accrued interest. While such securities are
on  loan, the borrower will pay the Portfolio any income accruing thereon. Loans
will be subject to termination by  the Portfolio in the normal settlement  time,
generally  three business  days after  notice, or by  the borrower  on one day's
notice. Borrowed securities must  be returned when the  loan is terminated.  Any
gain  or loss in the market price  of the borrowed securities that occurs during
the term of the loan inures to  the Portfolio and its respective investors.  The
Portfolio  may pay reasonable  finders' and custodial fees  in connection with a
loan. In addition, the Portfolio will consider all the facts and  circumstances,
including  the creditworthiness of the  borrowing financial institution, and the
Portfolio will not make any loans in excess of one year. The Portfolio will  not
lend  its securities to any officer, Trustee, Director, employee or affiliate or
placement agent of the Company, the Portfolio, or the Adviser, Administrator  or
Distributor, unless otherwise permitted by applicable law.
 
ILLIQUID  INVESTMENTS; PRIVATELY  PLACED AND OTHER  UNREGISTERED SECURITIES. The
Portfolio may not acquire any illiquid securities if, as a result thereof,  more
than  15% of the market value of the Portfolio's net assets would be in illiquid
investments or investments  that are  not readily marketable.  In addition,  the
Portfolio  will not invest more than 10% of the market value of its total assets
in restricted securities that  cannot be offered for  public sale in the  United
States  without first  being registered  under the  Securities Act  of 1933 (the
'Securities Act').  Subject to  those  non-fundamental policy  limitations,  the
Portfolio  may acquire investments that are  illiquid or have limited liquidity,
such as private  placements or  investments that  are not  registered under  the
Securities  Act, and  cannot be  offered for  public sale  in the  United States
without first being registered.  An illiquid investment  is any investment  that
cannot  be disposed  of within seven  days in  the normal course  of business at
approximately the amount  at which  it is  valued by  the Portfolio.  Repurchase
agreements  maturing in more than seven days are considered illiquid investments
and, as such, are subject  to the limitations set  forth in this paragraph.  The
price  the Portfolio pays for illiquid securities or receives upon resale may be
lower than the price paid or received for similar securities with a more  liquid
market.  Accordingly,  the  valuation  of  these  securities  will  reflect  any
limitations on their liquidity.
 
The Portfolio  may also  purchase  Rule 144A  securities sold  to  institutional
investors without registration under the Securities Act. These securities may be
determined to be liquid in accordance with guidelines established by the Adviser
and   approved  by  the  Trustees.  The  Trustees  will  monitor  the  Adviser's
implementation of these guidelines on a periodic basis.
 
MONEY MARKET INSTRUMENTS. The Portfolio is  permitted to invest in money  market
instruments  although it  intends to stay  invested in equity  securities to the
extent practical in light of its objective and long-term investment perspective.
The Portfolio may  make money  market investments pending  other investments  or
settlements,  for liquidity or  in adverse market  conditions. Such money market
investments may include obligations of the U.S. Government and its agencies  and
instrumentalities, commercial paper, bank obligations and repurchase agreements.
For  more  detailed  information  about  these  money  market  investments,  see
'Investment Objectives and Policies' in the SAI.
 
FUTURES AND OPTIONS TRANSACTIONS. The Portfolio  is permitted to enter into  the
futures and options transactions described below. These instruments are commonly
known as derivatives.
 
                                      -7-
 
<PAGE>

<PAGE>
The Portfolio may purchase and sell exchange traded and over-the-counter ('OTC')
put and call options on equity securities or indices of equity securities, enter
into forward contracts, purchase and sell futures contracts on indices of equity
securities  and purchase or  sell put and  call options on  futures contracts on
indices of equity securities. The Portfolio may use these techniques for hedging
or risk management purposes or, subject to certain limitations, for the  purpose
of obtaining desired exposure to certain securities or markets.
 
The  Portfolio  may use  these  techniques to  manage  its exposure  to changing
interest rates  and/or security  prices. Some  options and  futures  strategies,
including  selling  futures  contracts  and  buying  puts,  tend  to  hedge  the
Portfolio's investments against price fluctuations. Other strategies,  including
buying  futures contracts, writing puts and calls, and buying calls, may tend to
increase market  exposure.  For  example,  if the  Portfolio  wishes  to  obtain
exposure  to a particular market or market  sector but does not wish to purchase
the relevant  securities,  it  could,  as an  alternative,  purchase  a  futures
contract  on an index of such securities  or related securities. Such a purchase
would not constitute a hedging transaction and could be considered  speculative.
However, the Portfolio will use futures contracts or options in this manner only
for  the purpose of obtaining the same  level of exposure to a particular market
or market  sector  that  it  could have  obtained  by  purchasing  the  relevant
securities  and  will  not use  futures  contracts  or options  to  leverage its
exposure beyond this level. Options and  futures contracts may be combined  with
each  other or  with forward contracts  in order  to adjust the  risk and return
characteristics  of  the  Portfolio's  overall  strategy  in  a  manner   deemed
appropriate  to the  Adviser and consistent  with the  Portfolio's objective and
policies. Because combined  positions involve  multiple trades,  they result  in
higher transaction costs and may be more difficult to open and close out.
 
The  Portfolio's use  of these  transactions is  a highly  specialized activity,
which involves investment strategies and  risks different from those  associated
with  ordinary portfolio securities transactions, and  there can be no guarantee
that their use will increase the  Portfolio's return. While the Portfolio's  use
of  these  instruments  may  reduce certain  risks  associated  with  owning its
portfolio securities, these techniques themselves entail certain other risks. If
the Adviser  applies  a strategy  at  an  inappropriate time  or  judges  market
conditions  or  trends incorrectly,  such strategies  may lower  the Portfolio's
return. Certain strategies limit the Portfolio's opportunity to realize gains as
well as limiting its exposure to  losses. The Portfolio could experience  losses
if  the prices of its options and  futures positions were poorly correlated with
its other investments, or if it could not close out its positions because of  an
illiquid  secondary  market.  In  addition,  the  Portfolio  will  incur  costs,
including commissions and  premiums, in connection  with these transactions  and
these transactions could significantly increase the Portfolio's turnover rate.
 
The  Portfolio may purchase and sell put and call options on securities, indices
of securities and futures contracts, or purchase and sell futures contracts  for
the purposes described herein.
 
In  addition, in  order to assure  that the  Portfolio will not  be considered a
'commodity pool' for purposes of  Commodity Futures Trading Commission  ('CFTC')
rules,  the  Portfolio  will enter  into  transactions in  futures  contracts or
options on futures contracts only if (1) such transactions constitute bona  fide
hedging  transactions as defined under CFTC rules, or (2) no more than 5% of the
Portfolio's net assets are committed as initial margin or premiums to  positions
that do not constitute bona fide hedging transactions.
 
OPTIONS
 
PURCHASING  PUT  AND CALL  OPTIONS. By  purchasing a  put option,  the Portfolio
obtains the right (but not the obligation) to sell the instrument underlying the
option at a fixed strike price. In return for this right, the Portfolio pays the
current market price for the option (known as the option premium). Options  have
various  types of underlying instruments, including specific securities, indices
of securities, indices of securities prices and futures contracts. The Portfolio
may terminate its position in  a put option it has  purchased by allowing it  to
expire  or by  exercising the  option. The  Portfolio may  also close  out a put
option position by entering into an  offsetting transaction, if a liquid  market
exists.  If the option is allowed to  expire, the Portfolio will lose the entire
premium it paid. If the Portfolio exercises a put option on a security, it  will
sell  the instrument underlying the option at the strike price. If the Portfolio
exercises an option on an index, settlement is in cash and does not involve  the
actual sale of securities.
 
                                      -8-
 
<PAGE>

<PAGE>
American  style options may be exercised on any day up to their expiration date.
European style options may be exercised only on their expiration date.
 
The buyer of a typical put option can  expect to realize a gain if the price  of
the  underlying instrument  falls substantially.  However, if  the price  of the
instrument underlying the  option does  not fall enough  to offset  the cost  of
purchasing  the option, a put buyer can expect  to suffer a loss (limited to the
amount of the premium paid, plus related transaction costs).
 
The features of call options are essentially  the same as those of put  options,
except that the purchaser of a call option obtains the right to purchase, rather
than  sell, the instrument underlying the option at the option's strike price. A
call buyer typically attempts to participate in potential price increases of the
instrument underlying the option with risk limited to the cost of the option and
related transaction costs if security prices  fall. At the same time, the  buyer
can  expect to  suffer a  loss if  security prices  do not  rise sufficiently to
offset the cost of the option.
 
SELLING (WRITING) PUT AND CALL OPTIONS. When the Portfolio writes a put  option,
it  takes the opposite side  of the transaction from  the option's purchaser. In
return for receipt of the premium,  the Portfolio assumes the obligation to  pay
the  strike price for the instrument underlying the option if the other party to
the option  chooses to  exercise it.  The Portfolio  may seek  to terminate  its
position  in a put option it writes  before exercise by purchasing an offsetting
option in the market at its current price. If the market is not liquid for a put
option the Portfolio  has written, however,  the Portfolio must  continue to  be
prepared  to pay the strike price while the option is outstanding, regardless of
price changes, and must continue to post margin as discussed below.
 
If the price of  the underlying instrument rises,  a put writer would  generally
expect  to  profit, although  its gain  would be  limited to  the amount  of the
premium it received. If security prices remain the same over time, it is  likely
that  the writer will  also profit, because it  should be able  to close out the
option at a lower price. If security prices fall, however, the put writer  would
expect  to suffer a loss. This loss should be less than the loss from purchasing
and holding the  underlying instrument  directly, however,  because the  premium
received for writing the option should offset a portion of the decline.
 
Writing  a call option obligates  the Portfolio to sell  or deliver the option's
underlying instrument  in return  for  the strike  price  upon exercise  of  the
option.  The characteristics  of writing  call options  are similar  to those of
writing put  options,  except  that  writing calls  generally  is  a  profitable
strategy  if  prices remain  the same  or  fall. Through  receipt of  the option
premium a call writer  offsets part of  the effect of a  price decrease. At  the
same  time, because  a call  writer must be  prepared to  deliver the underlying
instrument in return for the strike price, even if its current value is greater,
a call writer gives up some ability to participate in security price increases.
 
The writer of a U.S. exchange traded put or call option on a security, an  index
of securities or a futures contract is required to deposit cash or securities or
a  letter of credit as  margin and to make  mark-to-market payments of variation
margin if and as the position becomes unprofitable.
 
OPTIONS  ON  INDICES.  The  Portfolio   is  permitted  to  enter  into   options
transactions  and may purchase and  sell put and call  options on any securities
index based  on  securities  in  which the  Portfolio  may  invest.  Options  on
securities  indices  are  similar  to options  on  securities,  except  that the
exercise of securities  index options is  settled by cash  payment and does  not
involve  the actual purchase  or sale of securities.  In addition, these options
are designed to reflect price fluctuations  in a group of securities or  segment
of  the securities market  rather than price fluctuations  in a single security.
The Portfolio, in purchasing  or selling index options,  is subject to the  risk
that  the value of its  portfolio securities may not change  as much as an index
because the Portfolio's investments generally will not match the composition  of
an index.
 
For  a number of reasons,  a liquid market may not  exist and thus the Portfolio
may not be able to close out  an option position that it has previously  entered
into.  When the  Portfolio purchases an  OTC option,  it will be  relying on its
counterparty to perform its obligations, and the Portfolio may incur  additional
losses if the counterparty is unable to perform.
 
                                      -9-
 
<PAGE>

<PAGE>
FUTURES CONTRACTS
 
When  the  Portfolio  purchases a  futures  contract,  it agrees  to  purchase a
specified quantity of an  underlying instrument at a  specified future date  and
price  or to make or receive  a cash payment based on  the value of a securities
index. When  the  Portfolio  sells a  futures  contract,  it agrees  to  sell  a
specified  quantity of the underlying instrument  at a specified future date and
price or to receive or  make a cash payment based  on the value of a  securities
index.  The price at which  the purchase and sale will  take place is fixed when
the Portfolio enters into the contract. Futures can be held until their delivery
dates or the positions can be (and  normally are) closed out before then.  There
is  no assurance,  however, that  a liquid  market will  exist when  a Portfolio
wishes to close out a particular position.
 
When the  Portfolio purchases  or sells  a futures  contract, the  value of  the
futures  contract tends to increase and decrease in tandem with the value of its
underlying instrument. Purchasing  futures contracts  may tend  to increase  the
Portfolio's  exposure  to  positive  and  negative  price  fluctuations  in  the
underlying instrument, much  as if  it had purchased  the underlying  instrument
directly,  as discussed above.  When the Portfolio sells  a futures contract, by
contrast, the value of  its futures position  will tend to  move in a  direction
contrary to the value of the underlying instrument. Selling futures contracts on
securities  similar  to those  held by  the Portfolio,  therefore, will  tend to
offset both  positive  and  negative  market  price  changes,  much  as  if  the
underlying instrument had been sold. Because there are a limited number of types
of  exchange-traded  options  and futures  contracts,  it is  likely  that these
standardized instruments  will  not exactly  match  the Portfolio's  current  or
anticipated  investments.  The Portfolio  may  invest in  futures  contracts and
options thereon based on securities with different issuers, maturities, or other
characteristics from  the  securities  in  which  it  typically  invests,  which
involves  a  risk  that the  options  or  futures position  will  not  track the
performance of the Portfolio's other  investments. The Portfolio may also  enter
into  transactions in futures contracts and options for non-hedging purposes, as
discussed above.
 
The purchaser or seller of a futures contract is not required to deliver or  pay
for  the underlying  instrument unless the  contract is held  until the delivery
date. However, when the Portfolio  buys or sells a  futures contract it will  be
required  to deposit 'initial margin' with the Custodian in a segregated account
in the  name of  its futures  broker,  known as  a futures  commission  merchant
('FCM').  Initial margin deposits  are typically equal to  a small percentage of
the contract's value.  If the value  of either party's  position declines,  that
party  will be required to make  additional 'variation margin' payments equal to
the change in value on a daily basis. The party that has a gain may be  entitled
to  receive all or a  portion of this amount. The  Portfolio may be obligated to
make payments of variation margin at a time when it is disadvantageous to do so.
Furthermore, it may not always  be possible for the  Portfolio to close out  its
futures positions. Until it closes out a futures position, the Portfolio will be
obligated  to continue  to pay  variation margin.  Initial and  variation margin
payments do not constitute purchasing on margin for purposes of the  Portfolio's
investment  restrictions. In the  event of the  bankruptcy of an  FCM that holds
margin on behalf of the  Portfolio, the Portfolio may  be entitled to return  of
margin  owed to it only in proportion to  the amount received by the FCM's other
customers, potentially resulting in losses to the Portfolio.
 
The Portfolio will  segregate liquid, high-grade  debt securities in  connection
with its use of options and futures contracts to the extent required by the SEC.
Securities  held  in  a segregated  account  cannot  be sold  while  the futures
contract or option is outstanding, unless they are replaced with other  suitable
assets.  As a  result, there is  a possibility  that the segregation  of a large
percentage of the Portfolio's  assets could impede  portfolio management or  the
Portfolio's ability to meet redemption requests or other current obligations.
 
For  further information about the Portfolio's use  of futures and options and a
more detailed discussion  of associated  risks, see  'Investment Objectives  and
Policies' in the SAI.
 
INVESTMENT RESTRICTIONS
 
The  investment  objective of  the  Fund and  the  Portfolio, together  with the
investment restrictions described  below and in  the SAI, except  as noted,  are
deemed  fundamental policies, i.e., they  may be changed only  by the 'vote of a
majority  of   the   outstanding  voting   securities'   (as  defined   in   the
 
                                      -10-
 
<PAGE>

<PAGE>
Investment Company Act of 1940 (the '1940 Act')), of the Fund and the Portfolio,
respectively.  The Fund has  the same investment  restrictions as the Portfolio,
except that the Fund may invest all of its investable assets in another open-end
investment company with the same investment objective and restrictions (such  as
the  Portfolio), and  the Fund  may retain an  investment adviser  to manage the
Fund's assets in accordance  with the investment  policies and restrictions  set
forth below. References below to the Fund's investment restrictions also include
the Portfolio's investment restrictions.
 
As  a diversified investment company, 75% of the Fund's total assets are subject
to the following fundamental limitations: (a) the Fund may not invest more  than
5%  of  its  total assets  in  the securities  of  any one  issuer,  except U.S.
Government securities;  and (b)  the  Fund may  not own  more  than 10%  of  the
outstanding voting securities of any one issuer.
 
The  Fund may not: (i)  purchase the securities or  other obligations of issuers
conducting their  principal  business  activity  in the  same  industry  if  its
investments  in such industry would exceed 25%  of the value of the Fund's total
assets, except this limitation shall not apply to investments in U.S. Government
securities; (ii) enter  into reverse  repurchase agreements  or other  permitted
borrowings  that constitute senior  securities under the  1940 Act, exceeding in
the aggregate  one-third of  the value  of the  Fund's assets;  or (iii)  borrow
money,  except from banks for extraordinary  or emergency purposes, or mortgage,
pledge or hypothecate any assets except  in connection with any such  borrowings
or  permitted reverse  repurchase agreements in  amounts up to  one-third of the
value of the Fund's assets at the time of such borrowing or purchase  securities
while  borrowings and other senior securities exceed 5% of its total assets. For
a more detailed discussion  of the above investment  restrictions, as well as  a
description   of   certain  other   investment  restrictions,   see  'Investment
Restrictions' and 'Additional Information' in the SAI.
 
MANAGEMENT
 
DIRECTORS AND  TRUSTEES. Pursuant  to  the Declaration  of Trust,  the  Trustees
establish  the  Portfolio's general  policies, are  responsible for  the overall
management of the Trust and review the actions of the Adviser, Administrator and
other service  providers. Similarly,  the Directors  set the  Company's  general
policies,  are responsible for the overall  management of the Company and review
the performance  of  its service  providers.  Additional information  about  the
Company's  Board of Directors and officers appears  in the SAI under the heading
'Directors and Trustees'. The Trustees are also Directors of the Company,  which
raises  certain conflicts  of interest. The  Company and the  Trust have adopted
written procedures reasonably  appropriate to deal  with these conflicts  should
they  arise. The officers of the Company  are also employees of Signature or its
affiliates.
 
ADVISER AND FUNDS SERVICES AGENT. The Fund  has not retained the services of  an
investment adviser because the Fund seeks to achieve its investment objective by
investing  all  of its  investable assets  in the  Portfolio. The  Portfolio has
retained the services  of the Branch  as investment adviser.  The Branch,  which
operates  out of  offices located  at 299  Park Avenue,  New York,  New York, is
licensed by the  Superintendent of  Banks of  the State  of New  York under  the
banking  laws of  the State  of New  York and  is subject  to state  and federal
banking laws and regulations applicable to a foreign bank that operates a  state
licensed branch in the United States.
 
The  Bank  has branches,  agencies, representative  offices and  subsidiaries in
Switzerland and in more  than 40 cities outside  Switzerland, including, in  the
United  States, New York City, Chicago,  Houston, Los Angeles and San Francisco.
In addition to the receipt of deposits and the making of loans and advances, the
Bank, through its offices  and subsidiaries engages in  a wide range of  banking
and  financial  activities typical  of  the world's  major  international banks,
including fiduciary,  investment advisory  and  custodial services  and  foreign
exchange  in the United States, Swiss,  Asian and Euro-capital markets. The Bank
is one of the  world's leading asset  managers and has been  active in New  York
City  since  1946.  At  June  30, 1995,  the  Bank  (including  its consolidated
subsidiaries) had total assets of $307.4 billion (unaudited) and equity  capital
and reserves of $19.7 billion (unaudited).
 
The   Adviser  provides  investment  advice  and  portfolio  management  to  the
Portfolio. Subject to  the supervision of  the Trustees, the  Adviser makes  the
Portfolio's day-to-day investment decisions, arranges
 
                                      -11-
 
<PAGE>

<PAGE>
for   the  execution  of  portfolio   transactions  and  generally  manages  the
Portfolio's investments  and  operations.  See  'Investment  Adviser  and  Funds
Services Agent' in the SAI.
 
The  Adviser  uses  a  sophisticated,  disciplined,  collaborative  process  for
managing all asset classes. Nancy Tengler will be primarily responsible for  the
day-to-day  management  and  implementation  of the  Adviser's  process  for the
Portfolio. Ms. Tengler is also the Managing Director -- Senior Portfolio Manager
of UBS Asset  Management (New York)  Inc.'s Value Equities  Group. She has  held
this position since December 1994. Previously, Ms. Tengler was the President and
Senior  Portfolio Manager  for Spare Tengler  Kaplan & Bischel  from August 1989
through June  1994. Ms.  Tengler is  currently managing  several portfolios  and
researching  investment  opportunities  in  several  industries,  including  the
pharmaceutical and electric utilities industries. Ms. Tengler co-authored a book
entitled Relative  Dividend  Yield --  Common  Stock Investing  for  Income  and
Appreciation,  and has  twelve years of  investment experience.  Ms. Tengler has
previously managed the investments of a mutual fund. Ms. Tengler received a B.A.
degree from Point Loma College. The  Branch has not previously advised a  mutual
fund. This may be viewed as a risk of investing in this Fund.
 
In  addition to the above-listed investment  advisory services, the Adviser also
provides  the  Fund  and  the  Portfolio  with  certain  related  administrative
services.  Subject to the  supervision of the  Board and Trustees, respectively,
the Adviser  is  responsible for:  establishing  performance standards  for  the
third-party  service  providers of  the Fund  and  Portfolio and  overseeing and
evaluating the performance of such entities; providing and presenting  quarterly
management   reports  to  the  Directors   and  the  Trustees;  supervising  the
preparation of reports  for Fund  and Portfolio  shareholders; and  establishing
voluntary  expense limitations for the Fund  and providing any resultant expense
reimbursement to the Fund.
 
The Branch provides its administrative services to the Fund pursuant to a  Funds
Services  Agreement  between the  Branch and  the Company.  The Branch  does not
receive a fee from the  Company or the Fund pursuant  to the terms of the  Funds
Services Agreement.
 
Under  the Trust's Investment Advisory Agreement, the Portfolio pays the Adviser
a fee, calculated daily and payable monthly,  at an annual rate of 0.60% of  the
Portfolio's  average net assets. The Branch  has voluntarily agreed to waive its
fees and reimburse the Fund for any  of its direct and indirect expenses to  the
extent  that the  Fund's total  operating expenses  exceed, on  an annual basis,
0.90% of  the  Fund's  average  daily  net assets.  The  Branch  may  modify  or
discontinue  this fee waiver  and expense limitation  at any time  in the future
with 30 days' notice to the Fund. See 'Expenses'.
 
INVESTMENTS IN THE FUND ARE NOT  DEPOSITS WITH OR OBLIGATIONS OF, OR  GUARANTEED
OR ENDORSED BY, THE BRANCH OR ANY OTHER BANK.
 
ADMINISTRATORS.  Under Administrative  Services Agreements with  the Company and
the Trust, Signature  and Signature-Cayman  serve as the  Administrators of  the
Fund and the Portfolio, respectively (in such capacities, the 'Administrators').
In  these capacities, Signature  and Signature-Cayman administer  all aspects of
the Fund's and the Portfolio's day-to-day operations, subject to the supervision
of the Adviser  and the Board  and Trustees, respectively,  except as set  forth
under  'Adviser  and  Funds  Services  Agent',  'Distributor',  'Custodian'  and
'Shareholder Services'. The Administrators (i) furnish general office facilities
and ordinary clerical and related  services for day-to-day operations  including
recordkeeping responsibilities; (ii) take responsibility for compliance with all
applicable  federal and state securities  and other regulatory requirements; and
(iii) perform administrative and managerial  oversight of the activities of  the
custodian,  transfer agent  and other agents  or independent  contractors of the
Fund and the Portfolio. Signature is also responsible for monitoring the  Fund's
status  as a  regulated investment  company under  the Internal  Revenue Code of
1986, as amended (the 'Code').
 
Under the Company's Administrative  Services Agreement, the  Fund has agreed  to
pay  Signature a fee, calculated daily and payable monthly, at an annual rate of
0.05% of the Fund's first $100 million of average net assets plus 0.025% of  the
next  $100 million of average net assets.  Signature does not receive a fee from
the Fund on average net assets in excess of $200 million.
 
Under the Trust's Administrative Services Agreement, the Portfolio has agreed to
pay Signature-Cayman a fee, calculated daily  and payable monthly, at an  annual
rate of 0.05% of the Portfolio's average net assets.
 
                                      -12-
 
<PAGE>

<PAGE>
DISTRIBUTOR. Under the Distribution Agreement, Signature, located at 6 St. James
Avenue,  Boston, MA  02116, serves  as the distributor  of Fund  shares (in such
capacity,  the  'Distributor').  The   Distributor  is  a  wholly-owned   direct
subsidiary of Signature Financial Group, Inc. and is a registered broker-dealer.
The Distributor does not receive a fee pursuant to the terms of the Distribution
Agreement.
 
CUSTODIAN.  Investors Bank & Trust Company,  whose principal offices are located
at 89 South  Street, Boston, Massachusetts  02111, serves as  the custodian  and
transfer  and  dividend disbursing  agent for  the Portfolio  and the  Fund. See
'Custodian' in the SAI. The Custodian also maintains offices at 1 First Canadian
Place, Suite 2800, Toronto, Ontario M5X1C8.
 
SHAREHOLDER SERVICES
 
The Company has entered into a  Shareholder Servicing Agreement with the  Branch
under which the Branch provides shareholder services to Fund shareholders, which
include  coordinating  shareholder  accounts  and  records,  assisting investors
seeking to purchase  or redeem  Fund shares,  providing performance  information
relating  to the Fund, and responding  to shareholder inquiries. The Company has
agreed to pay the Branch  for these services at an  annual rate of 0.25% of  the
average  daily  net assets  of  the Fund.  Under  the terms  of  the Shareholder
Servicing Agreement, the Branch may delegate one or more of its responsibilities
to other entities at its expense.
 
EXPENSES
 
In addition  to  the  fees  of  the  Branch,  Signature,  Signature-Cayman,  and
Investors  Bank  & Trust  Company, the  Fund  will be  responsible for,  or will
indirectly bear through its interest in the Portfolio, other expenses  including
brokerage  costs  and litigation  and  extraordinary expenses.  The  Adviser has
agreed to waive fees as necessary, if, in any fiscal year, the sum of the Fund's
expenses exceeds the limits  set by applicable  regulations of state  securities
commissions.  Such annual limits are currently 2.5%  of the first $30 million of
average net assets, 2% of  the next $70 million of  such net assets and 1.5%  of
such  net assets  in excess  of $100 million.  The Adviser  has also voluntarily
agreed  to  limit  the   total  operating  expenses   of  the  Fund,   excluding
extraordinary  expenses, to an annual rate of  0.90% of the Fund's average daily
net assets.  The  Adviser  may  modify or  discontinue  this  voluntary  expense
limitation at any time in the future with 30 days' notice to the Fund.
 
The  Fund  and  the  Portfolio  may  allocate  brokerage  transactions  to their
affiliates and the Adviser's affiliates. Brokerage transactions may be allocated
to these affiliates only if the commissions received by such affiliates are fair
and reasonable when compared to the commissions paid to unaffiliated brokers  in
connection  with comparable  transactions. See  'Portfolio Transactions'  in the
SAI.
 
PURCHASE OF SHARES
 
GENERAL INFORMATION  ON  PURCHASES.  Investors may  purchase  Fund  shares  only
through   the  Distributor.  All  purchase  orders   must  be  accepted  by  the
Distributor. The  Company also  reserves  the right  to determine  the  purchase
orders  that it  will accept  and it  reserves the  right to  cease offering its
shares at any time. The shares of the Fund may be purchased only in those states
where they may be lawfully sold.
 
The business days of the Fund and the Portfolio are the days the New York  Stock
Exchange (the 'NYSE') is open for regular trading.
 
The  shares of the Fund are sold on a continuous basis without a sales charge at
the net asset value per share next determined after receipt and acceptance of  a
purchase  order by the Distributor.  The Fund calculates its  net asset value at
the close of business. See 'Net Asset Value'. The minimum initial investment  in
the  Fund is $25,000, except that the  minimum initial investment is $10,000 for
shareholders of another series of the Company. The minimum subsequent investment
in the Fund  for all  investors is $5,000.  The minimum  initial investment  for
employees  of  the Bank  or  its affiliates  is  $5,000. The  minimum subsequent
investment is $1,000. These  minimum investment requirements  may be waived  for
certain  retirement plans or accounts for the benefit of minors. For purposes of
the minimum  investment  requirements, the  Fund  may aggregate  investments  by
related shareholders. Investors will
 
                                      -13-
 
<PAGE>

<PAGE>
receive the number of full and fractional shares of the Fund equal to the dollar
amount  of their subscription  divided by the  net asset value  per share of the
Fund as next determined on the day that the investor's subscription is accepted.
See 'Purchase of Shares' in the SAI.
 
Purchase orders in proper  form received by the  Distributor prior to 4:00  p.m.
New York time or the close of regular trading on the NYSE, whichever is earlier,
are  effective and  executed at  the net asset  value next  determined that day.
Purchase orders received after 4:00 p.m. New York time or the close of the NYSE,
whichever is earlier, will be executed at the net asset value determined on  the
next  business day. Investors become record shareholders  of the Fund on the day
they place their subscription order, provided it is received by the  Distributor
before  4:00  p.m.  As  record  shareholders,  investors  are  entitled  to earn
dividends.
 
Fund shares may be purchased in the following methods:
 
BRANCH CLIENTS:  Private Bank  Clients of  the Branch  should request  a  Branch
representative to assist them in placing a purchase order with the Distributor.
 
THROUGH  THE DISTRIBUTOR: Shareholders  who do not  currently maintain a private
banking relationship with the  Branch may purchase shares  of the Fund  directly
from the Distributor by wire transfer or mail.
 
The  Transfer Agent will maintain the accounts for all shareholders who purchase
Fund shares directly  through the Distributor.  For account balance  information
and shareholder services, such shareholders should contact the Transfer Agent at
(888)  UBS-FUND or in writing at UBS Private Investor Funds, Inc., c/o Investors
Bank & Trust Company, P.O. Box 1537 MFD 23, Boston, MA 02205-1537.
 
By wire: Purchases may be made by federal funds wire. To place a purchase  order
with  the  Fund, the  shareholder  must telephone  the  Transfer Agent  at (888)
UBS-FUND for specific instructions.
 
Subject to the minimum purchase  requirements discussed above, shares  purchased
by  federal funds wire  will be effected at  the net asset  value per share next
determined after acceptance of the order.
 
A completed  account application  must promptly  follow any  wire order  for  an
initial  purchase. No account application  is required for subsequent purchases.
Completed  account  applications  should  be  mailed  or  sent  via   facsimile.
Shareholders   should  contact  the  Transfer  Agent  for  further  instructions
regarding account applications.
 
By  mail:  Subject  to  the  minimum  purchase  requirements  discussed   above,
shareholders  may  purchase  shares  of  the  Fund  through  the  Distributor by
completing an account application and mailing it, together with a check  payable
to  'UBS Private Investor Funds, Inc.', to UBS Private Investor Funds, Inc., c/o
Investors Bank & Trust Company, P.O. Box 1537 MFD 23, Boston, MA 02205-1537.
 
Account applications are  not required  for subsequent  purchases; however,  the
shareholder's  account  number must  be clearly  marked on  the check  to ensure
proper credit.
 
Checks are subject to collection at  full value. For shares purchased by  check,
dividend  payments and redemption  proceeds, if any, will  be delayed until such
funds are collected, which may take up to 15 days from the date of purchase.
 
REDEMPTION OF SHARES
 
GENERAL INFORMATION ON REDEMPTIONS. A shareholder  may redeem all or any  number
of  the shares registered  in its name at  any time at the  net asset value next
determined after  a  redemption  request  in proper  form  is  received  by  the
Distributor.  The Fund calculates its net asset  value at the close of business.
See 'Net Asset Value'.
 
A redemption order will  be effected provided the  Distributor receives such  an
order  prior to 4:00 p.m. New  York time or the close  of regular trading on the
NYSE, whichever is earlier.  The redemption of Fund  shares is effective and  is
executed  at the  net asset  value next  determined that  day. Redemption orders
received after 4:00 p.m. New  York time or the close  of regular trading on  the
NYSE,  whichever is earlier, will be executed  at the net asset value determined
on the next  business day.  Proceeds of  an effective  redemption are  generally
deposited   the  next  business  day  in  immediately  available  funds  to  the
 
                                      -14-
 
<PAGE>

<PAGE>
account designated by the redeeming  shareholder or mailed to the  shareholder's
address of record, in accordance with the shareholder's instructions.
 
