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As filed with the U.S. Securities and Exchange Commission on October 10, 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. 5
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 7
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):
[X] Immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on March 31, 1997 pursuant to paragraph (a)(i)
[ ] 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.
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EXPLANATORY NOTE
This post-effective amendment no. 5 (the "Amendment") to the
Registrant's registration statement on Form N-1A (File No. 33-64401) is being
filed with respect to UBS Institutional International Equity Fund. The Amendment
does not affect the Registrant's currently effective Prospectuses with respect
to UBS International Equity Fund, UBS Bond Fund, UBS Tax-Exempt Bond Fund, UBS
U.S. 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 Prospectus with respect to UBS Institutional
International Equity Fund is being supplemented and not amended by the
Amendment, and therefore is incorporated herein by reference. Registrant's
currently effective Statement of Additional Information dated September 8, 1997
is being amended by the Amendment, and therefore is included herein.
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UBS PRIVATE INVESTOR FUNDS, INC.
UBS INSTITUTIONAL INTERNATIONAL EQUITY 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>
UBS Private Investor Funds, Inc.
UBS Institutional International Equity Fund
SUPPLEMENT DATED OCTOBER 10, 1997 TO THE
PROSPECTUS DATED APRIL 7, 1997
The "Financial Highlights" section is supplemented for the UBS
Institutional International Equity Fund with the following information.
FINANCIAL HIGHLIGHTS
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<PAGE>
UBS Institutional International Equity Fund
Financial Highlights
For the Period April 14, 1997 (Commencement of Operations) through August 29,
1997 (Unaudited)
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<S> <C>
FOR A SHARE OUTSTANDING FOR THE PERIOD
Net asset value, beginning of period........................................... $100.00
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Income from investment operations:
Net investment income..................................................... 0.96
Net realized and unrealized gain on investments, foreign currency
contracts and foreign currency translations............................. 6.82
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Total income from investment operations................................... 7.78
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Net asset value, end of period................................................. $107.78
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Total return................................................................... 7.78%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted).................................. $13,639
Ratio of expenses to average net assets(2)................................ 0.96%(3)
Ratio of net investment income to average net assets(2)................... 2.31%(3)
</TABLE>
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(1) Not annualized.
(2) Includes the Fund's share of UBS Investor Portfolios Trust -- UBS
International Equity Portfolio expenses and net of fee waiver and expense
reimbursements. Such fee waiver and expense reimbursements had the effect of
reducing the ratio of expenses to average net assets and increasing the
ratio of net investment income to average net assets by 1.18% (annualized).
(3) Annualized.
<PAGE>
<PAGE>
UBS PRIVATE INVESTOR FUNDS, INC.
STATEMENT OF ADDITIONAL INFORMATION
DATED OCTOBER 10, 1997
UBS BOND FUND
UBS U.S. 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
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
U.S. EQUITY FUND AND UBS INTERNATIONAL EQUITY FUND, THE PROSPECTUS DATED APRIL
7, 1997 FOR UBS INSTITUTIONAL INTERNATIONAL EQUITY FUND AND WITH THE
PROSPECTUSES, DATED SEPTEMBER 8, 1997 FOR UBS SMALL CAP FUND, UBS LARGE CAP
GROWTH FUND AND UBS HIGH YIELD BOND 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
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<S> <C>
GENERAL............................................................................................ SAI-1
INVESTMENT OBJECTIVES AND POLICIES................................................................. SAI-1
INVESTMENT RESTRICTIONS............................................................................ SAI-10
DIRECTORS AND TRUSTEES............................................................................. SAI-13
INVESTMENT ADVISER AND FUNDS SERVICES AGENT........................................................ SAI-15
ADMINISTRATORS..................................................................................... SAI-18
DISTRIBUTOR........................................................................................ SAI-19
CUSTODIAN.......................................................................................... SAI-19
SHAREHOLDER SERVICES............................................................................... SAI-19
INDEPENDENT ACCOUNTANTS............................................................................ SAI-20
EXPENSES........................................................................................... SAI-20
