<PAGE>
<PAGE>
As filed with the U.S. Securities and Exchange Commission on December 5, 1997
Registration Nos. 33-64401 and 811-07431
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 6
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 8
UBS PRIVATE INVESTOR FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
200 Clarendon Street, Boston, Massachusetts 02116
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code:
(888) 827-3863
Susan C. Mosher
200 Clarendon Street, Boston, Massachusetts 02116
(Name and Address of Agent for Service)
Copy to:
Burton M. Leibert, Esq.
Willkie Farr & Gallagher, 153 East 53rd Street, New York, New York 10022
It is proposed that this filing will become effective (check appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[X] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has previously registered an indefinite number of its shares of
common stock (par value $0.0001 per share) under the Securities Act of 1933, as
amended, pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended. Registrant filed the notice required by Rule 24f-2 with
respect to its series, UBS Tax Exempt Bond Fund, UBS Bond Fund, UBS U.S. Equity
Fund and UBS International Equity Fund (for their fiscal years ending December
31, 1996), on or before February 28, 1997.
UBS Investor Portfolios Trust has also executed this Registration
Statement.
<PAGE>
<PAGE>
EXPLANATORY NOTE
This post-effective amendment no. 6 (the "Amendment") to the
Registrant's registration statement on Form N-1A (File No. 33-64401) is being
filed with respect to UBS Real Estate Fund to introduce the Fund as the ninth
series of the Registrant. The Amendment does not affect the Registrant's
currently effective Prospectuses with respect to UBS International Equity Fund,
UBS Institutional International Equity Fund, UBS Bond Fund, UBS Tax-Exempt Bond
Fund, UBS Value Equity Fund, UBS Small Cap Fund, UBS Large Cap Growth Fund, UBS
High Yield Bond Fund, each of which is hereby incorporated herein by reference.
Registrant's currently effective Statement of Additional Information dated
October 10, 1997 is being amended by the Amendment, and therefore is included
herein.
<PAGE>
<PAGE>
UBS PRIVATE INVESTOR FUNDS, INC.
UBS REAL ESTATE FUND
CROSS-REFERENCE SHEET
PART A
<TABLE>
<CAPTION>
FORM N-1A
ITEM NUMBER CAPTION IN PROSPECTUS
- ----------- ------------------------------------
<C> <S> <C>
1. Cover Page.................................................... Outside Cover Page of Prospectus
2. Synopsis...................................................... Investors for Whom the Fund is
Designed
3. Condensed Financial Information............................... Not applicable
4. General Description of Registrant............................. Organization; Master-Feeder
Structure; Investment Objective
and Policies; Additional
Investment Information and Risk
Factors; Investment Restrictions
5. Management of the Fund........................................ Management; Shareholder Services;
Expenses
5A. Management's Discussion of Fund Performance................... Not applicable
6. Capital Stock and Other Securities............................ Dividends and Distributions; Net
Asset Value; Organization; Taxes;
Master-Feeder Structure
7. Purchase of Securities Being Offered.......................... Purchase of Shares; Net Asset Value
8. Redemption or Repurchase...................................... Redemption of Shares; Net Asset
Value
9. Pending Legal Proceedings..................................... Not applicable
</TABLE>
PART B
<TABLE>
<CAPTION>
FORM N-1A CAPTION IN STATEMENT
ITEM NUMBER OF ADDITIONAL INFORMATION
- ----------- ------------------------------------
<C> <S> <C>
10. Cover Page.................................................... Outside Front Cover Page
11. Table of Contents............................................. Table of Contents
12. General Information and History............................... Not applicable
13. Investment Objectives and Policies............................ Investment Objectives and Policies;
Investment Restrictions; Portfolio
Transactions
14. Management of the Fund........................................ Directors and Trustees
15. Control Persons and Principal Holders of Securities........... Directors and Trustees; Organization
16. Investment Advisory and Other Services........................ Investment Adviser and Funds
Services Agent; Administrator;
Distributor; Custodian;
Shareholder Services; Independent
Accountants; Expenses
17. Brokerage Allocation and Other Practices...................... Portfolio Transactions
18. Capital Stock and Other Securities............................ General; Organization
19. Purchase, Redemption and Pricing of Securities Being
Offered..................................................... Purchase of Shares; Redemption of
Shares; Exchange of Shares;
Dividends and Distributions; Net
Asset Value
20. Tax Status.................................................... Taxes
21. Underwriters.................................................. Distributor; Purchase of Shares; Net
Asset Value
22. Calculation of Performance Data............................... Performance Data
23. Financial Statements.......................................... Financial Statements
</TABLE>
PART C. Information required to be included in Part C is set forth under
the appropriately numbered items included in Part C of this Registration
Statement.
<PAGE>
<PAGE>
PROSPECTUS
UBS REAL ESTATE FUND
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116
FOR INFORMATION CALL (888) UBS-FUND ((888) 827-3863)
UBS Real Estate Fund (the 'Fund') seeks to provide total return through
long-term capital appreciation and current income. In order to accomplish this,
the Adviser (defined below) intends to invest in publicly traded equity
securities of domestic and foreign real estate companies, including Real Estate
Investment Trusts ('REITs'). For further information about REITs, see
'Investment Objective and Policies' and 'Additional Investment Information and
Risk Factors.' There is no assurance that the Fund will achieve its stated
objective.
The Fund is a non-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 REAL ESTATE PORTFOLIO (THE 'PORTFOLIO'). THE
PORTFOLIO IS A SERIES OF UBS INVESTOR PORTFOLIOS TRUST, (THE 'TRUST'), AN
OPEN-END MANAGEMENT INVESTMENT COMPANY. THE PORTFOLIO HAS THE SAME INVESTMENT
OBJECTIVE AS THE FUND. THE FUND EMPLOYS A TWO-TIER MASTER-FEEDER INVESTMENT FUND
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 Asset Management (New York)
Inc. (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
February , 1998 (the 'SAI'), provides further discussion of certain topics
referred to in this Prospectus and other matters that may be of interest to
investors. The SAI has been filed with the Securities and Exchange Commission,
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 (888)
UBS-FUND ((888) 827-3863).
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 FEBRUARY , 1998.
<PAGE>
<PAGE>
UBS REAL ESTATE FUND
INVESTORS FOR WHOM THE FUND IS DESIGNED
UBS Real Estate Fund (the 'Fund') is designed for investors seeking total
return, consisting of long-term capital appreciation and current income from a
portfolio of equity securities of domestic and foreign real estate companies.
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 Real Estate Portfolio (the 'Portfolio'). The Portfolio is a series
of UBS Investor Portfolios Trust (the 'Trust'), an open-end management
investment company. The Portfolio has 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 publicly traded equity
securities of domestic and foreign real estate companies, including common and
preferred stocks, shares in Real Estate Investment Trusts ('REITs') and
securities which are convertible into common stocks, including warrants and
rights. 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 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 at the Fund's discretion. 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 investment
fund 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. 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***..................................................... 1.20%
----
Total Operating Expenses, After Fee Waivers and Expense Reimbursements*............................. 1.20%
----
----
</TABLE>
* Expenses are expressed as a percentage of the Fund's projected average daily
net assets and are based on the annualized estimates of expenses expected to be
incurred during the fiscal period ending December 31, 1998, after any applicable
fee waivers and expense reimbursements. Without such fee waivers and expense
reimbursements, Total Operating Expenses are estimated to be equal, on an annual
basis, to 3.32% 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 each of the Fund
and the Portfolio for any of their respective operating expenses to the extent
that the Fund's total operating expenses (including its share of the Portfolio's
expenses) exceed, on an annual basis, 1.20% 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' prior notice to the Fund. The Portfolio's advisory fee
would be equal, on an annual basis, to 0.70% of the average daily net assets of
the Portfolio if there were no fee waiver in effect. See 'Management -- Adviser
and Funds Services Agent' and 'Expenses'.
*** The fees and expenses in Other Expenses include fees payable to:
(i) Investors Bank & Trust Company ('Investors Bank', the 'Custodian' or the
'Transfer Agent') (a) under an Administration Agreement with the Fund, (b) as
custodian of the Fund and the Portfolio, and (c) as transfer agent of the Fund,
(ii) Investors Fund Services (Ireland) Limited ('IBT Ireland') under an
Administration Agreement with the Portfolio, and
(iii) Eligible Institutions providing shareholder services under various
shareholder servicing agreements.
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 redemption at the end of each time period:
<TABLE>
<S> <C>
1 Year...................................................... $12
3 Years..................................................... 38
</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 (i) the composite total return for the period October 1, 1996
(commencement date) through December 31, 1997 and the year ended December 31,
1997 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'), and (ii) the annual total return
during the same periods for the
-3-
<PAGE>
<PAGE>
Morgan Stanley Real Estate Investment Trust Index (the 'Index'). The
discretionary accounts described in (i) above have substantially the same
investment objective and policies and are managed in a manner substantially the
same as the Portfolio. The composite total return for such accounts has been
adjusted to deduct all of the Fund's annual total operating expenses of 1.20% of
average daily net assets as set forth in the Expense Table above. No such
accounts were managed by UBSAM or the Branch prior to 1996. The composite total
return is time-weighted and weighted by individual account size and reflects the
reinvestment of dividends and interest. The discretionary accounts are not
subject to certain investment limitations and other restrictions imposed by
federal securities and tax laws on the Portfolio that, if applied to the
accounts, may have adversely affected their performance results. The composite
total return of these discretionary accounts does not represent the historical
performance of the Portfolio and should not be viewed as a prediction of future
performance of the Portfolio. The Index is a capitalization weighted total
return index comprised of the largest and most actively traded Real Estate
Investment Trusts. The Index is designed to provide a broad based measure of
real estate equity performance. The total returns of the Index do not include
management fees or commissions.
<TABLE>
<CAPTION>
COMPOSITE
TOTAL RETURN MORGAN STANLEY
OF SUB-ADVISER'S REAL ESTATE
DISCRETIONARY INVESTMENT
ACCOUNTS TRUST INDEX
---------------- --------------
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURN FOR THE:
- ------------------------------------
One Year Ended December 31, 1997........................................ % %
October 1, 1996* through December 31, 1997.............................. % %
</TABLE>
- ------------
* Commencement date.
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 investment objective of the
Fund and the Portfolio may be changed only with the approval of the holders of a
majority of the outstanding voting securities of the Fund or a majority of the
investors in the Portfolio, respectively, after 30 days' prior notice.
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 Investors Bank at (888) UBS-FUND.
The Fund may withdraw its investment in the Portfolio at any time if the Board
determines that it is in the Fund's best interest 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
-4-
<PAGE>
<PAGE>
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 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 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',
'Shareholder Services' and 'Expenses'. 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 each employs to seek to achieve its objective.
Additional information about the investment policies of the Fund and the
Portfolio appears in the SAI under 'Investment Objectives and Policies'. The
Fund seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio, which 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 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 UBSAM (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 Portfolio's objective is to provide total return, consisting of long-term
capital appreciation and current income. In order to accomplish this, the
Portfolio intends to invest in publicly traded equity securities of domestic and
foreign real estate companies. For purposes of the Portfolio's investment
objective, a 'real estate company' is one whose principal business focus is the
ownership, construction, financing, management or sale of commercial, industrial
or residential real estate. The Portfolio will invest principally in real estate
companies with market capitalizations of at least $50 million and which also
are, in the opinion of the Sub-Adviser, high quality companies. The Portfolio
may invest up to 20% of its assets in securities of foreign real estate
companies.
Under normal circumstances, the Portfolio will invest at least 65% of its assets
in income-producing equity securities of domestic and foreign real estate
companies, including dividend-paying common stocks, preferred stocks, shares in
REITs and securities which are convertible into common stocks including warrants
and rights. 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
issuers. In addition, the Portfolio will seek to diversify its
-5-
<PAGE>
<PAGE>
investment over a carefully selected list of securities in order to moderate the
risks inherent in equity investments.
