<PAGE>
<PAGE>
UBS
BOND
FUND
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UBS
Private Investor
Funds, Inc.
Semi-Annual Report
June 30, 1997
<PAGE>
<PAGE>
UBS Private Investor Funds, Inc.
Chairman's Letter
- --------------------------------------------------------------------------------
Dear Shareholder,
Thank you for your investment in the UBS Bond Fund, which is part of the UBS
Private Investor Funds.
We are pleased to provide you with the Fund's semi-annual report for the six
months ended June 30, 1997. This report contains a letter from the portfolio
manager discussing the performance of the Fund for the six months ended June 30,
1997 including an economic overview. In addition, it includes a complete set of
financial statements as well as a schedule of investments.
The UBS Private Investor Funds are an integral part of the asset allocation
service provided by The Private Bank* of Union Bank of Switzerland, the largest
bank in Switzerland. The Funds provide investment opportunities in U.S. and
international securities markets to enhance investment performance, diversify
risk and preserve capital within your investment objectives.
The UBS Private Investor Funds:
Bring you the expertise of The Private Bank's professional money managers
Make available global investment perspective and knowledge
Place a high priority on financial stability and preservation of wealth
To learn more about the other UBS Private Investor Funds, please call (888)
UBS-FUND. You will be provided with a copy of a prospectus which contains more
complete information including charges and expenses. Please read it carefully
before investing.
We appreciate your confidence in the UBS Private Investor Funds.
Sincerely,
Dr. HansPeter Lochmeier
Chairman of the Board
UBS Private Investor Funds, Inc.
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* 'The Private Bank', as used in this document, refers to Union Bank of
Switzerland, New York Branch.
This semi-annual report must be accompanied or preceded by the Fund's
prospectus.
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UBS Private Investor Funds, Inc.
Fund Commentary
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FUND PERFORMANCE
For the second quarter the UBS Bond Fund (the 'Fund') returned 2.75% versus
2.95% for the Lehman Intermediate Corporate/Government Bond Index (the 'Index').
For the six months ended June 30, 1997, the Fund returned 2.58% versus 2.83% for
the Index.
Growth of a $10,000 Investment
(Hypothetical -- Past performance is not an indication of future results.)
This chart provides a comparison of the Fund's performance to that of the Lehman
Brothers Intermediate Government/Corporate Bond Index. This chart compares total
returns (which includes changes in share price and reinvestment of all dividends
and capital gains) of a hypothetical $10,000 investment made on April 2, 1996
(commencement of operations) and held through June 30, 1997.
[GRAPH]
LEHMAN BROTHERS
INTERMEDIATE
UBS BOND GOVT./CORP.
DATE FUND BOND INDEX
-------- -------- ---------------
4/2/96 $10,000 $10,000
4/30/96 9,935 9,958
5/31/96 9,930 9,950
6/30/96 10,031 10,056
7/31/96 10,057 10,086
8/31/96 10,072 10,094
9/30/96 10,199 10,234
10/31/96 10,378 10,415
11/30/96 10,512 10,553
12/31/96 10,436 10,485
1/31/97 10,470 10,526
2/28/97 10,485 10,546
3/31/97 10,419 10,473
4/30/97 10,532 10,597
5/31/97 10,605 10,685
6/30/97 10,706 10,782
Average Annual Total Return
<TABLE>
<CAPTION>
LEHMAN BROTHERS
INTERMEDIATE
UBS BOND GOVT./CORP.
FUND BOND INDEX
-------- ---------------
<S> <C> <C>
Six months ended June 30, 1997........................................... 2.58% 2.83%
1 year ended June 30, 1997............................................... 6.73% 7.23%
April 2, 1996 (commencement of operations) through
June 30, 1997.......................................................... 5.62% 6.23%
</TABLE>
ECONOMIC OVERVIEW
The market suffered between December 1996 and March 1997 as renewed economic
vigor and low and declining unemployment increased fears of higher inflation and
protracted Fed tightening following a 25 b.p. rate hike on March 25, the first
in over two years. The market reversed course in the second quarter as economic
growth eased, and inflation remained quite benign: if the volatile food and
energy sectors
2
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UBS Private Investor Funds, Inc.
Fund Commentary
- --------------------------------------------------------------------------------
are excluded, core inflation as measured by the (core) Consumer Price Index has
risen at a 2.6% annualized rate in the first five months of the year, unchanged
from the inflation rate in 1996.
ECONOMIC FORECAST
While second quarter consumer spending has been below-trend, we regard the
deceleration primarily as a 'payback' from extremely rapid growth in the first
quarter. We expect real growth, excluding inventories, to rise by 3.5% in the
third quarter, driven by stronger consumer demand, with declining inventory
accumulation expected to pull GDP growth down to 3.0%. If this forecast were to
come to fruition, we believe it would create modest upward pressure on yields
late in the third quarter.
STRATEGY
Duration:
Although we continue to believe that the economy will grow more rapidly in the
third quarter than in the second, the shorter-term outlook is for a continued
rally in the market. Fundamentally, we expect a continuation of market-friendly
inflation data through the end of July. We are also concerned that at current
yields, the risk has increased that mortgage managers will need to buy
Treasuries to offset declining durations in MBS portfolios, propelling the
Treasury market higher. Accordingly in July we are moving our duration target
from a modest short to neutral. Currently, our duration is equal to that of the
benchmark.
Yield Curve:
The yield curve is likely to flatten by year-end but significant flattening is
unlikely to occur in the next one to two months. We have reduced our overweight
in the intermediate (5 to 10 year) sector and are currently neutral to the
curve.