PURCHASE OF SHARES................................................................................. SAI-20
REDEMPTION OF SHARES............................................................................... SAI-21
EXCHANGE OF SHARES................................................................................. SAI-21
DIVIDENDS AND DISTRIBUTIONS........................................................................ SAI-22
NET ASSET VALUE.................................................................................... SAI-22
PERFORMANCE DATA................................................................................... SAI-23
PORTFOLIO TRANSACTIONS............................................................................. SAI-24
ORGANIZATION....................................................................................... SAI-25
TAXES.............................................................................................. SAI-26
ADDITIONAL INFORMATION............................................................................. SAI-28
FINANCIAL STATEMENTS............................................................................... SAI-28
</TABLE>
ii
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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 eight series, seven of which are described in this
Statement of Additional Information ('SAI'). These seven series (each a 'Fund'
and collectively, the 'Funds') consist of: UBS Bond Fund, UBS International
Equity Fund, UBS Institutional International Equity Fund, UBS U.S. Equity Fund,
UBS Small Cap Fund, UBS Large Cap Growth Fund and UBS High Yield Bond 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 six Portfolios: UBS Bond Portfolio; UBS U.S.
Equity Portfolio; UBS International Equity Portfolio; UBS Small Cap Portfolio;
UBS Large Cap Growth Portfolio and UBS High Yield Bond Portfolio. UBS Bond Fund
invests in UBS Bond Portfolio; UBS U.S. Equity Fund invests in UBS U.S. 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; and UBS High Yield Bond Fund invests in UBS High
Yield Bond 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.
UBS U.S. EQUITY FUND (the 'U.S. Equity Fund') is designed for investors
seeking long-term capital appreciation and the potential for a high level of
current income with lower investment risk and
SAI-1
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volatility than is normally available from common stock funds. The U.S. Equity
Fund attempts to achieve its investment objective by investing all of its
investable assets in UBS U.S. Equity Portfolio (the 'U.S. Equity Portfolio'), a
series of the Trust having the same investment objective as the U.S. Equity
Fund.
Under normal circumstances, at least 80% of the U.S. Equity Portfolio's
assets will be invested in income-producing domestic equity securities,
including dividend-paying common stocks and securities that are convertible into
common stocks. The U.S. Equity Portfolio's primary investments are the common
stocks of established, high-quality U.S. corporations.
UBS INTERNATIONAL EQUITY FUND (the 'International Equity Fund') is designed
for investors who want to participate in the risks and returns associated with
investing in equity securities issued by foreign corporations 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 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 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 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
SAI-2
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<PAGE>
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.
MONEY MARKET INSTRUMENTS
As discussed in the Prospectus, each Fund may invest in money market
instruments to the extent consistent with its investment objective and policies.
A description of the various types of money market instruments that may be
purchased appears below. See 'Quality and Diversification Requirements'.
U.S. TREASURY SECURITIES. Each Fund may invest in direct obligations of the
U.S. Treasury, including Treasury Bills, Notes and Bonds, all of which are
backed as to principal and interest payments by the full faith and credit of the
United States.
ADDITIONAL U.S. GOVERNMENT OBLIGATIONS. Each Fund may invest in obligations
issued or guaranteed by U.S. Government agencies or instrumentalities. These
obligations may or may not be backed by the 'full faith and credit' of the
United States. In the case of securities not backed by the full faith and credit
of the United States, each Fund must look principally to the federal agency
issuing or guaranteeing the obligation for ultimate repayment, and may not be
able to assert a claim against the United States itself in the event the agency
or instrumentality does not meet its commitments. Securities in which each Fund
may invest that are not backed by the full faith and credit of the United States
include, but are not limited to, obligations of the Tennessee Valley Authority,
the Federal Home Loan Mortgage Corporation and the U.S. Postal Service, each of
which has the right to borrow from the U.S. Treasury to meet its obligations,
and the obligations of the Federal Farm Credit System and the Federal Home Loan
Banks, both of whose obligations may be satisfied only by the individual credits
of each issuing agency. Securities that are backed by the full faith and credit
of the United States include obligations of the Government National Mortgage
Association, the Farmers Home Administration and the Export-Import Bank.