Although the Portfolio intends to invest primarily in equity securities of real
estate companies, under normal market conditions it may invest up to 20% of its
assets in certain cash investments and certain short-term fixed income
securities. See 'Investment Objective 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; money market mutual funds; commercial
paper, bank certificates of deposit and bankers' acceptances; and repurchase
agreements collateralized by these securities. The Portfolio may also purchase
nonpublicly offered debt securities. See 'Additional Investment Information and
Risk Factors -- 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
'Additional Investment Information and Risk Factors -- Futures Contracts' and
' -- Options'.
The Portfolio may also sell securities short to a limited extent and for hedging
purposes only. See 'Additional Investment Information and Risk Factors -- Short
Sales.' The Fund may also invest in 'special situations'. See 'Additional
Investment Information and Risk Factors -- Special Situations'.
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.
ADDITIONAL INVESTMENT INFORMATION AND RISK FACTORS
NON-DIVERSIFIED STATUS. The Fund is classified as a 'non-diversified' investment
company under the Investment Company Act of 1940, as amended (the '1940 Act'),
which means that the Fund and the Portfolio are not limited by the 1940 Act in
the proportion of their assets that may be invested in the securities of a
single issuer. As such, the Portfolio may invest in a smaller number of
individual issuers than a diversified investment company. Therefore, an
investment in the Fund may present greater risk to an investor than an
investment in a diversified company.
However, the Fund intends to qualify as a regulated investment company (a 'RIC')
for purposes of the Internal Revenue Code of 1986, as amended (the 'Tax Code')
in order to obtain favorable tax treatment. See 'Taxes'. In order to qualify as
a RIC, the Fund and the Portfolio will have to meet certain requirements,
including asset diversification requirements. Under these asset diversification
requirements, the Portfolio will limit its investments so that, at the close of
each quarter of the taxable year:
(i) not more than 25% of the Portfolio's total assets (at market value) will be
invested in the securities of a single issuer, and
(ii) with respect to 50% of its total assets (at market value), not more than 5%
of its total assets (at market value) will be invested in the securities of a
single issuer, and
(iii) the Portfolio will not own more than 10% of the outstanding voting
securities of any single issuer. The Portfolio's investments in securities
issued by the U.S. Government, its agencies and instrumentalities are not
subject to these limitations.
REAL ESTATE SECURITIES. The Portfolio will not invest in real estate directly,
but only in securities issued by real estate companies. However, the Portfolio
(and the Fund) may be subject to risks similar to those associated with the
direct ownership of real estate (in addition to securities markets risks)
because of its policy of concentration in the securities of companies in the
real estate industry. These include declines in the value of real estate, risks
related to general and local economic conditions, dependency on management
skill, heavy cash flow dependency, possible lack of availability of mortgage
funds,
-6-
<PAGE>
<PAGE>
overbuilding, extended vacancies of properties, increased competition, increases
in property taxes and operating expenses, changes in zoning laws, losses due to
costs resulting from the clean-up of environmental problems, liability to third
parties for damages resulting from environmental problems, casualty or
condemnation losses, limitations on rents, changes in neighborhood property
values and the appeal of properties to tenants and changes in interest rates.
REAL ESTATE INVESTMENT TRUSTS. The Portfolio may invest without limit in shares
of REITs. REITs pool investors' funds for investment primarily in income
producing real estate or real estate related loans or interests. A REIT is not
taxed on income distributed to shareholders if it complies with several
requirements relating to its organization, ownership, assets, income and a
requirement that it distribute to its shareholders at least 95% of its taxable
income (other than net capital gains) for each taxable year. REITs can generally
be classified as Equity REITs, Mortgage REITs or Hybrid REITs.
Equity REITs, which invest the majority of their assets directly in real
property, derive their income primarily from rents. Equity REITs can also
realize capital gains by selling properties that have appreciated in value.
Mortgage REITs, which invest the majority of their assets in real estate
mortgages, derive their income primarily from interest payments.
Hybrid REITs combine the characteristics of both Equity REITs and Mortgage
REITs.
In addition to the risks of investments in Real Estate Securities noted above,
investment in REITs may present additional risks. Equity REITs may be affected
by changes in the value of the underlying property owned by the trusts, while
Mortgage REITs may be affected by the quality of any credit extended. Further,
Equity and Mortgage REITs are dependent upon specialized management skills and
generally may not be diversified. Equity and Mortgage REITs are also subject to
heavy cash flow dependency and defaults by borrowers. In addition, Equity and
Mortgage REITs could possibly fail to qualify for tax free pass-through of
income under the Tax Code, or to maintain their exemptions from registration
under the 1940 Act. The above factors may also adversely affect a borrower's or
a lessee's ability to meet its obligations to the REIT. In the event of a
default by a borrower or lessee, the REIT may experience delays in enforcing its
rights as a mortgagee or lessor and may incur substantial costs associated with
protecting its investments.
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 liquid 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).
SHORT SALES. In the event that the Sub-Adviser anticipates that the price of a
security will decline, the Sub-Adviser may sell the security short and borrow
the same security from a broker or other institution to complete the sale. The
Portfolio will incur a profit or a loss, depending upon whether the market price
of the security decreases or increases between the date of the short sale and
the date on which the Fund must replace the borrowed security. The Portfolio
will only enter into short sales for hedging purposes. All short sales will be
fully collateralized and the Portfolio will not sell securities short if
immediately after
-7-
<PAGE>
<PAGE>
and as a result of the short sale the value of all securities sold short by the
Portfolio exceeds 25% of its total assets. The Fund also limits short sales of
any one issuer's securities to 2% of the Fund's total assets and to 2% of any
one class of the issuer's securities.
SPECIAL SITUATIONS. From time to time, the Portfolio may invest in special
situations. A special situation arises when the Adviser believes that the
securities of a particular issuer will be recognized and appreciate in value due
to a specific development affecting that issuer. Developments that might create
a special situation include a new product or process, a technological
breakthrough, a management change, merger, recapitalization or other
extraordinary corporate event, or a change in market supply of and demand for
the security. Investments in special situations may carry an additional risk of
loss in the event that the anticipated development does not occur or does not
result in the anticipated market reaction.
REPURCHASE AGREEMENTS. The Portfolio may engage in repurchase agreement
transactions with brokers, dealers or banks that meet the credit guidelines
approved 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 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 Trust, or the Adviser, Sub-Adviser,
Administrator or Distributor, unless otherwise permitted by applicable law.
FOREIGN INVESTMENT INFORMATION. The Portfolio may invest up to 20% of its assets
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.
-8-
<PAGE>
<PAGE>
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.
The Portfolio may invest in securities of foreign issuers directly or in the
form of American Depositary Receipts ('ADRs'), European Depositary Receipts
('EDRs'), Global Depository Receipts ('GDRs') 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. GDRs are issued outside the United States, typically by non-U.S.
banks and trust companies. Generally, ADRs, in registered form, are designed for
use in the U.S. securities markets, and EDRs and GDRs, in bearer form, are
designed for use in European and non-U.S. securities markets, respectively.
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. 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.
-9-
<PAGE>
<PAGE>
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.
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 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 is sold or 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 (not including Rule 144A securities) that cannot be
offered for public sale in the United States without first being registered
under the Securities Act of 1933, as amended (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 of the Trust. The Trustees of the Trust 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, money market mutual funds, 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.
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
-10-
<PAGE>
<PAGE>
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 investment purposes in lieu of investing directly in
the corresponding securities or instruments. Such use of derivatives may be
considered speculative.
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. The use of options and futures may involve some
leverage; such leverage is reduced by the requirement of the SEC to 'cover' such
obligations. See 'Cover -- Segregated Accounts' below. 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 Sub-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 Sub-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
-11-
<PAGE>
<PAGE>
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 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 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.
-12-
<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 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' either with the Custodian in a segregated
account in the name of its futures broker, known as a futures commission
merchant ('FCM'), or with the 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.
COVER -- SEGREGATED ACCOUNTS. The Portfolio will segregate liquid 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
-13-
<PAGE>
<PAGE>
changed only by the 'vote of a majority of the outstanding voting securities'
(as defined in the 1940 Act), of the Fund or 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).
References below to the Portfolio's investment restrictions also include the
Fund's investment restrictions.
The Portfolio 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 Portfolio'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 Portfolio's total
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 Portfolio's total 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 Trust's Declaration of Trust, the
Trustees of the Trust 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 of the Company 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 of the Trust are also the Directors of the Company, which raises
certain conflicts of interest. The Company and the Trust have each adopted
written procedures reasonably designed to deal with these conflicts, should they
arise. The officers of the Company and the Trust are also employees of Investors
Bank or its affiliates.
ADVISER AND FUNDS SERVICES AGENT. The Company has not retained the services of
an investment adviser with respect to the Fund 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 of the Bank as
investment adviser and UBSAM as investment sub-adviser. The Branch, which
operates out of offices located at 1345 Avenue of the Americas, 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. UBSAM, which also operates out of offices
located at 1345 Avenue of the Americas, New York, New York, is a registered
investment adviser in the U.S.
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, 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 since 1946. At
June 30, 1997, the Bank (including its consolidated subsidiaries) had total
assets of $352.1 billion (unaudited) and equity capital and reserves of $16.2
billion (unaudited).
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.
-14-
<PAGE>
<PAGE>
In addition to the above-listed investment advisory services, the Branch also
provides the Fund and the Portfolio with certain related administrative
services. Subject to the supervision of the Directors and Trustees,
respectively, the Branch 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, equal, on an annual basis, to 0.70%
of the Portfolio's average daily net assets. The Branch has voluntarily agreed
to waive its fees and reimburse the Fund and the Portfolio for any of their
respective direct and indirect expenses to the extent that the Fund's total
operating expenses (including its share of the Portfolio's expenses) exceed, on
an annual basis, 1.20% 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' prior notice to the Fund. See 'Expenses'.
SUB-ADVISER. The Sub-Adviser uses a sophisticated, disciplined, collaborative
process for managing the Portfolio. Bruce C. Ebnother is primarily responsible
for the day-to-day management and implementation of the Sub-Adviser's process
for the Portfolio. Mr. Ebnother is a Vice President and Equities/Real Estate
Portfolio Manager at the Sub-Adviser, a position he has held since 1996. Prior
to joining the Sub-Adviser, Mr. Ebnother was a Senior Equity Analyst, Real
Estate, at Smith Barney from 1992 through 1996. In total, Mr. Ebnother has 14
years investment experience and holds a BA degree from Brown University. The
Sub-Adviser has advised mutual funds for only a short time.
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, equal, on an annual basis, to 0.40% of the first $25 million of
the Portfolio's average daily net assets plus 0.325% of the next $25 million of
such assets plus 0.25% of such 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. The Fund and the Portfolio employ Investors Bank & Trust Company
('Investors Bank') and Investors Fund Services (Ireland) Limited ('IBT
Ireland'), a subsidiary of Investors Bank, respectively, as Administrators under
Administration Agreements (the 'Administration Agreements') to provide certain
administrative services. The services provided by Investors Bank and IBT Ireland
under the Administration Agreements include certain accounting, clerical and
bookkeeping services, Blue Sky (for the Fund only), corporate secretarial
services and assistance in the preparation and filing of tax returns and reports
to shareholders and the SEC. Investors Bank is a wholly-owned subsidiary of
Investors Financial Services Corp., a publicly-held corporation and holding
company registered under the Bank Holding Company Act of 1956.
For its services under the Administration Agreement, the Fund has agreed to pay
Investors Bank a fee, calculated daily and payable monthly, equal, on an annual
basis, to 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. Investors Bank does
not receive a fee from the Fund on average daily net assets in excess of $200
million. Investors Bank's principal offices are located at 200 Clarendon Street,
Boston, Massachusetts 02116.
Under the Trust's Administrative Services Agreement, the Portfolio has agreed to
pay IBT Ireland a fee, calculated daily and payable monthly, equal, on an annual
basis, to 0.07% of the Portfolio's first $100 million of average daily net
assets and 0.05% of such assets in excess of $100 million. IBT Ireland's
principal offices are located at Deloitte & Touche House, 29 Earlsfort Terrace,
Dublin 2, Ireland.
DISTRIBUTOR. Pursuant to a Distribution Agreement, First Fund Distributors, Inc.