Sector:
Investment Grade Corporates:
Despite continued supply (annualized year to date issuance close to $150
billion), investment grade corporate spreads remained firm in June, at or near
the all time tights for most sectors. We have reduced corporate exposure in the
bank and finance sectors and intend to maintain a corporate duration that is
shorter than the index corporate duration.
Non-US Dollars:
European bond markets outperformed US Treasuries and the strongest performance
came from the high yielding European markets which benefited from continued
pro-EMU sentiment. Both France and Germany reaffirmed their commitment to EMU
under the current timetable, indicating continued fiscal stringency, given that
this is likely to be the only way that the deficit targets will be achieved. As
a result, European bond markets rallied while core European currencies weakened
against the US Dollar.
3
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UBS Private Investor Funds, Inc.
Fund Commentary
- --------------------------------------------------------------------------------
We maintained an exposure of approximately 5% of the portfolio in 5 and 6 year
German bonds fully hedged into US Dollars. This position outperformed equivalent
duration US Treasury positions by 0.4%. In addition to European exposure, we
maintained a 2.5% position in 3 year duration Canadian government bonds,
contributing 0.08 years in weighted average duration. Canada unexpectedly raised
rates mid-month which caused shorter dated bonds to lag US Treasuries although
the total return over the month still remained positive at around 0.75 b.p.
Ranjani Nagaswami
Portfolio Manager
Maud I. Welles
Portfolio Manager
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The Fund is not insured by the FDIC and is not a deposit with, an obligation of,
or guaranteed by Union Bank of Switzerland. The Fund is subject to investment
risks, including possible loss of principal amount invested.
Shares of the Fund are distributed by First Fund Distributors, Inc. which is not
affiliated with Union Bank of Switzerland.
Unlike other mutual funds, the Fund seeks to achieve its investment objective by
investing all of its investable assets in UBS Investor Portfolios Trust -- UBS
Bond Portfolio (the 'Portfolio') which is a separate fund with an identical
investment objective.
Union Bank of Switzerland is voluntarily waiving all shareholder servicing fees
for the Fund and reimbursing a portion of the Fund's expenses. Union Bank of
Switzerland is also waiving a portion of its advisory fees for the Portfolio. If
Union Bank of Switzerland had not waived fees and reimbursed expenses, total
return would have been lower. Past performance is not a guarantee of future
results. Investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost.
The Lehman Brothers Intermediate Government/Corporate Bond Index is an unmanaged
composite of intermediate duration consisting of publicly issued, fixed rate,
non-convertible domestic bonds.
4
<PAGE>
<PAGE>
UBS Bond Fund
Statement of Assets and Liabilities
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in UBS Investor Portfolios Trust -- UBS Bond
Portfolio, at value................................................................ $7,882,232
Receivable from funds services agent................................................. 10,224
Deferred organization expenses and other assets...................................... 106,171
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Total Assets............................................................... 7,998,627
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LIABILITIES:
Administrative services fees payable................................................. 913
Dividends payable.................................................................... 250
Other accrued expenses............................................................... 14,561
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Total Liabilities.......................................................... 15,724
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NET ASSETS........................................................................... $7,982,903
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----------
SHARES OUTSTANDING ($0.001 par value, 10 million shares authorized).................. 79,955
----------
----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE....................... $99.84
----------
----------
COMPOSITION OF NET ASSETS:
Shares of common stock, at par....................................................... $ 80
Additional paid-in capital........................................................... 8,043,010
Net unrealized depreciation of investments, foreign currency contracts and foreign
currency translations.............................................................. (65,969)
Accumulated undistributed net investment income...................................... 703
Accumulated undistributed net realized gains on securities and foreign currency
transactions....................................................................... 5,079
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Net Assets................................................................. $7,982,903
----------
----------
</TABLE>
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See notes to financial statements.
5
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UBS Bond Fund
Statement of Operations
For the Six Months Ended June 30, 1997 (Unaudited)
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<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Investment Income and Expenses allocated from UBS Investor Portfolios
Trust -- UBS Bond Portfolio
Interest............................................................ $259,110
Dividends........................................................... 8,483
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Investment income.............................................. $267,593
Total expenses...................................................... 31,126
Less: Fee waiver.................................................... (10,361)
--------
Net expenses........................................................ 20,765
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Net Investment Income from UBS Investor Portfolios Trust -- UBS Bond
Portfolio.............................................................. 246,828
EXPENSES:
Shareholder service fees................................................. 10,408
Administrative services fees............................................. 2,369
Amortization of organization expenses.................................... 9,708
Reports to shareholders expense.......................................... 9,350
Audit fees............................................................... 5,434
Transfer agent fees...................................................... 5,200
Legal fees............................................................... 4,837
Registration fees........................................................ 4,150
Fund accounting fees..................................................... 3,841
Directors' fees.......................................................... 2,976
Miscellaneous expenses................................................... 1,389
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Total expenses...................................................... 59,662
Less: Fee waiver and expense reimbursements......................... (47,121)
--------
Net expenses........................................................ 12,541
--------
Net investment income.................................................... 234,287
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM UBS INVESTOR
PORTFOLIOS TRUST -- UBS BOND PORTFOLIO
Net realized loss on securities transactions............................. (18,384)
Net realized gain on foreign currency transactions....................... 25,864
Net change in unrealized depreciation of investments..................... (58,210)
Net change in unrealized appreciation of foreign currency contracts and
translations........................................................... (8,380)
--------
Net realized and unrealized loss on investments from UBS Investor
Portfolios Trust -- UBS Bond Portfolio................................. (59,110)
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $175,177
--------
--------
</TABLE>
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See notes to financial statements.