BANK OBLIGATIONS. Each Fund, unless otherwise noted in the Prospectus or
below, may invest in negotiable certificates of deposit, time deposits and
bankers' acceptances of (i) banks, savings and loan associations and savings
banks that have more than $2 billion in total assets (the 'Asset Limitation')
and are organized under the laws of the United States or any state, (ii) foreign
branches of these banks or of foreign banks of equivalent size (Euros) and (iii)
U.S. branches of foreign banks of equivalent size (Yankees). The Asset
Limitation is not applicable to 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
and the High Yield Bond Fund), or any of its affiliated persons, is the ultimate
obligor or accepting bank. Each Fund may also invest in obligations of
international banking institutions designated or supported by national
governments to promote economic reconstruction, development or trade between
nations (e.g., the European Investment Bank, the Inter-American Development Bank
or the World Bank).
COMMERCIAL PAPER. Each Fund may invest in commercial paper, including
Master Demand obligations. Master Demand obligations are obligations that
provide for a periodic adjustment in the interest rate paid and permit daily
changes in the amount borrowed. Master Demand obligations are governed by
agreements between the issuer and Union Bank of Switzerland (the 'Bank'), New
York Branch (the 'Branch' or the 'Adviser'), and 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 and the High Yield Bond 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
- ------------
* Unless otherwise noted, references to the Adviser in the context of the
International Equity Portfolio, Small Cap Portfolio, Large Cap Growth Portfolio
and the High Yield Bond Portfolio refer to the Adviser and/or the Sub-Advisers,
as appropriate.
SAI-3
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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 without limitation corporate
and foreign bonds, asset-backed securities and other obligations described in
the Prospectus or this SAI.
As discussed in the Prospectus, the Bond Portfolio 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 Prospectus and below. See
'Quality and Diversification Requirements'. For information on short-term
investments in these securities, see 'Money Market Instruments'.
ASSET-BACKED SECURITIES. Asset-backed securities directly or indirectly
represent a participation interest in, or are secured by or payable from, a
stream of payments generated by particular assets such as mortgages, motor
vehicles or credit card receivables. Payments of principal and interest may be
guaranteed up to certain amounts and for a certain time period by a letter of
credit issued by a financial institution unaffiliated with the entities issuing
the securities. The asset-backed securities in which a Portfolio may invest are
subject to the Portfolio's overall credit requirements. However, asset-backed
securities, in general, are subject to certain risks. These risks include the
prepayment of the debtor's obligation and the creditor's limited interests in
applicable collateral. For example, credit card debt
SAI-4
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<PAGE>
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. Because asset-backed securities are relatively new, the market
experience in these securities is limited and the market's ability to sustain
liquidity through all phases of the market cycle has not been tested.
EQUITY INVESTMENTS
As discussed in the Prospectus, the U.S. Equity, International Equity,
Small Cap and Large Cap Growth Portfolios invest primarily in equity securities
consisting of common stocks and other securities with equity characteristics.
The securities in which these Portfolios invest include those listed on domestic
and foreign securities exchanges or traded on over-the-counter markets as well
as certain restricted or unlisted securities. A discussion of the various types
of equity investments that may be purchased by these Portfolios appears in the
Prospectus and below. See 'Quality and Diversification Requirements'.
EQUITY SECURITIES. The common stocks in which these Portfolios may invest
include the common stocks of any class or series of corporations or any similar
equity interests such as trust or partnership interests. The Portfolios' equity
investments include preferred stocks, warrants, rights and convertible
securities. These investments may or may not pay dividends and may or may not
carry voting rights. Common stock occupies the most junior position in a
company's capital structure.