(the 'Distributor') serves as the distributor of Fund shares. The Distributor is
a broker-dealer registered with the SEC and is
-15-
<PAGE>
<PAGE>
a member of the National Association of Securities Dealers, Inc. ('NASD'). The
Distributor is authorized by the NASD to act as a mutual fund underwriter and
distributor. The principal offices of the Distributor are located at 4455 E.
Camelback Road, Phoenix, Arizona 85018. The Distributor does not receive a fee
pursuant to the terms of the Distribution Agreement, but receives compensation
from Investors Bank.
CUSTODIAN. Investors Bank also serves as the custodian for the Portfolio and the
Fund and transfer and dividend disbursing agent for 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,
and may enter into additional shareholder servicing agreements with one or more
financial institutions (together with the Branch, 'Eligible Institutions') such
as a federal or state-chartered bank, trust company, savings and loan
association or savings bank, or broker-dealer. Pursuant to each shareholder
servicing agreement, an Eligible Institution, as agent for its customers who are
purchasing shares of the Fund, will perform the following services for these
investors, among other things: 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 each Eligible Institution a fee for
these services equal, on an annual basis, to 0.25% of the average daily net
assets of the Fund represented by shares of the Fund owned during the period for
which payment is being made by customers of the Eligible Institution. Under the
terms of the shareholder servicing agreements, Eligible Institutions may
delegate one or more of their responsibilities to other entities at their
expense.
EXPENSES
In addition to the fees of the Branch, Investors Bank, and IBT Ireland, the Fund
will be responsible for other expenses, including brokerage costs and litigation
and extraordinary expenses. The Branch has voluntarily agreed to limit the total
operating expenses of the Fund, excluding extraordinary expenses, to an annual
rate of 1.20% 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' prior notice to the Fund.
The Fund and the Portfolio may allocate brokerage transactions to their
affiliates and the Advisers' 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 Fund also reserves the right to determine the purchase orders
that it will accept and 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 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
and the minimum subsequent investment is $1,000. These minimum investment
requirements may be waived at the Fund's sole discretion.
No share certificates will be issued.
PURCHASE PRICE AND SETTLEMENT. 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 on any day on which the
New York Stock Exchange (the 'NYSE') is open for regular trading (a 'Fund
Business Day'). Purchase orders received and accepted by the Distributor prior
to 4:00 p.m. New York time on any Fund Business Day or prior to the close of the
NYSE, whichever is earlier, will be effective and executed at the net asset
-16-
<PAGE>
<PAGE>
value determined that day. The purchaser becomes a holder of record that day,
provided the Fund receives payment for those shares on the following business
day ('settlement date') and, as a recordholder, is entitled to earn dividends.
Purchase orders received after 4:00 p.m. or after the close of the NYSE,
whichever is earlier, will receive the net asset value determined on the next
Fund Business Day, and the investor becomes a holder of record on such next Fund
Business Day. 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 next determined on the day that the investor's
purchase is accepted. See also 'Purchase of Shares' in the SAI.
Customers of Eligible Institutions should request a representative of their
Eligible Institution to assist them in placing a purchase order with the
Distributor. Shareholders who do not currently maintain a relationship with an
Eligible Institution may purchase shares of the Fund directly from the
Distributor by wire transfer or mail.
By wire transfer: 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 (888-827-3863). A completed account application must promptly
follow any wire order for an initial purchase. Completed account applications
should be mailed or sent via facsimile. Investors should contact the Transfer
Agent for further instructions regarding account applications. Account
applications are not required for subsequent purchases; however, the investor's
account number must be clearly indicated on the wire to ensure proper credit.
An investor should instruct its bank to wire federal funds as indicated below on
settlement date:
Investors Bank & Trust Company
Attn: UBS Private Investor Funds, Inc.
ABA #: 011001438
DDA #: 841212416
for further credit to UBS Real Estate Fund
[Investor account name(s) and account number]
By mail: 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 9130; MFD 23; Boston, Massachusetts
02117-9130.
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. The
Fund will not accept third-party checks.
The Transfer Agent will maintain the accounts for all shareholders of record.
For account balance information and shareholder services, shareholders should
contact the Transfer Agent at (888) UBS-FUND (888-827-3863) or in writing to UBS
Private Investor Funds, Inc.; c/o Investors Bank & Trust Company; P.O. Box 9130;
MFD 23; Boston, MA 02117-9130.
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. To be in proper form, the Fund must have received the shareholders
taxpayer identification number and address. Redemption requests must include the
name of the Fund, the dollar amount or number of shares to be redeemed and the
shareholder's account number. The request must be signed by a person who is
authorized to transact on behalf of the shareholder. 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
-17-
<PAGE>
<PAGE>
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.
Customers of Eligible Institutions must request a representative of their
Eligible Institution to assist them in placing a redemption order with the Fund.
REDEMPTION PRICE AND SETTLEMENT. Redemption orders received by the Distributor
in good form prior to 4:00 p.m. New York time on any Fund Business Day or the
close of the NYSE, whichever is earlier, will be effected and executed at the
net asset value determined on that day. Redemption orders received after 4:00
p.m. New York time will be effected and executed at the net asset value
determined on the next Fund Business Day. Proceeds from the redemption will be
generally deposited the next business day in immediately available funds to the
account designated by the redeeming shareholder, or sent by check to the address
of record if requested by the shareholder.
Shareholders will continue to earn dividends through the day of redemption.
Shareholders who maintain an account directly with the Distributor may redeem
Fund shares by mail or telephone.
By mail: Redemption requests may 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, a signature guarantee is required. See
'General Information on Redemptions' above.
By telephone: The shareholder may place a redemption request by calling the
Transfer Agent at 888-UBS-FUND (888-827-3863). Shareholders utilizing the
telephone redemption option must have previously designated this option on the
initial account application, or by subsequent written authorization to the Fund.
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.
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.
-18-
<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
appropriate section relating to the purchase and redemption of shares in this
and other prospectuses. 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 Tax 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 Tax 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 $4,000 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.
Clients of Eligible Institutions desiring information concerning investments
through IRAs or other retirement plans should contact their Eligible
Institution. Clients who do not maintain a relationship with an Eligible
Institution 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, will be declared and paid quarterly. 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
-19-
<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 any day on which the New York Stock Exchange is closed, including
the following holidays: New Year's Day, Dr. Martin Luther King, Jr. 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 will 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 is currently authorized to issue shares in nine series: The UBS Bond
Fund Series; The UBS High Yield Bond Fund Series; The UBS Tax Exempt Bond Fund
Series; The UBS International Equity Fund Series; The UBS Institutional
International Equity Fund Series; The UBS Large Cap Growth Fund Series; The UBS
Small Cap Fund Series; The UBS Value Equity Fund Series; and the UBS Real Estate
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 Real Estate Fund Series are offered
through this Prospectus.
Shareholder inquiries by clients of Eligible Institutions may be directed to
their Eligible Institution 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, seven
series have been authorized, of which UBS Real Estate 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)
-20-
<PAGE>
<PAGE>
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.
TAXES
The Fund intends to qualify as a regulated investment company (a 'RIC') under
Subchapter M of the Tax Code. 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. The
Portfolio intends to qualify 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. 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, and to the extent that, 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.
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
-21-
<PAGE>
<PAGE>
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.
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.
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 periodic statements reflecting all account activity, including
dividends and any distributions whether reinvested in additional shares or paid
in cash.
Shareholders of certain Eligible Institutions may be 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 Eligible
Institution, 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
Morgan Stanley Indices, 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 an Eligible Institution by calling the Eligible Institution and
other shareholders may address their inquiries to the Transfer Agent.
-22-
<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
Investment Restrictions.................................................................... 13
Management................................................................................. 14
Shareholder Services....................................................................... 16
Expenses................................................................................... 16
Purchase of Shares......................................................................... 16
Redemption of Shares....................................................................... 17
Exchange of Shares......................................................................... 19
Retirement Plans........................................................................... 19
Dividends and Distributions................................................................ 19
Net Asset Value............................................................................ 20
Organization............................................................................... 20
Taxes...................................................................................... 21
Additional Information..................................................................... 22
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT ADVISER Union Bank of Switzerland,
New York Branch
1345 Avenue of the Americas
New York, NY 10105
INVESTMENT SUB-ADVISER UBS Asset Management (New York) Inc.
1345 Avenue of the Americas
New York, NY 10105
ADMINISTRATOR AND CUSTODIAN Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
DISTRIBUTOR First Fund Distributors, Inc.
4455 E. Camelback Road
Phoenix, Arizona 85018
</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 FEBRUARY , 1998
UBS BOND FUND
UBS VALUE EQUITY FUND
UBS INTERNATIONAL EQUITY FUND
UBS INSTITUTIONAL INTERNATIONAL EQUITY FUND
UBS SMALL CAP FUND
UBS LARGE CAP GROWTH FUND
UBS HIGH YIELD BOND FUND
UBS REAL ESTATE FUND
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND SHOULD BE READ
IN CONJUNCTION WITH THE PROSPECTUSES DATED MARCH 13, 1997, FOR UBS BOND FUND,
UBS VALUE EQUITY FUND AND UBS INTERNATIONAL EQUITY FUND, THE PROSPECTUS DATED
APRIL 7, 1997, FOR UBS INSTITUTIONAL INTERNATIONAL EQUITY FUND, THE
PROSPECTUSES, DATED SEPTEMBER 8, 1997, FOR UBS SMALL CAP FUND, UBS LARGE CAP
GROWTH FUND AND UBS HIGH YIELD BOND FUND AND WITH THE PROSPECTUS DATED
FEBRUARY , 1998, FOR UBS REAL ESTATE FUND (EACH A 'PROSPECTUS' AND
COLLECTIVELY, THE 'PROSPECTUSES'), AS THEY MAY BE SUPPLEMENTED FROM TIME TO
TIME. COPIES OF THE PROSPECTUSES MAY BE OBTAINED WITHOUT CHARGE FROM INVESTORS
BANK AND TRUST COMPANY 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-11
DIRECTORS AND TRUSTEES............................................................................. SAI-14
INVESTMENT ADVISER AND FUNDS SERVICES AGENT........................................................ SAI-17
ADMINISTRATORS..................................................................................... SAI-20
DISTRIBUTOR........................................................................................ SAI-21
CUSTODIAN.......................................................................................... SAI-21
SHAREHOLDER SERVICES............................................................................... SAI-21
INDEPENDENT ACCOUNTANTS............................................................................ SAI-22
EXPENSES........................................................................................... SAI-22
PURCHASE OF SHARES................................................................................. SAI-22
REDEMPTION OF SHARES............................................................................... SAI-23
EXCHANGE OF SHARES................................................................................. SAI-23
DIVIDENDS AND DISTRIBUTIONS........................................................................ SAI-23
NET ASSET VALUE.................................................................................... SAI-24
PERFORMANCE DATA................................................................................... SAI-25
PORTFOLIO TRANSACTIONS............................................................................. SAI-25
ORGANIZATION....................................................................................... SAI-27
TAXES.............................................................................................. SAI-28
ADDITIONAL INFORMATION............................................................................. SAI-30
FINANCIAL STATEMENTS............................................................................... SAI-30
</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 nine series, eight of which are described in this
Statement of Additional Information ('SAI'). These eight series (each a 'Fund'
and collectively, the 'Funds') consist of: UBS Bond Fund, UBS International
Equity Fund, UBS Institutional International Equity Fund, UBS Value Equity Fund,
UBS Small Cap Fund, UBS Large Cap Growth Fund, UBS High Yield Bond Fund and UBS
Real Estate Fund. The Company, a Maryland corporation, was organized on November
16, 1995. The Company's executive offices are located at 200 Clarendon Street,
Boston, Massachusetts 02116.