Shareholders  will not be record  holders for dividend purposes  on the day that
they redeem Fund shares.
 
Fund shares may be redeemed in the following methods:
 
BRANCH CLIENTS: Shareholders who are Private  Bank Clients of the Branch  should
request a Branch representative to assist them in placing a redemption order.
 
THROUGH THE DISTRIBUTOR: Shareholders who are not Branch clients may redeem Fund
shares by telephone or mail.
 
By telephone: Telephone redemptions may be made by calling the Transfer Agent at
(888) UBS-FUND. Redemption orders will be accepted until 4:00 p.m. New York time
or  the close of  regular trading on  the NYSE, whichever  is earlier. Telephone
redemption requests  are  limited  to those  shareholders  who  have  previously
elected  this service.  Such shareholders  risk possible  loss of  principal and
income in the event of a telephone  redemption not authorized by them. The  Fund
and  the  Transfer  Agent  will  employ  reasonable  procedures  to  verify that
telephone redemption instructions are genuine and will require that shareholders
electing such an option provide a  form of personal identification. The  failure
by  the Fund or the Transfer Agent to  employ such procedures may cause the Fund
or the Transfer Agent to be liable  for any losses incurred by investors due  to
telephone  redemptions based  upon unauthorized or  fraudulent instructions. The
telephone redemption option may be modified or discontinued at any time upon  60
days' notice to shareholders.
 
By  mail:  Redemption  requests  may  also  be  mailed  to  the  Transfer Agent,
identifying the Fund, the dollar amount or  number of shares to be redeemed  and
the shareholder's account number. The request must be signed in exactly the same
manner  as the account is  registered (e.g., if there is  more than one owner of
the shares, all must sign). In all cases, all signatures on a redemption request
must be signature guaranteed by an eligible guarantor institution which includes
a domestic bank,  a domestic  savings and  loan institution,  a domestic  credit
union,  a  member bank  of the  Federal Reserve  System  or a  member firm  of a
national securities exchange, pursuant to  the Fund's standards and  procedures;
if the guarantor institution belongs to one of the Medallion Signature programs,
it  must use the  specific 'Medallion Guaranteed'  stamp (guarantees by notaries
public are not acceptable). Further  documentation, such as copies of  corporate
resolutions  and instruments of  authority, may be  requested from corporations,
administrators, executors, personal representatives,  trustees or custodians  to
evidence  the authority of  the person or entity  making the redemption request.
The redemption request  in proper form  should be sent  to UBS Private  Investor
Funds,  Inc., c/o Investors Bank & Trust  Company, P.O. Box 1537 MFD 23, Boston,
MA 02205-1537.
 
MANDATORY REDEMPTION. If the value of a shareholder's holdings in the Fund falls
below $10,000 because  of a  redemption of shares,  the shareholder's  remaining
shares  may  be redeemed  60 days  after  written notice  unless the  account is
increased to $10,000 or more. For example, a shareholder whose initial and  only
investment  is $10,000 may be subject to mandatory redemption resulting from any
redemption that causes his or her investment to fall below $10,000.
 
FURTHER REDEMPTION INFORMATION. Investors should  be aware that redemptions  may
not  be processed unless the redemption request  is submitted in proper form. To
be in  proper form,  the  Fund must  have  received the  shareholder's  taxpayer
identification  number and address.  As discussed under  'Taxes' below, the Fund
may be  required  to impose  'back-up'  withholding  of federal  income  tax  on
dividends,  distributions and redemptions when  non-corporate investors have not
provided a certified taxpayer identification number. In addition, if an investor
sends a check to the Distributor for the purchase of Fund shares and shares  are
purchased  with funds  made available  by the  Distributor before  the check has
cleared, the transmittal of  redemption proceeds from the  sale of those  shares
will  not occur until the check used  to purchase such shares has cleared, which
may take up to 15 days. Redemption delays may be avoided by purchasing shares by
federal funds wire.
 
The right of redemption may  be suspended or the  date of payment postponed  for
such  periods as the 1940 Act or the  SEC may permit. See 'Redemption of Shares'
in the SAI.
 
                                      -15-
 
<PAGE>

<PAGE>
EXCHANGE OF SHARES
 
An investor may  exchange Fund  shares for  shares of  any other  series of  the
Company,  without charge. An exchange may be  made so long as after the exchange
the investor has shares, in each series in which it remains an investor, with  a
value  equal to or greater than each such series' minimum investment amount. See
'Purchase of Shares'  in the prospectuses  of the other  Company series for  the
minimum  investment amounts for each of those funds. Shares are exchanged on the
basis of relative net asset value per share. Exchanges are in effect redemptions
from one  fund  and  purchases  of  another fund  and  the  usual  purchase  and
redemption   procedures  and  requirements  are  applicable  to  exchanges.  See
'Purchase of Shares' and  'Redemption of Shares' in  this Prospectus and in  the
prospectuses  for the  other Company  series. See  also 'Additional Information'
below for an explanation of the telephone exchange policy.
 
Shareholders subject to federal income tax  who exchange shares in one fund  for
shares in another fund may recognize capital gain or loss for federal income tax
purposes.  The  Fund  reserves the  right  to  discontinue, alter  or  limit its
exchange  privilege  at  any  time.  For  investors  in  certain  states,  state
securities laws may restrict the availability of the exchange privilege.
 
RETIREMENT PLANS
 
The  Fund  has available  a form  of Individual  Retirement Account  ('IRA') for
investment in Fund shares. Subject to certain restrictions imposed by applicable
tax laws,  self-employed individuals  may purchase  shares of  the Fund  through
tax-deductible contributions to existing retirement plans known as Self-Employed
Retirement  Plans ('SERPs'). Fund  shares may also be  a suitable investment for
'401(k) Plans' which subject to certain restrictions allow their participants to
invest in qualified  pension plans on  a tax-deferred basis.  The Fund does  not
currently act as sponsor to such plans.
 
The  minimum initial  investment for  all such  retirement plans  is $2,000. The
minimum for all subsequent investments is $500.
 
Under the Code, individuals may make IRA contributions of up to $2,000 annually,
which  may   be,   depending   on  the   contributor's   participation   in   an
employer-sponsored  plan  and  income level,  wholly  or  partly tax-deductible.
However, dividends and  distributions held in  the account are  not taxed  until
withdrawn  in accordance with the  provisions of the Code.  An individual with a
non-working spouse may establish  a separate IRA for  the spouse under the  same
conditions  and contribute a combined maximum of  $2,250 annually to one or both
IRAs provided that no more than $2,000  may be contributed to the IRA of  either
spouse.
 
Investors  should be aware that  they may be subject  to penalties or additional
taxes on contributions  to or withdrawals  from IRAs or  other retirement  plans
under certain circumstances. Prior to a withdrawal, shareholders may be required
to certify as to their age and awareness of such restrictions in writing. Branch
clients  desiring  information  concerning  investments  through  IRAs  or other
retirement plans should  contact their Branch  representative. Non-Bank  clients
may obtain such information by calling the Transfer Agent at (888) UBS-FUND.
 
DIVIDENDS AND DISTRIBUTIONS
 
Dividends  consisting of substantially all of  the Fund's net investment income,
if any, are declared and paid annually. The Fund may also declare an  additional
dividend  of net investment  income in a  given year to  the extent necessary to
avoid the imposition of federal excise taxes on the Fund.
 
Substantially all of  the Fund's  realized net capital  gains, if  any, will  be
declared  and paid on an  annual basis, except that  an additional capital gains
distribution may be made in  a given year to the  extent necessary to avoid  the
imposition  of  federal  excise  taxes  on  the  Fund.  Declared  dividends  and
distributions are payable on the payment  date to shareholders of record on  the
record date.
 
Dividends  and capital  gains distributions paid  by the  Fund are automatically
reinvested in  additional Fund  shares unless  the shareholder  has elected,  in
writing,  to have them paid  in cash. Dividends and  distributions to be paid in
cash are credited to the account designated by the shareholder or sent by  check
 
                                      -16-
 
<PAGE>

<PAGE>
to  the shareholder's  address of record,  in accordance  with the shareholder's
instructions. The Fund  reserves the right  to discontinue, alter  or limit  the
automatic reinvestment privilege at any time.
 
NET ASSET VALUE
 
The Fund's net asset value per share equals the value of the Fund's total assets
(i.e.,  the value of its investment in the Portfolio plus its other assets) less
the amount of its liabilities, divided by the number of its outstanding  shares,
rounded to the nearest cent. Expenses, including the fees payable to the service
providers of the Fund and the Portfolio, are accrued daily. Securities for which
market  quotations are readily  available are valued at  market value. All other
securities will be valued at 'fair value'. See 'Net Asset Value' in the SAI  for
information on the valuation of the Portfolio's assets and liabilities.
 
The  Fund computes its  net asset value once  daily at the  close of business on
Monday through Friday, except that the net  asset value is not computed for  the
Fund  on a day  in which no orders  to purchase or redeem  Fund shares have been
received or on  the following holidays:  New Year's Day,  Presidents' Day,  Good
Friday,  Memorial  Day,  Independence  Day,  Labor  Day,  Thanksgiving  Day  and
Christmas Day. On days  when U.S. trading markets  close early in observance  of
these  holidays, the Fund expects to close  for purchases and redemptions at the
same time.
 
ORGANIZATION
 
UBS PRIVATE INVESTOR FUNDS, INC.
 
UBS Private  Investor  Funds,  Inc.,  a  Maryland  corporation  incorporated  on
November 16, 1995, is an open-end management investment company registered under
the  1940 Act and organized as a series  fund. The Company has no prior history.
The Company is currently authorized to issue shares in four series: The UBS Bond
Fund Series; The UBS Tax Exempt  Bond Fund Series; The UBS International  Equity
Fund  Series; and The UBS U.S. Equity Fund Series. Each outstanding share of the
Company will have a pro rata interest in  the assets of its series, but it  will
have  no interest in the assets of any  other Company series. Only shares of The
UBS U.S. Equity Fund Series are offered through this Prospectus.
 
Shareholder inquiries by clients of the Branch may be directed to the Branch and
other shareholders may address their inquiries to the Transfer Agent.
 
Shareholders of the  Fund are entitled  to one vote  for each share  and to  the
appropriate  fractional vote for  each fractional share.  There is no cumulative
voting. Shares have no  preemptive or conversion rights.  Shares are fully  paid
and  nonassessable when issued  by the Company.  The Company does  not intend to
hold meetings  of shareholders  annually.  The Directors  may call  meetings  of
shareholders  for action by shareholder vote as  may be required by its Articles
of Incorporation  or  the  1940 Act.  For  further  organizational  information,
including certain shareholder rights, see 'Organization' in the SAI.
 
UBS INVESTOR PORTFOLIOS TRUST
 
UBS  Investor Portfolios Trust, a  master trust fund formed  under New York law,
was organized on February 9, 1996. The Declaration of Trust permits the Trustees
to issue interests divided into one or more subtrusts or series. To date,  three
series have been authorized, of which UBS U.S. Equity Portfolio is one.
 
The  Declaration  of  Trust  provides  that  no  Trustee,  shareholder, officer,
employee, or agent of  the Trust shall  be held to  any personal liability,  nor
shall  resort be had to  such person's private property  for the satisfaction of
any obligation  or claim  or otherwise  in connection  with the  affairs of  the
Portfolio, but that only the Trust property shall be liable.
 
The  Declaration of Trust provides that the Fund and other entities investing in
the Portfolio  (e.g., other  investment  companies, insurance  company  separate
accounts  and common and commingled trust funds) will each be liable for all the
obligations of  the  Portfolio.  However,  the  risk  of  the  Fund's  incurring
financial loss on account of such liability is limited to circumstances in which
both  inadequate insurance existed  and the Portfolio itself  was unable to meet
its obligations. Accordingly, the Trustees believe that
 
                                      -17-
 
<PAGE>

<PAGE>
neither the Fund nor  its shareholders will be  adversely affected by reason  of
the Fund's investment in the Portfolio.
 
The  Company expects that,  immediately prior to the  initial public offering of
its shares, the sole holder of its capital stock will be Signature.
 
TAXES
 
The Company  intends  that  the  Fund  will  qualify  as  a  separate  regulated
investment  company under  Subchapter M of  the Code. As  a regulated investment
company, the Fund will not be subject to federal income taxes if at least 90% of
its net investment income  and net short-term capital  gains less any  available
capital loss carryforwards are distributed to shareholders within allowable time
limits.  The  Portfolio  intends  to  qualify as  an  association  treated  as a
partnership for federal income  tax purposes. As  such, the Portfolio  generally
should  not be subject to tax. The status  of the Fund as a regulated investment
company  is  dependent  on,  among  other  things,  the  Portfolio's   continued
qualification as a partnership for federal income tax purposes.
 
Dividends  from  net  investment  income  and  distributions  from  realized net
short-term capital gains in excess of  net long-term capital losses are  taxable
as  ordinary income to Fund shareholders whether such distributions are received
in the form  of cash  or reinvested  in additional  shares. To  the extent  that
dividends  distributed to shareholders are designated as derived from the Fund's
dividend income that would be eligible  for the dividends received deduction  if
the  Fund were not a regulated  investment company, such dividends are eligible,
subject to certain restrictions,  for the 70%  dividends received deduction  for
corporations.  Under proposals  made by the  Treasury Department  on December 7,
1995, the dividends received deduction  applicable to corporations investing  in
the  Fund would be reduced  from 70% to 50% for  dividends paid or accrued after
January 31, 1996. Distributions of net long-term capital gains in excess of  net
short-term  capital losses are taxable to Fund shareholders as long-term capital
gains regardless of  how long  a shareholder  has held  shares in  the Fund  and
regardless  of whether received in the form  of cash or reinvested in additional
shares. Long-term capital gains distributions to corporate shareholders are  not
eligible  for  the dividends-received  deduction.  Annual statements  as  to the
current federal tax status of distributions will be mailed to shareholders after
the end of the taxable year for the Fund.
 
Any gain or  loss realized on  the redemption or  exchange of Fund  shares by  a
shareholder  who is  not a  dealer in  securities generally  will be  treated as
long-term capital gain or loss  if the shares have been  held for more than  one
year,  and  otherwise as  short-term  capital gain  or  loss. However,  any loss
realized by a shareholder upon the redemption or exchange of shares in the  Fund
held  for six months or less will be  treated as a long-term capital loss to the
extent of any long-term capital  gain distributions received by the  shareholder
with respect to such shares. In addition, no loss will be allowed on the sale or
other  disposition of shares of  the Fund if, within  a period beginning 30 days
before the date of such sale or disposition and ending 30 days after such  date,
the  holder acquires (such as through dividend reinvestment) securities that are
substantially identical to the shares of the Fund.
 
The Fund will generally be subject to an  excise tax of 4% on the amount of  any
income  or  capital  gains,  above  certain  permitted  levels,  distributed  to
shareholders on  a  basis such  that  such income  or  gain is  not  taxable  to
shareholders  in  the  calendar  year  in  which  it  was  earned  by  the Fund.
Furthermore, dividends declared  in October,  November, or  December payable  to
shareholders  of record  on a  specified date in  such a  month and  paid in the
following January will be treated as having  been paid by the Fund and  received
by each shareholder in December. Under this rule, therefore, shareholders may be
taxed  in one year on dividends or distributions actually received in January of
the following year.
 
Distributions of net investment income or net long-term capital gains will  have
the effect of reducing the net asset value of the Fund's shares by the amount of
the  distribution. If the net asset value is reduced below a shareholder's cost,
the distribution will  nonetheless be taxable  as described above,  even if  the
distribution  represents a return of invested capital. Investors should consider
the tax implications  of buying shares  just prior to  a distribution, when  the
price of shares may reflect the amount of the forthcoming distribution.
 
                                      -18-
 
<PAGE>

<PAGE>
This  discussion of tax consequences is based on U.S. federal tax laws in effect
on the date of this Prospectus. These laws and regulations are subject to change
by legislative  or  administrative  action, possibly  with  retroactive  effect.
Investors  are urged to consult their own  tax advisors with respect to specific
questions as to federal taxes and with respect to the applicability of state  or
local taxes. See 'Taxes' in the SAI.
 
If  a correct and certified  taxpayer identification number is  not on file, the
Fund is required,  subject to  certain exemptions,  to withhold  31% of  certain
payments   made  or   distributions  declared   to  non-corporate  shareholders.
Shareholders should be aware that, under applicable regulations, the Fund may be
fined up  to  $50 annually  for  each account  for  which a  certified  taxpayer
identification  number is not provided. In the event that such a fine is imposed
with respect to any uncertified account in any year, a corresponding charge  may
be made against that account.
 
ADDITIONAL INFORMATION
 
The  Fund  will  send  its  shareholders  annual  and  semi-annual  reports. The
financial statements appearing in annual reports will be audited by  independent
accountants.  Shareholders also will be sent  confirmations of each purchase and
redemption and  monthly statements  reflecting all  account activity,  including
dividends  and any distributions whether reinvested in additional shares or paid
in cash.
 
All shareholders are given the privilege to initiate transactions  automatically
by  telephone upon opening an account. However, an investor should be aware that
a transaction authorized by telephone and  reasonably believed to be genuine  by
the  Company, the Branch, the Transfer Agent  or the Distributor may subject the
investor to risk of  loss if such  instruction is subsequently  found not to  be
genuine.   The  Company  and  its   service  providers  will  employ  reasonable
procedures,  including  requiring   investors  to  give   a  form  of   personal
identification  and tape recording  of telephonic instructions,  to confirm that
telephonic instructions by  investors are  genuine; if it  does not,  it or  the
service  provider may be liable for any losses due to unauthorized or fraudulent
instructions.
 
The Fund may make historical  performance information available and may  compare
its  performance to other  investments or relevant  indices, including data from
Lipper Analytical  Services, Inc.,  Micropal  Inc., Morningstar  Inc.,  Ibbotson
Associates, S&P 500 Index, the Dow Jones Average, the Frank Russell Indices, the
Financial Times World Stock Index and other industry publications.
 
The Fund may advertise 'total return'. The total return shows what an investment
in  the Fund would have earned over a specified period of time (one, five or ten
years or  since commencement  of operations,  if less)  assuming that  all  Fund
distributions  and dividends were reinvested on  the reinvestment dates and less
all recurring  fees  during the  period  and  assuming the  redemption  of  such
investment at the end of each period. This method of calculating total return is
required  by regulations  of the  SEC. Total  return data  similarly calculated,
unless otherwise indicated,  over other specified  periods of time  may also  be
used.  All  performance figures  are based  on historical  earnings and  are not
intended to indicate future performance. Performance information may be obtained
by clients  of the  Branch by  calling the  Branch, and  other shareholders  may
address their inquiries to the Transfer Agent.
 
                                      -19-

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<PAGE>

<PAGE>
TABLE OF CONTENTS
 
<TABLE>
<S>                                                                                                 <C>
Investors for Whom the Fund is Designed..........................................................     2
Master-Feeder Structure..........................................................................     4
Investment Objective and Policies................................................................     5
Additional Investment Information and Risk Factors...............................................     6
Options..........................................................................................     8
Futures Contracts................................................................................    10
Investment Restrictions..........................................................................    10
Management.......................................................................................    11
Shareholder Services.............................................................................    13
Expenses.........................................................................................    13
Purchase of Shares...............................................................................    13
Redemption of Shares.............................................................................    14
Exchange of Shares...............................................................................    16
Retirement Plans.................................................................................    16
Dividends and Distributions......................................................................    16
Net Asset Value..................................................................................    17
Organization.....................................................................................    17
Taxes............................................................................................    18
Additional Information...........................................................................    19
</TABLE>
 
- --------------------------------------------------------------------------------
 
<TABLE>
<S>                                                  <C>
INVESTMENT ADVISER                                   Union Bank of Switzerland,
                                                     New York Branch
                                                     299 Park Avenue
                                                     New York, NY 10171
 
ADMINISTRATOR AND DISTRIBUTOR                        Signature Broker-Dealer Services, Inc.
                                                     6 St. James Avenue
                                                     Boston, Massachusetts 02116
 
CUSTODIAN AND TRANSFER AGENT                         Investors Bank & Trust Company
                                                     89 South Street
                                                     Boston, Massachusetts 02111
</TABLE>
 
- --------------------------------------------------------------------------------
 
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, BY THE FUND IN ANY JURISDICTION
IN WHICH SUCH OFFER TO SELL OR SOLICITATION MAY NOT LAWFULLY BE MADE.
 
[LOGO]


<PAGE>

<PAGE>
- --------------------------------------------------------------------------------
                       UBS PRIVATE INVESTOR FUNDS, INC.
                        UBS INTERNATIONAL EQUITY FUND
 
- --------------------------------------------------------------------------------

<PAGE>

<PAGE>
- --------------------------------------------------------------------------------
 
PROSPECTUS
 
UBS INTERNATIONAL EQUITY FUND
6 ST. JAMES AVENUE
BOSTON, MASSACHUSETTS 02116
FOR INFORMATION CALL (800) 914-8566
 
UBS  International Equity Fund (the 'Fund') seeks to provide a high total return
from a portfolio of  equity securities of foreign  corporations. It is  designed
for  investors with a  long-term investment horizon who  want to diversify their
investments by adding  international equities and  take advantage of  investment
opportunities outside the United States.
 
The  Fund is  a diversified, no-load  mutual fund  for which there  are no sales
charges or exchange or redemption fees. The Fund is one of several series of UBS
Private Investor Funds, Inc. (the 'Company'), an open-end management  investment
company organized as a corporation under Maryland law.
 
UNLIKE  OTHER MUTUAL FUNDS THAT DIRECTLY  ACQUIRE AND MANAGE THEIR OWN PORTFOLIO
OF SECURITIES, THE FUND SEEKS TO  ACHIEVE ITS INVESTMENT OBJECTIVE BY  INVESTING
ALL  OF  ITS  INVESTABLE  ASSETS  IN  UBS  INTERNATIONAL  EQUITY  PORTFOLIO (THE
'PORTFOLIO'), A CORRESPONDING OPEN-END MANAGEMENT INVESTMENT COMPANY HAVING  THE
SAME INVESTMENT OBJECTIVE AS THE FUND. THE FUND EMPLOYS A TWO-TIER MASTER-FEEDER
STRUCTURE   THAT   IS  MORE   FULLY  DESCRIBED   UNDER  THE   SECTION  CAPTIONED
'MASTER-FEEDER STRUCTURE'.
 
The Portfolio is advised by the New York Branch (the 'Branch' or the  'Adviser')
of  Union  Bank of  Switzerland (the  'Bank')  and UBS  International Investment
London  Limited  (the  'Sub-Adviser'  and,   together  with  the  Adviser,   the
'Advisers').
 
This  Prospectus  sets forth  concisely the  information about  the Fund  that a
prospective investor  ought to  know before  investing. It  should be  read  and
retained  for  future reference.  A Statement  of Additional  Information, dated
March 1, 1996, provides further discussion of certain topics referred to in this
Prospectus and other matters that may be of interest to investors. The Statement
of Additional  Information  has been  filed  with the  Securities  and  Exchange
Commission  and is  incorporated herein  by reference  and is  available without
charge upon written  request from  the Company  or the  Distributor (as  defined
herein)  at the addresses set  forth on the back cover  of the Prospectus, or by
calling (800) 914-8566.
 
INVESTMENTS IN THE FUND ARE NOT  DEPOSITS WITH OR OBLIGATIONS OF, OR  GUARANTEED
OR  ENDORSED BY, UNION BANK OF SWITZERLAND OR ANY OTHER BANK. SHARES OF THE FUND
ARE NOT  INSURED  BY THE  FEDERAL  DEPOSIT INSURANCE  CORPORATION,  THE  FEDERAL
RESERVE  BOARD, OR ANY OTHER  GOVERNMENTAL AGENCY. AN INVESTMENT  IN THE FUND IS
SUBJECT TO RISKS THAT MAY CAUSE THE  VALUE OF THE INVESTMENT TO FLUCTUATE.  WHEN
THE  INVESTMENT IS REDEEMED,  THE VALUE MAY  BE HIGHER OR  LOWER THAN THE AMOUNT
ORIGINALLY INVESTED BY THE INVESTOR.
 
THESE SECURITIES HAVE  NOT BEEN APPROVED  OR DISAPPROVED BY  THE SECURITIES  AND
EXCHANGE  COMMISSION OR ANY  STATE SECURITIES COMMISSION  NOR HAS THE SECURITIES
AND EXCHANGE  COMMISSION OR  ANY  STATE SECURITIES  COMMISSION PASSED  UPON  THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
 
PROSPECTUS DATED MARCH 1, 1996.

<PAGE>

<PAGE>
UBS INTERNATIONAL EQUITY FUND
INVESTORS FOR WHOM THE FUND IS DESIGNED
 
UBS International Equity Fund (the 'Fund') is designed for investors who want to
participate in the risks and returns associated with equity securities issued by
foreign  corporations. The  Fund seeks  to achieve  its investment  objective by
investing all of  its investable  assets in UBS  International Equity  Portfolio
(the  'Portfolio'), an  open-end management  investment company  having the same
investment objective as  the Fund.  Because the  investment characteristics  and
experience of the Fund will correspond directly with those of the Portfolio, the
discussion in this Prospectus focuses on the investments and investment policies
of  the Portfolio.  The net asset  value of  shares of the  Fund fluctuates with
changes in the value of the investments in the Portfolio.
 
The Portfolio may make  various types of investments  in seeking its  objective.
Among  the permissible investments for the Portfolio are common stocks and other
securities  with  equity  characteristics  issued  by  foreign  companies.   The
Portfolio  may also invest  in futures contracts,  options, forward contracts on
foreign currencies  and certain  privately  placed securities.  The  Portfolio's
investments  in  securities of  foreign issuers,  including issuers  in emerging
markets, involve  unique investment  risks and  may be  more volatile  and  less
liquid  than the securities  of domestic issuers.  For further information about
these investments and related  investment techniques, see 'Investment  Objective
and Policies' discussed below.
 
The  minimum initial investment in the Fund  is $25,000, except that the minimum
initial investment is $10,000 for shareholders of another series of UBS  Private
Investor  Funds, Inc. (the 'Company'). The minimum subsequent investment for all
investors is $5,000.  These minimums  may be  waived for  certain accounts.  See
'Purchase of Shares'. If shareholders reduce their total investment in shares of
the  Fund to less  than $10,000, their  investment will be  subject to mandatory
redemption. See 'Redemption of Shares -- Mandatory Redemption'. The Fund is  one
of  several series  of the  Company, an  open-end management  investment company
organized as a Maryland corporation.
 
This Prospectus describes the investment objective and policies, management  and
operations  of the Fund  to enable investors  to decide if  the Fund suits their
investment needs. The Fund operates through a two-tier master-feeder  structure.
The  Company's Board of Directors (the 'Directors' or the 'Board') believes that
this structure  provides  Fund  shareholders with  the  opportunity  to  achieve
certain   economies  of  scale  that  would  otherwise  be  unavailable  if  the
shareholders' investments were not pooled  with other investors sharing  similar
investment objectives.
 
The  following table illustrates that investors in the Fund incur no shareholder
transaction expenses: their  investments in  the Fund  are subject  only to  the
operating  expenses  set  forth below  for  the  Fund and  the  Portfolio,  as a
percentage of average  daily net assets  of the Fund.  These operating  expenses
include  expenses incurred  by the Fund  and expenses incurred  by the Portfolio
that are allocable  to the Fund.  The Directors believe  that the aggregate  per
share  expenses of the Fund and the Portfolio will be approximately equal to and
may be less  than the  expenses that  the Fund would  incur if  it retained  the
services  of an investment adviser and invested its assets directly in portfolio
securities. Fund and Portfolio expenses  are discussed below under the  headings
'Management', 'Expenses' and 'Shareholder Services'.
 
<TABLE>
<S>                                                                                                    <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases.....................................................................   None
Sales Load Imposed on Reinvested Dividends..........................................................   None
Deferred Sales Load.................................................................................   None
Redemption Fees.....................................................................................   None
Exchange Fees.......................................................................................   None
</TABLE>
 
                                      -2-
 
<PAGE>

<PAGE>
 
<TABLE>
<S>                                                                                                    <C>
EXPENSE TABLE
ANNUAL OPERATING EXPENSES*
Advisory Fees, After Fee Waiver**...................................................................   0.00%
Rule 12b-1 Fees.....................................................................................   None
Other Expenses, After Expense Reimbursements***.....................................................   1.40%
                                                                                                       ----
Total Operating Expenses, After Fee Waivers
  and Expense Reimbursements*.......................................................................   1.40%
                                                                                                       ----
                                                                                                       ----
</TABLE>
 
*   Expenses are expressed as a percentage of the Fund's projected average daily
net  assets and are based on estimates of the expenses to be incurred during the
current  fiscal   year,   after  any   applicable   fee  waivers   and   expense
reimbursements.  Without  such  fee waivers  and  expense  reimbursements, Total
Operating Expenses would be equal,  on an annual basis,  to 9.20% of the  Fund's
projected average daily net assets. See 'Management'.
 
**    The New  York Branch  (the 'Branch'  or  the 'Adviser')  of Union  Bank of
Switzerland (the 'Bank') has agreed to waive fees and reimburse the Fund for any
of its operating expenses  (including those the  Fund incurs indirectly  through
the Portfolio) to the extent that the Fund's total operating expenses exceed, on
an  annual basis, 1.40% of  the Fund's average daily  net assets. The Branch may
modify or discontinue this undertaking at any  time in the future with 30  days'
notice to the Fund. The advisory fee would be 0.85% if there were no fee waiver.
See 'Management -- Adviser and Funds Services Agent' and 'Expenses'.
 
***  The  fees  and expenses  in  Other Expenses,  After  Expense Reimbursements
include fees  payable to  Signature Broker-Dealer  Services, Inc.  ('Signature')
under  an  Administrative  Services Agreement  with  the Fund,  fees  payable to
Signature Financial Group (Grand  Cayman) Limited ('Signature-Cayman') under  an
Administrative  Services Agreement with the Portfolio, fees payable to Investors
Bank & Trust Company (the 'Custodian'  or the 'Transfer Agent') as custodian  of
the Fund and the Portfolio, and fees payable to the Branch under the Shareholder
Servicing  Agreement.  For  a  more  detailed  description  of  contractual  fee
arrangements, including fee waivers and expense reimbursements, and of the  fees
and  expenses  included in  Other  Expenses, see  'Management'  and 'Shareholder
Services'.
 
EXAMPLE
 
An investor would pay the following expenses on a $1,000 investment, assuming  a
5% annual return and a redemption at the end of each time period:
 
<TABLE>
<S>                                                            <C>
1 Year......................................................   $14
3 Years.....................................................   $44
</TABLE>
 
The  above Expense  Table is designed  to assist investors  in understanding the
various direct and indirect costs and expenses that Fund investors are  expected
to  bear and  reflects the  expenses of  the Fund  and the  Fund's share  of the
Portfolio's expenses. In  connection with  the above Example,  please note  that
$1,000 is less than the Fund's minimum investment requirement and that there are
no  redemption or exchange fees of any kind. See 'Purchase of Shares', 'Exchange
of Shares'  and 'Redemption  of  Shares'. THE  EXAMPLE  IS HYPOTHETICAL;  IT  IS
INCLUDED  SOLELY FOR ILLUSTRATIVE PURPOSES, AND  ASSUMES THE CONTINUATION OF THE
FEE WAIVERS AND EXPENSE REIMBURSEMENTS REPRESENTED IN THE ABOVE 'EXPENSE TABLE'.
IT SHOULD  NOT BE  CONSIDERED  A REPRESENTATION  OF FUTURE  PERFORMANCE;  ACTUAL
EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
 
HISTORICAL PERFORMANCE OF COMPARABLE DISCRETIONARY ACCOUNTS. The following table
sets  forth the composite  average annual total  returns for the  one, three and
five year periods ended December  31, 1995 and the  period from January 1,  1988
(commencement  of operations of the relevant accounts) through December 31, 1995
for all discretionary  accounts described below  that have been  managed for  at
least  one  full quarter  by UBS  International  Investment London  Limited (the
'Sub-Adviser'), and the average annual total return during the same periods  for
the  Morgan  Stanley  Capital  International  EAFE  Index.  Such  accounts  have
substantially the same investment  objective and policies and  are managed in  a
manner  substantially the same as the Portfolio. The composite total returns for
such accounts have been  adjusted to deduct all  of the Fund's estimated  annual
total    operating   expenses    of   1.40%    of   projected    average   daily
 
                                      -3-
 
<PAGE>

<PAGE>
net assets as set forth in the Fee Table above. The composite total returns  are
time-weighted  and are equally  weighted for periods prior  to 1994, after which
they are  size-weighted, and  they  reflect the  reinvestment of  dividends  and
interest.  The Sub-Adviser believes that the  restatement of total returns prior
to 1994 would not result in any material changes in the total returns shown. The
composite total returns of these discretionary accounts should not be viewed  as
a  prediction of future performance of the Portfolio. The Morgan Stanley Capital
International EAFE Index is an  unmanaged index that measures stock  performance
in Europe, Australia and the Far East.
 