The convertible securities in which the Portfolios may invest include debt
securities or preferred stocks that may be converted into common stock or that
carry the right to purchase common stock. Convertible securities entitle the
holder to exchange the securities for a specified number of shares of common
stock, usually of the same company, at specified prices within a certain period
of time.
The terms of a convertible security determine its ranking in a company's
capital structure. In the case of subordinated convertible debentures, the
holders' claims on assets and earnings are subordinated to the claims of other
creditors, but are senior to the claims of preferred and common stockholders. In
the case of convertible preferred stock, the holders' claims on assets and
earnings are subordinated to the claims of all creditors, but are senior to the
claims of common stockholders.
FOREIGN INVESTMENTS
The International Equity Portfolio makes substantial investments in
companies based in foreign countries. The Bond and High Yield Bond 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. 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 and High Yield Bond Portfolios'
assets as measured in U.S. dollars may be affected, favorably or unfavorably, by
changes in currency rates and in exchange control regulations, including
currency blockage. The Bond, High Yield Bond and International Equity Portfolios
may enter into foreign currency exchange transactions in connection with the
settlement of foreign securities transactions or to manage their currency
exposure related to foreign investments. The Portfolios will not enter into such
transactions for speculative purposes. For a description of the risks associated
with investing in foreign securities, see 'Additional Investment Information and
Risk Factors' in the Prospectus.
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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).
INVESTMENT COMPANY SECURITIES. Securities of other investment companies may
be acquired by each Fund to the extent that such purchases are consistent with
that entity's investment objectives and restrictions and are permitted under the
Investment Company Act of 1940, as amended (the '1940 Act'). The 1940 Act
requires that, as determined immediately after a purchase is made, (i) not more
than 5% of the value of the Fund's total assets will be invested in the
securities of any one investment company, (ii) not more than 10% of the value of
the Fund's total assets will be invested in securities of investment companies
as a group and (iii) not more than 3% of the outstanding voting stock of any one
investment company will be owned by the Fund, provided, however, that a Fund may
invest all of its investable assets in an open-end investment company having the
same investment objective as that Fund. As a shareholder of another investment
company, a Fund would bear, along with other shareholders, its pro rata portion
of the other investment company's expenses, including advisory fees. These
expenses would be in addition to the expenses that such a Fund would bear in
connection with its own operations.
REVERSE REPURCHASE AGREEMENTS. Each Portfolio may enter into reverse
repurchase agreements. In a reverse repurchase agreement, the Portfolio sells a
security and agrees to repurchase the same security at a mutually agreed upon
date and price. For purposes of the 1940 Act, reverse repurchase agreements are
considered borrowings by the Portfolio and, therefore, a form of leverage. The
Portfolios will invest the proceeds of borrowings under reverse repurchase
agreements. In addition, the Portfolios will enter into a reverse repurchase
agreement only when the interest income to be earned from the investment of the
proceeds is greater than the interest expense of the repurchase agreement. The
Portfolios will not invest the proceeds of a reverse repurchase agreement for a
period that exceeds the term of the reverse repurchase agreement. The
limitations on each Portfolio's use of reverse repurchase agreements are
discussed under 'Investment Restrictions' below. Each Portfolio will establish
and maintain with the Custodian a separate account with a portfolio of
securities in an amount at least equal to its obligations under its reverse
repurchase agreements.
MORTGAGE DOLLAR ROLL TRANSACTIONS. The Bond Portfolio may engage in
mortgage dollar roll transactions with respect to mortgage securities issued by
the Government National Mortgage Association, the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation. In a mortgage dollar
roll transaction, the Portfolio sells a mortgage backed security and
simultaneously agrees to repurchase a similar security on a specified future
date at an agreed upon price. During the roll period, the Portfolio will not be
entitled to receive any interest or principal paid on the securities sold. The
Portfolio is compensated for the lost interest on the securities sold by the
difference between the sales price and the lower price for the future repurchase
as well as by the interest earned on the reinvestment of the sales proceeds. The
Portfolio may also be compensated by receipt of a
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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.