This SAI describes the investment objective 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, a master 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 of the 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 seven Portfolios: UBS Bond Portfolio; UBS
Value Equity Portfolio; UBS International Equity Portfolio; UBS Small Cap
Portfolio; UBS Large Cap Growth Portfolio; UBS High Yield Bond Portfolio and UBS
Real Estate Portfolio. UBS Bond Fund invests in UBS Bond Portfolio; UBS Value
Equity Fund invests in UBS Value Equity Portfolio; UBS International Equity Fund
and UBS Institutional International Equity Fund invest in UBS International
Equity Portfolio. UBS Small Cap Fund invests in UBS Small Cap Portfolio; UBS
Large Cap Growth Fund invests in UBS Large Cap Growth Portfolio; UBS High Yield
Bond Fund invests in UBS High Yield Bond Portfolio and UBS Real Estate Fund
invests in UBS Real Estate 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, the Bond Fund 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 HIGH YIELD BOND FUND (the 'High Yield Bond Fund') is designed for
investors seeking higher current income from a portfolio of higher-yielding,
lower-rated debt securities issued by domestic and foreign companies than
generally available from a portfolio of higher-rated obligations in exchange for
assuming additional risk of capital. The High Yield Bond Fund attempts to
achieve its objective by investing all of its investable assets in UBS High
Yield Bond Portfolio (the 'High Yield Bond Portfolio'), a series of the Trust
having the same investment objective as the High Yield Bond Fund. The High Yield
Bond Portfolio will also seek capital appreciation when consistent with high
current income by investing in securities benefiting from declines in long-term
interest rates or improvements in credit quality.
SAI-1
<PAGE>
<PAGE>
UBS VALUE EQUITY FUND (the 'Value 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 Value Equity Fund attempts to achieve its
investment objective by investing all of its investable assets in UBS Value
Equity Portfolio (the 'Value Equity Portfolio'), a series of the Trust having
the same investment objective as the Value Equity Fund.
Under normal circumstances, at least 80% of the Value 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 Value 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 but who may not be
prepared to meet the minimum investment requirements established by the UBS
Institutional International Equity Fund. The International Equity Fund attempts
to achieve its investment objective by investing all of its investable assets in
the UBS International Equity Portfolio (the 'International Equity Portfolio'), a
series of the Trust having the same investment objective as the International
Equity Fund.
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.
UBS INSTITUTIONAL INTERNATIONAL EQUITY FUND (the 'Institutional
International Equity Fund') is designed for institutional and certain other
investors who want to participate in the risks and returns associated with
investing in equity securities issued by foreign corporations. The Institutional
International Equity Fund attempts to achieve its investment objective by
investing all of its investable assets in the International Equity Portfolio, a
series of the Trust having the same investment objective as the Institutional
International Equity Fund.
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.
UBS SMALL CAP FUND (the 'Small Cap Fund') is designed for investors seeking
long-term capital appreciation from a portfolio of common stocks and other
equity securities of small capital growth companies believed to offer investors
above average potential for capital appreciation. 'Small capital' companies are
companies that have stock market capitalizations at the time of initial purchase
within the market capitalization range of those stocks on the Russell 2000
Index. 'Growth' companies are generally rapidly growing companies and may
include companies still in the development stage or older companies that appear
to be entering a new stage of growth owing to factors such as management changes
or new technology, products or markets. It may also include providers of
products or services with a high unit volume growth rate. The Small Cap Fund
attempts to achieve its objective by investing all of its investable assets in
UBS Small Cap Portfolio (the 'Small Cap Portfolio'), a series of the Trust
having the same investment objective as the Small Cap Fund.
UBS LARGE CAP GROWTH FUND (the 'Large Cap Growth Fund') is designed for
investors seeking long-term capital appreciation from a portfolio of common
stocks and other equity securities of large capital growth companies. 'Large
capital' companies are companies whose stock market capitalizations at
SAI-2
<PAGE>
<PAGE>
the time of initial purchase are within the market capitalization range of those
stocks on the Standard & Poor's 500 Index. 'Growth' companies generally include
companies with the potential for above-average earnings and cash flow growth or
meaningful increases in underlying asset values over time. The Large Cap Growth
Fund attempts to achieve its objective by investing all of its investable assets
in UBS Large Cap Growth Portfolio (the 'Large Cap Growth Portfolio'), a series
of the Trust having the same investment objective as the Large Cap Growth Fund.
UBS REAL ESTATE FUND (the 'Real Estate Fund') is designed for investors
seeking total return, consisting of long-term capital appreciation and current
income from a portfolio of equity securities of domestic and foreign real estate
companies. Because of the risks associated with common stock investments, the
Real Estate 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 Real Estate Fund seeks to achieve its investment objective by
investing all of its investable assets in UBS Real Estate Portfolio (the 'Real
Estate Portfolio'), a series of the Trust having the same investment objective
as the Real Estate Fund.
MONEY MARKET INSTRUMENTS
As discussed in the Prospectuses, 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 either the Institutional International Equity
Fund or the International Equity Fund (collectively, the 'International Equity
Funds'). 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 Funds, the Small Cap Fund, the Large Cap Growth Fund,
the High Yield Bond Fund and the Real Estate 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).
SAI-3
<PAGE>
<PAGE>
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 in the case of the
International Equity Funds, UBS International Investment London Limited ('UBSII'
or the 'Sub-Adviser'), and in the case of the Small Cap Fund, the Large Cap
Growth Fund, High Yield Bond Fund and the Real Estate Fund, UBS Asset Management
(New York), Inc., acting as agent, for no additional fee, in its capacity as
investment 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 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 Portfolios
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 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, with the exception of the Bond Portfolio and the High Yield
Bond Portfolio, may invest in other debt securities with remaining effective
maturities of less than thirteen months, including
- ------------
* Unless otherwise noted, references to the Adviser in the context of the
International Equity Portfolio, Small Cap Portfolio, Large Cap Growth Portfolio,
High Yield Bond Portfolio and the Real Estate Portfolio refer to the Adviser
and/or the Sub-Advisers, as appropriate.
SAI-4
<PAGE>
<PAGE>
without limitation corporate and foreign bonds, asset-backed securities and
other obligations described in the Prospectus or this SAI.
As discussed in the Prospectuses, the Bond Portfolio and the High Yield
Bond Portfolio, may invest in bonds and other debt securities of domestic and
foreign issuers to the extent consistent with their investment objectives and
policies. A description of these investments appears in the Prospectuses 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, 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.
EQUITY INVESTMENTS
As discussed in the Prospectuses, the Value Equity, International Equity,
Small Cap, Large Cap Growth and Real Estate 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 Prospectuses 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.
REAL ESTATE INVESTMENT TRUSTS ('REITS'). The Real Estate Portfolio's
investment in REITs presents certain further risks that are unique and in
addition to the risks associated with investing in the real estate industry.
Equity REITs may be affected by changes in the value of the underlying property
owned by the REITs, while mortgage REITs may be affected by the quality of any
credit extended. REITs are dependent on management skills, are not diversified
and are subject to the risks of financing projects. REITs whose underlying
assets include long-term health care properties, such as nursing, retirement and
assisted living facilities may be impacted by federal regulations concerning the
health care industry.
SAI-5
<PAGE>
<PAGE>
REITs (especially mortgage REITs) are also subject to interest rate risks.
When interest rates decline, the value of a REIT's investment in fixed rate
obligations can be expected to rise. Conversely, when interest rates rise, the
value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will gradually
align themselves to reflect changes in market interest rates, causing the value
of such investments to fluctuate less dramatically in response to interest
fluctuations than would investments in fixed rate obligations.
REITs may have limited financial resources, may trade less frequently and
in a limited volume, and may be subject to more abrupt or erratic price
movements than other securities.
FOREIGN INVESTMENTS
The International Equity Portfolio makes substantial investments in
companies based in foreign countries. The Bond, High Yield Bond and Real Estate
Portfolios may also invest in certain foreign securities. Neither the Bond
Portfolio nor the High Yield Bond Portfolio expect to invest more than 25% of
their total assets, at the time of purchase, in securities of foreign issuers.
The Real Estate Portfolio may invest up to 20% of its assets in foreign
securities. Foreign investments may be made directly in the securities of
foreign issuers or in the form of American Depository Receipts ('ADRs') Global
Depository Receipts ('GDRs') or European Depository Receipts ('EDRs').
Generally, ADRs, GDRs 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, European, in
the case of EDRs, or domestic and European in the case of GDRs, securities
markets.
Because investments in foreign securities may involve foreign currencies,
the value of the International Equity, Bond, High Yield Bond and Real Estate
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, High Yield Bond, International Equity and
Real Estate 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 Prospectuses.
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 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 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).
SAI-6
<PAGE>
<PAGE>
INVESTMENT COMPANY SECURITIES. Securities of other investment companies may
be acquired by each Portfolio 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 Portfolio's total assets will be invested in
the securities of any one investment company, (ii) not more than 10% of the
value of the Portfolio'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 Portfolio. Each
Portfolio, however, 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.
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.
SAI-7
<PAGE>
<PAGE>
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 (except the Real Estate 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. 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'.
The Real Estate Portfolio is classified as a 'non-diversified' investment
company under the 1940 Act, which means that the Portfolio is not limited by the
above-mentioned requirements. However, the Portfolio intends to qualify as a
regulated investment company ('RIC') for purposes of the Internal Revenue Code
of 1986, as amended (the 'Tax Code'). In order to qualify as a RIC, the
Portfolio will have to meet certain requirements, including asset
diversification requirements. Under these asset diversification requirements,
the Portfolio will limit its investments so that, at the close of each quarter
of the taxable year: (i) not more than 25% of the Portfolio's total assets (at
market value) will be invested in the securities of a single issuer, and (ii)
with respect to 50% of its total assets (at market value), not more than 5% of
its total assets (at market value) will be invested in the securities of a
single issuer, and (iii) the Portfolio will not own more than 10% of the
outstanding voting securities of any single issuer. The Portfolio's investments
in securities issued by the U.S. Government, its agencies and instrumentalities
are not subject to these limitations.
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 Ratings Group ('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.
HIGH YIELD BOND PORTFOLIO. The High Yield Bond Portfolio invests primarily
in lower-rated securities, commonly known as 'junk bonds.' Lower rated
securities include securities rated lower than Baa by Moody's or BBB or lower by
Standard & Poor's. Securities rated lower than Baa or BBB are considered to be
of poor standing and predominantly speculative. The High Yield Bond Portfolio
may
SAI-8
<PAGE>
<PAGE>
invest up to 10% of its assets in securities rated below Caa by Moody's or CCC
by Standard & Poor's (including securities in the lowest rating category of
either rating agency) or if unrated, determined by the Adviser* to be of
comparable quality. The market values of these securities tend to be more
sensitive to individual corporate developments and changes in economic
conditions than higher-quality securities.
VALUE EQUITY, INTERNATIONAL EQUITY, SMALL CAP, LARGE CAP GROWTH AND REAL
ESTATE PORTFOLIOS. The Value Equity, International Equity, Small Cap, Large Cap
Growth and Real Estate 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 Securities and Exchange Commission (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
- ------------
* Unless otherwise noted, references to the Adviser in the context of the
International Equity Portfolio, the Small Cap Portfolio, the Large Cap Growth
Portfolio, the High Yield Bond Portfolio and the Real Estate Portfolio refer to
the Adviser and/or the Sub-Adviser, as appropriate.
SAI-9
<PAGE>
<PAGE>
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 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 customs.
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.
SAI-10
<PAGE>
<PAGE>
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 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 or the 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 securities present at a shareholders' meeting
if the holders of more than 50% of the outstanding voting securities are present
or represented by proxy or (b) more than 50% of the outstanding voting
securities. Except as described below, 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. However, subject to applicable statutory and
regulatory requirements, a Fund would not request a vote of its shareholders
with respect to (a) any proposal relating to its corresponding Portfolio, which
proposal, if made with respect to the Fund, would not require the vote of the
shareholders of the Fund, or (b) any proposal with respect to the Portfolio that
is identical in all material respects to a proposal that has previously been
approved by shareholders of the Fund. Any proposal submitted to holders in the
Portfolio, and that is not required to be voted on by shareholders of the Fund,
would nevertheless be voted on by the Trustees of the Fund.