<TABLE>
<CAPTION>
                                                                                     MORGAN STANLEY
               AVERAGE ANNUAL TOTAL RETURNS FOR                    COMPOSITE      CAPITAL INTERNATIONAL
                PERIODS ENDED DECEMBER 31, 1995                   TOTAL RETURN         EAFE INDEX
- ---------------------------------------------------------------   ------------    ---------------------
<S>                                                               <C>             <C>
One Year.......................................................        8.85%              11.21%
Three Year.....................................................       16.72               16.69
Five Year......................................................       10.18                9.36
January 1, 1988 (commencement date)
  through December 31, 1995....................................       10.53                6.84
</TABLE>
 
MASTER-FEEDER STRUCTURE
 
Unlike  other mutual funds that directly  acquire and manage their own portfolio
of securities, the Fund seeks to  achieve its investment objective by  investing
all  of its  investable assets in  the Portfolio, a  separate investment company
with the same investment objective  as the Fund. The  Portfolio is one of  three
series  of UBS Investor Portfolios Trust  (the 'Trust'). See 'Organization'. The
investment objective of the Fund and the Portfolio may be changed only with  the
approval  of the holders of the outstanding  shares of the Fund or the investors
in the Portfolio, respectively.
 
This  master-feeder  structure  has  been  developed  relatively  recently,   so
shareholders should carefully consider this investment approach.
 
In  addition to selling an interest in  the Portfolio to the Fund, the Portfolio
may sell  interests in  the Portfolio  to other  mutual funds  or  institutional
investors.  Such investors will  invest in the  Portfolio on the  same terms and
conditions as the  Fund and will  pay a proportionate  share of the  Portfolio's
expenses.  However, other entities investing in the Portfolio may sell shares of
their own  fund  using a  different  pricing  structure than  the  Fund's.  Such
different pricing structures may result in differences in returns experienced by
investors  in  other funds  that invest  in the  Portfolio. Such  differences in
returns are  not uncommon  and  are present  in  other mutual  fund  structures.
Information  concerning other holders of interests in the Portfolio is available
from Signature at (617) 423-0800.
 
The Fund may withdraw its investment in  the Portfolio at any time if the  Board
determines  that it  is in  the Fund's best  interests to  do so.  Upon any such
withdrawal, the Board would consider what  action might be taken, including  the
investment  of all the Fund's assets  in another pooled investment entity having
the same investment objective and restrictions  as the Fund or the retaining  of
an  investment  adviser  to manage  the  Fund's  assets in  accordance  with the
investment policies described below with respect to the Portfolio.
 
Certain  changes   in  the   Portfolio's  investment   objective,  policies   or
restrictions, or a failure by the Fund's shareholders to approve a change in the
Portfolio's  investment  objective  or  restrictions, may  require  the  Fund to
withdraw its investments in the Portfolio.  Any such withdrawal could result  in
an   in-kind  distribution  of  portfolio  securities  (as  opposed  to  a  cash
distribution) by  the  Portfolio  to  the  Fund.  In  no  event,  however,  will
securities  which are not  readily marketable exceed  15% of the  total value of
such in-kind distribution. Such a distribution may result in the Fund's having a
less diversified  portfolio  of  investments  or  adversely  affect  the  Fund's
liquidity,  and  the  Fund  could  incur  brokerage,  tax  or  other  charges in
converting such securities to cash.  Notwithstanding the above, there are  other
means for meeting shareholder redemption requests, such as borrowing.
 
Smaller  funds  investing in  the Portfolio  may be  materially affected  by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the  Portfolio, the remaining  funds may subsequently  experience
higher  pro  rata operating  expenses,  thereby lowering  returns. Additionally,
because the  Portfolio would  become smaller,  it may  become less  diversified,
resulting in potentially
 
                                      -4-
 
<PAGE>

<PAGE>
increased   portfolio  risk   (however,  these  possibilities   also  exist  for
traditionally structured funds  that have large  or institutional investors  who
may  withdraw from a fund). Also, funds with a greater pro rata ownership in the
Portfolio could  have effective  voting  control of  its operations.  Except  as
permitted  by the Securities  and Exchange Commission  (the 'SEC'), whenever the
Fund is requested to  vote on matters pertaining  to the Portfolio, the  Company
will   hold  a   meeting  of  Fund   shareholders  and  will   cast  Fund  votes
proportionately as instructed by the Fund's shareholders. See 'Organization'  in
the  Statement of Additional  Information ('SAI'). Fund  shareholders who do not
vote will not affect the Fund's  votes at the Portfolio meeting. The  percentage
of  the Company's votes representing Fund  shareholders not voting will be voted
by the Company in the same proportion as the Fund shareholders who do, in  fact,
vote.
 
For  more information about  the Portfolio's investment  objective, policies and
restrictions, see 'Investment  Objective and  Policies', 'Additional  Investment
Information   and  Risk   Factors'  and  'Investment   Restrictions'.  For  more
information about the Portfolio's management and expenses, see 'Management'. For
more  information  about  changing   the  investment  objective,  policies   and
restrictions of the Fund or the Portfolio, see 'Investment Restrictions'.
 
INVESTMENT OBJECTIVE AND POLICIES
 
The  investment  objective of  the Fund  and the  Portfolio is  described below,
together with  the  policies  they  employ in  their  efforts  to  achieve  this
objective.  Additional information about the investment policies of the Fund and
the Portfolio appears in the SAI under Investment Objectives and Policies. There
can be no assurance that the investment  objective of the Fund or the  Portfolio
will be achieved.
 
The  Portfolio's investment objective is  to provide a high  total return from a
portfolio of  equity  securities  of foreign  corporations.  Total  return  will
consist of realized and unrealized capital gains and losses plus net income. The
Fund  attempts  to achieve  its  investment objective  by  investing all  of its
investable assets in UBS International Equity Portfolio, a series of an open-end
management investment company; such series has the same investment objective  as
the Fund. The Fund is designed for investors with a long-term investment horizon
who  want to  diversify their investments  by adding  international equities and
take advantage of investment opportunities outside the United States.
 
The Portfolio  seeks  to  achieve  its  investment  objective  by  investing  in
companies  that the  Sub-Adviser believes are  fundamentally sound  and that are
typically selling at below market  valuations and that the Sub-Adviser  believes
will  grow at above-market rates. The emphasis  on value leads to investments in
companies with relatively  low price/earnings  and price/book  value ratios  and
high yields.
 
The  Adviser is  responsible for supervising  the management  of the Portfolio's
investments. Consistent  with  these duties,  the  Adviser has  entered  into  a
Sub-Advisory Agreement with UBS International Investment London Limited ('UBSII'
or  the 'Sub-Adviser' and,  together with the  Adviser, the 'Advisers'), whereby
the Sub-Adviser is primarily responsible for the day-to-day investment decisions
for the Portfolio. The Adviser is solely responsible for paying the  Sub-Adviser
for these services. The Sub-Adviser is an affiliate of the Adviser.
 
The  Advisers actively manage currency exposure, in conjunction with country and
stock allocations,  in  an attempt  to  protect the  Portfolio's  market  value.
Through  the  use  of  forward  foreign  currency  exchange  contracts,  futures
contracts and options on  currencies, the Advisers  will adjust the  Portfolio's
foreign  currency  weightings  to  reduce  its  exposure  to  currencies  deemed
unattractive as  market  conditions  warrant,  based  on  fundamental  research,
technical  factors  and  the  judgment  of  the  Advisers'  experienced currency
managers. For more  information on foreign  currency exchange transactions,  see
'Additional Investment Information and Risk Factors'.
 
The  Portfolio  intends to  manage  its securities  actively  in pursuit  of its
investment objective. The Portfolio does not  expect to trade in securities  for
short-term  profits; however, when circumstances warrant, securities may be sold
without regard to the  length of time  held. It is  anticipated that the  annual
portfolio  turnover rate of the  Fund will be less than  100%. To the extent the
Portfolio engages  in short-term  trading, it  may incur  increased  transaction
costs.
 
EQUITY  INVESTMENTS. Under normal circumstances, the  Advisers intend to keep at
least 65% of the value of the  Portfolio's total assets in equity securities  of
foreign issuers, consisting of common stocks and other
 
                                      -5-
 
<PAGE>

<PAGE>
securities with equity characteristics such as preferred stock, warrants, rights
and  convertible securities. The Portfolio's  primary equity investments are the
common stock of established companies  based in developed countries outside  the
United  States. The Portfolio  will invest in  companies based in  at least five
foreign countries. Initially, the Adviser expects to invest in issues located in
the United Kingdom, France, Japan, Germany and Switzerland. The common stock  in
which  the Portfolio may invest includes the common stock of any class or series
or any similar equity interest such  as trust or limited partnership  interests.
The  Portfolio may  also invest in  securities of issuers  located in developing
countries. See  'Additional  Investment Information  and  Risk Factors  --  Risk
Factors  of Foreign Securities'. The Portfolio  will invest in securities listed
on foreign or domestic securities exchanges and securities traded in foreign  or
domestic  over-the-counter  markets, and  may  invest in  certain  restricted or
unlisted securities.
 
The Portfolio may also  invest in money market  instruments denominated in  U.S.
dollars  and other currencies,  securities on a  when-issued or delayed delivery
basis, enter  into  repurchase  and  reverse  repurchase  agreements,  loan  its
portfolio  securities, purchase certain privately  placed securities, enter into
forward contracts  on foreign  currencies, purchase  options on  currencies  and
enter  into certain hedging transactions that  may involve options on securities
and securities indices, futures contracts and options on futures contracts.  For
a  discussion of  these investments  and investment  techniques, see 'Additional
Investment Information and Risk Factors'.
 
ADDITIONAL INVESTMENT INFORMATION AND RISK FACTORS
 
Investments in non-U.S.  issuers involve  certain risks  and considerations  not
typically  associated  with investments  in  U.S. issuers.  These  risks include
greater price volatility, reduced liquidity and the significantly smaller market
capitalization of most non-U.S. securities markets, more substantial  government
involvement  in the economy, higher rates of inflation, greater social, economic
and political uncertainty and  the risk of  nationalization or expropriation  of
assets and risk of war.
 
CONVERTIBLE  SECURITIES. The convertible  securities in which  the Portfolio may
invest include any  debt securities or  preferred stocks that  may be  converted
into  common stock or that carry the right to purchase common stock. Convertible
securities entitle the holder to exchange the securities for a specified  number
of  shares of  common stock,  usually of the  same company,  at specified prices
within a certain period of time.
 
WHEN-ISSUED  AND  DELAYED  DELIVERY  SECURITIES.  The  Portfolio  may   purchase
securities  on a when-issued or delayed  delivery basis. Delivery of and payment
for these securities may take as long as  a month or more after the date of  the
purchase  commitment.  The  value  of  these  securities  is  subject  to market
fluctuation during  this  period  and  no interest  or  income  accrues  to  the
Portfolio  until settlement. At  the time of  settlement, a when-issued security
may be valued at less than its purchase price. Between the trade and  settlement
dates,  the  Portfolio will  maintain a  segregated  account with  the Custodian
consisting of a portfolio of high-grade, liquid debt securities with a value  at
least  equal to these  commitments. When entering into  a when-issued or delayed
delivery transaction, the Portfolio will rely  on the other party to  consummate
the  transaction;  if the  other  party fails  to do  so,  the Portfolio  may be
disadvantaged. It  is the  current policy  of the  Portfolio not  to enter  into
when-issued  commitments exceeding in  the aggregate 15% of  the market value of
the Portfolio's total assets less liabilities (excluding the obligations created
by these commitments).
 
REPURCHASE  AGREEMENTS.  The  Portfolio  may  engage  in  repurchase   agreement
transactions  with brokers,  dealers or  banks that  meet the  credit guidelines
established by the Trust's Board of  Trustees (the 'Trustees'). In a  repurchase
agreement,  the  Portfolio buys  a security  from  a seller  that has  agreed to
repurchase it at a mutually agreed upon date and price, reflecting the  interest
rate  effective for the term  of the agreement. The  term of these agreements is
usually from overnight to one  week. A repurchase agreement  may be viewed as  a
fully collateralized loan of money by the Portfolio to the seller. The Portfolio
always  receives securities as collateral with a  market value at least equal to
the purchase price plus accrued interest and this value is maintained during the
term of  the  agreement. If  the  seller  defaults and  the  collateral's  value
declines,  the  Portfolio  might incur  a  loss. If  bankruptcy  proceedings are
commenced with  respect to  the  seller, the  Portfolio's realization  upon  the
disposition  of collateral may be delayed  or limited. Investments in repurchase
agreements maturing in more than seven days and certain
 
                                      -6-
 
<PAGE>

<PAGE>
other investments that  may be  considered illiquid are  limited. See  'Illiquid
Investments; Privately Placed and Other Unregistered Securities' below.
 
REVERSE  REPURCHASE AGREEMENTS. The Portfolio is permitted to enter into reverse
repurchase agreements. In a reverse repurchase agreement, the Portfolio sells  a
security  and agrees to repurchase it at  a mutually agreed upon date and price,
reflecting the interest  rate effective for  the term of  the agreement. It  may
also  be viewed as the borrowing of money  by the Portfolio and, therefore, is a
form of leverage. Leverage may cause any gains or losses of the Portfolio to  be
magnified.  For more  information, including limitations  on the  use of reverse
repurchase agreements, see 'Investment Objectives  and Policies' in the SAI  and
'Investment Restrictions' below.
 
SECURITIES LENDING. Subject to applicable investment restrictions, the Portfolio
may lend its securities. The Portfolio may lend its securities if such loans are
secured  continuously by cash or equivalent collateral  or by a letter of credit
in favor of  the Portfolio at  least equal at  all times to  100% of the  market
value of the securities loaned, plus accrued interest. While such securities are
on  loan, the borrower will pay the Portfolio any income accruing thereon. Loans
will be subject to termination by  the Portfolio in the normal settlement  time,
generally  three business  days after  notice, or by  the borrower  on one day's
notice. Borrowed securities must  be returned when the  loan is terminated.  Any
gain  or loss in the market price  of the borrowed securities that occurs during
the term of the loan inures to  the Portfolio and its respective investors.  The
Portfolio  may pay reasonable  finders' and custodial fees  in connection with a
loan. In addition, the Portfolio will consider all the facts and  circumstances,
including  the creditworthiness of the  borrowing financial institution, and the
Portfolio will not make any loans in excess of one year. The Portfolio will  not
lend  its securities to any officer, Trustee, Director, employee or affiliate or
placement agent of the Portfolio, or the Adviser, Sub-Adviser, Administrator  or
Distributor, unless otherwise permitted by applicable law.
 
RISK  FACTORS  OF FOREIGN  SECURITIES. The  Portfolio  will invest  primarily in
foreign  securities.  Investments  in  securities  of  foreign  issuers  and  in
obligations  of foreign  branches of  domestic banks  involve somewhat different
investment risks from those affecting securities of domestic issuers. There  may
be  limited publicly available information with  respect to foreign issuers, and
foreign issuers are not  generally subject to  uniform accounting, auditing  and
financial  standards and requirements comparable to those applicable to domestic
companies. Dividends and  interest paid  by foreign  issuers may  be subject  to
withholding  and other foreign  taxes that may  decrease the net  return on such
investments.
 
Investors should  realize  that the  value  of the  Portfolio's  investments  in
foreign  securities may be adversely affected  by changes in political or social
conditions,  diplomatic   relations,   confiscatory   taxation,   expropriation,
nationalization,  limitation on the removal of funds or assets, or imposition of
(or change in) exchange control or  tax regulations in those foreign  countries.
In  addition,  changes in  government  administrations or  economic  or monetary
policies in  the  United  States  or abroad  could  result  in  appreciation  or
depreciation  of portfolio securities and  could favorably or unfavorably affect
the Portfolio's  operations. Furthermore,  the economies  of individual  foreign
nations  may differ  from the U.S.  economy, favorably or  unfavorably, in areas
such  as  growth  of  gross   national  product,  rate  of  inflation,   capital
reinvestment, resource self-sufficiency and balance of payments position; it may
also  be  more difficult  to obtain  and  enforce a  judgment against  a foreign
issuer. Any foreign investments made by the Portfolio must be made in compliance
with U.S. and foreign currency restrictions and tax laws restricting the amounts
and types of such investments.
 
In addition,  while  the  volume  of  transactions  effected  on  foreign  stock
exchanges  has increased in  recent years, in most  cases it remains appreciably
below that of domestic security exchanges. Accordingly, the Portfolio's  foreign
investments  may  be less  liquid and  their  prices may  be more  volatile than
comparable investments in securities of U.S. companies. Moreover, the settlement
periods for foreign securities, which are often longer than those for securities
of  U.S.  issuers,  may  affect  portfolio  liquidity.  In  buying  and  selling
securities  on foreign exchanges, purchasers normally pay fixed commissions that
are generally  higher than  the  negotiated commissions  charged in  the  United
States.  In  addition,  there  is  generally  less  government  supervision  and
regulation of securities  exchanges, brokers  and issuers  located in  countries
other than in the United States.
 
                                      -7-
 
<PAGE>

<PAGE>
Although  the Portfolio invests  primarily in securities  of established issuers
based in  developed foreign  countries,  it may  also  invest in  securities  of
issuers  in developing market countries. Investments in securities of issuers in
developing market countries may involve  a high degree of  risk and many may  be
considered speculative. These investments carry all of the risks of investing in
securities  of foreign issuers outlined in  this section to a heightened degree.
These heightened risks include: (i) greater risks of expropriation, confiscatory
taxation, nationalization, and  less social, political  and economic  stability;
(ii)  the small current  size of the  markets for securities  of emerging market
issuers and the currently  low or non-existent volume  of trading, resulting  in
limited  liquidity and in price volatility; (iii) certain national policies that
may restrict the Portfolio's investment opportunities including restrictions  on
investing  in  issuers  or  industries  deemed  sensitive  to  relevant national
interests; and (iv) the absence of developed legal structures governing  private
or foreign investment and private property.
 
The  Portfolio may invest  in securities of  foreign issuers directly  or in the
form of  American Depositary  Receipts  ('ADRs'), European  Depositary  Receipts
('EDRs')  or other similar  securities of foreign  issuers. These securities may
not necessarily  be denominated  in the  same currency  as the  securities  they
represent.  ADRs are receipts typically  issued by a U.S.  bank or trust company
evidencing ownership of the underlying foreign securities. Certain  institutions
issuing  ADRs  may not  be sponsored  by  the issuer  of the  underlying foreign
securities. A  non-sponsored depository  may not  provide the  same  shareholder
information  that  a  sponsored  depository is  required  to  provide  under its
contractual arrangements with the foreign issuer. EDRs are receipts issued by  a
European  financial  institution  evidencing a  similar  arrangement. Generally,
ADRs, in registered form, are designed  for use in the U.S. securities  markets,
and EDRs, in bearer form, are designed for use in European securities markets.
 
Because  investments in foreign securities involve foreign currencies, the value
of assets as measured in U.S. dollars may be affected, favorably or unfavorably,
by changes  in currency  exchange  rates and  in exchange  control  regulations,
including currency blockage. See 'Foreign Currency Exchange Transactions' below.
 
FOREIGN  CURRENCY EXCHANGE TRANSACTIONS. Because the Portfolio will buy and sell
securities and will receive interest and dividends in currencies other than  the
U.S.  dollar, the Portfolio may, from time  to time, enter into foreign currency
exchange transactions. The Portfolio may enter into these transactions on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency  exchange
market,  use forward currency contracts to  purchase or sell foreign currencies,
use currency futures contracts or purchase  or sell options thereon or  purchase
or sell currency options.
 
A  forward foreign currency exchange contract  is an obligation of the Portfolio
to purchase or sell a specific currency at a future date, which may be any fixed
number of days from the  date of the contract.  Currency options give the  buyer
the  right, but  not the  obligation, to purchase  or sell  a fixed  amount of a
specific currency at a fixed price at a future date. These contracts are entered
into in the interbank  market directly between  currency traders (usually  large
commercial  banks)  and their  customers.  A forward  foreign  currency exchange
contract generally has  no deposit  requirement, and is  traded at  a net  price
without  commission. The  Portfolio will not  enter into  these foreign currency
exchange  transactions  for  speculative  purposes.  Foreign  currency  exchange
transactions  do not eliminate fluctuations in  the local currency prices of the
Portfolio's securities or  in foreign  exchange rates,  or prevent  loss if  the
local currency prices of these securities should decline.
 
A  currency futures contract is a contract involving an obligation to deliver or
acquire the specified amount of a currency  at a specified price at a  specified
future time. Futures contracts may be settled on a net cash payment basis rather
than by the sale and delivery of the underlying currency.
 
The  Portfolio  may  enter into  foreign  currency exchange  transactions  in an
attempt to protect against  changes in foreign  currency exchange rates  between
the   trade  and  settlement  dates   of  specific  securities  transactions  or
anticipated securities transactions. The Portfolio  may use these techniques  to
hedge  against a change in foreign currency exchange rates (with the U.S. dollar
or other foreign currencies) that would cause a decline in the value of existing
investments denominated or principally traded in a foreign currency.
 
Although these transactions are intended to minimize  the risk of loss due to  a
decline  in the value of the hedged  currency, these transactions also limit any
potential gain that might be realized should the value
 
                                      -8-
 
<PAGE>

<PAGE>
of the  hedged  currency  increase.  Additionally,  the  premiums  paid  by  the
Portfolio  for currency or futures  options increase the Portfolio's transaction
costs.  Similarly,  the   cost  of  the   Portfolio's  spot  currency   exchange
transactions  is generally the difference between the bid and offer spot rate of
the currency being purchased or  sold. Moreover, forward contracts that  convert
one  foreign currency into another foreign  currency will cause the Portfolio to
assume the risk of fluctuations in the value of the currency purchased vis-a-vis
the hedged  currency  and  the  U.S.  dollar.  The  precise  matching  of  these
transactions  and the  value of  the securities  involved will  not generally be
possible because the future value of such securities in foreign currencies  will
change  as a  consequence of  market movements in  the value  of such securities
between the date such a transaction is entered into and the date it matures. The
projection  of  currency  market  movements  is  extremely  difficult  and   the
successful execution of a hedging strategy is highly uncertain.
 
ILLIQUID  INVESTMENTS; PRIVATELY  PLACED AND OTHER  UNREGISTERED SECURITIES. The
Portfolio may not acquire any illiquid securities if, as a result thereof,  more
than  15% of the market value of the Portfolio's net assets would be in illiquid
investments or investments  that are  not readily marketable.  In addition,  the
Portfolio  will not invest more than 10% of the market value of its total assets
in restricted securities that  cannot be offered for  public sale in the  United
States  without first  being registered  under the  Securities Act  of 1933 (the
'Securities Act').  Subject to  those  non-fundamental policy  limitations,  the
Portfolio  may acquire investments that are  illiquid or have limited liquidity,
such as private  placements or  investments that  are not  registered under  the
Securities  Act, and  cannot be  offered for  public sale  in the  United States
without first being registered.  An illiquid investment  is any investment  that
cannot  be disposed  of within seven  days in  the normal course  of business at
approximately the amount  at which  it is  valued by  the Portfolio.  Repurchase
agreements  maturing in more than seven days are considered illiquid investments
and, as such, are subject  to the limitations set  forth in this paragraph.  The
price  the Portfolio pays for illiquid securities or receives upon resale may be
lower than the price paid or received for similar securities with a more  liquid
market.  Accordingly,  the  valuation  of  these  securities  will  reflect  any
limitations on their liquidity.
 
The Portfolio  may also  purchase  Rule 144A  securities sold  to  institutional
investors without registration under the Securities Act. These securities may be
determined  to  be  liquid  in accordance  with  guidelines  established  by the
Advisers and approved by the Trustees.  The Trustees will monitor the  Advisers'
implementation of these guidelines on a periodic basis.
 
MONEY  MARKET INSTRUMENTS. The Portfolio is  permitted to invest in money market
instruments although it  intends to stay  invested in equity  securities to  the
extent   practical  in  light   of  its  objectives   and  long-term  investment
perspective. The  Portfolio  may make  money  market investments  pending  other
investments  or settlements, for liquidity or in adverse market conditions. Such
money market investments may include obligations of the U.S. Government and  its
agencies  and instrumentalities,  other debt securities,  commercial paper, bank
obligations and repurchase  agreements. The Portfolio  may purchase  nonpublicly
offered debt securities. The Portfolio may also invest in short-term obligations
of   sovereign  foreign  governments,   their  agencies,  instrumentalities  and
political subdivisions. For more detailed  information about these money  market
investments, see 'Investment Objectives and Policies' in the SAI.
 
FUTURES  AND OPTIONS TRANSACTIONS. The Portfolio  is permitted to enter into the
futures and options transactions described below. These instruments are commonly
known as derivatives.
 
The Portfolio may purchase and sell exchange traded and over-the-counter ('OTC')
put and call options on equity securities or indices of equity securities, enter
into forward contracts, purchase and sell futures contracts on indices of equity
securities, purchase  and sell  put and  call options  on futures  contracts  on
indices  of equity securities  and purchase and sell  options on currencies. The
Portfolio may use these techniques for  hedging or risk management purposes  or,
subject to certain limitations, for the purpose of obtaining desired exposure to
certain securities or markets.
 
The  Portfolio  may use  these  techniques to  manage  its exposure  to changing
interest rates, currency exchange rates and/or security prices. Some options and
futures strategies, including selling futures contracts and buying puts, tend to
hedge the Portfolio's investments against price fluctuations. Other  strategies,
including  buying futures contracts,  writing puts and  calls, and buying calls,
may tend to increase  market exposure. For example,  if the Portfolio wishes  to
obtain exposure to a particular market or
 
                                      -9-
 
<PAGE>

<PAGE>
market  sector but does not wish to  purchase the relevant securities, it could,
as an alternative, purchase a futures contract on an index of such securities or
related securities. Such a purchase  would not constitute a hedging  transaction
and  could be  considered speculative. However,  the Portfolio  will use futures
contracts or options in this manner only  for the purpose of obtaining the  same
level  of exposure to  a particular market  or market sector  that it could have
obtained by  purchasing  the  relevant  securities  and  will  not  use  futures
contracts  or options  to leverage its  exposure beyond this  level. Options and
futures contracts may be combined with  each other or with forward contracts  in
order  to adjust the risk and  return characteristics of the Portfolio's overall
strategy in a manner deemed appropriate to the Advisers and consistent with  the
Portfolio's  objective and policies. Because combined positions involve multiple
trades, they result  in higher transaction  costs and may  be more difficult  to
open and close out.
 
The  Portfolio's use  of these  transactions is  a highly  specialized activity,
which involves investment strategies and  risks different from those  associated
with  ordinary portfolio securities transactions, and  there can be no guarantee
that their use will increase the  Portfolio's return. While the Portfolio's  use
of  these  instruments  may  reduce certain  risks  associated  with  owning its
portfolio securities, these techniques themselves entail certain other risks. If
the Advisers  apply  a  strategy  at  an  inappropriate  time  or  judge  market
conditions  or  trends incorrectly,  such strategies  may lower  the Portfolio's
return. Certain strategies limit the Portfolio's opportunity to realize gains as
well as limiting its exposure to  losses. The Portfolio could experience  losses
if  the prices of its options and  futures positions were poorly correlated with
its other investments, or if it could not close out its positions because of  an
illiquid  secondary  market.  In  addition,  the  Portfolio  will  incur  costs,
including commissions and  premiums, in connection  with these transactions  and
these transactions could significantly increase the Portfolio's turnover rate.
 
The  Portfolio  may  purchase  and  sell put  and  call  options  on securities,
currencies, indices of securities  and futures contracts,  or purchase and  sell
futures contracts for the purposes described herein.
 
The  Commodity Exchange Act prohibits U.S.  persons, such as the Portfolio, from
buying  or  selling  certain  foreign  futures  contracts  or  options  on  such
contracts.  Accordingly, the  Portfolio will  not engage  in foreign  futures or
options transactions unless the contracts in question may lawfully be  purchased
and sold by U.S. persons in accordance with applicable Commodity Futures Trading
Commission ('CFTC') regulations or CFTC staff advisories, interpretations and no
action letters.
 
In  addition, in  order to assure  that the  Portfolio will not  be considered a
'commodity pool'  for purposes  of CFTC  rules, the  Portfolio will  enter  into
transactions  in futures contracts  or options on futures  contracts only if (1)
such transactions constitute  bona fide hedging  transactions, as defined  under
CFTC  rules, or (2) no more than 5%  of the Portfolio's net assets are committed
as initial margin  or premiums  to positions that  do not  constitute bona  fide
hedging transactions.
 
OPTIONS
 
PURCHASING  PUT  AND CALL  OPTIONS. By  purchasing a  put option,  the Portfolio
obtains the right (but not the obligation) to sell the instrument underlying the
option at a fixed strike price. In return for this right, the Portfolio pays the
current market price for the option (known as the option premium). Options  have
various   types  of  underlying   instruments,  including  specific  securities,
currencies, indices of  securities, indices  of securities  prices, and  futures
contracts.  The Portfolio  may terminate  its position  in a  put option  it has
purchased by allowing it  to expire or by  exercising the option. The  Portfolio
may  also  close  out a  put  option  position by  entering  into  an offsetting
transaction, if a liquid market exists. If the option is allowed to expire,  the
Portfolio will lose the entire premium it paid. If the Portfolio exercises a put
option  on a security, it will sell  the instrument underlying the option at the
strike price. If the Portfolio exercises an option on an index, settlement is in
cash and does not involve the actual sale of securities. American style  options
may  be exercised on any day up to their expiration date. European style options
may be exercised only on their expiration date.
 
The buyer of a typical put option can  expect to realize a gain if the price  of
the  underlying instrument  falls substantially.  However, if  the price  of the
instrument underlying the  option does  not fall enough  to offset  the cost  of
purchasing  the option, a put buyer can expect  to suffer a loss (limited to the
amount of the premium paid, plus related transaction costs).
 
                                      -10-
 
<PAGE>

<PAGE>
The features of call options are essentially  the same as those of put  options,
except that the purchaser of a call option obtains the right to purchase, rather
than  sell, the instrument underlying the option at the option's strike price. A
call buyer typically attempts to participate in potential price increases of the
instrument underlying the option with risk limited to the cost of the option and
related transaction costs if security prices  fall. At the same time, the  buyer
can  expect to  suffer a  loss if  security prices  do not  rise sufficiently to
offset the cost of the option.
 
SELLING (WRITING) PUT AND CALL OPTIONS. When the Portfolio writes a put  option,
it  takes the opposite side  of the transaction from  the option's purchaser. In
return for receipt of the premium,  the Portfolio assumes the obligation to  pay
the  strike price for the instrument underlying the option if the other party to
the option  chooses to  exercise it.  The Portfolio  may seek  to terminate  its
position  in a put option it writes  before exercise by purchasing an offsetting
option in the market at its current price. If the market is not liquid for a put
option the Portfolio  has written, however,  the Portfolio must  continue to  be
prepared  to pay the strike price while the option is outstanding, regardless of
price changes, and must continue to post margin as discussed below.
 
If the price of  the underlying instrument rises,  a put writer would  generally
expect  to  profit, although  its gain  would be  limited to  the amount  of the
premium it received. If security prices remain the same over time, it is  likely
that  the writer will  also profit, because it  should be able  to close out the
option at a lower price. If security prices fall, however, the put writer  would
expect  to suffer a loss. This loss should be less than the loss from purchasing
and holding the  underlying instrument  directly, however,  because the  premium
received for writing the option should offset a portion of the decline.
 
Writing  a call option obligates  the Portfolio to sell  or deliver the option's
underlying instrument  in return  for  the strike  price  upon exercise  of  the
option.  The characteristics  of writing  call options  are similar  to those of
writing put  options,  except  that  writing calls  generally  is  a  profitable
strategy  if  prices remain  the same  or  fall. Through  receipt of  the option
premium a call writer  offsets part of  the effect of a  price decrease. At  the
same  time, because  a call  writer must be  prepared to  deliver the underlying
instrument in return for the strike price, even if its current value is greater,
a call writer gives up some ability to participate in security price increases.
 