PRIVATELY PLACED AND CERTAIN UNREGISTERED SECURITIES. The Portfolios may
invest in privately placed, restricted, Rule 144A or other unregistered
securities as described in the Prospectus.
As to illiquid investments, a Portfolio is subject to a risk that it might
not be able to sell such securities at a price that the Portfolio deems
respective of their value. Where an illiquid security must be registered under
the Securities Act of 1933, as amended (the 'Securities Act'), before it may be
resold, the Portfolio may be obligated to pay all or part of the registration
expenses and a considerable period may elapse between the time the Portfolio
decides to sell and the time the Portfolio is permitted to sell under an
effective registration statement. If, during such a period, adverse market
conditions develop, the Portfolio might obtain a less favorable price than that
which prevailed when it decided to sell. When the Portfolios value these
securities, they will take into account the illiquid nature of these
instruments.
QUALITY AND DIVERSIFICATION REQUIREMENTS
Each Portfolio intends to meet the diversification requirements of the 1940
Act. To meet these requirements, 75% of the Portfolio's assets are subject to
the following fundamental limitations: (1) the Portfolio may not invest more
than 5% of its total assets in the securities of any one issuer, except
obligations of the U.S. Government, its agencies and instrumentalities and (2)
the Portfolio may not own more than 10% of the outstanding voting securities of
any one issuer. As for the 25% of a Portfolio's assets not subject to the
limitation described above, there is no limitation on investment of these assets
under the 1940 Act, so that all of such assets may be invested in securities of
any one issuer. Investments not subject to the limitations described above could
involve an increased risk to a Portfolio should an issuer, or a state or its
related entities, be unable to make interest or principal payments or should the
market value of such securities decline. See 'Investment Restrictions'.
BOND PORTFOLIO. The Bond Portfolio invests principally in a diversified
portfolio of 'high grade' and 'investment grade' securities. Investment grade
debt is rated, on the date of investment, within the four highest ratings of
Moody's Investors Service, Inc. ('Moody's'), currently Aaa, Aa, A and Baa, or of
Standard & Poor's 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
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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 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.
U.S. EQUITY, INTERNATIONAL EQUITY, SMALL CAP AND LARGE CAP GROWTH
PORTFOLIOS. The U.S. Equity, International Equity, Small Cap and Large Cap
Growth 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
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* Unless otherwise noted, references to the Adviser in the context of the
International Equity Portfolio, the Small Cap Portfolio, the Large Cap Growth
Portfolio and the High Yield Bond Portfolio refer to the Adviser and/or the
Sub-Adviser, as appropriate.
SAI-8
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available on various types of fixed-income securities including, but not
limited, to U.S. Treasury bonds, notes and bills, Eurodollar certificates of
deposit and on indices of fixed income and equity securities.
Unlike a futures contract, which requires the parties to buy and sell a
security or make a cash settlement payment based on changes in a financial
instrument or securities index on an agreed date, an option on a futures
contract entitles its holder to decide on or before a future date whether to
enter into such a contract. If the holder decides not to exercise its option,
the holder may close out the option position by entering into an offsetting
transaction or may decide to let the option expire and forfeit the premium
thereon. The purchaser of an option on a futures contract pays a premium for the
option but makes no initial margin payments or daily payments of cash in the
nature of 'variation' margin payments to reflect the change in the value of the
underlying contract as does a purchaser or seller of a futures contract.
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
SAI-9
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held to cover its options or futures positions could also be impaired. See
'Exchange Traded and Over-the-Counter Options' above for a discussion of the
liquidity of options not traded on an exchange.