6
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<PAGE>
UBS Bond Fund
Statement of Changes in Net Assets
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<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 2, 1996*
JUNE 30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
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<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income.......................................................... $ 234,287 $ 171,160
Net realized gain on securities and foreign currency transactions.............. 7,480 3,907
Net change in unrealized appreciation of investments, foreign currency
contracts and foreign currency translations.................................. (66,590) 621
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Net increase in net assets resulting from operations........................... 175,177 175,688
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DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.......................................................... (229,498) (170,408)
Net realized gains............................................................. (11,079) (1,273)
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Total dividends and distributions to shareholders.............................. (240,577) (171,681)
------------- --------------
TRANSACTIONS IN SHARES OF COMMON STOCK:
Net proceeds from sale of shares............................................... 4,198,955 10,846,978
Net asset value of shares issued to shareholders in reinvestment of dividends
and distributions............................................................ 221,462 127,366
Cost of shares redeemed........................................................ (3,872,404) (3,503,061)
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Net increase in net assets from transactions in shares of common stock......... 548,013 7,471,283
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NET INCREASE IN NET ASSETS..................................................... 482,613 7,475,290
NET ASSETS:
Beginning of period............................................................ 7,500,290 25,000
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End of period (including undistributed net investment income of $703 and
accumulated net investment loss of $4,086, respectively)..................... $ 7,982,903 $ 7,500,290
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</TABLE>
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* Commencement of operations.
See notes to financial statements.
7
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UBS Bond Fund
Financial Highlights
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<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 2, 1996*
JUNE 30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
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<S> <C> <C>
FOR A SHARE OUTSTANDING FOR THE PERIOD
Net asset value, beginning of period............................................ $100.13 $100.00
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Income from investment operations:
Net investment income...................................................... 2.79 4.12
Net realized and unrealized (loss) gain on investments, foreign currency
contracts and foreign currency translations.............................. (0.25) 0.14
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Total income from investment operations.................................... 2.54 4.26
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Less dividends and distributions to shareholders:
Dividends from net investment income....................................... (2.72) (4.11)
Distributions from net realized gains...................................... (0.11) (0.02)
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Total dividends and distributions.......................................... (2.83) (4.13)
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Net asset value, end of period.................................................. $ 99.84 $100.13
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Total return.................................................................... 2.58%(1) 4.36%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)................................... $ 7,983 $ 7,500
Ratio of expenses to average net assets(2)................................. 0.80%(3) 0.80%(3)
Ratio of net investment income to average net assets(2).................... 5.63%(3) 5.61%(3)
</TABLE>
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* Commencement of operations.
(1) Not annualized.
(2) Includes the Fund's share of UBS Investor Portfolios Trust -- UBS Bond
Portfolio expenses and net of fee waivers and expense reimbursements. Such
fee waivers and expense reimbursements had the effect of reducing the ratio
of expenses to average net assets and increasing the ratio of net investment
income to average net assets by 1.38% (annualized) and 3.33% (annualized)
for the respective periods.
(3) Annualized.
See notes to financial statements.
8
<PAGE>
<PAGE>
UBS Bond Fund
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
1. GENERAL
UBS Bond Fund (the 'Fund') is a diversified, no-load mutual fund registered
under the Investment Company Act of 1940. The Fund is a series of UBS Private
Investor Funds, Inc. (the 'Company'), an open-end management investment company
organized as a corporation under Maryland law. At June 30, 1997, the Company
included three other funds, UBS U.S. Equity Fund, UBS International Equity Fund
and UBS Institutional International Equity Fund. These financial statements
relate only to the Fund.
The Fund seeks to achieve its investment objective by investing substantially
all of its investable assets in the UBS Bond Portfolio of UBS Investor
Portfolios Trust (the 'Portfolio'), an open-end management investment company
that has the same investment objective as that of the Fund.
Investors Bank & Trust Company ('IBT') serves as the Fund's administrator and
First Fund Distributors, Inc. ('FFDI') serves as the Fund's distributor. Union
Bank of Switzerland, New York Branch ('UBS') serves as the funds services agent
to the Fund.
The financial statements of the Portfolio, including its Schedule of
Investments, are included elsewhere within this report and should be read in
conjunction with the Fund's financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. Significant accounting policies
followed by the Fund are as follows:
A. INVESTMENT VALUATION -- The value of the Fund's investment in the Portfolio
included in the accompanying Statement of Assets and Liabilities reflects the
Fund's proportionate beneficial interest in the net assets of the Portfolio
(13.7% at June 30, 1997). Valuation of securities by the Portfolio is discussed
in Note 2A of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report.
B. INVESTMENT INCOME, EXPENSES AND REALIZED AND UNREALIZED GAINS AND
LOSSES -- The Fund records its share of the investment income, expenses and
realized and unrealized gains and losses recorded by the Portfolio on a daily
basis. The investment income, expenses and realized and unrealized gains and
losses are allocated daily to investors of the Portfolio based upon the amount
of their investment in the Portfolio.
C. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies, including
the requirement to distribute substantially all of its taxable income, including
any net realized capital gains on investment transactions, to its shareholders.
Accordingly, no provision for federal income or excise taxes is necessary.