The writer of a U.S. exchange traded put or call option on a security, an  index
of securities or a futures contract is required to deposit cash or securities or
a  letter of credit as  margin and to make  mark-to-market payments of variation
margin if and as the position becomes unprofitable.
 
OPTIONS  ON  INDICES.  The  Portfolio   is  permitted  to  enter  into   options
transactions  and may purchase and  sell put and call  options on any securities
index based  on  securities  in  which the  Portfolio  may  invest.  Options  on
securities  indices  are  similar  to options  on  securities,  except  that the
exercise of securities  index options is  settled by cash  payment and does  not
involve  the actual purchase  or sale of securities.  In addition, these options
are designed to reflect price fluctuations  in a group of securities or  segment
of  the securities market  rather than price fluctuations  in a single security.
The Portfolio, in purchasing  or selling index options,  is subject to the  risk
that  the value of its  portfolio securities may not change  as much as an index
because the Portfolio's investments generally will not match the composition  of
an index.
 
For  a number of reasons,  a liquid market may not  exist and thus the Portfolio
may not be able to close out  an option position that it has previously  entered
into.  When the  Portfolio purchases an  OTC option,  it will be  relying on its
counterparty to perform its obligations, and the Portfolio may incur  additional
losses if the counterparty is unable to perform.
 
FUTURES CONTRACTS
 
When  the  Portfolio  purchases a  futures  contract,  it agrees  to  purchase a
specified quantity of an  underlying instrument at a  specified future date  and
price  or to make or receive  a cash payment based on  the value of a securities
index. When  the  Portfolio  sells a  futures  contract,  it agrees  to  sell  a
specified  quantity of the underlying instrument  at a specified future date and
price or to receive or  make a cash payment based  on the value of a  securities
index.  The price at which  the purchase and sale will  take place is fixed when
the Portfolio enters into the contract. Futures can be held until their delivery
dates or the positions can be (and  normally are) closed out before then.  There
is  no assurance,  however, that  a liquid  market will  exist when  a Portfolio
wishes to close out a particular position.
 
                                      -11-
 
<PAGE>

<PAGE>
When the  Portfolio purchases  or sells  a futures  contract, the  value of  the
futures  contract tends to increase and decrease in tandem with the value of its
underlying instrument. Purchasing  futures contracts  may tend  to increase  the
Portfolio's  exposure  to  positive  and  negative  price  fluctuations  in  the
underlying instrument, much  as if  it had purchased  the underlying  instrument
directly,  as discussed above.  When the Portfolio sells  a futures contract, by
contrast, the value of  its futures position  will tend to  move in a  direction
contrary to the value of the underlying instrument. Selling futures contracts on
securities  similar  to those  held by  the Portfolio,  therefore, will  tend to
offset both  positive  and  negative  market  price  changes,  much  as  if  the
underlying instrument had been sold. Because there are a limited number of types
of  exchange-traded  options  and futures  contracts,  it is  likely  that these
standardized instruments  will  not exactly  match  the Portfolio's  current  or
anticipated  investments.  The Portfolio  may  invest in  futures  contracts and
options thereon based  on currencies  or on securities  with different  issuers,
maturities,  or other characteristics from the  securities in which it typically
invests, which involves  a risk that  the options or  futures position will  not
track  the performance of  the Portfolio's other  investments. The Portfolio may
also enter into transactions  in futures contracts  and options for  non-hedging
purposes, as discussed above.
 
The  purchaser or seller of a futures contract is not required to deliver or pay
for the underlying  instrument unless the  contract is held  until the  delivery
date.  However, when the Portfolio  buys or sells a  futures contract it will be
required to deposit 'initial margin' with the Custodian in a segregated  account
in  the  name of  its futures  broker,  known as  a futures  commission merchant
('FCM'). Initial margin deposits  are typically equal to  a small percentage  of
the  contract's value.  If the value  of either party's  position declines, that
party will be required to make  additional 'variation margin' payments equal  to
the  change in value on a daily basis. The party that has a gain may be entitled
to receive all or a  portion of this amount. The  Portfolio may be obligated  to
make payments of variation margin at a time when it is disadvantageous to do so.
Furthermore,  it may not always  be possible for the  Portfolio to close out its
futures positions. Until it closes out a futures position, the Portfolio will be
obligated to  continue to  pay variation  margin. Initial  and variation  margin
payments  do not constitute purchasing on margin for purposes of the Portfolio's
investment restrictions. In  the event of  the bankruptcy of  an FCM that  holds
margin  on behalf of the  Portfolio, the Portfolio may  be entitled to return of
margin owed to it only in proportion  to the amount received by the FCM's  other
customers, potentially resulting in losses to the Portfolio.
 
The  Portfolio will segregate  liquid, high-grade debt  securities in connection
with its use of options and futures contracts to the extent required by the SEC.
Securities held  in  a segregated  account  cannot  be sold  while  the  futures
contract  or option is outstanding, unless they are replaced with other suitable
assets. As a  result, there is  a possibility  that the segregation  of a  large
percentage  of the Portfolio's  assets could impede  portfolio management or the
Portfolio's ability to meet redemption requests or other current obligations.
 
For further information about the Portfolio's  use of futures and options and  a
more  detailed discussion  of associated  risks, see  'Investment Objectives and
Policies' in the SAI.
 
INVESTMENT RESTRICTIONS
 
The investment  objective of  the  Fund and  the  Portfolio, together  with  the
investment  restrictions described  below and in  the SAI, except  as noted, are
deemed fundamental policies, i.e., they  may be changed only  by the 'vote of  a
majority  of the  outstanding voting securities'  (as defined  in the Investment
Company  Act  of  1940  (the  '1940  Act'))  of  the  Fund  and  the  Portfolio,
respectively.  The Fund has  the same investment  restrictions as the Portfolio,
except that the Fund may invest all of its investable assets in another open-end
investment company with the same investment objective and restrictions (such  as
the  Portfolio), and  the Fund  may retain an  investment adviser  to manage the
Fund's assets in accordance  with the investment  policies and restrictions  set
forth below. References below to the Fund's investment restrictions also include
the Portfolio's investment restrictions.
 
As  a diversified investment company, 75% of the Fund's total assets are subject
to the following fundamental limitations: (a) the Fund may not invest more  than
5% of its total assets in the securities of
 
                                      -12-
 
<PAGE>

<PAGE>
any  one issuer, except U.S. Government securities; and (b) the Fund may not own
more than 10% of the outstanding voting securities of any one issuer.
 
The Fund may not:  (i) purchase the securities  or other obligations of  issuers
conducting  their  principal  business  activity in  the  same  industry  if its
investments in such industry would exceed 25%  of the value of the Fund's  total
assets, except this limitation shall not apply to investments in U.S. Government
securities;  (ii) enter  into reverse  repurchase agreements  or other permitted
borrowings that constitute senior  securities under the  1940 Act, exceeding  in
the  aggregate one-third  of the  value of  the Fund's  assets; or  (iii) borrow
money, except from banks for  extraordinary or emergency purposes, or  mortgage,
pledge  or hypothecate any assets except  in connection with any such borrowings
or permitted reverse  repurchase agreements in  amounts up to  one-third of  the
value  of the Fund's assets at the time of such borrowing or purchase securities
while borrowings and other senior securities exceed 5% of its total assets.  For
a  more detailed discussion of  the above investment restrictions,  as well as a
description  of   certain  other   investment  restrictions,   see   'Investment
Restrictions' in the SAI.
 
MANAGEMENT
 
DIRECTORS  AND  TRUSTEES. Pursuant  to the  Declaration  of Trust,  the Trustees
establish the  Portfolio's general  policies, are  responsible for  the  overall
management  of the  Trust and  review the  actions of  the Adviser, Sub-Adviser,
Administrator and  other service  providers. Similarly,  the Directors  set  the
Company's  general policies, are  responsible for the  overall management of the
Company  and  review  the  performance  of  its  service  providers.  Additional
information  about the Company's Board of  Directors and officers appears in the
SAI under the heading 'Directors and Trustees'. The Trustees are also  Directors
of  the Company, which raises certain conflicts of interest. The Company and the
Trust have adopted written procedures reasonably appropriate to deal with  these
conflicts  should they arise. The officers of  the Company are also employees of
Signature or its affiliates.
 
ADVISER AND FUNDS SERVICES AGENT. The Fund  has not retained the services of  an
investment adviser because the Fund seeks to achieve its investment objective by
investing  all  of its  investable assets  in the  Portfolio. The  Portfolio has
retained the  services  of  the  Branch  as  investment  adviser  and  UBSII  as
investment sub-adviser. The Branch, which operates out of offices located at 299
Park  Avenue, New York, New York, is  licensed by the Superintendent of Banks of
the State of New  York under the banking  laws of the State  of New York and  is
subject  to  state and  federal  banking laws  and  regulations applicable  to a
foreign bank that operates a state licensed branch in the United States.  UBSII,
with  principal offices  at Triton Court,  14 Finsbury  Square, London, England,
EC2A 1PD, is a corporation organized under the laws of the United Kingdom.
 
The Bank  has branches,  agencies, representative  offices and  subsidiaries  in
Switzerland  and in more  than 40 cities outside  Switzerland, including, in the
United States, New York City, Chicago,  Houston, Los Angeles and San  Francisco.
In addition to the receipt of deposits and the making of loans and advances, the
Bank  through its offices  and subsidiaries (including UBSII)  engages in a wide
range  of  banking  and  financial  activities  typical  of  the  world's  major
international  banks,  including  fiduciary, investment  advisory  and custodial
services  and  foreign  exchange  in   the  United  States,  Swiss,  Asian   and
Euro-capital  markets. The Bank is one of the world's leading asset managers and
has been  active in  New  York City  since  1946. At  June  30, 1995,  the  Bank
(including  its consolidated  subsidiaries) had  total assets  of $307.4 billion
(unaudited) and equity capital  and reserves of  $19.7 billion (unaudited).  The
Branch  has not previously advised a mutual fund. This could be viewed as a risk
of investing in this Fund.
 
The  Advisers  provide  investment  advice  and  portfolio  management  to   the
Portfolio.  Subject  to the  supervision of  the Trustees  and the  Adviser, the
Sub-Adviser makes the Portfolio's day-to-day investment decisions, arranges  for
the  execution of portfolio  transactions and generally  manages the Portfolio's
investments and operations. See 'Investment Adviser and Funds Services Agent' in
the SAI.
 
In addition to the above-listed  investment advisory services, the Adviser  also
provides  the  Fund  and  the  Portfolio  with  certain  related  administrative
services. Subject to the  supervision of the  Board and Trustees,  respectively,
the  Adviser  is responsible  for:  establishing performance  standards  for the
third-party service  providers of  the  Fund and  Portfolio and  overseeing  and
evaluating  the performance of such entities; providing and presenting quarterly
management reports to the Directors and the Trustees;
 
                                      -13-
 
<PAGE>

<PAGE>
supervising the preparation of reports for Fund and Portfolio shareholders;  and
establishing  voluntary  expense  limitations  for the  Fund  and  providing any
resultant expense reimbursement to the Fund.
 
The Branch provides its administrative services to the Fund pursuant to a  Funds
Services  Agreement  between the  Branch and  the Company.  The Branch  does not
receive a fee from the  Company or the Fund pursuant  to the terms of the  Funds
Services Agreement.
 
Under  the Trust's Investment Advisory Agreement, the Portfolio pays the Adviser
a fee, calculated daily and payable monthly,  at an annual rate of 0.85% of  the
Portfolio's  average net assets. The Branch  has voluntarily agreed to waive its
fees and reimburse the Fund for any  of its direct and indirect expenses to  the
extent  that the  Fund's total  operating expenses  exceed, on  an annual basis,
1.40% of  the  Fund's  average  daily  net assets.  The  Branch  may  modify  or
discontinue  this fee waiver  and expense limitation  at any time  in the future
with 30 days' notice to the Fund. See 'Expenses'.
 
SUB-ADVISER. The Sub-Adviser  uses a  sophisticated, disciplined,  collaborative
process  for managing all asset classes. Robin Apps is primarily responsible for
the day-to-day management  and implementation of  the Sub-Adviser's process  for
the  Portfolio. Mr.  Apps has  been a Senior  Vice President  of the Sub-Adviser
since 1990, and is responsible  for researching investment opportunities in  the
Far  East. Mr. Apps has previously managed  the investments of a Canadian mutual
fund. Mr. Apps received  a bachelors degree from  Birmingham University and  has
twelve years of investment experience. Mr. Apps is also qualified as an actuary.
 
Pursuant  to the Sub-Advisory Agreement between the Adviser and the Sub-Adviser,
the Adviser  has agreed  to pay  the  Sub-Adviser a  fee, calculated  daily  and
payable monthly, at an annual rate of 0.75% of the Portfolio's first $20 million
of average net assets, plus 0.50% of the next $30 million of average net assets,
plus  0.40% of the Portfolio's average net  assets in excess of $50 million. The
Adviser is solely responsible for paying the Sub-Adviser this fee.
 
INVESTMENTS IN THE FUND ARE NOT  DEPOSITS WITH OR OBLIGATIONS OF, OR  GUARANTEED
OR ENDORSED BY, THE BRANCH OR ANY OTHER BANK.
 
ADMINISTRATORS. Under Administrative Service Agreements with the Company and the
Trust,  Signature and Signature-Cayman  serve as the  Administrators of the Fund
and the Portfolio, respectively (in  such capacities, the 'Administrators').  In
these  capacities, Signature and Signature-Cayman  administer all aspects of the
Fund's and the Portfolio's day-to-day operations, subject to the supervision  of
the  Adviser and the Board and Trustees, respectively, except as set forth under
'Adviser and Funds Services Agent', 'Distributor', 'Custodian' and  'Shareholder
Services'.  The  Administrators:  (i)  furnish  general  office  facilities  and
ordinary clerical  and  related  services for  day-to-day  operations  including
recordkeeping responsibilities; (ii) take responsibility for compliance with all
applicable  federal and state securities  and other regulatory requirements; and
(iii) perform administrative and managerial  oversight of the activities of  the
custodian,  transfer agent  and other agents  or independent  contractors of the
Fund and the Portfolio. Signature is also responsible for monitoring the  Fund's
status  as a  regulated investment  company under  the Internal  Revenue Code of
1986, as amended (the 'Code').
 
Under the Company's Administrative  Services Agreement, the  Fund has agreed  to
pay  Signature a fee, calculated daily and payable monthly, at an annual rate of
0.05% of the Fund's first $100 million of average net assets plus 0.025% of  the
next  $100 million of average net assets.  Signature does not receive a fee from
the Fund on average net assets in excess of $200 million.
 
Under the Trust's Administrative Services Agreement, the Portfolio has agreed to
pay Signature-Cayman a fee, calculated daily  and payable monthly, at an  annual
rate of 0.05% of the Portfolio's average net assets.
 
DISTRIBUTOR. Under the Distribution Agreement, Signature, located at 6 St. James
Avenue,  Boston, MA  02116, serves  as the distributor  of Fund  shares (in such
capacity,  the  'Distributor').  The   Distributor  is  a  wholly-owned   direct
subsidiary of Signature Financial Group, Inc. and is a registered broker-dealer.
The Distributor does not receive a fee pursuant to the terms of the Distribution
Agreement.
 
CUSTODIAN.  Investors Bank & Trust Company,  whose principal offices are located
at 89 South  Street, Boston, Massachusetts  02111, serves as  the custodian  and
transfer  and  dividend disbursing  agent for  the Portfolio  and the  Fund. See
'Custodian' in the SAI. The Custodian also maintains offices at 1 First Canadian
Place, Suite 2800, Toronto, Ontario M5X1C8.
 
                                      -14-
 
<PAGE>

<PAGE>
SHAREHOLDER SERVICES
 
The Company has entered into a  Shareholder Servicing Agreement with the  Branch
under which the Branch provides shareholder services to Fund shareholders, which
include  coordinating  shareholder  accounts  and  records,  assisting investors
seeking to purchase  or redeem  Fund shares,  providing performance  information
relating  to the Fund, and responding  to shareholder inquiries. The Company has
agreed to pay the Branch  for these services at an  annual rate of 0.25% of  the
average  daily  net assets  of  the Fund.  Under  the terms  of  the Shareholder
Servicing Agreement, the Branch may delegate one or more of its responsibilities
to other entities at its expense.
 
EXPENSES
 
In addition  to  the  fees  of  the  Branch,  Signature-Cayman,  Signature,  and
Investors  Bank  & Trust  Company, the  Fund  will be  responsible for,  or will
indirectly bear through its interest in the Portfolio, other expenses  including
brokerage  costs  and litigation  and  extraordinary expenses.  The  Adviser has
agreed to waive fees as necessary, if, in any fiscal year, the sum of the Fund's
expenses exceeds the limits  set by applicable  regulations of state  securities
commissions.  Such annual limits are currently 2.5%  of the first $30 million of
average net assets, 2% of  the next $70 million of  such net assets and 1.5%  of
such  net assets  in excess  of $100 million.  The Adviser  has also voluntarily
agreed  to  limit  the   total  operating  expenses   of  the  Fund,   excluding
extraordinary  expenses, to an annual rate of  1.40% of the Fund's average daily
net assets.  The  Adviser  may  modify or  discontinue  this  voluntary  expense
limitation at any time in the future with 30 days' notice to the Fund.
 
The  Fund  and  the  Portfolio  may  allocate  brokerage  transactions  to their
affiliates and the Advisers' affiliates. Brokerage transactions may be allocated
to these affiliates only if the commissions received by such affiliates are fair
and reasonable when compared to the commissions paid to unaffiliated brokers  in
connection  with comparable  transactions. See  'Portfolio Transactions'  in the
SAI.
 
PURCHASE OF SHARES
 
GENERAL INFORMATION  ON  PURCHASES.  Investors may  purchase  Fund  shares  only
through   the  Distributor.  All  purchase  orders   must  be  accepted  by  the
Distributor. The  Company also  reserves  the right  to determine  the  purchase
orders  that it  will accept  and it  reserves the  right to  cease offering its
shares at any time. The shares of the Fund may be purchased only in those states
where they may be lawfully sold.
 
The business days of the Fund and the Portfolio are the days the New York  Stock
Exchange (the 'NYSE') is open for regular trading.
 
The  shares of the Fund are sold on a continuous basis without a sales charge at
the net asset value per share next determined after receipt and acceptance of  a
purchase  order by the Distributor.  The Fund calculates its  net asset value at
the close of business. See 'Net Asset Value'. The minimum initial investment  in
the  Fund is $25,000, except that the  minimum initial investment is $10,000 for
shareholders of another series of the Company. The minimum subsequent investment
in the Fund  for all  investors is $5,000.  The minimum  initial investment  for
employees  of the Bank  or its affiliates  is $5,000. The  minimum subsequent is
$1,000.  These  minimum  investment  requirements  may  be  waived  for  certain
retirement  plans or  accounts for  the benefit of  minors. For  purposes of the
minimum investment requirements, the Fund  may aggregate investments by  related
shareholders. Investors will receive the number of full and fractional shares of
the  Fund equal to  the dollar amount  of their subscription  divided by the net
asset value  per share  of the  Fund  as next  determined on  the day  that  the
investor's subscription is accepted. See 'Purchase of Shares' in the SAI.
 
Purchase  orders in proper form  received by the Distributor  prior to 4:00 p.m.
New York time or the close of regular trading on the NYSE, whichever is earlier,
are effective and  executed at  the net asset  value next  determined that  day.
Purchase orders received after 4:00 p.m. New York time or the close of the NYSE,
whichever  is earlier, will be executed at the net asset value determined on the
next business day. Investors become record  shareholders of the Fund on the  day
they  place their subscription order, provided it is received by the Distributor
before 4:00  p.m.  As  record  shareholders,  investors  are  entitled  to  earn
dividends.
 
                                      -15-
 
<PAGE>

<PAGE>
Fund shares may be purchased in the following methods:
 
BRANCH  CLIENTS:  Private Bank  Clients of  the Branch  should request  a Branch
representative to assist them in placing a purchase order with the Distributor.
 
THROUGH THE DISTRIBUTOR: Shareholders  who do not  currently maintain a  private
banking  relationship with the  Branch may purchase shares  of the Fund directly
from the Distributor by wire transfer or mail.
 
The Transfer Agent will maintain the accounts for all shareholders who  purchase
Fund  shares directly through  the Distributor. For  account balance information
and shareholder services, such shareholders should contact the Transfer Agent at
(888) UBS-FUND or in writing at UBS Private Investor Funds, Inc., c/o  Investors
Bank and Trust Company, P.O. Box 1537 MFD 23, Boston, MA 02205-1537.
 
By  wire: Purchases may be made by federal funds wire. To place a purchase order
with the  Fund, the  shareholder  must telephone  the  Transfer Agent  at  (888)
UBS-FUND for specific instructions.
 
Subject  to the minimum purchase  requirements discussed above, shares purchased
by federal funds wire  will be effected  at the net asset  value per share  next
determined after acceptance of the order.
 
A  completed  account application  must promptly  follow any  wire order  for an
initial purchase. No account application  is required for subsequent  purchases.
Completed   account  applications  should  be  mailed  or  sent  via  facsimile.
Shareholders  should  contact  the  Transfer  Agent  for  further   instructions
regarding account applications.
 
By   mail:  Subject  to  the  minimum  purchase  requirements  discussed  above,
shareholders may  purchase  shares  of  the  Fund  through  the  Distributor  by
completing  an account application and mailing it, together with a check payable
to 'UBS Private Investor Funds, Inc.', to: UBS Private Investor Funds, Inc., c/o
Investors Bank & Trust Company, P.O. Box 1537 MFD 23, Boston, MA 02205-1537.
 
Account applications are  not required  for subsequent  purchases; however,  the
shareholder's  account  number must  be clearly  marked on  the check  to ensure
proper credit.
 
Checks are subject to collection at  full value. For shares purchased by  check,
dividend  payments and redemption  proceeds, if any, will  be delayed until such
funds are collected, which may take up to 15 days from the date of purchase.
 
REDEMPTION OF SHARES
 
GENERAL INFORMATION ON REDEMPTIONS. A shareholder  may redeem all or any  number
of  the shares registered  in its name at  any time at the  net asset value next
determined after  a  redemption  request  in proper  form  is  received  by  the
Distributor.  The Fund calculates its net asset  value at the close of business.
See 'Net Asset Value'.
 
A redemption order will  be effected provided the  Distributor receives such  an
order  prior to 4:00 p.m. New  York time or the close  of regular trading on the
NYSE, whichever is earlier.  The redemption of Fund  shares is effective and  is
executed  at the  net asset  value next  determined that  day. Redemption orders
received after 4:00 p.m. New  York time or the close  of regular trading on  the
NYSE,  whichever is earlier, will be executed  at the net asset value determined
on the next  business day.  Proceeds of  an effective  redemption are  generally
deposited  the next business  day in immediately available  funds to the account
designated by the redeeming shareholder  or mailed to the shareholder's  address
of record, in accordance with the shareholder's instructions.
 
Shareholders  will not  be recordholders for  dividend purposes on  the day that
they redeem Fund shares.
 
Fund shares may be redeemed in the following methods:
 
BRANCH CLIENTS: Shareholders who are Private  Bank Clients of the Branch  should
request a Branch representative to assist them in placing a redemption order.
 
THROUGH THE DISTRIBUTOR: Shareholders who are not Branch clients may redeem Fund
shares by telephone or mail.
 
By telephone: Telephone redemptions may be made by calling the Transfer Agent at
(888) UBS-FUND. Redemption orders will be accepted until 4:00 p.m. New York time
or  the close of  regular trading on  the NYSE, whichever  is earlier. Telephone
redemption   requests   are   limited    to   those   shareholders   who    have
 
                                      -16-
 
<PAGE>

<PAGE>
previously  elected  this  service.  Such  shareholders  risk  possible  loss of
principal and income in  the event of a  telephone redemption not authorized  by
them.  The  Fund and  the Transfer  Agent will  employ reasonable  procedures to
verify that telephone redemption instructions are genuine and will require  that
shareholders  electing such an option provide a form of personal identification.
The failure by  the Fund or  the Transfer  Agent to employ  such procedures  may
cause  the Fund or  the Transfer Agent to  be liable for  any losses incurred by
investors due to  telephone redemptions  based upon  unauthorized or  fraudulent
instructions. The telephone redemption option may be modified or discontinued at
any time upon 60 days' notice to shareholders.
 
By  mail:  Redemption  requests  may  also  be  mailed  to  the  Transfer Agent,
identifying the Fund, the dollar amount or  number of shares to be redeemed  and
the shareholder's account number. The request must be signed in exactly the same
manner  as the account is  registered (e.g., if there is  more than one owner of
the shares, all must sign). In all cases, all signatures on a redemption request
must be signature guaranteed by an eligible guarantor institution which includes
a domestic bank,  a domestic  savings and  loan institution,  a domestic  credit
union,  a  member bank  of the  Federal Reserve  System  or a  member firm  of a
national securities exchange, pursuant to  the Fund's standards and  procedures;
if the guarantor institution belongs to one of the Medallion Signature programs,
it  must use the  specific 'Medallion Guaranteed'  stamp (guarantees by notaries
public are not acceptable). Further  documentation, such as copies of  corporate
resolutions  and instruments of  authority, may be  requested from corporations,
administrators, executors, personal representatives,  trustees or custodians  to
evidence  the authority of  the person or entity  making the redemption request.
The redemption request  in proper form  should be sent  to UBS Private  Investor
Funds, Inc., c/o Investors Bank and Trust Company, P.O. Box 1537 MFD 23, Boston,
MA 02205-1537.
 
MANDATORY REDEMPTION. If the value of a shareholder's holdings in the Fund falls
below  $10,000 because  of a redemption  of shares,  the shareholder's remaining
shares may  be redeemed  60 days  after  written notice  unless the  account  is
increased  to $10,000 or more. For example, a shareholder whose initial and only
investment is $10,000 may be subject to mandatory redemption resulting from  any
redemption that causes his or her investment to fall below $10,000.
 
FURTHER  REDEMPTION INFORMATION. Investors should  be aware that redemptions may
not be processed unless the redemption  request is submitted in proper form.  To
be  in  proper form,  the  Fund must  have  received the  shareholder's taxpayer
identification number and address.  As discussed under  'Taxes' below, the  Fund
may  be  required  to impose  'back-up'  withholding  of federal  income  tax on
dividends, distributions and redemptions  when non-corporate investors have  not
provided a certified taxpayer identification number. In addition, if an investor
sends  a check to the Distributor for the purchase of Fund shares and shares are
purchased with funds  made available  by the  Distributor before  the check  has
cleared,  the transmittal of  redemption proceeds from the  sale of those shares
will not occur until the check used  to purchase such shares has cleared,  which
may take up to 15 days. Redemption delays may be avoided by purchasing shares by
federal funds wire.
 
The  right of redemption may  be suspended or the  date of payment postponed for
such periods as the 1940 Act or  the SEC may permit. See 'Redemption of  Shares'
in the SAI.
 
EXCHANGE OF SHARES
 
An  investor may  exchange Fund  shares for  shares of  any other  series of the
Company, without charge. An exchange may be  made so long as after the  exchange
the  investor has shares, in each series in which it remains an investor, with a
value equal to or greater than each such series' minimum investment amount.  See
'Purchase  of Shares' in  the prospectuses of  the other Company  series for the
minimum investment amounts for each of those funds. Shares are exchanged on  the
basis of relative net asset value per share. Exchanges are in effect redemptions
from  one  fund  and  purchases  of another  fund  and  the  usual  purchase and
redemption  procedures  and  requirements  are  applicable  to  exchanges.   See
'Purchase  of Shares' and 'Redemption  of Shares' in this  Prospectus and in the
prospectuses of  the other  Company series.  See also  'Additional  Information'
below for an explanation of the telephone exchange policy.
 
Shareholders  subject to federal income tax who  exchange shares in one fund for
shares in another fund may recognize capital gain or loss for federal income tax
purposes. The Fund reserves the right to
 
                                      -17-
 
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<PAGE>
discontinue, alter or limit its exchange privilege at any time. For investors in
certain states,  state securities  laws  may restrict  the availability  of  the
exchange privilege.
 
RETIREMENT PLANS
 
The  Fund  has available  a form  of Individual  Retirement Account  ('IRA') for
investment in Fund shares. Subject to certain restrictions imposed by applicable
tax laws,  self-employed individuals  may purchase  shares of  the Fund  through
tax-deductible contributions to existing retirement plans known as Self-Employed
Retirement  Plans ('SERPs'). Fund  shares may also be  a suitable investment for
'401(k) Plans' which subject to certain restrictions allow their participants to
invest in qualified  pension plans on  a tax-deferred basis.  The Fund does  not
currently act as sponsor to such plans.
 
The  minimum initial  investment for  all such  retirement plans  is $2,000. The
minimum for all subsequent investments is $500.
 
Under the Code, individuals may make IRA contributions of up to $2,000 annually,
which  may   be,   depending   on  the   contributor's   participation   in   an
employer-sponsored  plan  and  income level,  wholly  or  partly tax-deductible.
However, dividends and  distributions held in  the account are  not taxed  until
withdrawn  in accordance with the  provisions of the Code.  An individual with a
non-working spouse may establish  a separate IRA for  the spouse under the  same
conditions  and contribute a combined maximum of  $2,250 annually to one or both
IRAs provided that no more than $2,000  may be contributed to the IRA of  either
spouse.
 
Investors  should be aware that  they may be subject  to penalties or additional
taxes on contributions  to or withdrawals  from IRAs or  other retirement  plans
under certain circumstances. Prior to a withdrawal, shareholders may be required
to certify as to their age and awareness of such restrictions in writing. Branch
clients  desiring  information  concerning  investments  through  IRAs  or other
retirement plans should  contact their Bank  representative. Non-Branch  clients
may obtain such information by calling the Transfer Agent at (888) UBS-FUND.
 
DIVIDENDS AND DISTRIBUTIONS
 
Dividends  consisting of substantially all of  the Fund's net investment income,
if any, are declared and paid annually. The Fund may also declare an  additional
dividend  of net investment  income in a  given year to  the extent necessary to
avoid the imposition of federal excise taxes on the Fund.
 
Substantially all of  the Fund's  realized net capital  gains, if  any, will  be
declared  and paid on an  annual basis, except that  an additional capital gains
distribution may be made in  a given year to the  extent necessary to avoid  the
imposition  of  federal  excise  taxes  on  the  Fund.  Declared  dividends  and
distributions are payable on the payment  date to shareholders of record on  the
record date.
 
Dividends  and capital  gains distributions paid  by the  Fund are automatically
reinvested in  additional Fund  shares unless  the shareholder  has elected,  in
writing,  to have them paid  in cash. Dividends and  distributions to be paid in
cash are credited to the account designated by the shareholder or sent by  check
to  the shareholder's  address of record,  in accordance  with the shareholder's
instructions. The Fund  reserves the right  to discontinue, alter  or limit  the
automatic reinvestment privilege at any time.
 
NET ASSET VALUE
 
The Fund's net asset value per share equals the value of the Fund's total assets
(i.e.,  the value of its investment in the Portfolio plus its other assets) less
the amount of its liabilities, divided by the number of its outstanding  shares,
rounded to the nearest cent. Expenses, including the fees payable to the service
providers of the Fund and the Portfolio, are accrued daily. Securities for which
market  quotations are readily  available are valued at  market value. All other
securities will be valued at 'fair value.' See 'Net Asset Value' in the SAI  for
information on the valuation of the Portfolio's assets and liabilities.
 
The  Fund computes its  net asset value once  daily at the  close of business on
Monday through Friday, except that the net  asset value is not computed for  the
Fund  on a day  in which no orders  to purchase or redeem  Fund shares have been
received or on  the following holidays:  New Year's Day,  Presidents' Day,  Good
Friday,  Memorial  Day,  Independence  Day,  Labor  Day,  Thanksgiving  Day  and
Christmas Day. On
 
                                      -18-
 
<PAGE>

<PAGE>
days when U.S. trading markets close early in observance of these holidays,  the
Fund expects to close for purchases and redemptions at the same time.
 
Many  of  the  securities  held  by the  Portfolio  will  consist  of securities
primarily listed on foreign  exchanges, and these securities  may trade on  days
when  the Fund's net asset  value is not calculated.  Consequently, the value of
these securities may be significantly affected on days when an investor will  be
unable to redeem its shares.
 
ORGANIZATION
 
UBS PRIVATE INVESTOR FUNDS, INC.
 