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. As a matter of
fundamental policy, each Fund and Portfolio 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), 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 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;
SAI-11
<PAGE>
<PAGE>
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 also 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 (50% for the Real Estate Portfolio);
4. (Except for the Real Estate Portfolio) 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 Value Equity
Portfolio, the International Equity Portfolio, the Small Cap Portfolio nor
the Large Cap Growth Portfolio may purchase or sell real estate mortgage
loans. The Bond Portfolio, High Yield Bond Portfolio and the Real Estate
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, the Value Equity Portfolio, the Small Cap
Portfolio, the Large Cap Growth Portfolio and the Real Estate 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 -- ALL FUNDS. The investment
restrictions described below are non-fundamental policies of each Fund and its
corresponding Portfolio, and may be changed by their respective Directors and
Trustees without shareholder approval. These non-fundamental investment policies
provide that neither a Fund nor a Portfolio may:
1. 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;
2. 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,
SAI-12
<PAGE>
<PAGE>
including deposits of initial deposit and variation margin, and reverse
repurchase agreements are not considered a pledge of assets for purposes
of this restriction;
3. 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;
4. 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 Funds have no
current intention to engage in short selling.);
5. invest for the purpose of exercising control or management;
6. 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 (except the
Real Estate 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;
7. 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 Securities Act;
8. (except for the Small Cap Fund, Large Cap Growth Fund, High Yield Bond
Fund and Real Estate Fund) invest more than 15% of the Fund's net assets
(taken at the greater of cost or market value) in 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;
9. 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 (a) Rule 144A securities that have been determined
to be liquid by the Board of Trustees; and (b) commercial paper that is
sold under Section 4(2) of the Securities Act which: (i) is not traded
flat or in default as to interest or principal; and (ii) is rated in one
of the two highest categories by at least two nationally recognized
statistical rating organizations and the Fund's Board of Directors has
determined the commercial paper to be liquid; or (iii) is rated in one of
the two highest categories by one nationally recognized statistical
rating agency and the Fund's Board of Directors has determined that the
commercial paper is of equivalent quality and is liquid;
10. (except for the Small Cap Fund, Large Cap Growth Fund, High Yield Bond
Fund and Real Estate Fund) 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,
SAI-13
<PAGE>
<PAGE>
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;
11. 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 (except for the Small Cap Fund,
Large Cap Growth Fund, High Yield Bond Fund and Real Estate Fund) 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;
12. 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);
13. 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
14. (except for the Small Cap Fund, Large Cap Growth Fund, High Yield Bond
Fund and Real Estate Fund) 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 same persons who are
the Company's Directors are also the Trust's Trustees. The Company's Board is
responsible for the overall management of the Fund, including the general
supervision and review of its investment activities. The Company's 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 the Trust with substantially the same
responsibilities. 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 December 31, 1997, 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 Trustees or Directors or officers receives compensation from the Company
or 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
SAI-14
<PAGE>
<PAGE>
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
1345 Avenue of the Americas the Board (February 1996-Present); Union Bank of Switzerland
New York, NY 10105 (Investment Services Department), Division Head.
Age: 55
Timothy M. Spicer, CPA Director UBS Investor Portfolios Trust, Trustee (February 1996-
1345 Avenue of the Americas Present); San Francisco Sentry Investment Group (a west
New York, NY 10105 coast investment adviser and venture capital firm),
Age: 48 President and Chief Operating Officer (1995-Present);
Ensemble Information Systems (software and electronic
information provider), Co-Founder, Chairman of 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 (1993-1996); PM Squared (health care
information service company), Director (1996-Present);
Arcxel Technologies (fibre-channel company), Director
(1996-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 Bay area, including
Pacific Swimming, Big Brothers/Big Sisters and United Way.
Peter Lawson-Johnston Director UBS Investor Portfolios Trust, Trustee (February 1996-
1345 Avenue of the Americas Present); Zemex Corporation (mining), Chairman of the Board
New York, NY 10105 and Director (1990-Present); The McGraw-Hill Companies,
Age: 71 Inc. (publishing), Director (1990-1997); National Review,
Inc. (publishing), Director (1990-Present); Guggenheim
Brothers (real estate -- venture capital partnership),
Senior Partner (1990-Present); Elgerbar Corporation
(holding company), President and Director (1990-Present);
The Solomon R. Guggenheim Foundation (operates the
Guggenheim Museums in New York and the Peggy Guggenheim
Collection in Venice, Italy), President (1990-1995),
Chairman and Trustee (1995-Present); The Harry Frank
Guggenheim Foundation (charitable organization), Chairman
of the Board and Director (1990-Present).
Paul J. Jasinski President Managing Director, Investors Bank & Trust Company,
200 Clarendon Street (1990-Present).
Boston, Massachusetts 02116
Age: 50
Nicholas G. Chunias Treasurer Director, Mutual Fund Administration -- Reporting and
200 Clarendon Street and Chief Compliance, Investors Bank & Trust Company, (1996- Present);
Boston, Massachusetts 02116 Financial Director, Fund Accounting, Investors Bank & Trust Company,
Age: 32 Officer (1993-1996); Account Supervisor, Coopers & Lybrand, LLP,
(1992-1993).
</TABLE>
SAI-15
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
POSITION
WITH THE
NAME, ADDRESS AND AGE COMPANY PRINCIPAL OCCUPATIONS DURING THE LAST FIVE YEARS
- -------------------------------- ------------ -----------------------------------------------------------
<S> <C> <C>
Susan C. Mosher Secretary Director, Mutual Fund Administration -- Legal
200 Clarendon Street Administration, Investors Bank & Trust Company,
Boston, Massachusetts 02116 (1995-Present); Associate Counsel, 440 Financial Group of
Age: 43 Worcester, Inc., (1993-1995); Associate and Partner,
Gallagher, Callahan & Gartrell, P.A., (1986-1992).
</TABLE>
- ------------------------------------
* 'Interested Person' within the meaning of the 1940 Act.
COMPENSATION TABLE*
<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION
AGGREGATE RETIREMENT BENEFITS ESTIMATED FROM COMPANY AND
COMPENSATION ACCRUED AS PART OF ANNUAL BENEFITS FUND COMPLEX**
NAME OF PERSON, POSITION FROM COMPANY FUND EXPENSES UPON RETIREMENT PAID TO DIRECTORS
- ---------------------------------- ------------ ------------------- --------------- ------------------
<S> <C> <C> <C> <C>
Dr. Lochmeier 0 0 0 0
Chairman of the Board
Mr. Spicer $ 0 0 $
Director
Mr. Lawson-Johnston $ 0 0 $
Director
</TABLE>
- ------------------------------------
*The noted amounts are for the fiscal year ended December 31, 1997. The
Directors are also reimbursed for all reasonable expenses incurred during the
execution of their duties.
**The Fund Complex consists of the Company and UBS Investor Portfolios
Trust.
As of November 24, 1997, the following owned of record or, to the knowledge
of management, beneficially owned more than 5% of the outstanding shares of:
UBS Value Equity Fund -- Union Bank of Switzerland, NY Branch, 1345
Avenue of the Americas, New York, NY 10105 (8.16%); C.E. Exley, Jr. and
S.Y. Exley Tr., u/a/d 8/2/93 C.E. Exley, Jr. Trust, 2350 Kettering Tower,
Dayton, OH 45423 (7.98%); Union Bank of Switzerland, NY Branch, 1345 Avenue
of the Americas, New York, NY 10105 (7.19%); Union Bank of Switzerland, NY
Branch, 1345 Avenue of the Americas, New York, NY 10105 (6.04%).
UBS Bond Fund -- Union Bank of Switzerland, NY Branch, 1345 Avenue of
the Americas, New York, NY 10105 (15.73%); Union Bank of Switzerland, NY
Branch, 1345 Avenue of the Americas, New York, NY 10105 (11.93%); Union
Bank of Switzerland, NY Branch, 1345 Avenue of the Americas, New York, NY
10105 (10.60%); Union Bank of Switzerland, NY Branch, 1345 Avenue of the
Americas, New York, NY 10105 (6.90%); Greenco, 213 Market Street,
Harrisburg, PA 17101 (6.29%); Union Bank of Switzerland, NY Branch, 1345
Avenue of the Americas, New York, NY 10105 (5.50%).
UBS International Equity Fund -- H.T. Wilson, Jr. and B.M. Wilson
Community Property, 2001 Kirby Drive, Houston, TX 77019 (6.69%).
UBS High Yield Bond Fund -- Union Bank of Switzerland, NY Branch, 1345
Avenue of the Americas, New York, NY 10105 (19.52%); Union Bank of
Switzerland, NY Branch, 1345 Avenue of the Americas, New York, NY 10105
(19.52%); Union Bank of Switzerland, NY Branch, 1345 Avenue of the
Americas, New York, NY 10105 (13.02%); Union Bank of Switzerland, NY
Branch, 1345 Avenue of the Americas, New York, NY 10105 (9.92%); Union Bank
of Switzerland, NY Branch, 1345 Avenue of the Americas, New York, NY 10105
(9.76%).
UBS Small Cap Fund -- Union Bank of Switzerland, NY Branch, 1345
Avenue of the Americas, New York, NY 10105 (21.10%); J.E. Klabunde & M.C.
Klabunde Tr., u/a/d 2/26/92 FBO Klabunde Revocable Trust, 254 Spring Creek
Pl. NE, Albuquerque, NM 87122 (8.40%); Union Bank of Switzerland, NY
Branch, 1345 Avenue of the Americas, New York, NY 10105 (7.79%);
SAI-16
<PAGE>
<PAGE>
Union Bank of Switzerland, NY Branch, 1345 Avenue of the Americas, New
York, NY 10105 (6.75%).
UBS Large Cap Growth Fund -- Union Bank of Switzerland, NY Branch,
1345 Avenue of the Americas, New York, NY 10105 (31.56%); Union Bank of
Switzerland, NY Branch, 1345 Avenue of the Americas, New York, NY 10105
(23.79%); Union Bank of Switzerland, NY Branch, 1345 Avenue of the
Americas, New York, NY 10105 (8.44%); Union Bank of Switzerland, NY Branch,
1345 Avenue of the Americas, New York, NY 10105 (6.60%).
UBS Institutional International Equity Fund -- Archstone Foundation,
401 E. Ocean Blvd., Ste. 1000, Long Beach, CA 90802 (100.00%).
The UBS Real Estate Fund had not commenced operations as of November
24, 1997.
The Company has no knowledge of any other owners of record of 5% or more of
the outstanding shares of a Fund. Shareholders owning 25% or more of the
outstanding shares of a Fund may take actions without the approval of other
investors in the Fund.
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'), UBSII serves as the
sub-adviser to the International Equity Portfolio. Pursuant to Sub-Advisory
Agreements between the Branch and UBS Asset Management (New York) Inc.
('UBSAM'), UBSAM serves as the sub-adviser to the Small Cap, Large Cap Growth,
High Yield Bond and Real Estate Portfolios. The Branch, which operates out of
offices located at 1345 Avenue of the Americas, 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. UBSAM is a
wholly-owned subsidiary of UBS Inc., whose parent is the Bank. (The Adviser and
the Sub-Adviser are collectively referred to as the 'Advisers'.) Subject to the
supervision of the Trustees, the Adviser (UBSII in the case of the International
Equity Portfolio and UBSAM in the case of the Small Cap Portfolio, Large Cap
Growth Portfolio, High Yield Bond Portfolio and Real Estate Portfolio), 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, 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 and UBSAM) 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 since
SAI-17
<PAGE>
<PAGE>
1946. At December 31, 1997, the Bank (including its consolidated subsidiaries)
had total assets of $ billion and equity capital and reserves of $
billion.
BOND AND HIGH YIELD BOND FUNDS. 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.
VALUE 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.
SMALL CAP AND LARGE CAP GROWTH FUNDS. The Sub-Adviser's portfolio managers
have extensive experience in managing equity portfolios. Based on the investment
objective of the Fund, the Sub-Adviser analyzes equity securities of either
small capitalization growth companies or large capitalization growth companies
in order to identify above average growth opportunities for each respective
Fund. These opportunities may be characterized by the combination of security
valuations (e.g. price relative to earnings and/or cash flow) and above average
earnings growth expectations.
INTERNATIONAL EQUITY AND INSTITUTIONAL INTERNATIONAL EQUITY FUNDS. 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.
REAL ESTATE FUND. [To be inserted.]