D. DIVIDENDS AND DISTRIBUTIONS -- The Fund declares dividends from net
investment income to shareholders of record on the day of declaration. Such
dividends are declared daily and paid monthly. Net realized gains, if any, will
be distributed at least annually. However, to the extent that net realized gains
of the Fund can be reduced by capital loss carryovers, such gains will not be
distributed. Dividends and distributions are recorded on the ex-dividend date.
The amounts of dividends from net investment income and distributions from net
realized gains are determined in accordance with federal income tax regulations
which may differ from generally accepted accounting principles. These 'book/tax'
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the
9
<PAGE>
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UBS Bond Fund
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
composition of net assets based upon their federal tax-basis treatment;
temporary differences do not require reclassification. For the fiscal year ended
December 31, 1996, the Fund increased accumulated undistributed net realized
gains by $6,044, reduced accumulated undistributed net investment income by
$4,838 and decreased paid-in capital by $1,206. Net investment income, net
realized gains and net assets were not affected by this change.
E. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Fund in connection
with its organization in the amount of approximately $107,000 have been deferred
and are being amortized on a straight line basis over five years from the Fund's
commencement of operations (April 2, 1996).
F. OTHER -- The Fund bears all costs of its operations other than expenses
specifically assumed by IBT, FFDI and UBS. Expenses incurred by the Company on
behalf of any two or more funds are allocated in proportion to the net assets of
each fund, except when allocations of direct expenses to each fund can otherwise
be made fairly. Expenses directly attributable to the Fund are charged directly
to the Fund.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. ADMINISTRATION AGREEMENT -- Under the terms of an Administration Agreement
with the Company effective March 13, 1997, IBT provides overall administrative
services and general office facilities. As compensation for such services, the
Company has agreed to pay IBT a fee, accrued daily and payable monthly, at an
annual rate of 0.065% of the Fund's first $100 million average daily net assets
and 0.025% of the next $100 million average daily net assets. IBT does not
receive a fee on average daily net assets in excess of $200 million. Prior to
March 13, 1997, Signature Broker-Dealer Services, Inc. ('Signature') provided
overall administrative services and general office facilities. As compensation
for such services, the Company had agreed to pay Signature a fee, accrued daily
and paid monthly, at an annual rate of 0.05% of the Fund's first $100 million
average daily net assets and 0.025% of the next $100 million average daily net
assets. Signature did not receive a fee on average daily net assets in excess of
$200 million. For the six months ended June 30, 1997, the administrative
services fee amounted to $2,369.
B. DISTRIBUTION AGREEMENT -- Under the terms of a Distribution Agreement
effective March 13, 1997, FFDI serves as the distributor of Fund shares. FFDI
does not receive any fees from the Fund for services provided pursuant to this
agreement. Prior to March 13, 1997, Signature served as the distributor of Fund
shares. Signature did not receive any additional fees for services provided as
the distributor.
C. SHAREHOLDER SERVICING AGREEMENT -- The Fund has entered into a Shareholder
Servicing Agreement with UBS pursuant to which UBS provides certain services to
shareholders of the Fund. The Fund has agreed to pay UBS a fee for these
services, accrued daily and payable monthly, at an annual rate of 0.25% of the
average daily net assets of the Fund. For the six months ended June 30, 1997,
the shareholder service fee amounted to $10,408, all of which was waived.
D. FUNDS SERVICES AGREEMENT -- Under the terms of a Funds Services Agreement
with the Company, UBS has agreed to provide certain administrative services to
the Fund. UBS is not entitled to any additional compensation pursuant to this
agreement.
E. EXPENSE REIMBURSEMENTS -- UBS has voluntarily agreed to limit the total
operating expenses of the Fund, including its share of the Portfolio's expenses
and excluding extraordinary expenses, to an annual rate of 0.80% of the Fund's
average daily net assets. For the six months ended June 30, 1997, UBS reimbursed
the Fund for expenses totaling $36,713 in connection with this voluntary
limitation. UBS may modify or discontinue this voluntary expense limitation at
any time with 30 days' advance notice to the Fund.