UBS  Private  Investor  Funds,  Inc.,  a  Maryland  corporation  incorporated on
November 16, 1995, is an open-end management investment company registered under
the 1940 Act and organized as a  series fund. The Company has no prior  history.
The Company is currently authorized to issue shares in four series: The UBS Bond
Fund  Series; The UBS Tax Exempt Bond  Fund Series; The UBS International Equity
Fund Series; and The UBS U.S. Equity Fund Series. Each outstanding share of  the
Company  will have a pro rata interest in  the assets of its series, but it will
have no interest in the assets of  any other Company series. Only shares of  UBS
International Equity Fund Series are offered through this Prospectus.
 
Shareholder inquiries by clients of the Branch should be directed to the Branch,
while other shareholders should address their inquiries to the Transfer Agent.
 
Shareholders  of the  Fund are entitled  to one vote  for each share  and to the
appropriate fractional vote for  each fractional share.  There is no  cumulative
voting.  Shares have no  preemptive or conversion rights.  Shares are fully paid
and nonassessable when  issued by the  Company. The Company  does not intend  to
hold  meetings  of shareholders  annually. The  Directors  may call  meetings of
shareholders for action by shareholder vote  as may be required by its  Articles
of  Incorporation  or  the  1940 Act.  For  further  organizational information,
including certain shareholder rights, see 'Organization' in the SAI.
 
UBS INVESTOR PORTFOLIOS TRUST
 
UBS Investor Portfolios Trust,  a master trust fund  formed under New York  law,
was organized on February 9, 1996. The Declaration of Trust permits the Trustees
to  issue interests divided into one or more subtrusts or series. To date, three
series have been authorized, of which UBS International Equity Portfolio is one.
 
The Declaration  of  Trust  provides  that  no  Trustee,  shareholder,  officer,
employee,  or agent of  the Trust shall  be held to  any personal liability, nor
shall resort be had  to such person's private  property for the satisfaction  of
any  obligation or  claim or  otherwise in  connection with  the affairs  of the
Portfolio, but that only the Trust property shall be liable.
 
The Declaration of Trust provides that the Fund and other entities investing  in
the  Portfolio  (e.g., other  investment  companies, insurance  company separate
accounts and common and commingled trust funds) will each be liable for all  the
obligations  of  the  Portfolio.  However,  the  risk  of  the  Fund's incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance existed  and the Portfolio itself  was unable to  meet
its obligations. Accordingly, the Trustees believe that neither the Fund nor its
shareholders  will be adversely  affected by reason of  the Fund's investment in
the Portfolio.
 
The Company expects that,  immediately prior to the  initial public offering  of
its shares, the sole holder of its capital stock will be Signature.
 
TAXES
 
The  Company  intends  that  the  Fund  will  qualify  as  a  separate regulated
investment company under  Subchapter M of  the Code. As  a regulated  investment
company, the Fund will not be subject to federal income taxes if at least 90% of
its  net investment income  and net short-term capital  gains less any available
capital loss carryforwards are distributed to shareholders within allowable time
limits. The  Portfolio  intends  to  qualify as  an  association  treated  as  a
partnership for federal income tax purposes. As
 
                                      -19-
 
<PAGE>

<PAGE>
such,  the Portfolio generally should  not be subject to  tax. The status of the
Fund as a regulated investment company is dependent on, among other things,  the
Portfolio's  continued  qualification as  a partnership  for federal  income tax
purposes.
 
Distributions of net long-term capital gains in excess of net short-term capital
losses are taxable to Fund shareholders as long-term capital gains regardless of
how long a shareholder  has held shares  in the Fund  and regardless of  whether
received  in the form of cash  or reinvested in additional shares. Distributions
of net investment income and realized net short-term capital gains in excess  of
net  long-term capital losses are taxable  as ordinary income to shareholders of
the Fund  whether  such  distributions are  received  in  the form  of  cash  or
reinvested in additional shares. Annual statements as to the current federal tax
status  of distributions  will be  mailed to shareholders  after the  end of the
taxable year for the Fund. Distributions  to corporate shareholders of the  Fund
will  not qualify for the dividends-received deduction because the income of the
Fund will not consist of dividends paid by United States corporations.
 
Any gain or  loss realized on  the redemption or  exchange of Fund  shares by  a
shareholder  who is  not a  dealer in  securities generally  will be  treated as
long-term capital gain or loss  if the shares have been  held for more than  one
year,  and  otherwise as  short-term  capital gain  or  loss. However,  any loss
realized by a shareholder upon the redemption or exchange of shares in the  Fund
held  for six months or less will be  treated as a long-term capital loss to the
extent of any long-term capital  gain distributions received by the  shareholder
with respect to such shares. In addition, no loss will be allowed on the sale or
other  disposition of shares of  the Fund if, within  a period beginning 30 days
before the date of such sale or disposition and ending 30 days after such  date,
the  holder acquires (such as through dividend reinvestment) securities that are
substantially identical to the shares of the Fund.
 
The Fund will generally be subject to an  excise tax of 4% on the amount of  any
income  or  capital  gains,  above  certain  permitted  levels,  distributed  to
shareholders on  a  basis such  that  such income  or  gain is  not  taxable  to
shareholders  in  the  calendar  year  in  which  it  was  earned  by  the Fund.
Furthermore, dividends  declared in  October, November  or December  payable  to
shareholders  of record  on a  specified date in  such a  month and  paid in the
following January will be treated as having  been paid by the Fund and  received
by each shareholder in December. Under this rule, therefore, shareholders may be
taxed  in one year on dividends or distributions actually received in January of
the following year.
 
The Portfolio is  subject to foreign  withholding taxes with  respect to  income
received from sources within certain foreign countries. So long as more than 50%
of  the value of the  Portfolio's total assets at the  close of any taxable year
consists of stock or securities of  foreign corporations, the Fund may elect  to
treat  its proportionate share of foreign income  taxes paid by the Portfolio as
paid directly by the  Fund's shareholders. The Fund  will make such an  election
only  if it deems  it to be in  the best interests of  its shareholders and will
notify shareholders  in writing  each year  that it  makes the  election of  the
amount  of  foreign  income  taxes,  if  any,  to  be  treated  as  paid  by the
shareholders. If the Fund makes the election, each shareholder will be  required
to  include in income  its proportionate share  of the amount  of foreign income
taxes paid by the Portfolio and will be entitled to claim either a credit (which
is subject to certain limitations), or, if the shareholder itemizes  deductions,
a  deduction for its share of the  foreign income taxes in computing its federal
income tax liability. No deduction will be permitted to individuals in computing
their alternative minimum tax liability.
 
If the Portfolio  or the  Fund purchases  shares in  certain foreign  investment
entities, referred to as 'passive foreign investment companies,' the Fund may be
subject  to U.S. Federal income  tax, and an additional  charge in the nature of
interest, on a portion  of any 'excess distribution'  from such company or  gain
from the disposition of such shares, even if the distribution or gain is paid by
the Fund as a dividend to its shareholders. If the Fund were able and elected to
treat  a passive foreign  investment company as a  'qualified electing fund,' in
lieu of the treatment described above, the  Fund would be required each year  to
include  in  income,  and  distribute to  shareholders  in  accordance  with the
distribution requirement  set forth  above, the  Fund's pro  rata share  of  the
ordinary  earnings  and  net  capital  gains  of  the  company,  whether  or not
distributed to the Fund.
 
Distributions of net investment income or net long-term capital gains will  have
the effect of reducing the net asset value of the Fund's shares by the amount of
the  distribution. If the net asset value is reduced below a shareholder's cost,
the distribution will  nonetheless be taxable  as described above,  even if  the
 
                                      -20-
 
<PAGE>

<PAGE>
distribution  represents a return of invested capital. Investors should consider
the tax implications  of buying shares  just prior to  a distribution, when  the
price of shares may reflect the amount of the forthcoming distribution.
 
This  discussion of tax consequences is based on U.S. federal tax laws in effect
on the date of this Prospectus. These laws and regulations are subject to change
by legislative  or  administrative  action, possibly  with  retroactive  effect.
Investors  are urged to consult their own  tax advisors with respect to specific
questions as to federal taxes and with respect to the applicability of state  or
local taxes. See 'Taxes' in the SAI.
 
If  a correct and certified  taxpayer identification number is  not on file, the
Fund is required,  subject to  certain exemptions,  to withhold  31% of  certain
payments   made  or   distributions  declared   to  non-corporate  shareholders.
Shareholders should be aware that, under applicable regulations, the Fund may be
fined up  to  $50 annually  for  each account  for  which a  certified  taxpayer
identification  number is not provided. In the event that such a fine is imposed
with respect to any uncertified account in any year, a corresponding charge  may
be made against that account.
 
ADDITIONAL INFORMATION
 
The  Fund  will  send  its  shareholders  annual  and  semi-annual  reports. The
financial statements appearing in annual reports will be audited by  independent
accountants.  Shareholders will also be sent  confirmations of each purchase and
redemption and  monthly statements  reflecting all  account activity,  including
dividends  and any distributions whether reinvested in additional shares or paid
in cash.
 
All shareholders are given the privilege to initiate transactions  automatically
by  telephone upon opening an account. However, an investor should be aware that
a transaction authorized by telephone and  reasonably believed to be genuine  by
the  Company, the Branch, the Transfer Agent  or the Distributor may subject the
investor to risk of  loss if such  instruction is subsequently  found not to  be
genuine.   The  Company  and  its   service  providers  will  employ  reasonable
procedures,  including  requiring   investors  to  give   a  form  of   personal
identification  and tape recording  of telephonic instructions,  to confirm that
telephonic instructions by  investors are  genuine; if it  does not,  it or  the
service  provider may be liable for any losses due to unauthorized or fraudulent
instructions.
 
The Fund may make historical  performance information available and may  compare
its  performance to other  investments or relevant  indices, including data from
Lipper Analytical  Services, Inc.,  Micropal  Inc., Morningstar  Inc.,  Ibbotson
Associates,  Standard &  Poor's 500 Composite  Stock Price Index,  the Dow Jones
Average, the Frank Russell  Indices, the EAFE Index,  the Financial Times  World
Stock Index and other industry publications.
 
The Fund may advertise 'total return'. The total return shows what an investment
in  the Fund would have earned over a specified period of time (one, five or ten
years or  since commencement  of operations,  if less)  assuming that  all  Fund
distributions  and dividends were reinvested on  the reinvestment dates and less
all recurring  fees  during the  period  and  assuming the  redemption  of  such
investment at the end of each period. This method of calculating total return is
required  by regulations  of the  SEC. Total  return data  similarly calculated,
unless otherwise indicated,  over other specified  periods of time  may also  be
used.  All  performance figures  are based  on historical  earnings and  are not
intended to indicate future performance. Performance information may be obtained
by clients of  the Branch by  calling the Branch,  while other shareholders  may
address their inquiries to the Transfer Agent.
 
                                      -21-

<PAGE>

<PAGE>
TABLE OF CONTENTS
 
<TABLE>
<S>                                                                                                 <C>
Investors for Whom the Fund is Designed..........................................................     2
Master-Feeder Structure..........................................................................     4
Investment Objective and Policies................................................................     5
Additional Investment Information and Risk Factors...............................................     6
Options..........................................................................................    10
Futures Contracts................................................................................    11
Investment Restrictions..........................................................................    12
Management.......................................................................................    13
Shareholder Services.............................................................................    15
Expenses.........................................................................................    15
Purchase of Shares...............................................................................    15
Redemption of Shares.............................................................................    16
Exchange of Shares...............................................................................    17
Retirement Plans.................................................................................    18
Dividends and Distributions......................................................................    18
Net Asset Value..................................................................................    18
Organization.....................................................................................    19
Taxes............................................................................................    19
Additional Information...........................................................................    21
</TABLE>
 
- --------------------------------------------------------------------------------
 
<TABLE>
<S>                                                  <C>
INVESTMENT ADVISER                                   Union Bank of Switzerland,
                                                     New York Branch
                                                     299 Park Avenue
                                                     New York, NY 10171
 
ADMINISTRATOR AND DISTRIBUTOR                        Signature Broker-Dealer Services, Inc.
                                                     6 St. James Avenue
                                                     Boston, Massachusetts 02116
 
CUSTODIAN AND TRANSFER AGENT                         Investors Bank & Trust Company
                                                     89 South Street
                                                     Boston, Massachusetts 02111
</TABLE>
 
- --------------------------------------------------------------------------------
 
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, BY THE FUND IN ANY JURISDICTION
IN WHICH SUCH OFFER TO SELL OR SOLICITATION MAY NOT LAWFULLY BE MADE.
 
[LOGO]



<PAGE>
<PAGE>
                        UBS PRIVATE INVESTOR FUNDS, INC.
                      STATEMENT OF ADDITIONAL INFORMATION
                              DATED MARCH 1, 1996
                                 UBS BOND FUND
                              UBS U.S. EQUITY FUND
                         UBS INTERNATIONAL EQUITY FUND
 
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND SHOULD BE READ
IN  CONJUNCTION WITH THE  PROSPECTUSES DATED MARCH 1,  1996 (EACH A 'PROSPECTUS'
AND TOGETHER, THE 'PROSPECTUSES'),  FOR THE FUNDS LISTED  ABOVE, AS THEY MAY  BE
SUPPLEMENTED  FROM  TIME TO  TIME. COPIES  OF THE  PROSPECTUSES MAY  BE OBTAINED
WITHOUT CHARGE FROM SIGNATURE  BROKER-DEALER SERVICES, INC.  AT THE ADDRESS  AND
PHONE NUMBER SET FORTH HEREIN.


<PAGE>
<PAGE>
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                                                       PAGE
                                                                                                      ------
 
<S>                                                                                                   <C>
GENERAL............................................................................................    SAI-1
INVESTMENT OBJECTIVES AND POLICIES.................................................................    SAI-1
INVESTMENT RESTRICTIONS............................................................................    SAI-9
DIRECTORS AND TRUSTEES.............................................................................   SAI-12
INVESTMENT ADVISER AND FUNDS SERVICES AGENT........................................................   SAI-14
ADMINISTRATORS.....................................................................................   SAI-16
DISTRIBUTOR........................................................................................   SAI-17
CUSTODIAN..........................................................................................   SAI-17
SHAREHOLDER SERVICES...............................................................................   SAI-18
INDEPENDENT ACCOUNTANTS............................................................................   SAI-18
EXPENSES...........................................................................................   SAI-18
PURCHASE OF SHARES.................................................................................   SAI-19
REDEMPTION OF SHARES...............................................................................   SAI-19
EXCHANGE OF SHARES.................................................................................   SAI-19
DIVIDENDS AND DISTRIBUTIONS........................................................................   SAI-20
NET ASSET VALUE....................................................................................   SAI-20
PERFORMANCE DATA...................................................................................   SAI-21
PORTFOLIO TRANSACTIONS.............................................................................   SAI-22
ORGANIZATION.......................................................................................   SAI-23
TAXES..............................................................................................   SAI-24
ADDITIONAL INFORMATION.............................................................................   SAI-26
FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS.........................................      F-1
</TABLE>
 
                                       ii

<PAGE>
<PAGE>

GENERAL
 
     UBS  Private Investor Funds, Inc. (the 'Company') is an open-end management
investment company  organized  as  a  series  fund.  The  Company  is  currently
authorized  to issue shares in four series, three of which are described in this
Statement of Additional Information ('SAI').  These three series (each a  'Fund'
and  collectively, the  'Funds') consist  of: UBS  Bond Fund;  UBS International
Equity Fund; and UBS U.S. Equity Fund. The Company, a Maryland corporation,  was
organized on November 16, 1995. The Company's executive offices are located at 6
St. James Avenue, Boston, Massachusetts 02116.
 
     This  SAI describes the investment  objectives and policies, management and
operations of each Fund to enable investors to determine if the Funds suit their
investment needs. Each Fund employs a two-tier master-feeder structure. As  more
fully  described herein, each Fund invests substantially  all of its assets in a
corresponding series of a separate trust having the same investment objective as
that Fund.  Each  Trust  series  will in  turn  directly  invest  in  securities
consistent  with its investment objective.  See 'Master-Feeder Structure' in the
Prospectus.
 
     UBS Investor  Portfolios Trust,  an  unincorporated business  trust  formed
under  New York law (the 'Trust'), was organized  on February 9, 1996, and is an
open-end management investment  company. The  Declaration of  Trust permits  the
Board  of Trustees of  the Trust (the  'Trustees') to issue  interests in one or
more  subtrusts  or   'series'  (each  a   'Portfolio'  and  collectively,   the
'Portfolios').  To date,  the Trust has  established three  Portfolios: UBS Bond
Portfolio; UBS U.S.  Equity Portfolio; and  UBS International Equity  Portfolio.
UBS Bond Fund invests in UBS Bond Portfolio; UBS U.S. Equity Fund invests in UBS
U.S.  Equity  Portfolio;  and  UBS  International  Equity  Fund  invests  in UBS
International Equity Portfolio. Where appropriate, references to a Fund refer to
that Fund acting through its corresponding Portfolio.
 
     This SAI provides  additional information  with respect to  each Fund,  and
should  be read in conjunction with  that Fund's current Prospectus. Capitalized
terms not otherwise defined in  this SAI have the  meanings accorded to them  in
the Fund's Prospectus.
 
INVESTMENT OBJECTIVES AND POLICIES
 
     UBS  BOND FUND (the 'Bond Fund') is designed for investors seeking a higher
total return from a portfolio of debt securities issued by foreign and  domestic
companies   than  that  generally  available  from  a  portfolio  of  short-term
obligations in exchange for some risk  of capital. Although the net asset  value
of  the  Bond Fund  will fluctuate,  it attempts  to conserve  the value  of its
investments to the extent consistent with its objective. The Bond Fund  attempts
to  achieve its objective by investing all  of its investable assets in UBS Bond
Portfolio (the  'Bond  Portfolio'),  a  series of  the  Trust  having  the  same
investment  objective as the  Bond Fund. The Bond  Portfolio attempts to achieve
its investment objective by investing primarily in the corporate and  government
debt  obligations and  related securities described  in the  Prospectus and this
SAI.
 
     UBS U.S. EQUITY  FUND (the 'U.S.  Equity Fund') is  designed for  investors
seeking  long-term capital  appreciation and the  potential for a  high level of
current income  with  lower investment  risk  and volatility  than  is  normally
available  from common stock funds. The U.S. Equity Fund attempts to achieve its
investment objective  by investing  all of  its investable  assets in  UBS  U.S.
Equity Portfolio (the 'U.S. Equity Portfolio'), a series of the Trust having the
same investment objective as the U.S. Equity Fund.
 
     Under  normal circumstances,  at least 80%  of the  U.S. Equity Portfolio's
assets  will  be  invested  in  income-producing  domestic  equity   securities,
including dividend-paying common stocks and securities that are convertible into
common  stocks. The U.S.  Equity Portfolio's primary  investments are the common
stocks of established, high-quality U.S. corporations.
 
     UBS INTERNATIONAL EQUITY FUND (the 'International Equity Fund') is designed
for investors who want to participate  in the risks and returns associated  with
investing in equity securities issued by foreign corporations. The International
Equity  Fund attempts to  achieve its investment objective  by investing all its
investable assets  in UBS  International  Equity Portfolio  (the  'International
Equity  Portfolio'), a series of the  Trust having the same investment objective
as the International Equity Fund.
 
                                     SAI-1
 

<PAGE>
<PAGE>

     The  International  Equity  Portfolio  seeks  to  achieve  its   investment
objective   by  investing  primarily   in  the  equity   securities  of  foreign
corporations, consisting  of  common stocks  and  other securities  with  equity
characteristics  such  as  preferred stocks,  warrants,  rights  and convertible
securities. Under  normal  circumstances,  the  International  Equity  Portfolio
expects  to invest at least 65% of its  total assets in such securities. It does
not intend to  invest in  U.S. securities (other  than short-term  instruments),
except temporarily, when extraordinary circumstances prevailing at the same time
in  a significant  number of developed  foreign countries  render investments in
such countries inadvisable.
 
MONEY MARKET INSTRUMENTS
 
     As discussed  in the  Prospectus,  each Fund  may  invest in  money  market
instruments to the extent consistent with its investment objective and policies.
A  description of  the various  types of  money market  instruments that  may be
purchased appears below. See 'Quality and Diversification Requirements'.
 
     U.S. TREASURY SECURITIES. Each Fund may invest in direct obligations of the
U.S. Treasury,  including Treasury  Bills, Notes  and Bonds,  all of  which  are
backed as to principal and interest payments by the full faith and credit of the
United States.
 
     ADDITIONAL U.S. GOVERNMENT OBLIGATIONS. Each Fund may invest in obligations
issued  or guaranteed  by U.S.  Government agencies  or instrumentalities. These
obligations may or  may not  be backed  by the 'full  faith and  credit' of  the
United States. In the case of securities not backed by the full faith and credit
of  the United  States, each  Fund must look  principally to  the federal agency
issuing or guaranteeing the  obligation for ultimate repayment,  and may not  be
able  to assert a claim against the United States itself in the event the agency
or instrumentality does not meet its commitments. Securities in which each  Fund
may invest that are not backed by the full faith and credit of the United States
include,  but are not limited to, obligations of the Tennessee Valley Authority,
the Federal Home Loan Mortgage Corporation and the U.S. Postal Service, each  of
which  has the right to  borrow from the U.S.  Treasury to meet its obligations,
and the obligations of the Federal Farm Credit System and the Federal Home  Loan
Banks, both of whose obligations may be satisfied only by the individual credits
of  each issuing agency. Securities that are backed by the full faith and credit
of the United  States include  obligations of the  Government National  Mortgage
Association, the Farmers Home Administration and the Export-Import Bank.
 
     BANK  OBLIGATIONS. Each Fund,  unless otherwise noted  in the Prospectus or
below, may  invest in  negotiable  certificates of  deposit, time  deposits  and
bankers'  acceptances of  (i) banks, savings  and loan  associations and savings
banks that have more  than $2 billion in  total assets (the 'Asset  Limitation')
and are organized under the laws of the United States or any state, (ii) foreign
branches of these banks or of foreign banks of equivalent size (Euros) and (iii)
U.S.  branches  of  foreign  banks  of  equivalent  size  (Yankees).  The  Asset
Limitation is  not applicable  to the  International Equity  Fund. See  'Foreign
Investments'.  No Fund will invest in obligations for which the Adviser, defined
below (or  the Sub-Adviser,  defined below,  in the  case of  the  International
Equity  Fund), or  any of  its affiliated  persons, is  the ultimate  obligor or
accepting bank.  Each  Fund may  also  invest in  obligations  of  international
banking  institutions designated or supported by national governments to promote
economic  reconstruction,  development  or  trade  between  nations  (e.g.,  the
European  Investment  Bank, the  Inter-American  Development Bank  or  the World
Bank).
 
     COMMERCIAL PAPER.  Each  Fund may  invest  in commercial  paper,  including
Master  Demand  obligations.  Master  Demand  obligations  are  obligations that
provide for a  periodic adjustment in  the interest rate  paid and permit  daily
changes  in  the  amount borrowed.  Master  Demand obligations  are  governed by
agreements between the issuer  and Union Bank of  Switzerland (the 'Bank'),  New
York  Branch (the 'Branch'  or the 'Adviser'),  and UBS International Investment
London Limited ('UBSII' or the 'Sub-Adviser')  in the case of the  International
Equity  Fund,  acting  as agent,  for  no  additional fee,  in  its  capacity as
investment (sub)adviser to the Portfolios and as fiduciary for other clients for
whom it exercises investment discretion. The monies loaned to the borrower  come
from  accounts  managed by  the (Sub-)Adviser,  or  its affiliates,  pursuant to
arrangements with such accounts. Interest and principal payments are credited to
such accounts.  The  (Sub-)Adviser, acting  as  a  fiduciary on  behalf  of  its
clients,  has  the right  to increase  or  decrease the  amount provided  to the
borrower under an obligation. The
 
                                     SAI-2
 

<PAGE>
<PAGE>

borrower has the right to pay without  penalty all or any part of the  principal
amount  then outstanding on an obligation together  with interest to the date of
payment. Because these obligations typically  provide that the interest rate  is
tied  to the Federal Reserve commercial paper composite rate, the rate on Master
Demand obligations is subject to change. Repayment of a Master Demand obligation
to participating accounts  depends on  the ability of  the borrower  to pay  the
accrued   interest  and  principal  of  the   obligation  on  demand,  which  is
continuously monitored by the  (Sub-)Adviser. Because Master Demand  obligations
typically  are not rated by credit rating agencies, the Portfolios may invest in
such unrated obligations only if at the time of an investment the obligation  is
determined  by  the (Sub-)Adviser  to have  a credit  quality which  satisfies a
Portfolio's   quality   restrictions.    See   'Quality   and    Diversification
Requirements'.   Although  there  is  no  secondary  market  for  Master  Demand
obligations, such  obligations are  considered  to be  liquid because  they  are
payable  upon  demand.  The  Portfolios  do  not  have  any  specific percentage
limitation on investments in Master Demand obligations.
 
     REPURCHASE AGREEMENTS. Each Portfolio may enter into repurchase  agreements
with  brokers, dealers or banks that meet  the credit guidelines approved by the
Trustees. In a repurchase agreement, a  Portfolio buys a security from a  seller
that  has agreed to repurchase the same  security at a mutually agreed upon date
and price.  The  resale price  normally  is in  excess  of the  purchase  price,
reflecting an agreed upon interest rate. This interest rate is effective for the
period  of time the Portfolio is invested in the agreement and is not related to
the coupon rate on the underlying  security. A repurchase agreement may also  be
viewed  as a fully collateralized loan of  money by the Portfolio to the seller.
The period of these repurchase agreements will usually be short, from  overnight
to  one week, and at no time  will the Portfolio invest in repurchase agreements
for more than  thirteen months. The  securities that are  subject to  repurchase
agreements,  however, may have maturity dates  in excess of thirteen months from
the effective  date of  the  repurchase agreement.  The Portfolios  will  always
receive  securities as collateral  whose market value is,  and during the entire
term of the  agreement remains,  at least  equal to  100% of  the dollar  amount
invested  by the  Portfolios in  each agreement  plus accrued  interest, and the
Portfolios will make payment for such securities only upon physical delivery  or
upon  evidence of book  entry transfer to  the account of  the Custodian. If the
seller defaults, a Portfolio might incur a  loss if the value of the  collateral
securing  the repurchase agreement declines and might incur disposition costs in
connection  with  liquidating  the   collateral.  In  addition,  if   bankruptcy
proceedings   are  commenced  with  respect  to  the  seller  of  the  security,
realization of proceeds upon disposition of the collateral by the Portfolio  may
be delayed or limited.
 
CORPORATE BONDS AND OTHER DEBT SECURITIES
 
     Each Portfolio may invest in other debt securities with remaining effective
maturities  of  not  more  than thirteen  months,  including  without limitation
corporate and  foreign  bonds,  asset-backed securities  and  other  obligations
described in the Prospectus or this SAI.
 
     As  discussed in the Prospectus, the Bond Portfolio may invest in bonds and
other debt securities of domestic and  foreign issuers to the extent  consistent
with  its investment objectives and policies. A description of these investments
appears  in  the  Prospectus  and   below.  See  'Quality  and   Diversification
Requirements'.  For information  on short-term investments  in these securities,
see 'Money Market Instruments'.
 
     ASSET-BACKED SECURITIES.  Asset-backed  securities directly  or  indirectly
represent  a participation  interest in,  or are secured  by or  payable from, a
stream of  payments generated  by  particular assets  such as  mortgages,  motor
vehicles  or credit card receivables. Payments  of principal and interest may be
guaranteed up to certain amounts  and for a certain time  period by a letter  of
credit  issued by a financial institution unaffiliated with the entities issuing
the securities. The asset-backed securities in which a Portfolio may invest  are
subject  to the  Portfolio's overall credit  requirements. However, asset-backed
securities, in general, are  subject to certain risks.  These risks include  the
prepayment  of the debtor's  obligation and the  creditor's limited interests in
applicable collateral. For example, credit  card debt receivables are  generally
unsecured  and the debtors are  entitled to the protection  of a number of state
and federal consumer credit laws, many of  which give such debtors the right  to
set  off certain amounts owed  on credit card debt  thereby reducing the balance
due. Additionally, if the letter of credit is exhausted,
 
                                     SAI-3
 

<PAGE>
<PAGE>

holders of asset-backed  securities may  also experience delays  in payments  or
losses  if the full amounts due on  underlying sales contracts are not realized.
Because asset-backed securities  are relatively  new, the  market experience  in
these  securities  is  limited and  the  market's ability  to  sustain liquidity
through all phases of the market cycle has not been tested.
 
EQUITY INVESTMENTS
 
     As discussed in the  Prospectus, the U.S.  Equity and International  Equity
Portfolios invest primarily in equity securities consisting of common stocks and
other  securities  with equity  characteristics. The  securities in  which these
Portfolios invest  include  those  listed on  domestic  and  foreign  securities
exchanges or traded on over-the-counter markets as well as certain restricted or
unlisted  securities. A  discussion of the  various types  of equity investments
that may be purchased by these  Portfolios appears in the Prospectus and  below.
See 'Quality and Diversification Requirements'.
 
     EQUITY  SECURITIES. The common stocks in  which these Portfolios may invest
include the common stocks of any class or series of corporations or any  similar
equity  interests such as trust or partnership interests. The Portfolios' equity
investments  include  preferred   stocks,  warrants,   rights  and   convertible
securities.  These investments may or  may not pay dividends  and may or may not
carry voting  rights.  Common stock  occupies  the  most junior  position  in  a
company's capital structure.
 
     The  convertible securities in which the Portfolios may invest include debt
securities or preferred stocks that may  be converted into common stock or  that
carry  the right  to purchase common  stock. Convertible  securities entitle the
holder to exchange  the securities for  a specified number  of shares of  common
stock,  usually of the same company, at specified prices within a certain period
of time.
 
     The terms of a  convertible security determine its  ranking in a  company's
capital  structure.  In the  case  of subordinated  convertible  debentures, the
holders' claims on assets and earnings  are subordinated to the claims of  other
creditors, but are senior to the claims of preferred and common stockholders. In
the  case  of convertible  preferred stock,  the holders'  claims on  assets and
earnings are subordinated to the claims of all creditors, but are senior to  the
claims of common stockholders.
 
FOREIGN INVESTMENTS
 
     The   International  Equity  Portfolio  makes  substantial  investments  in
companies based in  foreign countries.  The Bond  Portfolio may  also invest  in
certain  foreign securities. The  Bond Portfolio does not  expect to invest more
than 25% of its total  assets at the time of  purchase in securities of  foreign
issuers.  Foreign investments may be made  directly in the securities of foreign
issuers or in  the form  of American  Depositary Receipts  ('ADRs') or  European
Depositary  Receipts ('EDRs'). Generally, ADRs and EDRs are receipts issued by a
bank or trust company that evidence ownership of underlying securities issued by
a foreign corporation and that are designed for use in the domestic, in the case
of ADRs, or European, in the case of EDRs, securities markets.
 
     Because investments in foreign  securities may involve foreign  currencies,
the value of the International Equity and Bond Portfolios' assets as measured in
U.S.  dollars may be affected, favorably  or unfavorably, by changes in currency
rates and in exchange control regulations, including currency blockage. The Bond
and International Equity  Portfolios may  enter into  foreign currency  exchange
transactions   in  connection   with  the   settlement  of   foreign  securities
transactions  or  to   manage  their  currency   exposure  related  to   foreign
investments.   The  Portfolios  will  not   enter  into  such  transactions  for
speculative purposes. For a description  of the risks associated with  investing
in  foreign securities, see 'Additional Investment Information and Risk Factors'
in the Prospectus.
 
ADDITIONAL INVESTMENTS
 
     WHEN-ISSUED AND DELAYED  DELIVERY SECURITIES. Each  Portfolio may  purchase
securities  on a when-issued or delayed delivery basis. For example, delivery of
and payment for these securities can take  place a month or more after the  date
of the purchase commitment. The purchase price and the interest rate payable, if
any,  on the securities are fixed on the purchase commitment date or at the time
the settlement
 
                                     SAI-4
 

<PAGE>
<PAGE>

date is fixed. The value of such securities is subject to market fluctuation and
no interest accrues to a Portfolio until  settlement takes place. At the time  a
Portfolio  makes  the  commitment to  purchase  securities on  a  when-issued or
delayed delivery basis,  it will record  the transaction, reflect  the value  of
such  securities each day in determining its net asset value and, if applicable,
calculate the maturity for the purposes  of average maturity from that date.  At
the  time of settlement, a  when-issued security may be  valued at less than the
purchase price. To  facilitate such acquisitions,  each Portfolio will  maintain
with  the Custodian a segregated account with liquid assets, consisting of cash,
U.S. Government securities or other high-grade, liquid securities, in an  amount
at  least equal  to the value  of such  commitments. On delivery  dates for such
transactions, each Portfolio will meet its obligations from maturities or  sales
of  the securities held  in the segregated  account and/or from  cash flow. If a
Portfolio chooses to  dispose of  the right  to acquire  a when-issued  security
prior  to  its acquisition,  it  could, as  with  the disposition  of  any other
portfolio obligation, incur a gain or loss due to market fluctuation. It is  the
current  policy  of each  Portfolio not  to  enter into  when-issued commitments
exceeding in the  aggregate 15% of  the market value  of that Portfolio's  total
assets,  less  liabilities  (excluding the  obligations  created  by when-issued
commitments).
 