The Sub-Advisers are registered investment advisers under the Investment
Advisers Act of 1940, as amended.
The Prospectus for each of the Funds contains a description of fees payable
to the Adviser. For the fiscal year ended December 31, 1997, the Bond Portfolio,
Value Equity Portfolio, International Equity Portfolio, High Yield Bond
Portfolio, Small Cap Portfolio and Large Cap Growth Portfolio paid investment
advisory fees equal to $ , $ , $ , $ , $ and
$ , respectively. The Real Estate Portfolio had not commenced operations
as of December 31, 1997.
The Branch has voluntarily agreed to waive its fees and reimburse each Fund
and its corresponding Portfolio for their respective operating expenses to the
extent that the operating expenses (excluding extraordinary items) of the Bond
Fund, High Yield Bond Fund, Value Equity Fund, Institutional International
Equity Fund, International Equity Fund, Small Cap Fund, Large Cap Growth Fund
and Real Estate Fund exceed, on an annual basis, 0.80%, 0.90%, 0.90%, 0.95%,
1.40%, 1.20%, 1.00% and 1.20%, 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' prior notice to the affected Fund. See 'Expenses'.
For the fiscal year ended December 31, 1997, UBS reimbursed the Bond Fund, Value
Equity Fund, International Equity Fund, High Yield Bond Fund, Institutional
International Equity Fund, Small Cap Fund and Large Cap Growth Fund for expenses
totaling $ , $ , $ , $ , $ ,
$ and $ , respectively. The Real Estate Fund had not commenced
operations as of December 31, 1997.
Pursuant to the Sub-Advisory Agreements, the Sub-Advisers, under the
supervision of the Trustees and the Adviser, make the day-to-day investment
decisions for the International Equity, Small Cap, Large Cap Growth, High Yield
Bond and Real Estate Portfolios. Under the Sub-Advisory Agreement, the Adviser
has agreed to pay UBSII a fee, calculated daily and payable monthly equal, on an
annual basis, to 0.75% of the International Equity Portfolio's first $20 million
of average net assets, 0.50% of the next $30 million of average net assets, and
0.40% of average net assets in excess of $50 million. The Adviser is solely
responsible for paying this fee to UBSII. For the fiscal year ended December 31,
1997, the Adviser paid $ to UBSII on behalf of the International Equity
Portfolio.
SAI-18
<PAGE>
<PAGE>
Under the Sub-Advisory Agreements with UBSAM, the Adviser has agreed to pay
UBSAM a fee, calculated daily and payable monthly equal, on an annual basis, to
the following percentages of each Portfolio's respective average net assets:
<TABLE>
<S> <C>
UBS High Yield Bond Portfolio........................................ 0.25% of the first $25 million
0.20% of the next $25 million
0.15% over $50 million
UBS Small Cap Portfolio.............................................. 0.40% of the first $25 million
0.325% of the next $25 million
0.25% over $50 million
UBS Large Cap Growth Portfolio....................................... 0.30% of the first $25 million
0.25% of the next $25 million
0.20% over $50 million
UBS Real Estate Portfolio............................................ 0.40% of the first $25 million
0.325% of the next $25 million
0.25% over $50 million
</TABLE>
The Adviser is solely responsible for paying this fee to UBSAM. For the
fiscal year ended December 31, 1997, the Adviser paid $ , $
and $ to UBSAM on behalf of the High Yield Bond, Small Cap and Large
Cap Growth Portfolios, respectively. The Real Estate Portfolio had not commenced
operations as of December 31, 1997.
The Investment Advisory and Sub-Advisory Agreements for the Bond, Value
Equity and International Equity Portfolios will each continue in effect until
April 1998. The Investment Advisory and Sub-Advisory Agreements for the Small
Cap, Large Cap Growth and High Yield Bond Portfolios will each continue in
effect until September 1999, and the Investment Advisory and Sub-Advisory
Agreement for the Real Estate Portfolio will each continue in effect until
February 2000. Thereafter the agreements 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 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'.
In addition to the above noted investment advisory services, the Adviser
(but not the Sub-Advisers) also provides certain administrative services to the
Funds and the Portfolios and, subject to the supervision of the Board of
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
SAI-19
<PAGE>
<PAGE>
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-Advisers 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. Commencing on March 13, 1997, the Trust and the Company
employed Investors Fund Services (Ireland) Limited ('IBT Ireland'), a subsidiary
of Investors Bank & Trust Company ('Investors Bank') and Investors Bank,
respectively, as Administrators under Administration Agreements (the
'Administration Agreements') to provide certain administrative services. The
services provided by IBT Ireland and Investors Bank under the Administration
Agreements include certain accounting, clerical and bookkeeping services, Blue
Sky (for the Funds only), corporate secretarial services and assistance in the
preparation and filing of tax returns and reports to shareholders and the SEC.
Investors Bank is a wholly-owned subsidiary of Investors Financial Services
Corp., a publicly-held corporation and holding company registered under the Bank
Holding Company Act of 1956. For its services under the Administration
Agreement, each Fund pays Investors Bank a fee which is calculated daily and
paid monthly, equal, on an annual basis, to 0.065% of the Fund's first $100
million in average daily net assets and 0.025% of the next $100 million in
average daily net assets. Investors Bank does not receive a fee from the Fund on
average daily net assets in excess of $200 million. For its services under the
Administration Agreement, each Portfolio pays IBT Ireland a fee which is
calculated daily and paid monthly equal, on an annual basis, to 0.07% of the
Portfolio's first $100 million in average daily net assets and 0.05% of the
assets in excess of $100 million. IBT Ireland's principal offices are located at
Deloitte & Touche House, 29 Earlsfort Terrace, Dublin 2, Ireland. Investors
Bank's principal offices are located at 200 Clarendon Street, Boston,
Massachusetts 02116.
During the period March 31, 1997 through December 31, 1997, the Bond, Value
Equity, International Equity, Small Cap, Large Cap Growth and High Yield Bond
Portfolios paid IBT Ireland administrative fees of $ , $ ,
$ , $ , $ and $ , respectively, while the
Bond, Value Equity, International Equity, Institutional International Equity,
Small Cap, Large Cap Growth and High Yield Bond Funds paid Investors Bank
administrative fees of $ , $ , $ , $ ,
$ , $ and $ , respectively. The Real Estate Portfolio
and Fund had not commenced operations as of December 31, 1997.
During the period April 2, 1996 (commencement of operations) through March
13, 1997, Signature Broker-Dealer Services, Inc. ('Signature') and Signature
Financial Group (Grand Cayman) Ltd. ('Signature Grand Cayman') served as
Administrators to the Company and the Trust, respectively. During the period
April 2, 1996 (commencement of operations) through December 31, 1996, the Bond,
Value Equity and International Equity Portfolios paid Signature Grand Cayman
administrative fees of $14,594, $7,036 and $11,712, respectively, while the
Bond, Value Equity and International Equity Funds paid Signature administrative
fees of $1,526, $2,593 and $4,131, respectively. During the period January 1,
1997 to March 13, 1997, the Bond, Value Equity and International Equity
Portfolios paid Signature Grand Cayman administrative fees of $ ,
$ , and $ , respectively, while the Bond, Value Equity,
International Equity and Institutional International Equity Funds paid Signature
administrative fees of $ , $ , $ , and $ ,
respectively. The
SAI-20
<PAGE>
<PAGE>
Small Cap Portfolio and Fund, Large Cap Growth Portfolio and Fund, High Yield
Bond Portfolio and Fund and the Real Estate Portfolio and Fund had not commenced
operations as of March 13, 1997.
The Administration Agreements may be renewed or amended by the Directors or
Trustees, as applicable, without a shareholder vote. The Administration
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 Administration 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
DISTRIBUTOR. Pursuant to a Distribution Agreement, First Fund Distributors,
Inc. (the 'Distributor') serves as the distributor of Fund shares. The
Distributor is a broker-dealer registered with the SEC and is a member of the
National Association of Securities Dealers, Inc. ('NASD'). The Distributor is
authorized by the NASD to act as a mutual fund underwriter and distributor. The
principal offices of the Distributor are located at 4455 E. Camelback Road,
Phoenix, Arizona 85018. The Distributor does not receive a fee pursuant to the
terms of the Distribution Agreement, but receives compensation from Investors
Bank.
CUSTODIAN
Investors Bank (the 'Custodian'), whose principal offices are located at
200 Clarendon Street, Boston, Massachusetts 02116, serves as the custodian,
transfer and dividend disbursing agent for the Funds and the Portfolios.
Pursuant to 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 200
Clarendon Street, Boston, Massachusetts 02116. 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.
SHAREHOLDER SERVICES
The Company (excluding UBS Institutional International Equity Fund) has
entered into a shareholder servicing agreement with the Branch, and may enter
into additional shareholder servicing agreements with one or more financial
institutions (together with the Branch, 'Eligible Institutions') such as a
federal or state-chartered bank, trust company, savings and loan association or
savings bank, or broker-dealer. Pursuant to each shareholder servicing
agreement, an Eligible Institution, as agent for its customers who are
purchasing shares of the Fund, will perform shareholder services for these
investors, 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
SAI-21
<PAGE>
<PAGE>
agreed to pay each Eligible Institution a fee equal, on an annual basis, to
0.25% of the average daily net assets of such Fund represented by shares of the
Fund owned during the period for which payment is being made by customers of the
Eligible Institution. For the period April 2, 1996 (commencement of operations)
through December 31, 1996, the shareholder service fee for the Bond Fund, Value
Equity Fund and International Equity Fund amounted to $7,632, $12,965 and
$20,658, respectively, all of which were waived. For the fiscal year ended
December 31, 1997, the shareholder service fee for the Bond Fund, Value Equity
Fund and International Equity Fund amounted to $ , $ and
$ , respectively, all of which were waived. For the period October 1,
1997 (commencement of operations) through December 31, 1997, the shareholder
service fee for the Small Cap Fund and the High Yield Bond Fund amounted to
$ and $ , respectively, all of which were waived. For the
period October 15, 1997 (commencement of operations) through December 31, 1997,
the shareholder service fee for the Large Cap Growth Fund amounted to
$ , all of which was waived. The Real Estate Fund had not commenced
operations as of December 31, 1997.
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 and UBSAM under the
Sub-Advisory Agreements, may raise issues under these laws. However, the Branch,
UBSII and UBSAM 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, UBSII or UBSAM 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, UBSII and UBSAM.
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. 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 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' prior notice to the affected Fund. For additional information
regarding waivers or expense subsidies, see 'Management' in the Prospectuses.
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.
SAI-22
<PAGE>
<PAGE>
For each Fund except the Institutional International Equity Fund, the
minimum investment requirement for certain retirement plans such as Individual
Retirement Accounts ('IRAs'), Self-Employed Retirement Plans ('SERPs'), 401(k)
Plans and other tax-deferred plans is $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.
These minimum investment requirements may be waived at the Fund's discretion.
The Institutional International Equity Fund has not adopted special minimum
investment requirements for retirement plans.
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 its 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 the section regarding purchase of shares in the
appropriate Prospectus). Requests for exchange are made in the same manner as
requests for redemptions (see the section regarding redemption of shares in the
appropriate Prospectus). Shares of the acquired series are purchased for
settlement when the proceeds from redemption become available. The Company
reserves the right to
SAI-23
<PAGE>
<PAGE>
discontinue, alter or limit this exchange privilege at any time. Shares of the
Institutional International Equity Fund are not eligible for the exchange
privilege.
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
(usually 4:00 p.m. EST, unless trading on the NYSE is suspended at an earlier
time) 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 any day on which the
NYSE is closed, including the following legal holidays: New Year's Day, Dr.
Martin Luther King, Jr. 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 and High Yield Bond Portfolios, 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 Portfolios by using bid quotes
from at least one dealer 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.
In the case of the Value Equity, Small Cap, Large Cap Growth, International
Equity and Real Estate 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.
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
SAI-24
<PAGE>
<PAGE>
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 may 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 Eligible Institution.
See 'Additional Information' in the Prospectuses.