POSITION LIMITS. Futures exchanges can limit the number of futures and
options on futures contracts that can be held or controlled by an entity. If an
adequate exemption cannot be obtained, a Portfolio or the Adviser may be
required to reduce the size of its futures and options positions or may not be
able to trade a certain futures or options contract in order to avoid exceeding
such limits.
ASSET COVERAGE FOR FUTURES CONTRACTS AND OPTIONS POSITIONS. The Portfolios
intend to comply with Section 4.5 of the regulations under the Commodity
Exchange Act, which limits the extent to which a Portfolio can commit assets to
initial margin deposits and option premiums. In addition, the Portfolios will
comply with guidelines established by the SEC with respect to coverage of
options and futures contracts by mutual funds, and if the guidelines so require,
will set aside appropriate liquid assets 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
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restrictions while such borrowings are outstanding and provided further
that for purposes of this restriction, short-term credits necessary for the
clearance of transactions are not considered borrowings. This borrowing
provision facilitates the orderly sale of portfolio securities, for
example, in the event of abnormally heavy redemption requests and is not
for investment purposes. Collateral arrangements for premium and margin
payments in connection with its hedging activities are not deemed to be a
pledge of assets;
2. Purchase the securities of an issuer if, immediately after such purchase,
it owns more than 10% of the outstanding voting securities of such issuer;
provided, however, that a Fund may invest all or part of its investable
assets in an open-end management investment company with the same
investment objective and restrictions. This limitation 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;
4. Purchase securities or other obligations of issuers conducting their
principal business activity in the same industry if, immediately after such
purchase the value of its investments in such industry would exceed 25% of
the value of its total assets; provided, however, that a Fund may invest
all or part of its investable assets in an open-end management investment
company with the same investment objective and restrictions. For purposes
of industry concentration, there is no percentage limitation with respect
to investments in U.S. Government securities;
5. Make loans, except through the purchase or holding of debt obligations
(including privately placed securities) or by entering into repurchase
agreements or loans of portfolio securities;
6. Purchase or sell real estate, commodities or commodities contracts or
options thereon (except for its interest in hedging and certain other
activities as described under 'Investment Objective(s) and Policies'),
interests in oil, gas, or mineral exploration or development programs
(including limited partnerships). In addition, neither the U.S. Equity
Portfolio, the International Equity Portfolio, the Small Cap Portfolio, the
Large Cap Growth Portfolio may purchase or sell real estate mortgage loans.
The Bond Portfolio and High Yield Bond Portfolio, however, may purchase
debt obligations secured by interests in real estate or issued by companies
that invest in real estate or interests therein including real estate
investment trusts ('REITs'); and the International Equity Portfolio, the
U.S. Equity Portfolio, the Small Cap Portfolio and the Large Cap Growth
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;
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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, 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 Fund has 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 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 and High Yield Bond
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 and High Yield Bond
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
SAI-12
<PAGE>
<PAGE>
1/2 of 1% of the shares or securities, or both, all taken at market value,
of such issuer, and such persons owning more than 1/2 of 1% of such
shares or securities together own beneficially more than 5% of such shares
or securities, or both, all taken at market value;
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 and High Yield Bond 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 and High Yield Bond
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 June 30, 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
SAI-13
<PAGE>
<PAGE>
year. Every Director who is an 'Interested Person' (within the meaning of the
1940 Act) of the Company is also an 'Interested Person' of the Trust. Similarly,
every Director who is not an 'Interested Person' of the Company is not an
'Interested Person' of the Trust.
<TABLE>
<CAPTION>
POSITION
WITH THE
NAME, ADDRESS AND AGE COMPANY PRINCIPAL OCCUPATIONS DURING THE LAST FIVE YEARS
- -------------------------------- ------------ -----------------------------------------------------------
<S> <C> <C>
Dr. HansPeter Lochmeier* Chairman of UBS Investor Portfolios Trust (mutual fund), Trustee
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: 47 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, Inc.