10
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UBS Bond Fund
Notes to Financial Statements
June 30, 1997 (Unaudited)
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4. CAPITAL SHARE TRANSACTIONS
At June 30, 1997 there were 500 million shares of the Company's common stock
authorized, of which 10 million shares were classified as common stock of the
Fund. Transactions in shares of the Fund were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD FROM APRIL 2, 1996
JUNE 30, 1997 (COMMENCEMENT OF OPERATIONS)
(UNAUDITED) THROUGH DECEMBER 31, 1996
------------- ----------------------------
<S> <C> <C>
Shares subscribed.................................... 42,085 108,567
Shares issued in reinvestment of dividends and
distributions...................................... 2,226 1,278
Shares redeemed...................................... (39,262) (35,189)
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Net increase in shares outstanding................... 5,049 74,656
------------- ----------
------------- ----------
</TABLE>
11
<PAGE>
<PAGE>
UBS Bond Portfolio
Schedule of Investments
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE COUPON MATURITY
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- ----------- ---------------------------------------------------------------- ------ -------- -----------
<S> <C> <C> <C> <C>
U.S. TREASURY & U.S. GOVERNMENT AGENCY OBLIGATIONS -- 54.9%
U.S. TREASURY OBLIGATIONS -- 50.9%
$10,800,000 U.S. Treasury Bond.............................................. 5.88% 11/15/99 $10,730,772
1,203,000 U.S. Treasury Bond.............................................. 7.75% 1/31/00 1,246,801
1,375,000 U.S. Treasury Bond.............................................. 6.25% 4/30/01 1,371,136
1,150,000 U.S. Treasury Bond.............................................. 6.75% 8/15/26 1,138,144
1,000,000 U.S. Treasury Note.............................................. 6.00% 8/31/97 1,000,620
790,000 U.S. Treasury Note.............................................. 5.25% 7/31/98 785,063
100,000 U.S. Treasury Note.............................................. 7.00% 4/15/99 101,578
1,100,000 U.S. Treasury Note.............................................. 6.50% 4/30/99 1,108,250
1,255,000 U.S. Treasury Note.............................................. 6.38% 4/30/99 1,261,664
150,000 U.S. Treasury Note.............................................. 6.75% 5/31/99 151,734
1,700,000 U.S. Treasury Note.............................................. 6.38% 7/15/99 1,709,299
155,000 U.S. Treasury Note.............................................. 6.88% 8/31/99 157,300
145,000 U.S. Treasury Note.............................................. 7.13% 9/30/99 147,968
375,000 U.S. Treasury Note.............................................. 5.88% 2/15/00 372,011
1,950,000 U.S. Treasury Note.............................................. 7.13% 2/29/00 1,992,647
505,000 U.S. Treasury Note.............................................. 6.75% 4/30/00 511,626
800,000 U.S. Treasury Note.............................................. 5.50% 12/31/00 779,872
500,000 U.S. Treasury Note.............................................. 6.63% 7/31/01 504,685
1,000,000 U.S. Treasury Note.............................................. 6.25% 2/28/02 994,370
1,514,000 U.S. Treasury Note.............................................. 7.50% 5/15/02 1,584,260
1,170,000 U.S. Treasury Note.............................................. 6.38% 8/15/02 1,169,637
419,000 U.S. Treasury Note.............................................. 7.25% 5/15/04 436,740
100,000 U.S. Treasury Note.............................................. 7.25% 8/15/04 104,250
-----------
29,360,427
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 4.0%
1,400,000 Federal Home Loan Mortgage Corp................................. 5.96% 10/20/00 1,380,974
975,758 Federal National Mortgage Assc., Pool #250576................... 7.00% 6/01/26 957,882
-----------
2,338,856
-----------
TOTAL U.S. TREASURY & U.S. GOVERNMENT AGENCY
OBLIGATIONS (COST $31,647,493)................................ 31,699,283
-----------
CORPORATE OBLIGATIONS -- 31.5%
CORPORATE OBLIGATIONS -- DOMESTIC -- 30.5%
AEROSPACE/DEFENSE -- 0.9%
500,000 Lockheed Martin................................................. 6.55% 5/15/99 501,668
-----------
BANKING -- 3.3%
500,000 BanPonce Corp. ................................................. 6.75% 4/26/00 501,215
600,000 First USA Bank.................................................. 7.00% 8/20/01 601,776
720,000 J.P. Morgan & Co. .............................................. 8.50% 8/15/03 776,138
-----------
1,879,129
-----------
BROKERAGE -- 3.9%
1,000,000 Goldman Sachs (a)............................................... 7.80% 7/15/02 1,037,770
750,000 Lehman Brothers Inc. ........................................... 6.89% 10/10/00 752,093
200,000 Lehman Brothers Inc. ........................................... 7.25% 4/15/03 200,788
250,000 Salomon Inc. ................................................... 7.30% 5/15/02 252,008
-----------
2,242,659
-----------
BUILDING SUPPLIES -- 0.9%
500,000 Sherwin Williams................................................ 6.25% 2/01/00 498,909
-----------
CAPITAL EQUIPMENT -- 1.4%
800,000 Case Corp. ..................................................... 7.25% 8/01/05 805,336
-----------
</TABLE>
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See notes to financial statements.
12
<PAGE>
<PAGE>
UBS Bond Portfolio
Schedule of Investments
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE COUPON MATURITY
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- ----------- ---------------------------------------------------------------- ------ -------- -----------
<S> <C> <C> <C> <C>
FINANCING & LEASING -- 6.1%
$ 950,000 Associates Corp. N.A............................................ 8.50% 1/10/00 $ 993,976
500,000 CIT Group Holdings.............................................. 6.70% 6/02/00 503,399
1,000,000 Chrysler Finance................................................ 6.53% 6/19/00 1,001,280
750,000 Countrywide Home Loan........................................... 7.45% 9/16/03 764,550