YIELD QUOTATIONS. As required by regulations of the SEC, the annualized
yield for the Bond Fund and the High Yield Bond Fund is computed by dividing the
Funds' net investment income per share (which may differ from the net income per
share used for accounting purposes) 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 Prospectuses.
TOTAL RETURN QUOTATIONS. As required by SEC regulations, the average annual
total return of the Bond, High Yield Bond, Value Equity, Small Cap, Large Cap
Growth, International Equity, Institutional International Equity and Real Estate
Funds for a period is computed by assuming a hypothetical initial investment 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
investment 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 Morgan Stanley Indices,
Merrill Lynch Indices, Lipper Analytical Services, Inc., Lehman
Government/Corporate Intermediate Bond Index, 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'r' Index and other
industry publications.
SAI-25
<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 and High Yield Bond Portfolios will be
undertaken principally to accomplish their objectives in relation to expected
movements in the general level of interest rates. The Bond and High Yield Bond
Portfolios may engage in short-term trading consistent with their objectives.
In connection with portfolio transactions for the Bond and High Yield Bond
Portfolios, 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. For the fiscal year ended
December 31, 1997, the portfolio turnover rate for the Bond Portfolio was %.
For the period October 1, 1997 (commencement of operations) through December 31,
1997, the portfolio turnover rate for the High Yield Bond Portfolio had not
commenced operations as of December 31, 1996.
In connection with portfolio transactions for the Value Equity, Small Cap,
Large Cap Growth, International Equity and Real Estate 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 annual portfolio turnover rate for the Real Estate Portfolio is
expected to be under 100%. For the fiscal year ended December 31, 1997, the
portfolio turnover rate for the Value Equity and International Equity Portfolios
was % and %, respectively. For the period October 1, 1997 (commencement of
operations) through December 31, 1997, the portfolio turnover rate for the Small
Cap Portfolio was %. For the period October 15, 1997 (commencement of
operations) through December 31, 1997, the portfolio turnover rate for the Large
Cap Growth Portfolio was %. The Real Estate Portfolio had not commenced
operations as of December 31, 1997.
In selecting a broker, the Adviser or Sub-Advisers, as applicable, consider
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-Advisers decide 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 Advisers believe 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. For the fiscal year
ended December 31, 1997, the Trust paid brokerage commissions on behalf of the
Value Equity and International Equity Portfolios in the amount of $ and
$ , respectively. For the period October 1, 1997 (commencement of
operations) through December 31, 1997, the Trust paid brokerage commissions on
behalf of the Small Cap Portfolio in the amount of $ . For the period
October 15, 1997 (commencement of operations) through December 31, 1997, the
Trust paid brokerage commissions on
SAI-26
<PAGE>
<PAGE>
behalf of the Large Cap Growth Portfolio in the amount of $ . The Real
Estate Portfolio had not commenced operations as of December 31, 1997.
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-Advisers, 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 relating thereto of which the Adviser,
Sub-Advisers 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
authorized to issue shares of common stock, par value $0.001 per share, in nine
series: The UBS Bond Fund Series; The UBS Tax Exempt Bond Fund Series; The UBS
Value Equity Fund Series; The UBS Institutional International Equity Fund
Series; The UBS International Equity Fund Series; The UBS High Yield Bond Fund
Series; The UBS Small Cap Fund Series; The UBS Large Cap Growth Fund Series and
The UBS Real Estate 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
nine 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
SAI-27
<PAGE>
<PAGE>
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.
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, seven
series have been authorized. Each series (i.e., a Portfolio) of the Trust
corresponds to a Fund of the Company, with the exception that the International
Equity Portfolio corresponds to the International Equity Fund and the
Institutional International Equity Fund.
A copy of the Trust's Declaration of Trust is on file in the office of its
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 has qualified 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; and (b) 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.
SAI-28
<PAGE>
<PAGE>
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 losses realized by a Portfolio
on forward currency contracts, options and futures contracts or on the
underlying securities.
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 Prospectuses. 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
SAI-29
<PAGE>
<PAGE>
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 Funds from their 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 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
With respect to the securities offered by the Prospectuses, this SAI and
the Prospectuses do 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. Pursuant to the rules and regulations
of the SEC, certain portions have been omitted. The Registration Statement,
including the exhibits filed therewith, 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 relating 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. Each such statement is
qualified in all respects by such reference.
FINANCIAL STATEMENTS
The Annual Report(s) of the Funds dated December 31, 1997 has been filed
with the SEC pursuant to Section 30(b) of the 1940 Act and Rule 30b2-1
thereunder and is hereby included herein. The Real Estate Fund had not commenced
operations as of December 31, 1997. Consequently, financial statements for the
Real Estate Fund are not included in the Annual Report.
SAI-30
<PAGE>
<PAGE>
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements:
The following financial statements are included in Part A:
To be filed by amendment.
The following financial statements are included in Part B:
To be filed by amendment.
<PAGE>
<PAGE>
(b) Exhibits.
(1) Articles of Incorporation of the Company.1
(2) Bylaws of the Company.1
(4)(A) Specimen certificate evidencing shares of Common Stock, $.001 par value,
of the Company.1
(4)(B) Articles FIFTH, SIXTH, NINTH and TWELFTH of the Company's Articles of
Incorporation, relating to the rights of stockholders.1
(4)(C) Selected portions of the Company's Bylaws, relating to the rights of
stockholders.1
(5) Investment Advisory Agreement between the Company and Union Bank of
Switzerland (the 'Bank'), New York Branch (the 'Adviser') on behalf of UBS Tax
Exempt Bond Fund.1
(6) Distribution Agreement between the Company and First Fund Distributors,
Inc.3
(8) Custodian Agreement between the Company and Investors Bank & Trust Company.1
(9)(A) Administrative Services Agreement between the Company and Investors Bank
& Trust Company on behalf of the Funds.3
(9)(B) Transfer Agency and Service Agreement between the Company and Investors
Bank & Trust Company on behalf of the Funds.1
(10) Opinion and consent of counsel.2
(11) To be filed by amendment.
(13) Subscription Agreement between the Company and Signature Broker-Dealer
Services, Inc. with respect to the Company's initial capitalization.2
(17) To be filed by amendment.
(18) Powers of Attorney.3
- -----------------------
1 Incorporated herein by reference from pre-effective amendment no. 1 to the
Registrant's registration statement (the "Registration Statement") on Form N-1A
(File nos. 33-64401, 811-07431) as filed with the U.S. Securities and Exchange
Commission (the "SEC") on February 9, 1996.
2 Incorporated herein by reference from pre-effective amendment no. 2 to the
Registration Statement as filed with the SEC on February 26, 1996.
3. Incorporated by reference from post-effective amendment no. 3 to the
Registration Statement as filed with the SEC on March 27, 1997.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not Applicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
Common Stock (par value $0.0001)
Title of Class: Number of record holders as of November 24, 1997
UBS Tax Exempt Bond Fund: 1
<PAGE>
<PAGE>
UBS Bond Fund: 52
UBS Value Equity Fund: 95
UBS International Equity Fund: 112
UBS Institutional International Equity Fund: 1
UBS Small Cap Fund: 57
UBS Large Cap Growth Fund: 16
UBS High Yield Bond Fund: 27
ITEM 27. INDEMNIFICATION.
STATE LAW, ARTICLES OF INCORPORATION AND BYLAWS. It is the Company's policy
to indemnify its officers, directors, employees and other agents to the maximum
extent permitted by Section 2-418 of the Maryland General Corporation Law,
Articles SEVENTH and EIGHTH of the Company's Articles of Incorporation and
Article IV of the Company's Bylaws (each set forth below).
SECTION 2-418 OF THE MARYLAND GENERAL CORPORATION LAW READS AS FOLLOWS:
'2-418 INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS.
(a) In this section the following words have the meaning indicated.
(1) 'Director' means any person who is or was a director of a
corporation and any person who, while a director of a corporation, is or
was serving at the request of the corporation as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, other enterprise, or
employee benefit plan.
(2) 'Corporation' includes any domestic or foreign predecessor entity
of a corporation in a merger, consolidation, or other transaction in which
the predecessor's existence ceased upon consummation of the transaction.
(3) 'Expenses' include attorney's fees.
(4) 'Official capacity' means the following:
(i) When used with respect to a director, the office of director in
the corporation; and
(ii) When used with respect to a person other than a director as
contemplated in subsection (j), the elective or appointive office in the
corporation held by the officer, or the employment or agency
relationship undertaken by the employee or agent in behalf of the
corporation.
(iii) 'Official capacity' does not include service for any other
foreign or domestic corporation or any partnership, joint venture,
trust, other enterprise, or employee benefit plan.
(5) 'Party' includes a person who was, is, or is threatened to be made
a named defendant or respondent in a proceeding.
(6) 'Proceeding' means any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, or
investigative.
(b)(1) A corporation may indemnify any director made a party to any
proceeding by reason of service in that capacity unless it is established
that:
(i) the act or omission of the director was material to the matter
giving rise to the proceeding; and
1. Was committed in bad faith; or
2. Was the result of active and deliberate dishonesty; or
(ii) The director actually received an improper personal benefit in
money, property, or services; or
(iii) In the case of any criminal proceeding, the director had
reasonable cause to believe that the act or omission was unlawful.
<PAGE>
<PAGE>
(2)(i) Indemnification may be against judgments, penalties, fines,
settlements, and reasonable expenses actually incurred by the director in
connection with the proceeding.
(ii) However, if the proceeding was one by or in the right of the
corporation, indemnification may not be made in respect of any proceeding
in which the director shall have been adjudged to be liable to the
corporation.
(3)(i) The termination of any proceeding by judgment, order, or
settlement does not create a presumption that the director did not meet the
requisite standard of conduct set forth in this subsection.
(ii) The termination of any proceeding by conviction, or a plea of
nolo contendere or its equivalent, or an entry of an order of probation
prior to judgment, creates a rebuttable presumption that the director did
not meet that standard of conduct.
(c) A director may not be indemnified under subsection (B) of this
section in respect of any proceeding charging improper personal benefit to
the director, whether or not involving action in the director's official
capacity, in which the director was adjudged to be liable on the basis that
personal benefit was improperly received.
(d) Unless limited by the charter:
(1) A director who has been successful, on the merits or otherwise,
in the defense of any proceeding referred to in subsection (B) of this
section shall be indemnified against reasonable expenses incurred by the
director in connection with the proceeding.
(2) A court of appropriate jurisdiction upon application of a
director and such notice as the court shall require, may order
indemnification in the following circumstances:
(i) If it determines a director is entitled to reimbursement
under paragraph (1) of this subsection, the court shall order
indemnification, in which case the director shall be entitled to
recover the expenses of securing such reimbursement; or
(ii) If it determines that the director is fairly and reasonably
entitled to indemnification in view of all the relevant
circumstances, whether or not the director has met the standards of
conduct set forth in subsection (b) of this section or has been
adjudged liable under the circumstances described in subsection (c)
of this section, the court may order such indemnification as the
court shall deem proper. However, indemnification with respect to any
proceeding by or in the right of the corporation or in which
liability shall have been adjudged in the circumstances described in
subsection (c) shall be limited to expenses.
(3) A court of appropriate jurisdiction may be the same court in
which the proceeding involving the director's liability took place.
(e)(1) Indemnification under subsection (b) of this section may not
be made by the corporation unless authorized for a specific proceeding
after a determination has been made that indemnification of the director
is permissible in the circumstances because the director has met the
standard of conduct set forth in subsection (b) of this section.
(2) Such determination shall be made:
(i) By the board of directors by a majority vote of a quorum
consisting of directors not, at the time, parties to the proceeding,
or, if such a quorum cannot be obtained, then by a majority vote of a
committee of the board consisting solely of two or more directors
not, at the time, parties to such proceeding and who were duly
designated to act in the matter by a majority vote of the full board
in which the designated directors who are parties may participate;
(ii) By special legal counsel selected by the board of directors
<PAGE>
<PAGE>
or a committee of the board by vote as set forth in subparagraph (i)
of this paragraph, or, if the requisite quorum of the full board
cannot be obtained therefor and the committee cannot be established,
by a majority vote of the full board in which director [SIC] who are
parties may participate; or
(iii) By the shareholders.