     INVESTMENT COMPANY SECURITIES. Securities of other investment companies may
be acquired by each Fund to the  extent that such purchases are consistent  with
that entity's investment objectives and restrictions and are permitted under the
Investment  Company  Act of  1940, as  amended  (the '1940  Act'). The  1940 Act
requires that, as determined immediately after a purchase is made, (i) not  more
than  5%  of the  value  of the  Fund's  total assets  will  be invested  in the
securities of any one investment company, (ii) not more than 10% of the value of
the Fund's total assets will be  invested in securities of investment  companies
as a group and (iii) not more than 3% of the outstanding voting stock of any one
investment company will be owned by the Fund, provided, however, that a Fund may
invest all of its investable assets in an open-end investment company having the
same  investment objective as that Fund.  As a shareholder of another investment
company, a Fund would bear, along with other shareholders, its pro rata  portion
of  the  other investment  company's  expenses, including  advisory  fees. These
expenses would be in  addition to the  expenses that such a  Fund would bear  in
connection with its own operations.
 
     REVERSE  REPURCHASE  AGREEMENTS.  Each  Portfolio  may  enter  into reverse
repurchase agreements. In a reverse repurchase agreement, the Portfolio sells  a
security  and agrees to repurchase  the same security at  a mutually agreed upon
date and price. For purposes of the 1940 Act, reverse repurchase agreements  are
considered  borrowings by the Portfolio and,  therefore, a form of leverage. The
Portfolios will  invest  the proceeds  of  borrowings under  reverse  repurchase
agreements.  In addition,  the Portfolios will  enter into  a reverse repurchase
agreement only when the interest income to be earned from the investment of  the
proceeds  is greater than the interest  expense of the repurchase agreement. The
Portfolios will not invest the proceeds of a reverse repurchase agreement for  a
period   that  exceeds  the  term  of  the  reverse  repurchase  agreement.  The
limitations on  each  Portfolio's  use  of  reverse  repurchase  agreements  are
discussed  under 'Investment Restrictions' below.  Each Portfolio will establish
and maintain  with  the  Custodian  a  separate  account  with  a  portfolio  of
securities  in an  amount at  least equal to  its obligations  under its reverse
repurchase agreements.
 
     MORTGAGE DOLLAR  ROLL  TRANSACTIONS.  The  Bond  Portfolio  may  engage  in
mortgage  dollar roll transactions with respect to mortgage securities issued by
the Government  National Mortgage  Association,  the Federal  National  Mortgage
Association and the Federal Home Loan Mortgage Corporation. In a mortgage dollar
roll   transaction,  the  Portfolio   sells  a  mortgage   backed  security  and
simultaneously agrees to  repurchase a  similar security on  a specified  future
date  at an agreed upon price. During the roll period, the Portfolio will not be
entitled to receive any interest or  principal paid on the securities sold.  The
Portfolio  is compensated for  the lost interest  on the securities  sold by the
difference between the sales price and the lower price for the future repurchase
as well as by the interest earned on the reinvestment of the sales proceeds. The
Portfolio may  also be  compensated by  receipt of  a commitment  fee. When  the
Portfolio  enters into a  mortgage dollar roll transaction,  liquid assets in an
amount sufficient  to pay  for the  future repurchase  are segregated  with  its
Custodian.  Mortgage dollar roll transactions  are considered reverse repurchase
agreements for purposes of the Portfolio's investment restrictions.
 
                                     SAI-5
 

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<PAGE>

     SECURITIES LENDING. Each Portfolio  may lend its  securities if such  loans
are  secured continuously  by cash  or equivalent collateral  or by  a letter of
credit in favor  of the Portfolio  at least equal  at all times  to 100% of  the
market  value  of  the  securities loaned,  plus  accrued  interest.  While such
securities are on loan, the borrower will pay the Portfolio any income  accruing
thereon.  Loans will be subject  to termination by the  Portfolios in the normal
settlement time, generally three business days  after notice or by the  borrower
on  one day's  notice. Borrowed  securities must  be returned  when the  loan is
terminated. Any gain or loss in the market price of the borrowed securities that
occurs during the term of  the loan inures to  the Portfolio and its  respective
investors.  The Portfolios  may pay  reasonable finder's  and custodial  fees in
connection with a loan. In addition, the Portfolios will consider all facts  and
circumstances   including  the  creditworthiness   of  the  borrowing  financial
institution, and the Portfolios will not make  any loans in excess of one  year.
The Portfolios will not lend their securities to any officer, Trustee, Director,
employee,  or affiliate or placement agent of  the Company, the Trust, or to the
Adviser, Sub-Adviser,  Administrator or  Distributor or  any affiliate  thereof,
unless otherwise permitted by applicable law.
 
     PRIVATELY  PLACED AND  CERTAIN UNREGISTERED SECURITIES.  The Portfolios may
invest  in  privately  placed,  restricted,  Rule  144A  or  other  unregistered
securities as described in the Prospectus.
 
     As  to illiquid investments, a Portfolio is subject to a risk that it might
not be  able  to sell  such  securities at  a  price that  the  Portfolio  deems
respective  of their value. Where an  illiquid security must be registered under
the Securities Act of 1933, as amended (the 'Securities Act'), before it may  be
resold,  the Portfolio may be  obligated to pay all  or part of the registration
expenses and a  considerable period may  elapse between the  time the  Portfolio
decides  to  sell and  the  time the  Portfolio is  permitted  to sell  under an
effective registration  statement.  If, during  such  a period,  adverse  market
conditions  develop, the Portfolio might obtain a less favorable price than that
which prevailed  when  it decided  to  sell.  When the  Portfolios  value  these
securities,   they  will  take  into  account   the  illiquid  nature  of  these
instruments.
 
QUALITY AND DIVERSIFICATION REQUIREMENTS
 
     Each Portfolio intends to meet the diversification requirements of the 1940
Act. To meet these  requirements, 75% of the  Portfolio's assets are subject  to
the  following fundamental  limitations: (1) the  Portfolio may  not invest more
than 5%  of  its total  assets  in the  securities  of any  one  issuer,  except
obligations  of the U.S. Government, its  agencies and instrumentalities and (2)
the Portfolio may not own more than 10% of the outstanding voting securities  of
any  one issuer.  As for  the 25%  of a  Portfolio's assets  not subject  to the
limitation described above, there is no limitation on investment of these assets
under the 1940 Act, so that all of such assets may be invested in securities  of
any  one issuer,  subject to the  limitation of any  applicable state securities
laws. Investments not subject to  the limitations described above could  involve
an  increased risk to  a Portfolio should an  issuer, or a  state or its related
entities, be unable to make interest or principal payments or should the  market
value of such securities decline. See 'Investment Restrictions'.
 
     BOND  PORTFOLIO. The  Bond Portfolio  invests principally  in a diversified
portfolio of 'high  grade' and 'investment  grade' securities. Investment  grade
debt  is rated, on  the date of  investment, within the  four highest ratings of
Moody's Investors Service, Inc. ('Moody's'), currently Aaa, Aa, A and Baa, or of
Standard & Poor's Corporation  ('Standard & Poor's'), currently  AAA, AA, A  and
BBB.  High grade debt  is rated, on the  date of the  investment, within the two
highest categories of the above ratings.  The Bond Portfolio may also invest  up
to 5% of its total assets in securities which are 'below investment grade'. Such
securities  must be  rated, on the  date of investment,  Ba by Moody's  or BB by
Standard & Poor's.  The Portfolio  may invest in  debt securities  that are  not
rated  or other debt securities to which these ratings are not applicable, if in
the opinion of  the Adviser, such  securities are of  comparable quality to  the
rated securities discussed above. In addition, at the time the Portfolio invests
in  any commercial  paper, bank obligation  or repurchase  agreement, the issuer
must have outstanding debt rated  A or higher by  Moody's or Standard &  Poor's,
the  issuer's parent corporation, if any, must have outstanding commercial paper
rated Prime-1 by Moody's or A-1 by Standard & Poor's, or if no such ratings  are
available,  the  investment  must  be of  comparable  quality  in  the Adviser's
opinion.
 
                                     SAI-6
 

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<PAGE>

     U.S. EQUITY  AND  INTERNATIONAL  EQUITY PORTFOLIOS.  The  U.S.  Equity  and
International  Equity Portfolios may  invest in convertible  debt securities for
which there are no specific quality  requirements. In addition, at the time  the
Portfolios  invest  in  any  commercial  paper,  bank  obligation  or repurchase
agreement, the issuer must have outstanding debt rated A or higher by Moody's or
Standard  &  Poor's,  the  issuer's  parent  corporation,  if  any,  must   have
outstanding  commercial  paper rated  Prime-1 by  Moody's or  A-1 by  Standard &
Poor's, or  if  no  such  ratings  are available,  the  investment  must  be  of
comparable  quality in the Adviser's* opinion. At the time the Portfolios invest
in any other  short-term debt  securities, they  must be  rated A  or higher  by
Moody's  or  Standard  &  Poor's,  or if  unrated,  the  investment  must  be of
comparable quality in the Adviser's opinion.
 
     In  determining  whether  a  particular  unrated  security  is  a  suitable
investment,  the  Adviser  takes  into  consideration  asset  and  debt  service
coverage, the purpose of the financing, the history of the issuer, existence  of
other  rated securities  of the issuer,  and other relevant  conditions, such as
comparability to other issuers.
 
OPTIONS AND FUTURES TRANSACTIONS
 
     EXCHANGE-TRADED AND OVER-THE-COUNTER OPTIONS. All options purchased or sold
by the  Portfolios will  be exchange  traded or  will be  purchased or  sold  by
securities   dealers   ('over-the-counter'   or   'OTC   options')   that   meet
creditworthiness standards approved by the Trustees. Exchange-traded options are
obligations of the Options Clearing  Corporation. In OTC options, the  Portfolio
relies on the dealer from which it purchased the option to perform if the option
is  exercised. Thus, when a Portfolio purchases  an OTC option, it relies on the
dealer from  which it  purchased the  option to  make or  take delivery  of  the
underlying  securities. Failure by the dealer to  do so would result in the loss
of the premium paid by the Portfolio as well as loss of the expected benefit  of
the  transaction. To the extent  that a Portfolio may  trade in foreign options,
such options may be effected through local clearing organizations.
 
     The staff of the SEC has taken the position that, in general, purchased OTC
options and the  underlying securities  used to  cover written  OTC options  are
illiquid  securities. However,  a Portfolio may  treat as  liquid the underlying
securities used to cover written OTC options, provided it has arrangements  with
certain qualified dealers who agree that the Portfolio may repurchase any option
it  writes for a maximum  price to be calculated  by a predetermined formula. In
these cases, the  OTC option  itself would only  be considered  illiquid to  the
extent that the maximum repurchase price under the formula exceeds the intrinsic
value of the option.
 
     FUTURES  CONTRACTS  AND OPTIONS  ON FUTURES  CONTRACTS. The  Portfolios are
permitted to enter  into futures and  options transactions and  may purchase  or
sell futures contracts and purchase put and call options, including put and call
options  on futures contracts. Futures contracts  obligate the buyer to take and
the seller to  deliver at  a future  date a  specified quantity  of a  financial
instrument  or an  amount of cash  based on the  value of a  securities index or
financial instrument.  Currently, futures  contracts  are available  on  various
types  of fixed-income  securities, including but  not limited  to U.S. Treasury
bonds, notes and  bills, Eurodollar certificates  of deposit and  on indices  of
fixed income and equity securities.
 
     Unlike  a futures contract,  which requires the  parties to buy  and sell a
security or  make a  cash settlement  payment based  on changes  in a  financial
instrument  or  securities index  on  an agreed  date,  an option  on  a futures
contract entitles its holder  to decide on  or before a  future date whether  to
enter  into such a contract.  If the holder decides  not to exercise its option,
the holder may  close out  the option position  by entering  into an  offsetting
transaction  or may  decide to  let the  option expire  and forfeit  the premium
thereon. The purchaser of an option on a futures contract pays a premium for the
option but makes no  initial margin payments  or daily payments  of cash in  the
nature  of 'variation' margin payments to reflect the change in the value of the
underlying contract as does a purchaser or seller of a futures contract.
 
- ------------
     * Unless otherwise noted, references to  the Adviser in the context of  the
International  Equity Portfolio refer to the  Adviser and/or the Sub-Adviser, as
appropriate.
 
                                     SAI-7
 

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<PAGE>

     The seller of an option on a futures contract receives the premium paid  by
the  purchaser and may be  required to pay initial  margin. Amounts equal to the
initial margin and any additional  collateral required on futures contracts  and
on  any  options  on futures  contracts  sold by  a  Portfolio are  paid  by the
Portfolio into  a segregated  account, in  the name  of the  Futures  Commission
Merchant,  as required by the 1940 Act and the SEC's interpretations thereunder.
To the extent  a Portfolio may  trade in futures  and options therein  involving
foreign  securities,  such  transactions  may  be  effected  according  to local
regulations and business custom.
 
     COMBINED POSITIONS.  The  Portfolios  may purchase  and  write  options  in
combination  with  each  other,  or  in  combination  with  futures  or  forward
contracts, to  adjust  the  risk  and  return  characteristics  of  the  overall
position.  For example,  the Portfolios  may write a  call option  at one strike
price and buy a call option at a lower price, in order to reduce the risk of the
written call  option in  the  event of  a  substantial price  increase.  Because
combined  positions involve multiple  trades, they result  in higher transaction
costs and may be more difficult to open and close out.
 
     CORRELATION OF PRICE CHANGES. Because there  are a limited number of  types
of  exchange-traded  options  and  futures  contracts,  it  is  likely  that the
standardized options and futures  contracts available will  not exactly match  a
Portfolio's  current  or  anticipated  investments. A  Portfolio  may  invest in
options and  futures  contracts  based on  securities  with  different  issuers,
maturities,  or other characteristics from the  securities in which it typically
invests, which involves  a risk that  the options or  futures position will  not
track the performance of the Portfolio's other investments.
 
     Options  and futures contracts  prices can also diverge  from the prices of
their underlying  instruments,  even if  the  underlying instruments  match  the
Portfolio's  investments well. Options and futures contracts prices are affected
by such factors as current and anticipated short-term interest rates, changes in
volatility of the underlying instrument, and the time remaining until expiration
of the contract, which  may not affect security  prices the same way.  Imperfect
correlation  may also result from differing levels  of demand in the options and
futures markets and the securities  markets, from structural differences in  how
options and futures and securities are traded, or from imposition of daily price
fluctuation  limits or trading  halts. A Portfolio may  purchase or sell options
and futures contracts  with a  greater or lesser  value than  the securities  it
wishes  to hedge or  intends to purchase  in order to  attempt to compensate for
differences in volatility between the contract and the securities, although this
may not be successful in all cases. If price changes in a Portfolio's options or
futures  positions  are  poorly  correlated  with  its  other  investments,  the
positions may fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.
 
     LIQUIDITY  OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
market will  exist  for  any  particular  option  or  futures  contract  at  any
particular  time even  if the  contract is traded  on an  exchange. In addition,
exchanges may establish daily price  fluctuation limits for options and  futures
contracts  and may halt trading if a contract's price moves up or down more than
the limit in a given  day. On volatile trading  days when the price  fluctuation
limit  is reached  or a  trading halt  is imposed,  it may  be impossible  for a
Portfolio to enter into  new positions or close  out existing positions. If  the
market  for a  contract is  not liquid  because of  price fluctuation  limits or
otherwise, it could  prevent prompt  liquidation of  unfavorable positions,  and
could  potentially  require a  Portfolio to  continue to  hold a  position until
delivery or expiration  regardless of  changes in its  value. As  a result,  the
Portfolio's  access  to  other  assets  held to  cover  its  options  or futures
positions could  also be  impaired. See  'Exchange Traded  and  Over-the-Counter
Options'  above for a  discussion of the  liquidity of options  not traded on an
exchange.
 
     POSITION LIMITS.  Futures exchanges  can limit  the number  of futures  and
options  on futures contracts that can be held or controlled by an entity. If an
adequate exemption  cannot  be obtained,  a  Portfolio  or the  Adviser  may  be
required  to reduce the size of its futures  and options positions or may not be
able to trade a certain futures or options contract in order to avoid  exceeding
such limits.
 
     ASSET  COVERAGE FOR FUTURES CONTRACTS AND OPTIONS POSITIONS. The Portfolios
intend to  comply  with Section  4.5  of  the regulations  under  the  Commodity
Exchange  Act, which limits the extent to which a Portfolio can commit assets to
initial margin deposits and  option premiums. In  addition, the Portfolios  will
comply  with  guidelines established  by  the SEC  with  respect to  coverage of
options and futures contracts by mutual funds, and if the guidelines so require,
will set aside appropriate liquid assets
 
                                     SAI-8
 

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<PAGE>

in a segregated custodial account in the amount prescribed. Securities held in a
segregated account cannot  be sold  and will be  considered illiquid  securities
while  the futures contract  or option is outstanding,  unless they are replaced
with other  suitable  assets. As  a  result, there  is  a possibility  that  the
segregation of a large percentage of a Portfolio's assets could impede portfolio
management  or  the Portfolio's  ability to  meet  redemption requests  or other
current obligations.
 
INVESTMENT RESTRICTIONS
 
     The Funds  have  adopted  the  following  fundamental  and  non-fundamental
investment restrictions (as defined and distinguished below); to the extent that
a  fundamental policy  and non-fundamental  policy apply  to a  given investment
activity or strategy, the more restrictive policy shall govern.
 
     FUNDAMENTAL INVESTMENT RESTRICTIONS. The investment restrictions below have
been  adopted  by  the  Company's  Board  of  Directors  (the  'Board'  or   the
'Directors')   with  respect  to  each  Fund   and  by  the  Trustees  for  each
corresponding  Portfolio.  Except  where   otherwise  noted,  these   investment
restrictions  are 'fundamental' policies  which, under the 1940  Act, may not be
changed without the 'vote of a majority of the outstanding voting securities' of
the Fund and  Portfolio, as applicable,  to which  they relate. The  'vote of  a
majority  of the outstanding voting securities' under the 1940 Act is the lesser
of (a) 67% or more  of the voting shares present  at a shareholders' meeting  if
the  holders of more  than 50% of  the outstanding voting  shares are present or
represented by proxy or (b) more than 50% of the outstanding voting shares.  The
limitations  described below apply  at the time the  securities are purchased by
the Fund or Portfolio, as applicable. Whenever a Fund is requested to vote on  a
change   in  the  fundamental  investment   restrictions  of  its  corresponding
Portfolio, the Company will hold a  meeting of that Fund's shareholders and  the
Company  will cast that Fund's votes in the Portfolio in proportion to the votes
cast by that Fund's shareholders. The  investment restrictions of each Fund  and
its   corresponding  Portfolio   are  identical,   unless  otherwise  specified.
Accordingly, references below to a  Fund also include that Fund's  corresponding
Portfolio  unless  the context  requires otherwise;  similarly, references  to a
Portfolio also  include  the  corresponding Fund  unless  the  context  requires
otherwise.
 
1.    Borrow  money, except from  banks for extraordinary  or emergency purposes
      and then only in amounts up to one-third of the value of its total  assets
      (including  the  amount  borrowed), less  liabilities  (not  including the
      amounts borrowed), or mortgage, pledge, or hypothecate any assets,  except
      in   connection  with  any  permitted   borrowing  or  reverse  repurchase
      agreements (see  Investment  Restrictions No.  7).  It will  not  purchase
      securities  while  borrowings  (including  reverse  repurchase agreements)
      exceed 5% of its net assets;  provided, however, that it may increase  its
      interest  in  an  open-end  management investment  company  with  the same
      investment  objective   and  restrictions   while  such   borrowings   are
      outstanding  and provided further  that for purposes  of this restriction,
      short-term credits necessary  for the  clearance of  transactions are  not
      considered  borrowings. This  borrowing provision  facilitates the orderly
      sale of  portfolio securities,  for example,  in the  event of  abnormally
      heavy  redemption requests and is  not for investment purposes. Collateral
      arrangements for  premium  and  margin payments  in  connection  with  its
      hedging activities are not deemed to be a pledge of assets;
 
2.    Purchase  the securities of an issuer if, immediately after such purchase,
      it owns more than 10% of the outstanding voting securities of such issuer;
      provided, however, that a  Fund may invest all  or part of its  investable
      assets  in  an  open-end  management  investment  company  with  the  same
      investment objective and restrictions. This limitation shall not apply  to
      investments of up to 25% of its total assets;
 
3.    Purchase  the  securities  or  other obligations  of  any  one  issuer if,
      immediately after such purchase,  more than 5% of  the value of its  total
      assets  would be  invested in securities  or other obligations  of any one
      such issuer; provided, however, that a Fund may invest all or part of  its
      investable  assets in an  open-end management investment  company with the
      same investment  objective and  restrictions.  This limitation  shall  not
      apply  to  securities issued  or guaranteed  by  the U.S.  Government, its
      agencies or instrumentalities or to investments of up to 25% of its  total
      assets;
 
                                     SAI-9
 

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<PAGE>

4.    Purchase  securities  or  other obligations  of  issuers  conducting their
      principal business activity  in the  same industry  if, immediately  after
      such  purchase the value of its  investments in such industry would exceed
      25% of the value of its total  assets; provided, however, that a Fund  may
      invest  all or  part of  its investable  assets in  an open-end management
      investment company with  the same investment  objective and  restrictions.
      For  purposes of industry concentration, there is no percentage limitation
      with respect to investments in U.S. Government securities;
 
5.    Make loans, except  through the  purchase or holding  of debt  obligations
      (including  privately placed  securities) or  by entering  into repurchase
      agreements or loans of portfolio securities;
 
6.    Purchase or  sell real  estate, commodities  or commodities  contracts  or
      options  thereon (except  for its  interest in  hedging and  certain other
      activities as  described under  'Investment Objective(s)  and  Policies'),
      interests  in  oil, gas,  or mineral  exploration or  development programs
      (including limited  partnerships). In  addition, neither  the U.S.  Equity
      Portfolio nor the International Equity Portfolio may purchase or sell real
      estate  mortgage  loans. The  Bond Portfolio,  however, may  purchase debt
      obligations secured by  interests in  real estate or  issued by  companies
      that  invest in  real estate  or interests  therein including  real estate
      investment trusts ('REITs');  and the International  Equity Portfolio  and
      the U.S. Equity Portfolio may purchase the equity securities or commercial
      paper issued by companies that invest in real estate or interests therein,
      including REITs;
 
7.    Issue  any senior security, except as appropriate to evidence indebtedness
      that it is permitted to incur pursuant to Investment Restriction No. 1 and
      except that it may enter into reverse repurchase agreements, provided that
      the  aggregate  of   senior  securities,   including  reverse   repurchase
      agreements,  shall not exceed  one-third of the market  value of its total
      assets (including  the  amounts  borrowed),  less  liabilities  (excluding
      obligations created by such borrowings and reverse repurchase agreements).
      Hedging  activities as described in 'Investment Objective(s) and Policies'
      shall not be considered senior securities for purposes hereof; or
 
8.    Act as an underwriter of securities.
 
     NON-FUNDAMENTAL INVESTMENT RESTRICTIONS -- BOND FUND, U.S. EQUITY FUND  AND
INTERNATIONAL  EQUITY FUND. The investment  restrictions described below are not
fundamental policies of these Funds or their corresponding Portfolios and may be
changed by  their  respective  Directors  and  Trustees.  These  non-fundamental
investment policies provide that neither the Funds nor the Portfolios may:
 
       i.      borrow  money  (including through  reverse repurchase  or forward
               roll transactions) for any purpose in excess of 5% of the  Fund's
               total assets (taken at cost), except that the Fund may borrow for
               temporary or emergency purposes up to 1/3 of its assets;
 
      ii.      pledge,  mortgage or hypothecate for any purpose in excess of 10%
               of the Fund's total assets (taken at market value), provided that
               collateral arrangements  with  respect to  options  and  futures,
               including  deposits of initial deposit  and variation margin, and
               reverse repurchase  agreements are  not  considered a  pledge  of
               assets for purposes of this restriction;
 
      iii.      purchase any security or evidence of interest therein on margin,
                except  that such short-term credit as  may be necessary for the
                clearance of purchases and sales  of securities may be  obtained
                and except that deposits of initial deposit and variation margin
                may  be made in connection with the purchase, ownership, holding
                or sale of futures;
 
      iv.      sell securities it does  not own such that  the dollar amount  of
               such short sales at any one time exceeds 25% of the net equity of
               the  Fund, and the value of securities of any one issuer in which
               the Fund is short exceeds the lesser of 2.0% of the value of  the
               Fund's  net assets or 2.0% of the  securities of any class of any
               U.S. issuer, and provided  that short sales may  be made only  in
               those  securities which are fully listed on a national securities
               exchange or a foreign exchange  (This provision does not  include
               the  sale of securities the  Fund contemporaneously owns or where
               the Fund has the  right to obtain  securities equivalent in  kind
               and  amount to  those sold, i.e.,  short sales  against the box.)
               (The Fund has no current intention to engage in short selling.);
 
       v.      invest for the purpose of exercising control or management;
 
                                     SAI-10
 

<PAGE>
<PAGE>

      vi.      purchase securities issued  by any investment  company except  by
               purchase  in the open  market where no commission  or profit to a
               sponsor or  dealer  results from  such  purchase other  than  the
               customary  broker's  commission,  or except  when  such purchase,
               though not made in the open market,  is part of a plan of  merger
               or  consolidation;  provided,  however,  that  securities  of any
               investment company will  not be  purchased for the  Fund if  such
               purchase at the time thereof would cause (a) more than 10% of the
               Fund's  total  assets (taken  at the  greater  of cost  or market
               value) to be invested in the securities of such issuers; (b) more
               than 5% of the Fund's total assets (taken at the greater of  cost
               or market value) to be invested in any one investment company; or
               (c) more than 3% of the outstanding voting securities of any such
               issuer  to be held for the Fund; provided further that, except in
               the case  of  a  merger  or consolidation,  the  Fund  shall  not
               purchase any securities of any open-end investment company unless
               (1)  the Fund's investment adviser waives the investment advisory
               fee with respect to assets invested in other open-end  investment
               companies  and (2) the Fund incurs  no sales charge in connection
               with that investment;
 
      vii.      invest more than 10%  of the Fund's total  assets (taken at  the
                greater  of cost or market  value) in securities (excluding Rule
                144A securities) that are restricted as to resale under the 1933
                Act;
 
     viii.      invest more than 15%  of the Fund's total  assets (taken at  the
                greater  of cost or  market value) in  (a) securities (excluding
                Rule 144A securities) that are restricted as to resale under the
                1933 Act, and (b)  securities that are  issued by issuers  which
                (including  predecessors) have been in operation less than three
                years  (other  than   U.S.  Government  securities),   provided,
                however,  that no  more than 5%  of the Fund's  total assets are
                invested  in  securities  issued  by  issuers  which  (including
                predecessors) have been in operation less than three years;
 
      ix.      invest  more  than 15%  of the  Fund's net  assets (taken  at the
               greater of cost or market value) in securities that are  illiquid
               or  not readily marketable (excluding Rule 144A securities deemed
               by the Board of Directors of the Fund to be liquid);
 
       x.      invest in securities issued by  an issuer any of whose  officers,
               directors, trustees or security holders is an officer or Director
               of  the Fund,  or is  an officer or  director of  the Adviser, if
               after the purchase of the securities of such issuer for the  Fund
               one  or more of such persons own beneficially more than 1/2 of 1%
               of the shares or securities, or both, all taken at market  value,
               of  such issuer, and such  persons owning more than  1/2 of 1% of
               such shares or securities together own beneficially more than  5%
               of such shares or securities, or both, all taken at market value;
 
      xi.      invest  in warrants (other than warrants  acquired by the Fund as
               part of a unit or attached to securities at the time of purchase)
               if, as a result, the investments (valued at the lower of cost  or
               market)  would exceed 5% of the value of the Fund's net assets or
               if, as a result, more than 2%  of the Fund's net assets would  be
               invested  in warrants not listed on a recognized United States or
               foreign stock  exchange, to  the extent  permitted by  applicable
               state securities laws;
 
      xii.      write  puts and calls on securities unless each of the following
                conditions are met: (a) the security underlying the put or  call
                is  within the investment policies of the Fund and the option is
                issued by the Options Clearing  Corporation, except for put  and
                call  options issued by non-U.S.  entities or listed on non-U.S.
                securities or commodities exchanges; (b) the aggregate value  of
                the  obligations underlying the  puts determined as  of the date
                the options  are sold  shall not  exceed 5%  of the  Fund's  net
                assets;  (c) the securities subject to  the exercise of the call
                written by the Fund must  be owned by the  Fund at the time  the
                call is sold and must continue to be owned by the Fund until the
                call has been exercised, has lapsed, or the Fund has purchased a
                closing  call,  and such  purchase  has been  confirmed, thereby
                extinguishing  the  Fund's  obligation  to  deliver   securities
                pursuant  to the call it has sold; and  (d) at the time a put is
                written, the Fund establishes a segregated
 
                                     SAI-11
 

<PAGE>
<PAGE>

                account with its custodian consisting of cash or short-term U.S.
                Government securities equal in value to the amount the Fund will
                be obligated to pay upon exercise of the put (this account  must
                be  maintained until the  put is exercised,  has expired, or the
                Fund has purchased  a closing put,  which is a  put of the  same
                series as the one previously written);
 
     xiii.      buy  and sell puts and calls  on securities, stock index futures
                or options  on  stock index  futures,  or financial  futures  or
                options  on financial futures unless: (a) the options or futures
                are offered  through the  facilities  of a  national  securities
                association   or  are   listed  on  a   national  securities  or
                commodities exchange, except for put and call options issued  by
                non-U.S.   entities   or  listed   on  non-U.S.   securities  or
                commodities exchanges; (b)  the aggregate premiums  paid on  all
                such options which are held at any time do not exceed 20% of the
                Fund's  total  net  assets; (c)  the  aggregate  margin deposits
                required on all such futures or options thereon held at any time
                do not  exceed 5%  of  the Fund's  total  assets; and  (d)  such
                activities  are permitted by Regulation  4.5 under the Commodity
                Exchange Act; and
 
     xiv.      distribute  securities  that  are   not  readily  marketable   to
               residents  of the State of  Arizona when effecting redemptions in
               kind.
 
     ALL FUNDS. There will be no violation of any investment restriction if that
restriction  is  complied  with  at  the  time  the  relevant  action  is  taken
notwithstanding a later change in market value of an investment, in net or total
assets, in the securities rating of the investment or any other later change.
 
DIRECTORS AND TRUSTEES
 
DIRECTORS
 
     The  Company's Board consists  of three directors.  The Company's Directors
are also  the  Trust's  Trustees.  The Board  is  responsible  for  the  overall
management  of the  Fund, including  the general  supervision and  review of its
investment activities. The Board, in turn,  elects the officers of the  Company.
Similarly,  the Trustees, as such, are responsible for the overall management of
the Trust,  including  the general  supervision  and review  of  its  investment
activities.   The  officers   of  the   Company  hold   similar  positions  with
substantially the  same  responsibilities  with the  Trust.  The  addresses  and
principal  occupations of the Company's Director's  and officers and the Trust's
Trustees and officers are  listed below. As of  February 1, 1996, the  Directors
and  officers of the  Company owned of record,  as a group, less  than 1% of the
outstanding shares of the Company. None  of the Company's Directors or  officers
receives  compensation from the Company exceeding  $60,000 per fiscal year. None
of the Trustees or  the Trust's employees receives  compensation from the  Trust
exceeding  $60,000 per fiscal year. Every Director who is an 'Interested Person'
(within the meaning  of the  1940 Act)  of the  Company is  also an  'Interested
Person'  of  the Trust.  Similarly,  every Director  who  is not  an 'Interested
Person' of the Company is not an 'Interested Person' of the Trust.
 