265,000 General Electric Capital Corp................................... 6.88% 4/15/00 268,567
-----------
3,531,772
-----------
FOOD -- 0.4%
200,000 Foodbrands America, Inc. ....................................... 10.75% 5/15/06 234,464
-----------
FUNERAL SERVICES -- 1.0%
600,000 Loewen Group International, Inc. ............................... 7.50% 4/15/01 607,547
-----------
INDUSTRIAL -- CAPTIVE FINANCE -- 3.8%
600,000 Caterpillar Financial........................................... 6.77% 12/29/00 601,860
1,000,000 Pitney Bowes Credit............................................. 6.54% 7/15/99 1,003,740
600,000 Sears Roebuck Acceptance Corp................................... 5.59% 2/16/01 578,994
-----------
2,184,594
-----------
MEDIA/CABLE -- 2.1%
600,000 News America Holdings........................................... 7.50% 3/01/00 611,916
400,000 Turner Broadcasting............................................. 7.40% 2/01/04 401,203
200,000 Viacom, Inc. ................................................... 6.75% 1/15/03 192,320
-----------
1,205,439
-----------
REAL ESTATE -- 1.4%
700,000 Chelsea GCA Realty.............................................. 7.75% 1/26/01 710,927
125,000 Susa Partnership LP............................................. 7.13% 11/01/03 123,217
-----------
834,144
-----------
TELECOMMUNICATIONS -- 1.9%
400,000 U.S. West Capital Funding....................................... 6.85% 1/15/02 399,572
700,000 WorldCom Inc. .................................................. 7.55% 4/01/04 713,104
-----------
1,112,676
-----------
TRANSPORTATION -- 0.5%
300,000 Norfolk Southern Corporation.................................... 6.95% 5/01/02 301,749
-----------
UTILITIES -- 2.9%
426,000 BVPS II Funding Corp. .......................................... 7.38% 12/01/99 426,000
700,000 Centerior Energy Corp. (a)...................................... 7.67% 7/01/04 702,415
550,000 Connecticut Light and Power (a)................................. 7.75% 6/01/02 547,635
-----------
1,676,050
-----------
TOTAL CORPORATE OBLIGATIONS -- DOMESTIC (COST $17,547,820)...... 17,616,136
-----------
CORPORATE OBLIGATIONS -- FOREIGN -- 0.7%
BANKING -- 0.7%
400,000 Spintab (a) (Cost $402,326)..................................... 7.50% 8/14/49 402,044
-----------
CORPORATE OBLIGATIONS -- EURODOLLAR -- 0.3%
ENERGY -- 0.1%
50,000 BP America Inc. ................................................ 9.75% 3/01/99 52,576
-----------
INDUSTRIAL -- CAPTIVE FINANCE -- 0.2%
80,000 Unilever Capital................................................ 9.25% 3/29/00 85,149
-----------
TOTAL CORPORATE OBLIGATIONS -- EURODOLLAR (COST $138,314)....... 137,725
-----------
TOTAL CORPORATE OBLIGATIONS (COST $18,088,460).................. 18,155,905
-----------
</TABLE>
- ------------------------
See notes to financial statements.
13
<PAGE>
<PAGE>
UBS Bond Portfolio
Schedule of Investments
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE COUPON MATURITY
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- ----------- ---------------------------------------------------------------- ------ -------- -----------
<S> <C> <C> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS -- 8.3%
CANADA -- 2.5%
$ 910,000* Canada Government............................................... 7.50% 9/01/00 $ 699,772
800,000* Canada Government............................................... 7.50% 3/01/01 617,154
50,000 Province of Ontario............................................. 7.38% 1/27/03 51,479
50,000 Province of Quebec.............................................. 9.13% 8/22/01 53,833
-----------
1,422,238
-----------
GERMANY -- 4.7%
2,100,000* German Unity Fund............................................... 8.00% 1/21/02 1,370,076
2,140,000* Treuhandanstalt................................................. 7.13% 1/29/03 1,356,265
-----------
2,726,341
-----------
JAPAN -- 1.1%
355,000 Japan Finance Corp. ............................................ 9.13% 10/11/00 379,435
250,000 Japan Finance Corp. for Municipal Enterprises................... 6.85% 4/15/06 250,513
-----------
629,948
-----------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS (COST $4,881,407).......... 4,778,527
-----------
ASSET BACKED SECURITIES -- 1.6%
CREDIT CARD RECEIVABLES -- 1.6%
440,000 First Omni Bank Credit Card Trust, Series 96-A.................. 6.65% 9/15/03 441,100
500,000 Sears Credit Account Master Trust, Series 96-3.................. 7.00% 7/16/08 506,875
-----------
TOTAL ASSET BACKED SECURITIES (COST $937,838)................... 947,975
-----------
<CAPTION>
SHARES
- -----------
<S> <C> <C> <C> <C>
PREFERRED STOCK -- 1.0%
REAL ESTATE -- 1.0%
600 1585 Broadway Corp. (a) (Cost $601,530)......................... 593,250
-----------
TOTAL INVESTMENTS AT MARKET VALUE -- 97.3%
(COST $56,156,728).......................................................... 56,174,940
OTHER ASSETS IN EXCESS OF LIABILITIES -- 2.7%................................. 1,563,254
-----------
NET ASSETS -- 100.0%.......................................................... $57,738,194
-----------
-----------
</TABLE>
- ------------------------
* Securities denominated in foreign currency.
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30, 1997,
the value of these securities amounted to $3,283,114 or 5.7% of net assets.
SUMMARY OF OPEN FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
U.S. DOLLAR
FOREIGN U.S. DOLLAR NET UNREALIZED
CURRENCY UNITS U.S. DOLLAR VALUE AT APPRECIATION/
CURRENCY AND SETTLEMENT DATE SOLD PROCEEDS JUNE 30, 1997 (DEPRECIATION)
- ---------------------------------------------------------- -------------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
SALE CONTRACTS
Canadian Dollar, 7/16/97.................................. 1,880,000 $1,362,319 $1,362,841 ($ 522)
German Deutsche Mark, 7/16/97............................. 4,915,000 2,848,780 2,823,781 24,999
-------
$ 24,477
-------
-------
</TABLE>
Note: Based upon the cost of investments of $56,156,728 for Federal Income Tax
purposes at June 30, 1997, the aggregate gross unrealized appreciation and
depreciation was $200,043 and $181,831, respectively, resulting in net
unrealized appreciation of $18,212.
See notes to financial statements.