(3) Authorization of indemnification and determination as to
reasonableness of expenses shall be made in the same manner as the
determination that indemnification is permissible. However, if the
determination that indemnification is permissible is made by special
legal counsel, authorization of indemnification and determination as to
reasonableness of expenses shall be made in the manner specified in
subparagraph (ii) of paragraph (2) of this subsection for selection of
such counsel.
(4) Shares held by directors who are parties to the proceeding may
not be voted on the subject matter under this subsection.
(f)(1) Reasonable expenses incurred by a director who is a party to
a proceeding may be paid or reimbursed by the corporation in advance of
the final disposition of the proceeding upon receipt by the corporation
of:
(i) A written affirmation by the director of the director's good
faith belief that the standard of conduct necessary for
indemnification by the corporation as authorized in this section has
been met; and
(ii) A written undertaking by or on behalf of the director to
repay the amount if it shall ultimately be determined that the
standard of conduct has not been met.
(2) The undertaking required by subparagraph (ii) of paragraph (1)
of this subsection shall be an unlimited general obligation of the
director but need not be secured and may be accepted without reference
to financial ability to make the repayment.
(3) Payments under this subsection shall be made as provided by the
charter, bylaws, or contract or as specified in subsection (e) of this
section.
(g) The indemnification and advancement of expenses provided or
authorized by this section may not be deemed exclusive of any other
rights, by indemnification or otherwise, to which a director may be
entitled under the charter, the bylaws, a resolution of shareholders or
directors, an agreement or otherwise, both as to action in an official
capacity and as to action in another capacity while holding such office.
(h) This section does not limit the corporation's power to pay or
reimburse expenses incurred by a director in connection with an
appearance as a witness in a proceeding at a time when the director has
not been made a named defendant or respondent in the proceeding.
(i) For purposes of this section:
(1) The corporation shall be deemed to have requested a director
to serve an employee benefit plan where the performance of the
director's duties to the corporation also imposes duties on, or
otherwise involves services by, the director to the plan or
participants or beneficiaries of the plan;
(2) Excise taxes assessed on a director with respect to an
employee benefit plan pursuant to applicable law shall be deemed
fines; and
(3) Action taken or omitted by the director with respect to an
employee benefit plan in the performance of the director's duties for
a purpose reasonably believed by the director to be in the interest
of the participants and beneficiaries of the plan shall be deemed to
<PAGE>
<PAGE>
be for a purpose which is not opposed to the best interests of the
corporation.
(j) Unless limited by the charter:
(1) An officer of the corporation shall be indemnified as and to
the extent provided in subsection (d) of this section for a director
and shall be entitled, to the same extent as a director, to seek
indemnification pursuant to the provisions of subsection (d);
(2) A corporation may indemnify and advance expenses to an
officer, employee, or agent of the corporation to the same extent
that it may indemnify directors under this section; and
(3) A corporation, in addition, may indemnify and advance
expenses to an officer, employee, or agent who is not a director to
such further extent, consistent with law, as may be provided by its
charter, bylaws, general or specific action of its board of directors
or contract.
(k)(1) A corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee, or agent of
the corporation, or who, while a director, officer, employee, or agent
of the corporation, is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee, or agent of another
foreign or domestic corporation, partnership, joint venture, trust,
other enterprise, or employee benefit plan against any liability
asserted against and incurred by such person in any such capacity or
arising out of such person's position, whether or not the corporation
would have the power to indemnify against liability under the provisions
of this section.
(2) A corporation may provide similar protection, including a trust
fund, letter of credit, or surety bond, not inconsistent with this
section.
(3) The insurance or similar protection may be provided by a
subsidiary or an affiliate of the corporation.
(l) Any indemnification of, or advance of expenses to, a director
in accordance with this section, if arising out of a proceeding by or in
the right of the corporation, shall be reported in writing to the
shareholders with the notice of the next stockholders' meeting or prior
to the meeting.'
Article SEVENTH of the Company's Articles of Incorporation provides:
'To the fullest extent permitted by Maryland statutory or decisional
law, as amended or interpreted, and the Investment Company Act of 1940, no
director or officer of the Corporation shall be personally liable to the
Corporation or its stockholders for money damages; provided, however, that
nothing herein shall be construed to protect any director or officer of the
Corporation against any liability to the Corporation or its security
holders to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such person's office. No amendment of
the Corporation's charter or repeal of any of its provisions shall limit or
eliminate the limitation of liability provided to directors and officers
hereunder with respect to any act or omission occurring prior to such
amendment or repeal.'
Article EIGHTH of the Company's Articles of Incorporation provides:
'The Corporation shall indemnify (i) its directors and officers,
whether serving the Corporation or at its request any other entity, to the
full extent required or permitted by Maryland statutory and decisional law,
now or hereafter in force, including the advance of expenses under the
procedures and to the full extent permitted by law, and (ii) other
employees and agents to such extent as shall be authorized by the Board of
Directors or the Bylaws and as permitted by law. Nothing contained herein
shall be construed to protect any director, officer, employee or agent of
<PAGE>
<PAGE>
the Corporation against any liability to the Corporation or its security
holders to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such person's office. The foregoing
rights of indemnification shall not be exclusive of any other rights to
which those seeking indemnification may be entitled. The Board of Directors
may take such action as is necessary to carry out these indemnification
provisions and is expressly empowered to adopt, approve and amend from time
to time such Bylaws, resolutions or contracts implementing such provisions
or such further indemnification arrangements as may be permitted by law. No
amendment of the Corporation's charter or repeal of any of its provisions
shall limit or eliminate the right of indemnification provided hereunder
with respect to acts or omissions occurring prior to such amendment or
repeal.'
Article FOURTH of the Company's Bylaws provides:
Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director or officer of the Corporation
or serves or served at the request of the Corporation any other enterprise
as a director or officer, whether or not the Corporation would have power
to indemnify such person.
------------------------
Reference is made to Article 4 of the Company's Distribution Agreement.
The Company, its Directors and officers are insured against certain
expenses in connection with the defense of claims, demands, action's suits or
proceedings, and certain liabilities that might be imposed as a result of such
actions, suits or proceedings.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the 'Securities Act'), may be permitted to Directors,
officers and controlling persons of the Company and the principal underwriter
pursuant to the foregoing provisions or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a Director, officer, or controlling person of the Company
and the principal underwriter in connection with the successful defense of any
action, suit or proceeding) is asserted against the Company by such Director,
officer or controlling person or principal underwriter in connection with the
shares being registered, the Company will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
See 'Investment Adviser and Funds Services Agent' in the Statement of
Additional Information. Information as to the directors and officers of the
Sub-Adviser is included in its forms ADV as filed with the Securities and
Exchange Commission (the 'SEC') and is hereby incorporated herein by reference.
Information as to the directors and officers of the Adviser is as follows.
<TABLE>
<CAPTION>
Name Title
---- ----
<S> <C>
Dr. HansPeter A. Lochmeier Senior Managing Director
J. Michael Gaffney Managing Director and Chief Investment Officer
Lawrence E. Gore Managing Director
Peter E. Guernsey, Jr. Managing Director
Alfredo F. Roth Managing Director
Paul Eckstein Senior Managing Director
</TABLE>
<PAGE>
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) First Fund Distributors ("First Fund") is the principal underwriter of
the shares of UBS Bond Fund, UBS Tax Exempt Bond Fund, UBS Value Equity Fund,
UBS International Equity Fund, UBS Institutional International Equity Fund, UBS
Small Cap Fund, UBS Large Cap Growth Fund, UBS High Yield Bond Fund and UBS Real
Estate Fund. First Fund also acts as a principal underwriter and distributor for
numerous other registered investment companies.
(b) The following are the directors and officers of First Fund. The
principal business address of these individuals is 4455 E. Camelback Road,
Phoenix, Arizona 85018 unless otherwise noted. Their respective position and
offices with the Company, if any, are also indicated.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICERS POSITIONS AND OFFICERS
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ------------------ ---------------- ---------------
<S> <C> <C>
Robert H. Wadsworth President & Treasurer None
4455 E. Camelback Road
Phoenix, Arizona 85018
Eric Banhazl Vice President None
4455 E. Camelback Road
Phoenix, Arizona 85018
Steven J. Paggioli Vice President None
4455 E. Camelback Road
Phoenix, Arizona 85018
</TABLE>
(c) First Fund has received no commissions or other compensation from the
Company to date.
<PAGE>
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents of the Company required to be
maintained by Section 31(a) of the 1940 Act and the rules thereunder will be
maintained at the offices of Investors Bank & Trust Company, 200 Clarendon
Street, Boston, Massachusetts 02116 and at First Canadian Place, Suite 2800,
Toronto, Ontario, M5X1C8.
ITEM 31. MANAGEMENT SERVICES.
Not applicable.
ITEM 32. UNDERTAKINGS.
(a) If the information called for by Item 5A of Form N-1A is contained in
the latest annual report to shareholders, the Registrant shall furnish each
person to whom a prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders upon request and without charge.
(b) Registrant undertakes to file a Post-effective Amendment to its
Registration Statement relating to the UBS Real Estate Fund (the "New Fund")
using financial information, which need not be certified, within four to six
months from the date the New Fund commences investment operations.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, UBS Private Investor Funds, Inc.
(the "Registrant") has duly caused this Post-Effective Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Boston and Commonwealth of Massachusetts on the
5th day of December, 1997.
UBS PRIVATE INVESTOR FUNDS, INC.
By: /s/ Paul J. Jasinski
- ---------------------------------
Paul J. Jasinski
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities indicated on the 5th day of December,
1997.
/s/ Paul J. Jasinski
- ---------------------------------
Paul J. Jasinski
President
/s/ Nicholas G. Chunias
- ---------------------------------
Nicholas G. Chunias
Treasurer and Principal Accounting and Financial Officer
Hans-Peter Lochmeier*
- ---------------------------------
HansPeter Lochmeier
Director
Timothy McDermott Spicer*
- ---------------------------------
Timothy McDermott Spicer
Director
Peter Lawson-Johnston*
- ---------------------------------
Peter Lawson-Johnston
Director
*By /s/ Susan C. Mosher
- ---------------------------------
Susan C. Mosher,
as attorney-in-fact pursuant to a power of attorney filed with
Registrant's Post-effective amendment no. 3 to its Registration Statement on
March 27, 1997.
<PAGE>
<PAGE>
SIGNATURES
UBS Investor Portfolios Trust (the "Portfolio Trust") has duly caused
this Post-Effective Amendment to the Registration Statement (the "Registration
Statement") on Form N-1A (File nos. 33-64401, 811-07431) of UBS Private Investor
Funds, Inc. to be signed on its behalf by the undersigned, thereto duly
authorized on the 5th day of December, 1997.
UBS INVESTOR PORTFOLIOS TRUST
By: /s/ Paul J. Jasinski
- ---------------------------------
Paul J. Jasinski
President of the Portfolio Trust
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement on Form N-1A of UBS
Private Investor Funds, Inc. has been signed below by the following persons in
the capacities indicated on the 5th day of December, 1997.
/s/ Paul J. Jasinski
- ---------------------------------
Paul J. Jasinski
President of the Portfolio Trust
/s/ Nicholas G. Chunias
- ---------------------------------
Nicholas G. Chunias
Treasurer and Principal Accounting and Financial Officer of the Portfolio Trust
Hans-Peter Lochmeier*
- ---------------------------------
HansPeter Lochmeier
Trustee of the Portfolio Trust
Timothy McDermott Spicer*
- ---------------------------------
Timothy McDermott Spicer
Trustee of the Portfolio Trust
Peter Lawson-Johnston*
- ---------------------------------
Peter Lawson-Johnston
Trustee of the Portfolio Trust
*By /s/ Susan C. Mosher
- ---------------------------------
Susan C. Mosher,
as attorney-in-fact pursuant to a power of attorney filed with
Registrant's Post-Effective Amendment no. 3 to its Registration Statement on
March 27, 1997.
<PAGE>
<PAGE>
INDEX TO EXHIBITS
None
STATEMENT OF DIFFERENCES
The registered trademark symbol shall be expressed as......................'r'
<PAGE>