<TABLE>
<CAPTION>
                                     POSITION
                                     WITH THE
     NAME, ADDRESS AND AGE           COMPANY          PRINCIPAL OCCUPATIONS DURING THE LAST FIVE YEARS
- --------------------------------   ------------  -----------------------------------------------------------
<S>                                <C>           <C>
Dr. HansPeter Lochmeier*           Chairman of   UBS  Investor  Portfolios  Trust  (mutual  fund),   Trustee
299 Park Avenue                    the Board     (February   1996-Present);   Union   Bank   of  Switzerland
New York, NY 10171                               (Investment Services Department), Department Head.
Age: 54
</TABLE>
 
                                                  (table continued on next page)
 
                                     SAI-12
 

<PAGE>
<PAGE>

(table continued from previous page)
 
<TABLE>
<CAPTION>
                                     POSITION
                                     WITH THE
     NAME, ADDRESS AND AGE           COMPANY          PRINCIPAL OCCUPATIONS DURING THE LAST FIVE YEARS
- --------------------------------   ------------  -----------------------------------------------------------
<S>                                <C>           <C>
Timothy M. Spicer, CPA             Director      UBS Investor  Portfolios  Trust,  Trustee  (February  1996-
299 Park Avenue                                  Present);   Ensemble  Information   Systems  (software  and
New York, NY 10171                               electronic information provider),  Co-Founder, Chairman  of
Age: 46                                          the  Board  and  Chief  Executive  Officer  (1990-Present);
                                                 Amanda Venture  Investors  (AVI)  (a  San  Francisco  based
                                                 venture  capital  firm),  Managing  Partner (1995-Present);
                                                 CoreLink Resources (provides  mutual fund related  services
                                                 to  small and medium sized banks), Director (1993-Present);
                                                 Smith & Hawken (mail order supplier of gardening tools  and
                                                 clothing),    Director   and    Chief   Financial   Officer
                                                 (1990-1992);   Concord   Holding   Corporation    (provides
                                                 distribution  and administrative services to mutual funds),
                                                 Director   (1989-1995);    active    in    civic/charitable
                                                 organizations   in  the  San  Francisco,  California  area,
                                                 including Big Brothers/Big Sisters and United Way.
Peter Lawson-Johnston              Director      UBS Investor  Portfolios  Trust,  Trustee  (February  1996-
299 Park Avenue                                  Present); Zemex Corporation (mining), Chairman of the Board
New York, NY 10171                               and Director (1990-Present); McGraw-Hill, Inc.
Age: 69                                          (publishing),  Director  (1990-Present);  National  Review,
                                                 Inc.  (publishing),  Director  (1990-Present);   Guggenheim
                                                 Brothers  (real  estate  --  venture  capital partnership),
                                                 Partner  (1990-Present);   Elgerbar  Corporation   (holding
                                                 company),   President  and   Director  (1990-Present);  The
                                                 Solomon R. Guggenheim Foundation  (operates the Solomon  R.
                                                 Guggenheim  Museum  in New  York  and the  Peggy Guggenheim
                                                 Collection  in   Venice,  Italy),   Chairman  and   Trustee
                                                 (1990-Present);   The  Harry  Frank  Guggenheim  Foundation
                                                 (charitable  organization),  Chairman  of  the  Board   and
                                                 Trustee (1990-Present).
Timothy P. Sullivan                President     UBS  Investor  Portfolios Trust,  Vice  President (February
437 Madison Avenue                               1996-Present); Signature Financial Group, Inc.**  (provides
New York, NY 10022                               distribution  and administrative services to mutual funds),
Age: 34                                          Vice President (1995-Present); Swiss Bank Corporation, Vice
                                                 President/Associate Director  (1992-1995); EquitiLink  USA,
                                                 Inc. (1989-1991).
John R. Elder, CPA                 Treasurer     UBS  Investor Portfolios  Trust, Treasurer  (February 1996-
6 St. James Avenue                               Present); Signature Financial Group, Inc.**, Vice President
Boston, MA 02116                                 (April 1995-Present);  Phoenix Home  Life Mutual  Insurance
Age: 47                                          Company (mutual funds division), Treasurer (1983-1995).
Thomas M. Lenz, Esq.               Secretary     UBS  Investor Portfolios  Trust, Secretary  (February 1996-
6 St. James Avenue                               Present); Signature Financial Group, Inc.**, Vice President
Boston, MA 02116                                 and Associate General Counsel (1989-Present).
Age: 37
</TABLE>
 
- ------------------------------------
      * 'Interested Person' within the meaning of the 1940 Act.
     **  Signature  Broker-Dealer  Services,   Inc.,  the  Company's   principal
underwriter  and  administrator,  is  a  wholly  owned  subsidiary  of Signature
Financial Group, Inc.
 
                                     SAI-13
 

<PAGE>
<PAGE>

                              COMPENSATION TABLE*
 
<TABLE>
<CAPTION>
                                                         PENSION OR                            TOTAL COMPENSATION
                                      AGGREGATE      RETIREMENT BENEFITS       ESTIMATED        FROM COMPANY AND
                                     COMPENSATION    ACCRUED AS PART OF     ANNUAL BENEFITS    FUND COMPLEX PAID
     NAME OF PERSON, POSITION        FROM COMPANY       FUND EXPENSES       UPON RETIREMENT       TO DIRECTORS
- ----------------------------------   ------------    -------------------    ---------------    ------------------
 
<S>                                  <C>             <C>                    <C>                <C>
Dr. Lochmeier                                 0               0                    0                       0
Director
Mr. Spicer                             $ 13,000               0                    0                $ 25,000**
Director
Mr. Lawson-Johnston                    $ 13,000               0                    0                $ 25,000**
Director
</TABLE>
 
- ------------------------------------
      *The  Company  has  not  completed   its  first  fiscal  year  since   its
organization, and the noted amounts are estimates for the period January 1, 1996
through  December 31, 1996. The Directors are also reimbursed for all reasonable
expenses incurred during the execution of their duties.
 
     **The other entity in the Fund Complex is UBS Investor Portfolios Trust.
 
INVESTMENT ADVISER AND FUNDS SERVICES AGENT
 
     Pursuant to Investment Advisory Agreements between the Trust and Union Bank
of Switzerland, New York Branch, the Branch serves as the Portfolios' investment
adviser. Pursuant  to  a  Sub-Advisory  Agreement between  the  Branch  and  UBS
International  Investment London Limited, UBSII serves as the sub-adviser to the
International Equity  Portfolio.  The  Branch, which  operates  out  of  offices
located   at  299  Park  Avenue,  New  York,   New  York,  is  licensed  by  the
Superintendent of Banks of the State of  New York under the banking laws of  the
State  of  New  York  and is  subject  to  state and  federal  banking  laws and
regulations applicable to a foreign bank  that operates a state licensed  branch
in  the United States.  UBSII is a  wholly-owned direct subsidiary  of UBS Asset
Management London  Limited, which  is  a direct  subsidiary  of UBS  UK  Holding
Limited,  which is in turn  a wholly-owned direct subsidiary  of the Bank. UBSII
was organized  under the  laws of  the United  Kingdom on  June 19,  1986.  (The
Adviser  and the  Sub-Adviser are collectively  referred to  as the 'Advisers'.)
Subject to the supervision of the Trustees, the Adviser, and in the case of  the
International   Equity  Portfolio,  UBSII,   makes  the  Portfolios'  day-to-day
investment decisions, arranges for the  execution of portfolio transactions  and
generally   manages   each   Portfolio's   investments   and   provides  certain
administrative services.
 
     The investment advisory services provided by the Advisers to the Portfolios
are not exclusive under the terms  of the advisory agreements. The Advisers  are
free  to  and do  render  similar investment  advisory  services to  others. The
Advisers  serve  as  investment  advisers  to  personal  investors  and  act  as
fiduciaries  for  trusts, estates  and employee  benefit  plans. Certain  of the
assets of trusts and estates under management are invested in common trust funds
for which the Advisers serve as trustees. The accounts managed or advised by the
Advisers have varying investment  objectives and the  Advisers invest assets  of
such  accounts in  investments substantially similar  to, or the  same as, those
which are expected to  constitute the principal  investments of the  Portfolios.
Such accounts are supervised by officers and employees of the Advisers (or their
affiliates) who may also be acting in similar capacities for the Portfolios. See
'Portfolio Transactions'.
 
     The Bank has branches, agencies, representative offices and subsidiaries in
Switzerland  and in more  than 40 cities outside  Switzerland, including, in the
United States, New York City, Chicago,  Houston, Los Angeles and San  Francisco.
In addition to the receipt of deposits and the making of loans and advances, the
Bank,  through its offices and subsidiaries  (including UBSII) engages in a wide
range  of  banking  and  financial  activities  typical  of  the  world's  major
international  banks,  including  fiduciary, investment  advisory  and custodial
services  and  foreign  exchange  in   the  United  States,  Swiss,  Asian   and
Euro-capital  markets. The Bank is one of the world's leading asset managers and
has been  active in  New  York City  since  1946. At  June  30, 1995,  the  Bank
(including  its consolidated  subsidiaries) had  total assets  of $307.4 billion
(unaudited) and equity capital and reserves of $19.7 billion (unaudited).
 
                                     SAI-14
 

<PAGE>
<PAGE>

     BOND FUND. The Adviser's fixed income analysts have extensive experience in
selecting bonds  and monitoring  their performance.  These analysts  review  the
creditworthiness  of individual  issuers as  well as  the broad  economic trends
likely to affect the bond markets.
 
     U.S.  EQUITY  FUND.  While  many  investment  advisers  evaluate  companies
primarily  on their earnings and their  price/earnings ratio, the Adviser uses a
different investment approach. The Adviser believes that dividend yields, rather
than earnings, are the best indicators of future performance. Consequently,  the
Adviser will select attractively priced stocks with high dividends. In addition,
the  Adviser's  analysts  often  meet with  company  managers,  often  contact a
company's suppliers, review the business operations and financial statements  of
companies  and  try to  'get  behind' the  numbers  to gain  a  true sense  of a
company's value.
 
     INTERNATIONAL  EQUITY  FUND.  The  Sub-Adviser's  analysts  have  extensive
experience  in  managing  international  portfolios.  These  analysts  track the
performance of more than  1,600 companies around the  world, and pay  particular
attention to the energy, life sciences, technology and financial industries.
 
     The  Sub-Adviser is  a registered  investment adviser  under the Investment
Advisers Act of 1940, as amended.
 
     Under the Trust's Advisory Agreement, each Portfolio will pay the Adviser a
fee, calculated daily and payable monthly, at an annual rate of that Portfolio's
average net assets, as shown below.
 
<TABLE>
<CAPTION>
             PORTFOLIO                        ANNUALIZED FEE RATE
- -----------------------------------    ----------------------------------
 
<S>                                    <C>
UBS Bond Portfolio                     0.45% of Average Daily Net Assets
UBS U.S. Equity Portfolio              0.60% of Average Daily Net Assets
UBS International Equity Portfolio     0.85% of Average Daily Net Assets
</TABLE>
 
     The Branch has voluntarily agreed to waive its fees and reimburse each Fund
for its operating  expenses (including  those that each  Fund incurs  indirectly
through  its Portfolio)  to the  extent that  the operating  expenses (excluding
extraordinary items) of the  Bond Fund, U.S. Equity  Fund and the  International
Equity Fund exceed, on an annual basis, 0.80%, 0.90% and 1.40%, respectively, of
such  Fund's average daily net assets. The Branch may modify or discontinue this
expense limitation  at any  time  in the  future with  30  days' notice  to  the
affected Fund. See 'Expenses'.
 
     Pursuant   to  the  Sub-Advisory  Agreement,  the  Sub-Adviser,  under  the
supervision of the  Trustees and  the Adviser, makes  the day-to-day  investment
decisions  for  the  International  Equity  Portfolio.  Under  the  Sub-Advisory
Agreement, the Adviser has agreed to pay the Sub-Adviser a fee, calculated daily
and payable monthly,  at an  annual rate of  0.75% of  the International  Equity
Portfolio's  first $20 million of average net assets, plus 0.50% of the next $30
million of average net assets, plus 0.40% of this Portfolio's average net assets
in excess  of $50  million. The  Adviser is  solely responsible  for paying  the
Sub-Adviser this fee.
 
     The  Investment Advisory  Agreements and  Sub-Advisory Agreement  will each
continue in effect until February 1998, and thereafter will be subject to annual
approval by the Trustees  or the vote  of a majority  of the outstanding  voting
securities  (as defined  in the  1940 Act)  of each  Portfolio provided  that in
either case the continuance also is approved  by a majority of the Trustees  who
are  not interested persons  (as defined in the  1940 Act) of  the Trust by vote
cast in person at a meeting called  for the purpose of voting on such  approval.
The Investment Advisory and Sub-Advisory Agreements will terminate automatically
if  assigned and  are terminable  at any  time without  penalty by  a vote  of a
majority of the Trustees or by a vote  of the holders of a majority (as  defined
in  the 1940  Act) of  the Portfolio's  outstanding shares  on 60  days' written
notice to  the Adviser  or Sub-Adviser  as  applicable. Whenever  a Fund,  as  a
shareholder  of a Portfolio, is  required by the 1940  Act to vote its Portfolio
interest, the Company will hold a  meeting of that Fund's shareholders and  will
vote  its  Portfolio  interests  proportionately as  instructed  by  that Fund's
shareholders.  See  'Organization'.  Each  Investment  Advisory  Agreement   and
Sub-Advisory  Agreement is  also terminable  by the  Adviser or  Sub-Adviser, as
applicable,  on  60  days'  written   notice  to  the  Trust.  See   'Additional
Information'.
 
                                     SAI-15
 

<PAGE>
<PAGE>

     In  addition to the  above noted investment  advisory services, the Adviser
(but not the Sub-Adviser) also  provides certain administrative services to  the
Funds  and  the Portfolios  and  subject to  the  supervision of  the  Board and
Trustees, as applicable, is responsible for: establishing performance  standards
for  the Funds' and Portfolios' third-party service providers and overseeing and
evaluating the performance of such entities; providing and presenting  quarterly
management   reports  to  the  Directors   and  the  Trustees;  supervising  the
preparation of reports  for Fund  and Portfolio  shareholders; and  establishing
voluntary  expense limitations for the Fund  and providing any resultant expense
reimbursement to the Fund.
 
     These administrative services are provided to the Portfolios by the Adviser
pursuant to the above discussed  Investment Advisory Agreements. However,  these
administrative  services are provided to the  Funds pursuant to a Funds Services
Agreement between the Adviser and the Company. The Adviser is not entitled to  a
fee  from  the  Company or  the  Funds under  the  terms of  the  Funds Services
Agreement.
 
     The Glass-Steagall Act and other applicable laws generally prohibit  banks,
such as Union Bank of Switzerland, from engaging in the business of underwriting
or  distributing securities, and  the Board of Governors  of the Federal Reserve
System has issued an interpretation to the  effect that under these laws a  bank
holding company registered under the federal Bank Holding Company Act or certain
subsidiaries thereof may not sponsor, organize, or control a registered open-end
investment  company continuously engaged in the  issuance of its shares, such as
the Company.  The  interpretation does  not  prohibit  a holding  company  or  a
subsidiary  thereof from  acting as investment  adviser or custodian  to such an
investment company. The Advisers believe that they may perform the services  for
the   Portfolios  and  the  Funds   contemplated  by  the  Investment  Advisory,
Sub-Advisory and Funds Services Agreements without violating the  Glass-Steagall
Act  or other applicable banking  laws or regulations. State  laws on this issue
may differ  from the  interpretation  of relevant  federal  law, and  banks  and
financial  institutions may be required to register as dealers pursuant to state
securities laws. However, it is possible  that future changes in either  federal
or state statutes and regulations concerning the permissible activities of banks
or  trust companies, as well as further judicial or administrative decisions and
interpretations of present  and future statutes  and regulations, might  prevent
these entities from continuing to perform such services.
 
     If the Adviser or Sub-Adviser were prohibited from providing these services
to  the Funds or the Portfolios, it is expected that the Directors and Trustees,
as applicable, would recommend to shareholders that they approve new  agreements
with other qualified service providers.
 
ADMINISTRATORS
 
     Under  Administrative Services Agreements  with the Company  and the Trust,
Signature Broker-Dealer  Services, Inc.  ('Signature') and  Signature  Financial
Group (Grand Cayman) Limited ('Signature-Cayman') serve as the Administrators of
the   Funds  and   the  Portfolios,   respectively  (in   such  capacities,  the
'Administrators').  In   these   capacities,  Signature   and   Signature-Cayman
administer all aspects of their day-to-day operations subject to the supervision
of  the Directors and the Trustees, as applicable, except as set forth under the
sections captioned 'Investment Adviser and Funds Services Agent', 'Distributor',
'Custodian' and 'Shareholder Services'.  The Administrators (i) furnish  general
office  facilities  and ordinary  clerical and  related services  for day-to-day
operations, including record-keeping responsibilities; (ii) take  responsibility
for  complying  with  all  applicable federal  and  state  securities  and other
regulatory requirements including,  without limitation,  preparing, mailing  and
filing (but not paying for) registration statements, prospectuses, statements of
additional  information, proxy statements and all required reports to the Funds'
and Portfolios' shareholders,  the SEC,  and state  securities commissions;  and
(iii)  perform such administrative and managerial oversight of the activities of
the Funds'  and  Portfolios'  custodian,  transfer agent  and  other  agents  or
independent  contractors as the Directors and Trustees, respectively, may direct
from time to time.  Signature is also responsible  for monitoring the status  of
each  Fund as a regulated investment company  under the Internal Revenue Code of
1986, as amended (the 'Code').
 
                                     SAI-16
 

<PAGE>
<PAGE>

     Under the  Company's  Administrative  Services Agreements,  each  Fund  has
agreed  to pay  Signature a  fee, calculated daily  and payable  monthly, at the
following annual rates:
 
<TABLE>
<CAPTION>
                                                                   ANNUALIZED
FUND'S AVERAGE DAILY NET ASSETS                                     FEE RATE
- ----------------------------------------------------------------   ----------
<S>                                                                <C>
First $100 Million..............................................      0.050%
Next $100 Million...............................................      0.025%
In excess of $200 Million.......................................      0.000%
</TABLE>
 
     Under the  Trust's Administrative  Services Agreement,  each Portfolio  has
agreed  to pay Signature-Cayman a fee,  calculated daily and payable monthly, at
an annual rate of 0.05% of its average net assets.
 
     The Administrative Services  Agreements may  be renewed or  amended by  the
Directors   or   Trustees,  as   applicable,   without  shareholder   vote.  The
Administrative Services Agreements are terminable at any time without penalty by
a vote of a majority  of the Directors or Trustees,  as applicable, on not  less
than  60  days'  written  notice  to the  other  party.  The  Administrators may
subcontract for the  performance of their  obligations under the  Administrative
Services Agreements with the prior written consent of the Directors or Trustees,
as  applicable. If an Administrator subcontracts all  or a portion of its duties
to another party, that Administrator shall be fully responsible for the acts and
omissions of  any such  subcontractor(s) as  it would  be for  its own  acts  or
omissions.
 
DISTRIBUTOR
 
     Signature  also serves as  the exclusive distributor of  the shares of each
Fund and holds itself available to  receive purchase orders for such shares  (in
this  capacity, the 'Distributor'). The Distributor  has been granted the right,
as each Fund's  agent, to solicit  and accept  orders for the  purchase of  Fund
shares  in accordance with  the terms of the  Distribution Agreement between the
Company, on behalf of each Fund, and the Distributor. The Distribution Agreement
shall continue in  effect with  respect to each  Fund until  February 1997,  and
thereafter  will be subject to annual approval (i) by a vote of the holders of a
majority of each Fund's  outstanding voting securities or  by the Directors  and
(ii)  by  a vote  of a  majority of  the Directors  who are  not parties  to the
Distribution Agreement or interested persons (as defined by the 1940 Act) of the
Company cast in person  at a meeting  called for the purpose  of voting on  such
approval. The Distribution Agreement will terminate automatically if assigned by
either  party thereto and is terminable at  any time, without penalty, by a vote
of a majority of the Directors, a vote  of a majority of such Directors who  are
not  'interested  persons' of  the Company  or by  a  vote of  the holders  of a
majority of the Fund's outstanding shares, in any case on not more than 60 days'
written notice  to the  other party.  The  Distributor does  not receive  a  fee
pursuant  to the terms  of the Distribution Agreement.  The principal offices of
the Distributor are located at 6 St. James Avenue, Boston, Massachusetts 02116.
 
CUSTODIAN
 
     Investors Bank & Trust Company ('IBT' or the 'Custodian'), whose  principal
offices  are located at 89 South  Street, Boston, Massachusetts 02111, serves as
the custodian and transfer and dividend  disbursing agent for the Funds and  the
Portfolios.  Pursuant to the  Custodian Agreements with the  Trust, on behalf of
each Portfolio,  and the  Company, on  behalf  of each  Fund, the  Custodian  is
responsible  for maintaining the books and records of portfolio transactions and
holding portfolio securities and cash. As transfer agent and dividend disbursing
agent, the Custodian  is responsible for  maintaining account records  detailing
the  ownership of Portfolio and Fund interests and for crediting income, capital
gains and other changes in share ownership to investors' accounts. The Custodian
will  perform  its  duties  as  the  Portfolios'  transfer  agent  and  dividend
disbursing agent from its offices located at 1 First Canadian Place, Suite 2800,
Toronto,  Ontario  M5X1C8, while  its duties  as the  Funds' transfer  agent and
dividend disbursing agent will be performed  at its offices located at 89  South
Street,  Boston, Massachusetts 02111. Each Fund and Portfolio is responsible for
its proportionate share of  the Company's and  Trust's, as applicable,  transfer
agency, custodial and dividend disbursement fees.
 
                                     SAI-17
 

<PAGE>
<PAGE>

SHAREHOLDER SERVICES
 
     The  Company,  on  behalf of  each  Fund,  has entered  into  a Shareholder
Servicing Agreement with the Branch under which the Branch provides  shareholder
services  to  Fund shareholders,  which  include performing  shareholder account
administrative and servicing  functions, such as  answering inquiries  regarding
account  status and  history, the manner  in which purchases  and redemptions of
shares may be made and certain other matters pertaining to each Fund,  assisting
customers in designating and changing dividend options, account designations and
addresses,  providing  necessary  personnel  and  facilities  to  coordinate the
establishment and  maintenance  of shareholder  accounts  and records  with  the
Funds'  Distributor and transfer agent,  assisting investors seeking to purchase
or redeem Fund shares, arranging  for the wiring or  other transfer of funds  to
and  from customer accounts in connection with orders to purchase or redeem Fund
shares, verifying purchase and redemption orders, transfers among and changes in
accounts and providing  other related  services. In return  for these  services,
each  Fund has agreed to pay the Branch a  fee at an annual rate of 0.25% of the
average daily net assets of the Fund.
 
     As discussed under  'Investment Adviser and  Shareholder Servicing  Agent',
the  Glass-Steagall  Act and  other applicable  laws  and regulations  limit the
activities of  bank  holding companies  and  certain of  their  subsidiaries  in
connection  with registered open-end investment companies. The activities of the
Branch under  the  Shareholder  Servicing  Agreement,  the  Investment  Advisory
Agreement  and the  Funds Services  Agreement and  UBSII under  the Sub-Advisory
Agreement, may raise  issues under  these laws.  However, the  Branch and  UBSII
believe  that they may properly perform  these services and the other activities
described herein and  in the Prospectuses  without violating the  Glass-Steagall
Act or other applicable banking laws or regulations.
 
     If  the Branch  or UBSII  were prohibited  from providing  their respective
services under  the  above noted  agreements,  the Directors  and  Trustees,  as
applicable,  would seek  an alternative  provider of  such services.  In such an
event, changes in the operation of the  Funds or the Portfolios might occur  and
shareholders  might not receive the same level of service previously provided by
the Branch and UBSII.
 
INDEPENDENT ACCOUNTANTS
 
     The  Company's  and  the  Trust's  independent  accounting  firm  is  Price
Waterhouse  LLP, 1177 Avenue of the Americas, New York, New York 10036. The U.S.
firm of Price  Waterhouse is  a Registered Limited  Liability Partnership  (LLP)
under  the laws of the State of Delaware and, from August 1, 1994, will continue
its practice under  the name  Price Waterhouse  LLP. Price  Waterhouse LLP  will
conduct  an annual audit of the financial statements of each Fund and Portfolio,
assist in the review and filing of  the federal and state income tax returns  of
the Funds and Portfolios and consult with the Funds and Portfolios as to matters
of accounting and federal and state income taxation.
 
EXPENSES
 
     Each   Fund  and  Portfolio  is  responsible  for  the  fees  and  expenses
attributable to it. Each Fund will bear its proportionate share of the  expenses
in its corresponding Portfolio.
 
     The  Branch has  agreed that if  in any fiscal  year the sum  of any Fund's
expenses (including each Fund's proportionate share of the expenses incurred  by
its corresponding Portfolio) exceeds the limits set by applicable regulations of
state  securities commissions then the Branch shall waive its fees to the extent
necessary to remove such  excess. Currently, the Branch  believes that the  most
restrictive  expense limitation of state  securities commissions limits expenses
to an annual rate of 2.5% of the first $30 million of average net assets, 2%  of
the next $70 million of such net assets and 1.5% of such net assets in excess of
$100 million. For additional information regarding waivers or expense subsidies,
see  'Management' in the  Prospectus. The Branch has  also voluntarily agreed to
limit  the  total  operating  expenses  of  each  Fund  (including  each  Fund's
proportionate  share of the  expenses incurred by  its corresponding Portfolio),
excluding ordinary expenses, as  set forth in each  Fund's Prospectus under  the
caption  'Expenses'. The  Branch may modify  or discontinue this  fee waiver and
expense limitation  at any  time  in the  future with  30  days' notice  to  the
affected Fund.
 
                                     SAI-18
 

<PAGE>
<PAGE>

PURCHASE OF SHARES
 
     Investors  may purchase Fund  shares as described  in each Prospectus under
'Purchase of Shares.' Fund shares are sold on a continuous basis without a sales
charge at the  net asset  value per  share next  determined after  receipt of  a
purchase order.
 
     The  minimum investment requirements  for certain retirement  plans such as
Individual  Retirement   Accounts  ('IRAs'),   Self-Employed  Retirement   Plans
('SERPs'),  401(k) Plans  and other tax-deferred  plans are  $2,000. The minimum
investment requirement  for  all subsequent  investments  is $500.  The  minimum
investment  requirement for accounts established for the benefit of minors under
the 'Uniform Gift to Minor's Act' is $5,000. The minimum investment  requirement
for all subsequent investments is $1,000. The minimum investment requirement for
employees  of  the Bank  and its  affiliates is  $5,000. The  minimum subsequent
investment is $1,000.
 
     In addition, the minimum investment requirements may be met by  aggregating
the  investments of related shareholders. A  'related shareholder' is limited to
an immediate family  member, including mother,  father, spouse, child,  brother,
sister and grandparent and includes step and adoptive relationships.
 
     Each  Fund may, at its own option, accept securities in payment for shares.
The securities tendered are valued by the methods described in 'Net Asset Value'
as of the day the  Fund shares are purchased. This  is a taxable transaction  to
the investor. Securities may be accepted in payment for shares only if they are,
in  the  judgment of  the Advisers,  appropriate  investments for  the Portfolio
corresponding to  that Fund.  In addition,  securities accepted  in payment  for
shares  must: (i)  meet the  investment objective  and policies  of the relevant
Portfolio; (ii) be acquired by the Fund for investment and not for resale (other
than for resale to the corresponding Portfolio); (iii) be liquid securities that
are not restricted as to transfer either by law or by market liquidity; and (iv)
have a value that is readily ascertainable, as evidenced by a listing on a stock
exchange, over-the-counter market or by readily available market quotations from
a dealer in such securities. Each Fund reserves the right to accept or reject at
its own option any and all securities offered in payment for its shares.
 
REDEMPTION OF SHARES
 
     Investors may redeem  shares of each  Fund as described  in the  Prospectus
under 'Redemption of Shares'.
 
     If the Directors and Trustees determine that it would be detrimental to the
best  interest of the  remaining shareholders of  a Fund or  Portfolio to effect
redemptions wholly or  partly in cash,  payment of the  redemption price may  be
made  in whole  or in  part by  an in-kind  distribution of  securities from the
Portfolio, in lieu of cash, in conformity with the applicable rules of the  SEC.
If   shares  are  redeemed  in-kind,   the  redeeming  shareholder  might  incur
transaction costs in converting the securities into cash. The methods of valuing
portfolio securities distributed to a shareholder are described under 'Net Asset
Value', and such  valuations will be  made as  of the same  time the  redemption
price is determined.
 
     FURTHER REDEMPTION INFORMATION. The right of redemption may be suspended or
the  date of payment  postponed, in the case  of the Company  and the Trust: (i)
during periods when the New York Stock Exchange (the 'NYSE') is closed for other
than weekends  and  holidays  or  when  trading on  the  NYSE  is  suspended  or
restricted;  (ii) during periods in which  an emergency exists, as determined by
the SEC, which causes disposal by a Portfolio of, or evaluation of the net asset
value of, its securities to be unreasonable or impracticable; or (iii) for  such
other periods as the 1940 Act or the SEC may permit.
 
EXCHANGE OF SHARES
 
     An  investor may exchange Fund shares for shares of any other series of the
Company as described under 'Exchange  of Shares' in the prospectuses.  Investors
considering  an exchange  of Fund  shares for  shares of  another Company series
should read the prospectus of the series  into which the transfer is being  made
prior  to such  exchange (see 'Purchase  of Shares'). Requests  for exchange are
made in  the  same  manner  as requests  for  redemptions  (see  'Redemption  of
Shares').  Shares of the  acquired series are purchased  for settlement when the
proceeds  from   redemption   become   available.   Certain   state   securities
 
                                     SAI-19
 

<PAGE>
<PAGE>

laws  may  restrict  the availability  of  the exchange  privilege.  The Company
reserves the right to discontinue, alter or limit this exchange privilege at any
time.
 
DIVIDENDS AND DISTRIBUTIONS
 
     Each Fund will  declare and  pay dividends and  distributions as  described
under 'Dividends and Distributions' in its Prospectus.
 
     Determination  of the  net income for  the Bond  Fund is made  at the times
described in that Prospectus; in addition, net investment income for days  other
than  business days is determined  at the time net  asset value is determined on
the prior business day.
 
NET ASSET VALUE
 
     Each Fund computes its net asset value once daily at the close of  business
on Monday through Friday as described under 'Net Asset Value' in the Prospectus.
The net asset value will not be computed on a day in which no orders to purchase
or redeem Fund shares have been received or on the following legal holidays: New
Year's  Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. On days when U.S. trading markets close
early in observance of these holidays, the Funds and the Portfolios would expect
to close for purchases and redemptions at  the same time. The days on which  net
asset value is determined are the Funds' business days.
 
     The  net asset value per share of each Fund equals the value of that Fund's
pro rata interest in its corresponding Portfolio plus the value of all its other
assets not  invested in  the  Portfolio, if  any,  less its  total  liabilities,
divided  by the number  of outstanding shares  of that Fund.  The following is a
discussion of the procedures used by the Portfolios in valuing their assets.
 
     In the case of the Bond Portfolio, securities with a maturity of 60 days or
more,  including  securities  that   are  listed  on   an  exchange  or   traded
over-the-counter,  are valued by the Portfolio by  using the average of at least
three bid quotes from  dealers or, in  all other cases,  by taking into  account
various   factors  affecting  market  value,  including  yields  and  prices  of
comparable securities, indications as to values from dealers and general  market
conditions.  All portfolio securities with a  remaining maturity of less than 60
days are valued by the amortized cost method, whereby such securities are valued
at acquisition cost  as adjusted  for amortization  of premium  or accretion  of
discount  to maturity. Because many of  the municipal bond issues outstanding do
not have large  principal obligations and  because of the  varying risk  factors
applicable to each issuer, no readily available market quotations exist for most
municipal securities.
 
     Trading  in  securities  on  most  foreign  exchanges  and over-the-counter
markets is normally completed  before the close  of the NYSE  and may also  take
place  on days on which  the NYSE is closed.  If events materially affecting the
value of securities occur between the time  when the exchange on which they  are
traded  closes and the time when the  Portfolio's net asset value is calculated,
such securities  will be  valued at  fair value  in accordance  with  procedures
established by and under the general supervision of the Trustees.
 