14
<PAGE>
<PAGE>
UBS Bond Portfolio
Statement of Assets and Liabilities
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $56,156,728)......................................... $56,174,940
Cash............................................................................. 1,243,409
Dividends and interest receivable................................................ 954,022
Receivable for investment securities sold........................................ 520,295
Unrealized appreciation on open forward foreign currency contracts............... 24,477
Deferred organization expenses and other assets.................................. 22,481
-----------
Total Assets................................................................ 58,939,624
-----------
LIABILITIES:
Administrative services fees payable............................................. 11,480
Investment advisory fees payable................................................. 9,474
Payable for investment securities purchased...................................... 1,120,119
Other accrued expenses........................................................... 60,357
-----------
Total Liabilities........................................................... 1,201,430
-----------
NET ASSETS....................................................................... $57,738,194
-----------
-----------
COMPOSITION OF NET ASSETS:
Paid-in capital for beneficial interests......................................... $57,738,194
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
15
<PAGE>
<PAGE>
UBS Bond Portfolio
Statement of Operations
For the Six Months Ended June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends........................................................... $ 61,847
Interest............................................................ 1,764,042
----------
Total income................................................... $1,825,889
EXPENSES
Investment advisory fees............................................ 127,063
Administrative services fees........................................ 16,980
Audit fees.......................................................... 19,701
Custodian fees and expenses......................................... 18,000
Fund accounting fees................................................ 12,989
Amortization of organization expenses............................... 4,478
Legal fees.......................................................... 4,010
Trustees' fees...................................................... 3,968
Insurance expense................................................... 3,253
Miscellaneous expenses.............................................. 2,015
----------
Total expenses................................................. 212,457
Less: Fee waiver............................................... (70,590)
----------
Net expenses................................................... 141,867
----------
Net investment income............................................... 1,684,022
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities transactions........................ (133,399)
Net realized gain on foreign currency transactions.................. 189,961
Net change in unrealized appreciation of investments................ (124,272)
Net change in unrealized appreciation of foreign currency contracts
and translations.................................................. (63,414)
----------
Net realized and unrealized loss on investments..................... (131,124)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................ $1,552,898
----------
----------
</TABLE>
- ------------------------
See notes to financial statements.
16
<PAGE>
<PAGE>
UBS Bond Portfolio
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 2, 1996*
JUNE 30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income......................................................... $ 1,684,022 $ 1,703,082
Net realized gain on securities and foreign currency transactions............. 56,562 44,624
Net change in unrealized appreciation of investments, foreign currency
contracts and foreign currency translations................................. (187,686) 227,405
------------- -----------------
Net increase in net assets resulting from operations.......................... 1,552,898 1,975,111
------------- -----------------
CAPITAL TRANSACTIONS:
Proceeds from contributions................................................... 13,452,359 59,142,218
Value of withdrawals.......................................................... (10,267,915) (8,116,477)
------------- -----------------
Net increase in net assets from capital transactions.......................... 3,184,444 51,025,741
------------- -----------------
NET INCREASE IN NET ASSETS.................................................... 4,737,342 53,000,852
NET ASSETS:
Beginning of period........................................................... 53,000,852 --
------------- -----------------
End of period................................................................. $ 57,738,194 $53,000,852
------------- -----------------
------------- -----------------
</TABLE>
- ------------------------
* Commencement of operations.
See notes to financial statements.
17
<PAGE>
<PAGE>
UBS Bond Portfolio
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 2, 1996*
JUNE 30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)................................... $57,738 $53,001
Ratio of expenses to average net assets(1)................................. 0.50%(2) 0.50%(2)
Ratio of net investment income to average net assets(1).................... 5.96%(2) 5.83%(2)
Portfolio turnover......................................................... 74% 100%
</TABLE>
- ------------------------
* Commencement of operations.
(1) Net of fee waivers. Such fee waivers had the effect of reducing the ratio of
expenses to average net assets and increasing the ratio of net investment
income to average net assets by 0.25% (annualized) and 0.45% (annualized)
for the respective periods.
(2) Annualized.
See notes to financial statements.
18
<PAGE>
<PAGE>
UBS Bond Portfolio
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
1. GENERAL
UBS Bond Portfolio (the 'Portfolio'), a separate series of UBS Investor
Portfolios Trust (the 'Trust'), is registered under the Investment Company Act
of 1940, as a diversified, open-end management investment company. The Trust is
organized as a trust under the laws of the State of New York.
The investment adviser of the Portfolio is Union Bank of Switzerland, New York
Branch ('UBS'). Investors Fund Services (Ireland) Limited ('IBT Ireland') acts
as the Portfolio's administrator.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements:
A. INVESTMENT VALUATION -- Debt securities with remaining maturities of more
than 60 days are normally valued by a pricing service approved by the Board of
Trustees (the 'Trustees'). Such pricing service will consider various factors
when arriving at a valuation for a security. Such factors include yields and
prices of comparable securities, indications as to values from dealers in such
securities and general market conditions. In the event a pricing service is
unable to price a security, the security will be valued by taking the average of
the bid and ask prices as provided by a dealer in such security.
Debt securities that mature in 60 days or less are valued at amortized cost,
which approximates market value. The amortized cost method involves valuing a
security at its cost on the date of purchase or, in the case of securities
purchased with more than 60 days until maturity, at their market value each day
until the 61st day prior to maturity, and thereafter assuming a constant
amortization to maturity of the difference between the principal amount due at
maturity and such valuation.
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.
B. FOREIGN CURRENCY TRANSLATION -- The accounting records of the Portfolio are
maintained in U.S. dollars. Assets, including investment securities, and
liabilities denominated in foreign currency are translated into U.S. dollars at
the prevailing rate of exchange at period-end. Purchases and sales of
securities, income and expenses are translated at the prevailing rate of
exchange on the respective dates of such transactions. Gain/loss on translation
of foreign currency includes net exchange gains and losses, gains and losses on
disposition of foreign currency and adjustments to the amount of foreign taxes
withheld.
The assets and liabilities are presented at the exchange rates and market values
at the close of the period. The changes in net assets arising from changes in
exchange rates and the changes in net assets resulting from changes in market
prices of securities held at period-end are not separately presented. However,
gains and losses from certain foreign currency transactions are treated as
ordinary income for U.S. Federal income tax purposes.
C. FORWARD FOREIGN CURRENCY CONTRACTS -- The Portfolio may enter into forward
foreign currency contracts in connection with planned purchases or sales of
securities or to hedge the U.S. dollar value of portfolio securities denominated
in a particular currency. The Portfolio could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts
and from unanticipated movements in the value of a foreign currency relative to
the U.S. dollar. The forward foreign currency contracts are marked-to-market
daily using the daily exchange rate of the underlying currency and any
19
<PAGE>
<PAGE>
UBS Bond Portfolio
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
resulting gains or losses are recorded for financial statement purposes as
unrealized gains or losses until the contract settlement date.
The Portfolio's use of forward contracts involves, to varying degrees, elements
of market risk in excess of the amount recognized in the statement of assets and
liabilities. The contract or notional amounts reflect the extent of the
Portfolio's involvement in these financial instruments. Risks arise from the
possible movements in the foreign exchange rates underlying these instruments.
The unrealized appreciation/depreciation on forward contracts reflects the
Portfolio's exposure at period-end to credit loss in the event of a
counterparty's failure to perform its obligations.
D. ACCOUNTING FOR INVESTMENTS -- Securities transactions are accounted for on
trade date. Realized gains and losses on security transactions are determined on
the identified cost basis. Interest income, adjusted for amortization of
premiums and accretion of discounts on investments, is accrued daily.
E. U.S. FEDERAL INCOME TAXES -- The Portfolio is considered a partnership under
the U.S. Internal Revenue Code (the 'Code'). As such, each investor in the
Portfolio will be taxed on its share of the Portfolio's ordinary income and
capital gains. Accordingly, no provision for federal income taxes is necessary.
It is intended that the Portfolio will be managed in such a way that an investor
will be able to satisfy the requirements of the Code applicable to regulated
investment companies.
F. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Portfolio in
connection with its organization in the amount of approximately $30,000 have
been deferred and are being amortized on a straight line basis over five years
from the Portfolio's commencement of operations (April 2, 1996).
G. OTHER -- The Portfolio bears all costs of its operations other than expenses
specifically assumed by UBS and SFG. Expenses incurred by the Trust on behalf of
any two or more portfolios are allocated in proportion to the net assets of each
portfolio, except when allocations of direct expenses to each portfolio can
otherwise be made fairly. Expenses directly attributable to the Portfolio are
charged directly to the Portfolio.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. INVESTMENT ADVISORY AGREEMENT -- The Portfolio has retained the services of
UBS as investment adviser. UBS 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. As compensation for overall
investment management services, the Trust has agreed to pay UBS an investment
advisory fee, accrued daily and payable monthly, at an annual rate of 0.45% of
the Portfolio's average daily net assets. For the six months ended June 30,
1997, UBS voluntarily agreed to waive a portion of its investment advisory fee.
Such waiver amounted to $70,590.
B. ADMINISTRATION AGREEMENT -- Under the terms of an Administration Agreement
with the Trust, effective March 13, 1997, IBT Ireland provides overall
administrative services and general office facilities to the Portfolio and the
Trust. As compensation for such services, the Portfolio has agreed to pay IBT
Ireland an administrative services fee, accrued daily and payable monthly, at an
annual rate of 0.07% of the Portfolio's first $100 million average daily net
assets and 0.05% of the Portfolio's average daily net assets in excess of $100
million. Prior to March 13, 1997, Signature Financial Group (Grand Cayman), Ltd.
('SFG') provided overall administrative services and general office facilities
to the Portfolio and the Trust. As compensation for such services, the Portfolio
had agreed to pay SFG an administrative services fee, accrued daily and paid
monthly, at an annual rate of 0.05% of the Portfolio's average daily net assets.
For the six months ended June 30, 1997, the administrative services fee amounted
to $16,980.
20
<PAGE>
<PAGE>
UBS Bond Portfolio
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
4. PURCHASES AND SALES OF INVESTMENTS
For the six months ended June 30, 1997, purchases and sales of investment
securities, excluding short-term investments, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
U.S. Government Securities............................................... $24,162,513 $24,289,047
Corporate obligations.................................................... 22,182,754 15,903,047
----------- -----------
Total.......................................................... $46,345,267 $40,192,094
----------- -----------
----------- -----------
</TABLE>
21
<PAGE>
<PAGE>
UBS Bond Fund
200 Clarendon Street
Boston, Massachusetts 02116
<TABLE>
<S> <C>
Investment Adviser Union Bank of Switzerland,
New York Branch
1345 Avenue of the Americas
New York, NY 10105
Administrator Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
Distributor First Fund Distributors, Inc.
4455 East Camelback Road
Phoenix, AZ 85018
Custodian and Transfer Agent Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
The accompanying financial statements dated as of June 30, 1997 were not
audited and, accordingly, no opinion is expressed on them.
</TABLE>