     In  the  case  of  the U.S.  Equity  and  International  Equity Portfolios,
securities listed on domestic  exchanges, other than  options on stock  indices,
are  valued using the  last sales price  on the most  representative exchange at
4:00 p.m. New York time or, in the absence of recorded sales, at the average  of
readily  available closing  bid and  asked prices  on such  exchange or,  in the
absence of  such prices,  at the  readily available  closing bid  price on  such
exchange.  Securities listed on foreign exchanges  are valued at the last quoted
sale price available  before the  time when  net assets  are valued  or, in  the
absence  of such recorded sales, at the average of readily available closing bid
and asked prices  on such exchange  or, in the  absence of such  prices, at  the
readily  available closing bid  price on such  exchange. Unlisted securities are
valued at the average of the quoted bid and asked prices in the over-the-counter
market. The value of each security for which readily available market quotations
exist is based on a decision as  to the broadest and most representative  market
for  such security. For purposes  of calculating net asset  value per share, all
assets and  liabilities  initially  expressed  in  foreign  currencies  will  be
converted into U.S. dollars at the prevailing market rates available at the time
of valuation.
 
                                     SAI-20
 

<PAGE>
<PAGE>

     Options on stock indices traded on national securities exchanges are valued
at the close of options trading on such exchanges, which is currently 4:10 p.m.,
New  York time.  Stock index futures  and related options  traded on commodities
exchanges are  valued  at  their last  sales  price  as of  the  close  of  such
commodities  exchanges, which is currently 4:15  p.m., New York time. Securities
or other assets for which market quotations are not readily available are valued
at fair value in accordance with procedures established by and under the general
supervision of  the Trustees.  Such procedures  include the  use of  independent
pricing  services,  indications as  to values  from  dealers and  general market
conditions. Short-term investments that mature in 60 days or less are valued  at
amortized  cost method  (as discussed above)  if their original  maturity was 60
days or less, or by amortizing their value on the 61st day prior to maturity, if
their original maturity  when acquired  by a Portfolio  was more  than 60  days,
unless this is determined not to represent fair value by the Trustees.
 
     Trading  in  securities  on  most  foreign  exchanges  and over-the-counter
markets is normally completed  before the close  of the NYSE  and may also  take
place  on days on which  the NYSE is closed.  If events materially affecting the
value of securities occur between the time  when the exchange on which they  are
traded  closes and the  time when a  Portfolio's net asset  value is calculated,
such securities  will be  valued at  fair value  in accordance  with  procedures
established by and under the general supervision of the Trustees.
 
     If  market quotations for  the securities of any  Portfolio are not readily
available, such securities will be valued at 'fair value' as determined in  good
faith by the Trustees.
 
PERFORMANCE DATA
 
     From  time to  time, the  Funds may  quote performance  in terms  of yield,
actual distributions, total  return or  capital appreciation  in reports,  sales
literature  and  advertisements  published  by  the  Funds.  Current performance
information for the Funds may be obtained by calling your Shareholder  Servicing
Agent. See 'Additional Information' in the Prospectus.
 
     YIELD  QUOTATIONS. As  required by regulations  of the  SEC, the annualized
yield for the Bond Fund is computed by dividing the Fund's net investment income
per share earned during a 30-day period by  its net asset value on the last  day
of  the period. The average  daily number of Fund  shares outstanding during the
period that are  eligible to receive  dividends is used  in determining the  net
investment  income per share. Income is computed by totaling the interest earned
on all debt obligations during the  period and subtracting from that amount  the
total  of all recurring expenses incurred during the period. The 30-day yield is
then annualized on a bond-equivalent basis assuming semi-annual reinvestment and
compounding  of   net  investment   income,  as   described  under   'Additional
Information' in the Prospectus.
 
     TOTAL RETURN QUOTATIONS. As required by SEC regulations, the average annual
total  return of  the Bond,  U.S. Equity  and International  Equity Funds  for a
period is computed by assuming a  hypothetical initial payment of $1,000. It  is
then  assumed that all of the dividends  and distributions by that Fund over the
relevant period are reinvested. It is then assumed that at the end of the period
the entire  amount  is  redeemed.  The  average  annual  total  return  is  then
calculated  by determining the  annual rate required for  the initial payment to
grow to the  amount which would  have been received  upon redemption (i.e.,  the
average annual compound rate of return).
 
     Aggregate total returns, reflecting the cumulative percentage change over a
measuring period, may also be calculated.
 
     GENERAL.  A Fund's performance  will vary from  time-to-time depending upon
market conditions,  the  composition  of its  corresponding  Portfolio  and  its
operating  expenses. Consequently, any given performance quotation should not be
considered representative of a Fund's  performance for the future. In  addition,
because  performance will fluctuate, it may not provide a basis for comparing an
investment in a Fund with certain bank deposits or other investments that pay  a
fixed yield or return for a stated period of time.
 
     Comparative  performance  information  may be  used  from time  to  time in
advertising the Funds' shares, including  data from Lipper Analytical  Services,
Inc.,  Micropal,  Inc.,  Ibbotson  Associates,  Morningstar  Inc.,  the  S&P 500
Composite Stock Price Index, the Dow Jones Industrial Average, the Frank Russell
Indices, The EAFE Index and other industry publications.
 
                                     SAI-21
 

<PAGE>
<PAGE>

PORTFOLIO TRANSACTIONS
 
     The Advisers place  orders for  all purchases  and sales  of securities  on
behalf  of the  Portfolios. The  Advisers enter  into repurchase  agreements and
reverse repurchase agreements and effect loans of portfolio securities on behalf
of the Portfolios. See 'Investment Objectives and Policies'.
 
     Fixed income  and  debt  securities  and  municipal  bonds  and  notes  are
generally  traded at a net price with  dealers acting as principal for their own
accounts without a stated commission. The price of the security usually includes
profit to the dealers. In underwritten offerings, securities are purchased at  a
fixed  price  that  includes  an  amount  of  compensation  to  the underwriter,
generally referred to as the underwriter's concession or discount. Occasionally,
certain securities may be  purchased directly from an  issuer, in which case  no
commissions or discounts are paid.
 
     Portfolio   transactions  for   the  Bond  Portfolio   will  be  undertaken
principally to accomplish its objective in relation to expected movements in the
general level of  interest rates. The  Bond Portfolio may  engage in  short-term
trading consistent with its objectives.
 
     In  connection  with portfolio  transactions  for the  Bond  Portfolio, the
Adviser intends to seek best price and execution on a competitive basis for both
purchases and sales  of securities.  Portfolio turnover  may vary  from year  to
year,  as  well as  within  a year.  The portfolio  turnover  rate for  the Bond
Portfolio is expected to be under 100%.
 
     In  connection  with  portfolio  transactions  for  the  U.S.  Equity   and
International  Equity Portfolios, the overriding objective is to obtain the best
possible execution of purchase and sale orders. Portfolio turnover may vary from
year to year, as well as within a year. The portfolio turnover rate for the U.S.
Equity and International Equity Portfolios is expected to be under 100%.
 
     In selecting a broker, the Adviser or Sub-Adviser, as applicable, considers
a number of factors including: the price per unit of the security; the  broker's
reliability   for  prompt,  accurate  confirmations   and  on-time  delivery  of
securities; the broker's  financial condition;  and the  commissions charged.  A
broker may be paid a brokerage commission greater than that another broker might
have  charged  for  effecting the  same  transaction if,  after  considering the
foregoing factors, the  Adviser or  Sub-Adviser decides that  the broker  chosen
will   provide   the  best   possible  execution.   The  Advisers   monitor  the
reasonableness of  the brokerage  commissions  paid in  light of  the  execution
received.  The Trustees regularly  review the reasonableness  of commissions and
other transaction costs  incurred by the  Portfolios in light  of the facts  and
circumstances  deemed relevant, and, in that connection, will review reports and
published data concerning transaction costs incurred by institutional  investors
generally.  Research services  provided by  brokers to  which the  Advisers have
allocated brokerage  business  in  the  past  include  economic  statistics  and
forecasting   services,  industry  and   company  analyses,  portfolio  strategy
services,  quantitative  data,  and  consulting  services  from  economists  and
political  analysts. Research  services furnished  by brokers  are used  for the
benefit of  all the  Adviser's clients  and not  solely or  necessarily for  the
benefit  of  the Portfolios.  The Adviser  believes that  the value  of research
services received  is  not  determinable and  does  not  significantly  increase
expenses.  The Portfolios do not  reduce their fee to  the Adviser by any amount
that might be attributable to the value of such services.
 
     Subject  to  the  overriding  objective  of  obtaining  the  best  possible
execution  of  orders, the  Advisers  may allocate  a  portion of  a Portfolio's
brokerage transactions to  their affiliates.  In order for  their affiliates  to
effect  any portfolio transactions for the  Portfolios, the commissions, fees or
other remuneration  received by  such  affiliates must  be reasonable  and  fair
compared  to the commissions, fees, or  other remuneration paid to other brokers
in connection with  comparable transactions involving  similar securities  being
purchased  or sold on a securities exchange  during a comparable period of time.
Furthermore, the Trustees,  including a  majority of  the Trustees  who are  not
'interested  persons', have adopted  procedures that are  reasonably designed to
ensure that any commissions, fees, or other remuneration paid to such affiliates
are consistent with the foregoing standard.
 
     Portfolio securities will not  be purchased from or  through or sold to  or
through  the Portfolio's  Adviser, Sub-Adviser,  Distributor or  any 'affiliated
person' (as defined in the 1940 Act)  or any affiliated person of such a  person
when  such entities are acting as principals,  except to the extent permitted by
law. In  addition,  the  Portfolios  will not  purchase  securities  during  the
existence of any underwriting group
 
                                     SAI-22
 

<PAGE>
<PAGE>

relating  thereto of  which the Adviser,  Sub-Adviser or affiliate  thereof is a
member, except to the extent permitted by law.
 
     On those  occasions  when the  Advisers  deem the  purchase  or sale  of  a
security  to be in the best interests of  a Portfolio as well as other customers
including other Portfolios, the Advisers  to the extent permitted by  applicable
laws  and regulations may, but are not obligated to, aggregate the securities to
be sold or  purchased for a  Portfolio with those  to be sold  or purchased  for
other  customers in  order to obtain  best execution,  including lower brokerage
commissions if appropriate.  In such an  event, the securities  so purchased  or
sold  as well as any  expenses incurred in the  transaction will be allocated by
the Advisers in a manner that  is equitable and consistent with their  fiduciary
obligations  to their clients. In some instances, this procedure might adversely
affect a Portfolio.
 
     If a Portfolio writes an option and effects a closing purchase  transaction
with  respect to  an option  written by  it, such  transaction will  normally be
executed by the  same broker-dealer  who executed the  sale of  the option.  The
writing  of options by a Portfolio will be subject to limitations established by
each of the exchanges governing the maximum number of options in each class that
may be written by  a single investor  or group of  investors acting in  concert,
regardless of whether the options are written on the same or different exchanges
or  are held or written in one or  more accounts or through one or more brokers.
The number of  options that a  Portfolio may  write may be  affected by  options
written  by the Advisers for other  investment advisory clients. An exchange may
order the liquidation of positions found to be in excess of these limits and  it
may impose certain other sanctions.
 
ORGANIZATION
 
UBS PRIVATE INVESTOR FUNDS, INC.
 
     UBS Private Investor Funds, Inc. is a Maryland corporation and is currently
issuing  shares of common stock, par value $0.001 per share, in four series: The
UBS Bond Fund Series; The UBS Tax  Exempt Bond Fund Series; The UBS U.S.  Equity
Fund Series; and The UBS International Equity Fund Series.
 
     Each  share of a series issued by the Company will have a pro rata interest
in the  assets of  that series.  The Company  is currently  authorized to  issue
500,000,000  shares of common stock, including  10,000,000 shares of each of the
four current series. Under Maryland law, the Board has the authority to increase
the number of shares of stock that the Company has the authority to issue.  Each
share  has one vote (and fractional shares have a corresponding fractional vote)
with respect to matters  upon which shareholder  vote is required;  stockholders
have  no cumulative voting  rights with respect  to their shares.  Shares of all
series vote together as  a single class  except that if  the matter being  voted
upon  affects only  a particular series  then it will  be voted on  only by that
series. If a matter affects a  particular series differently from other  series,
that  series will  vote separately  on such  matter. Each  share is  entitled to
participate equally in  dividends and  distributions declared  by the  Directors
with respect to the relevant series, and in the net distributable assets of such
series on liquidation.
 
     Under  Maryland law, the Company is not  required to hold an annual meeting
of stockholders unless required to do so under the 1940 Act. It is the Company's
policy not to  hold an annual  meeting of stockholders  unless so required.  All
shares  of the Company  (regardless of series)  have noncumulative voting rights
for the election of Directors. Under  Maryland law, the Company's Directors  may
be  removed  by vote  of  stockholders. The  Board  currently consists  of three
directors.
 
     CONTROL PERSONS. The Company expects that, immediately prior to the initial
public offering of its shares, the sole  holder of the capital stock of each  of
its series will be Signature. Upon the offering of the shares of the Funds, each
Fund  may  have  a  number  of  shareholders each  holding  5%  or  more  of the
outstanding shares of such  Fund. In such an  event, the Company cannot  predict
the  length of time  that such persons will  own such amounts  or whether one or
more of such persons will become 'control' persons of such Fund.
 
                                     SAI-23
 

<PAGE>
<PAGE>

UBS INVESTOR PORTFOLIOS TRUST
 
     UBS Investor Portfolios Trust,  a master trust fund  formed under New  York
law,  was organized on  February 9, 1996.  The Declaration of  Trust permits the
Trustees to issue interests in one or  more subtrusts or series. To date,  three
series  have  been authorized.  Each  series (i.e.,  a  Portfolio) of  the Trust
corresponds to a Fund of the Company.
 
     A copy of the Trust's Declaration of Trust is on file in the office of  the
Administrator.
 
     Holders  of interest in the Trust, such as the Funds, may redeem all or any
part of  their interest  in the  Trust at  any time,  upon the  submission of  a
redemption request in proper form. See 'Redemption of Shares'.
 
TAXES
 
     Each Fund intends to qualify and intends to remain qualified as a regulated
investment  company (a 'RIC') under  Subchapter M of the Code.  As a RIC, a Fund
must, among other  things: (a)  derive at  least 90%  of its  gross income  from
dividends,  interest, payments  with respect to  loans of  stock and securities,
gains from  the  sale or  other  disposition  of stock,  securities  or  foreign
currency  and other  income (including  but not  limited to  gains from options,
futures, and  forward  contracts)  derived  with  respect  to  its  business  of
investing  in such stock,  securities or foreign currency;  (b) derive less than
30% of its gross income from the sale or other disposition of stock, securities,
options, futures or forward  contracts (other than  options, futures or  forward
contracts  on foreign currencies) held less than three months; and (c) diversify
its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the
value of  the  Fund's total  assets  is  represented by  cash,  U.S.  Government
securities, investments in other RICs and other securities limited in respect of
any one issuer, to an amount not greater than 5% of the Fund's total assets, and
10%  of the outstanding voting securities of  such issuer and (ii) not more than
25% of the value of  its total assets is invested  in the securities of any  one
issuer  (other than U.S. Government securities or the securities of other RICs).
As a RIC, a Fund (as opposed to its shareholders) will not be subject to federal
income taxes on the net investment income and capital gains that it  distributes
to its shareholders, provided that at least 90% of its net investment income and
realized  net short-term capital gains in excess of net long-term capital losses
for the taxable year is distributed.
 
     For federal income tax purposes, dividends  that are declared by a Fund  in
October,  November or December  as of a  record date in  such month and actually
paid in January of the  following year will be treated  as if they were paid  on
December  31 of the  year declared. Therefore, such  dividends will generally be
taxable to a shareholder in the year declared rather than the year paid.
 
     Gains or losses on sales  of securities by a  Portfolio will be treated  as
long-term  capital gains or  losses if the  securities have been  held by it for
more than one  year except in  certain cases where,  if applicable, a  Portfolio
acquires  a put or writes a  call thereon. Other gains or  losses on the sale of
securities will be short-term capital gains  or losses. Gains and losses on  the
sale,  lapse or other  termination of options  on securities will  be treated as
gains and  losses  from the  sale  of securities.  If  an option  written  by  a
Portfolio  lapses  or is  terminated through  a closing  transaction, such  as a
repurchase by the Portfolio  of the option from  its holder, the Portfolio  will
realize  a short-term  capital gain  or loss,  depending on  whether the premium
income is greater or less than the  amount paid by the Portfolio in the  closing
transaction. If securities are purchased by a Portfolio pursuant to the exercise
of  a put option written by it, the Portfolio will subtract the premium received
from its cost basis in the securities purchased.
 
     Under the  Code, gains  or losses  attributable to  disposition of  foreign
currency  or to foreign currency contracts, or to fluctuations in exchange rates
between the time a Portfolio accrues income or receivables or expenses or  other
liabilities  denominated in a foreign currency and the time a Portfolio actually
collects such income or pays such liabilities, are treated as ordinary income or
ordinary loss. Similarly, gains or losses on the disposition of debt  securities
held  by a  Portfolio, if  any, denominated in  foreign currency,  to the extent
attributable to  fluctuations  in exchange  rates  between the  acquisition  and
disposition dates are also treated as ordinary income or loss.
 
     Forward currency contracts, options and futures contracts entered into by a
Portfolio  may create 'straddles' for U.S.  federal income tax purposes and this
may affect the character and timing of gains or
 
                                     SAI-24
 

<PAGE>
<PAGE>

losses realized  by  a Portfolio  on  forward currency  contracts,  options  and
futures  contracts or on the underlying  securities. 'Straddles' may also result
in the loss of the holding period  of underlying securities for purposes of  the
30%  of gross income test described  above, and therefore, a Portfolio's ability
to enter into forward currency contracts,  options and futures contracts may  be
limited.
 
     Certain options, futures and foreign currency contracts held by a Portfolio
at  the end of  each fiscal year will  be required to be  'marked to market' for
federal income  tax purposes  -- i.e.,  treated as  having been  sold at  market
value.  For  such  options  and  futures contracts,  60%  of  any  gain  or loss
recognized on these deemed sales and  on actual dispositions will be treated  as
long-term  capital gain or loss, and the remainder will be treated as short-term
capital gain or loss regardless of how long the Portfolio has held such  options
or  futures. Any gain or  loss recognized on foreign  currency contracts will be
treated as ordinary income.
 
     FOREIGN SHAREHOLDERS. Distributions of  net investment income and  realized
net  short-term capital  gains in  excess of net  long-term capital  losses to a
shareholder who, as to  the United States, is  a non-resident alien  individual,
fiduciary  of  a  foreign  trust  or  estate,  foreign  corporation  or  foreign
partnership (a 'foreign shareholder') will be subject to U.S. withholding tax at
the rate of  30% (or  lower treaty rate)  unless the  dividends are  effectively
connected  with a U.S. trade  or business of the  shareholder, in which case the
dividends will be subject to  tax on a net income  basis at the graduated  rates
applicable  to U.S. individuals  or domestic corporations.  Distributions of net
long-term capital gains to foreign shareholders will not be subject to U.S.  tax
unless  the distributions are effectively connected with the shareholder's trade
or business in  the United  States or, in  the case  of a shareholder  who is  a
non-resident  alien individual, the shareholder was present in the United States
for more than 182 days during the taxable year and certain other conditions  are
met.
 
     In  the case of a foreign shareholder who is a nonresident alien individual
and who is not otherwise subject to  withholding as described above, a Fund  may
be  required to withhold U.S.  federal income tax at the  rate of 31% unless IRS
Form W-8 is provided. See 'Taxes' in the Prospectus. Transfers by gift of shares
of a Fund by a  foreign shareholder who is  a nonresident alien individual  will
not  be subject to  U.S. federal gift tax,  but the value of  shares of the Fund
held by such a shareholder at his or her death will be includible in his or  her
gross estate for U.S. federal estate tax purposes.
 
     FOREIGN  TAXES. It is expected that  the International Equity Portfolio may
be subject to  foreign withholding taxes  with respect to  income received  from
sources  within  foreign  countries. In  the  case of  the  International Equity
Portfolio, so long as more than 50% in value of the Portfolio's total assets  at
the  close  of any  taxable  year consists  of  stock or  securities  of foreign
corporations, the Portfolio may elect to treat any foreign income taxes paid  by
it  as  paid directly  by  its shareholders.  The  Portfolio will  make  such an
election only if it deems it to be in the best interest of its shareholders. The
Portfolio will notify  its shareholders in  writing each year  if they make  the
election  and of the  amount of foreign income  taxes, if any,  to be treated as
paid by the shareholders. If the Portfolio makes the election, each  shareholder
of  the International  Equity Fund  will be  required to  include in  his or her
income their proportionate share of the  amount of foreign income taxes paid  by
the  Portfolio and  will be entitled  to claim  either a credit  (subject to the
limitations discussed below), or, if he or she itemizes deductions, a  deduction
for his or her share of the foreign income taxes in computing federal income tax
liability.  (No  deduction  will  be  permitted  in  computing  an  individual's
alternative minimum tax  liability.) A  shareholder who is  a nonresident  alien
individual  or a foreign corporation  may be subject to  U.S. withholding tax on
the income resulting from the election described in this paragraph, but may  not
be  able to claim  a credit or deduction  against such U.S.  tax for the foreign
taxes treated as having been paid by such shareholder. A tax-exempt  shareholder
will  not  ordinarily benefit  from this  election.  Shareholders who  choose to
utilize a credit (rather than a deduction) for foreign taxes will be subject  to
the  limitation  that  the credit  may  not  exceed the  shareholder's  U.S. tax
(determined without regard to  the availability of  the credit) attributable  to
his or her total foreign source taxable income. For this purpose, the portion of
dividends  and  distributions paid  by the  International  Equity Fund  from its
foreign source net investment income will  be treated as foreign source  income.
This  Portfolio's gains and losses from the sale of securities will generally be
treated as  derived from  U.S. sources,  however, and  certain foreign  currency
gains  and losses  likewise will  be treated as  derived from  U.S. sources. The
limitation   on    the    foreign    tax   credit    is    applied    separately
 
                                     SAI-25
 

<PAGE>
<PAGE>

to  foreign source 'passive  income', such as the  portion of dividends received
from the Portfolio  that qualifies as  foreign source income.  In addition,  the
foreign  tax credit is allowed to offset only 90% of the alternative minimum tax
imposed  on  corporations  and   individuals.  Because  of  these   limitations,
shareholders  may  be unable  to claim  a credit  for the  full amount  of their
proportionate shares  of the  foreign  income taxes  paid by  the  International
Equity Portfolio.
 
     STATE  AND LOCAL TAXES. Each Fund may be subject to state or local taxes in
jurisdictions in which that  Fund is deemed to  be doing business. In  addition,
the  treatment of a Fund  and its shareholders in  those states that have income
tax laws might  differ from  treatment under the  federal income  tax laws.  For
example,  a portion of the dividends received  by shareholders may be subject to
state income  tax.  Shareholders should  consult  their own  tax  advisors  with
respect to any state or local taxes.
 
ADDITIONAL INFORMATION
 
     This  SAI does not contain all the information included in the Registration
Statement filed with  the SEC under  the Securities  Act and the  1940 Act  with
respect to the securities offered hereby. Certain portions of this SAI have been
omitted  pursuant  to the  rules and  regulations of  the SEC.  The Registration
Statement, including the exhibits filed  therewith, the Prospectus and the  SAI,
may  be examined at the office of the SEC, Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington D.C. 20549.
 
     Statements contained in this SAI to the contents of any agreement or  other
document  referred  to  are not  necessarily  complete, and,  in  each instance,
reference is made to the  copy of such agreement or  other document filed as  an
exhibit  to the Registration Statement of which this document forms a part, each
such statement being qualified in all respects by such reference.
 
                                     SAI-26

<PAGE>
<PAGE>

UBS PRIVATE INVESTOR FUNDS, INC.
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1996
- --------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                                                                       UBS             UBS
                                                                         UBS       U.S. EQUITY    INTERNATIONAL
                                                                      BOND FUND       FUND         EQUITY FUND
                                                                      ---------    -----------    -------------
 
<S>                                                                   <C>          <C>            <C>
ASSETS
     Cash..........................................................    $25,000       $25,000         $25,000
     Deferred organization costs...................................     72,500        72,500          72,500
                                                                      ---------    -----------    -------------
          Total Assets.............................................     97,500        97,500          97,500
                                                                      ---------    -----------    -------------
LIABILITIES
     Organization expenses payable.................................     72,500        72,500          72,500
                                                                      ---------    -----------    -------------
NET ASSETS.........................................................    $25,000       $25,000         $25,000
                                                                      ---------    -----------    -------------
                                                                      ---------    -----------    -------------
Shares outstanding ($0.001 par value)..............................        250           250             250
                                                                      ---------    -----------    -------------
                                                                      ---------    -----------    -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE.....    $100.00       $100.00         $100.00
                                                                      ---------    -----------    -------------
                                                                      ---------    -----------    -------------
COMPOSITION OF NET ASSETS:
     Shares of common stock, at par................................    $     0       $     0         $     0
     Additional paid-in capital....................................     25,000        25,000          25,000
                                                                      ---------    -----------    -------------
Net Assets, January 31, 1996.......................................    $25,000       $25,000         $25,000
                                                                      ---------    -----------    -------------
                                                                      ---------    -----------    -------------
</TABLE>
 
                       See Notes to Financial Statements.
 
                                      F-1

<PAGE>
<PAGE>

UBS Private Investor Funds, Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements
January 31, 1996
- --------------------------------------------------------------------------------
 
NOTE 1 -- GENERAL
 
UBS  Private Investor  Funds, Inc. (the  'Company') was organized  as a Maryland
corporation on  November 16,  1995.  The Company  consists  of four  series,  as
follows:  UBS Bond Fund, UBS Tax Exempt Bond  Fund, UBS U.S. Equity Fund and UBS
International Equity  Fund.  The  accompanying financial  statements  and  notes
relate  to only UBS Bond Fund, UBS U.S. Equity Fund and UBS International Equity
Fund (collectively, the 'Funds').
 
UBS Bond Fund, UBS U.S.  Equity Fund and UBS  International Equity Fund seek  to
achieve  their  investment objectives  by investing  substantially all  of their
investable assets  in UBS  Bond Portfolio,  UBS U.S.  Equity Portfolio  and  UBS
International  Equity Portfolio (collectively,  the 'Portfolios'), respectively.
The Portfolios are series  of UBS Investor Portfolios  Trust (the 'Master'),  an
open-end   management  investment  company,  and  have  substantially  the  same
investment objective as each corresponding Fund.
 
As  the  Funds  seek  to  achieve  their  investment  objectives  by   investing
substantially  all of their investable assets in corresponding Portfolios of the
Master, these Funds  have not retained  the services of  an investment  adviser.
Rather,  the Master will retain  the services of Union  Bank of Switzerland, New
York Branch  (the  'Branch') as  investment  adviser.  Under the  terms  of  the
Investment  Advisory Agreement between each Portfolio and the Branch, the Branch
will be  entitled to  receive a  fee  for the  provision of  investment  advice,
portfolio management and certain administrative services to the Portfolios. This
fee  is calculated daily  and payable monthly  based on a  percentage of the net
assets of each Portfolio at the following annual rates:
 
<TABLE>
<S>                                                                     <C>
UBS Bond Portfolio...................................................   0.45%
UBS U.S. Equity Portfolio............................................   0.60%
UBS International Equity Portfolio...................................   0.85%
</TABLE>
 
As each Fund  absorbs a pro-rata  portion of the  expenses of its  corresponding
Portfolio, this fee, although incurred by the Portfolio, is borne by each Fund.
 
In  addition to the  Investment Advisory Agreement, the  Branch expects to enter
into a Sub-Advisory Agreement with  UBS International Investment London  Limited
('UBSII')  with respect to UBS International  Equity Fund. Pursuant to the terms
of this agreement, the Branch will pay  UBSII a monthly fee out of its  advisory
fee.
 
Signature  Broker-Dealer Services, Inc.  ('Signature') will serve  as the Funds'
administrator, principal underwriter and distributor of the Funds' shares.
 
The Funds have had no operations through January 31, 1996 other than the sale to
Signature of 250 shares of each Fund for $25,000.
 
Organization costs  incurred in  connection with  the organization  and  initial
registration  of the Funds will  be paid initially by  UBS and reimbursed by the
Funds. Such organization costs have been deferred and will be amortized  ratably
over  a period of sixty  months from the commencement  of operations. The amount
paid by each Fund on any redemption by Signature (or any subsequent holder) of a
Fund's initial shares will be reduced by the pro-rata portion of any unamortized
organization expenses of the Fund and its corresponding Portfolio. The amount of
such reduction  attributable  to  the  unamortized  organization  costs  of  the
corresponding  Portfolio shall be  contributed by the  Fund to its corresponding
Portfolio.
 
NOTE 2 -- AGREEMENTS
 
The Company  expects to  enter into  an Administrative  Services Agreement  with
Signature  pursuant  to  which  it  will  agree  to  administer  the  day-to-day
operations of the Funds  subject to the  direction and control  of the Board  of
Directors of the Company. For the services provided to the Funds, Signature will
 
                                      F-2
 

<PAGE>
<PAGE>

receive  a fee, accrued daily and payable monthly, at an annual rate of 0.05% of
each Fund's first $100 million  average net assets and  0.025% of the next  $100
million  of such  assets. Signature  will not be  paid a  fee on  such assets in
excess of $200 million.
 
The Master  expects to  enter  into an  Administrative Services  Agreement  with
Signature   Financial  Group  (Grand  Cayman)  Limited  ('Signature-Cayman'),  a
wholly-owned subsidiary  of  Signature.  Under  the  terms  of  this  Agreement,
Signature-Cayman  will administer  the day-to-day  operations of  the Portfolios
subject to the direction and control of the Board of Trustees of the Master. For
services provided to the Portfolio, Signature will receive a fee, accrued  daily
and  payable monthly, at an annual rate of 0.05% of each Portfolio's average net
assets. As  each  Fund  absorbs  a  pro-rata portion  of  the  expenses  of  its
corresponding  Portfolio, this fee, although incurred by the Portfolio, is borne
by each Fund.
 
Signature expects to enter into a  Distribution Agreement with the Company.  The
Distributor  does not receive  a fee pursuant  to the terms  of the Distribution
Agreement.
 
The Company expects to enter into separate Shareholder Servicing Agreements (the
'SSA') with the  Branch and Signature.  Pursuant to  the terms of  the SSA,  the
Branch  will agree to provide shareholder support  to their clients who are also
shareholders of the Funds while Signature will agree to provide support services
to all other shareholders of  the Funds. Both Signature  and the Branch will  be
entitled to a fee under the SSA, accrued daily and payable monthly, at an annual
rate of 0.25% of the average balance of the accounts so serviced. Services to be
provided may include, but are not limited to, any of the following: establishing
and/or maintaining shareholder accounts and records, assisting investors seeking
to purchase or redeem Fund shares, providing performance information relating to
the Fund and responding to shareholder inquiries.
 
The Branch has voluntarily agreed to waive a portion of its fees and reimburse a
portion  of Fund expenses to the extent  that the ordinary operating expenses of
the Funds (including  the expenses  of the  Portfolios allocated  to the  Funds)
exceed the following annual rates of each such Fund's average net assets:
 
<TABLE>
<CAPTION>
                          FUND                             EXPENSE LIMITATION
- --------------------------------------------------------   ------------------
 
<S>                                                        <C>
UBS Bond Fund...........................................          0.80%
UBS U.S. Equity Fund....................................          0.90%
UBS International Equity Fund...........................          1.40%
</TABLE>
 
                                      F-3
 

<PAGE>
<PAGE>

                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Shareholder and Board of Directors of
UBS PRIVATE INVESTOR FUNDS, INC.
 
In  our opinion, the  accompanying statement of  assets and liabilities presents
fairly, in all material respects, the  financial position of UBS Bond Fund,  UBS
U.S.  Equity Fund and  UBS International Equity  Fund (three of  the four series
constituting UBS  Private Investor  Funds, Inc.,  hereafter referred  to as  the
'Funds')  at January 31, 1996, in  conformity with generally accepted accounting
principles. This  financial  statement  is  the  responsibility  of  the  Fund's
management;  our  responsibility  is to  express  an opinion  on  this financial
statement based on our audit. We conducted our audit of this financial statement
in accordance with generally accepted  auditing standards which require that  we
plan  and perform  the audit  to obtain  reasonable assurance  about whether the
financial  statement  is  free  of  material  misstatement.  An  audit  includes
examining,  on a test basis, evidence  supporting the amounts and disclosures in
the  financial  statement,   assessing  the  accounting   principles  used   and
significant  estimates made by management,  and evaluating the overall financial
statement presentation. We believe  that our audit  provides a reasonable  basis
for the opinion expressed above.
 
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
January 31, 1996
 
                                      F-4
<PAGE>




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