Age: 70 (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
200 Clarendon Street Company, (1990-Present).
Boston, Massachusetts 02116
Age: 50
Nicholas G. Chunias Treasurer Director, Mutual Fund Administration -- Reporting and Compliance,
200 Clarendon Street and Chief Investors Bank & Trust Company, (1996-Present);
Boston, Massachusetts 02116 Financial Financial Director, Fund Accounting, Investors Bank & Trust
Age: 32 Officer Company, (1993-1996); Account Supervisor, Coopers &
Lybrand, LLP, (1992-1993).
</TABLE>
SAI-14
<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: 42 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 $9,000 0 0 $ 21,000
Director
Mr. Lawson-Johnston $9,000 0 0 $ 21,000
Director
</TABLE>
- ------------------------------------
*The Company commenced operations on April 2, 1996, and the noted amounts
are therefore for the period from April 2, 1996 through December 31, 1996. 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 May 16, 1997, the following owned of record or, to the knowledge of
management, beneficially owned more than 5% of the outstanding shares of:
UBS U.S. Equity Fund -- Union Bank of Switzerland, NY Branch, 1345
Avenue of the Americas, New York, NY 10105 (28.91%); C.E. Exley and S.Y.
Exley Tr., u/a/d 8/2/93 C.E. Exley Trust, 2350 Kettering Tower, Dayton, OH
45423 (9.99%); Investors Bank & Trust Co. Custodian FBO Norman S. Lattman
IRA R/O, 900 Fifth Avenue, Unit 18A, New York, NY 10021 (5.81%).
UBS Bond Fund -- Union Bank of Switzerland, NY Branch, 1345 Avenue of
the Americas, New York, NY 10105 (64.74%); Greenco, 213 Market Street,
Harrisburg, PA 17101 (9.25%); Investors Bank & Trust Co. Custodian,
Lawrence Lachman IRA, 104 East 68th Street, APT 5A, New York, NY 10021
(5.66%).
UBS International Equity Fund -- Union Bank of Switzerland, NY Branch,
1345 Avenue of the Americas, New York, NY 10105 (31.09%).
UBS Institutional International Equity Fund -- Archstone Foundation,
401 E. Ocean Blvd., Suite 206, Long Beach, CA 90802 (100%).
The UBS Small Cap Fund, UBS Large Cap Growth Fund and UBS High Yield
Bond Fund had not commenced operations as of May 16, 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 serves as the
sub-adviser to the International Equity Portfolio. The Branch, which
operates out of offices located at
SAI-15
<PAGE>
<PAGE>
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. (The
Adviser and the Sub-Adviser are collectively referred to as the 'Advisers'.)
Subject to the supervision of the Trustees, the Adviser, and in the case of the
International Equity Portfolio, UBSII, makes the Portfolios' day-to-day
investment decisions, arranges for the execution of portfolio transactions and
generally manages each Portfolio's investments and provides certain
administrative services.
The investment advisory services provided by the Advisers to the Portfolios
are not exclusive under the terms of the advisory agreements. The Advisers are
free to and do render similar investment advisory services to others. The
Advisers serve as investment advisers to personal investors and act as
fiduciaries for trusts, estates and employee benefit plans. Certain of the
assets of trusts and estates under management are invested in common trust funds
for which the Advisers serve as trustees. The accounts managed or advised by the
Advisers have varying investment objectives and the Advisers invest assets of
such accounts in investments substantially similar to, or the same as, those
which are expected to constitute the principal investments of the Portfolios.
Such accounts are supervised by officers and employees of the Advisers (or their
affiliates) who may also be acting in similar capacities for the Portfolios. See
'Portfolio Transactions'.
The Bank has branches, agencies, representative offices and subsidiaries in
Switzerland and in more than 40 cities outside Switzerland, including, in the
United States, New York City, 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 City since 1946. At December 31, 1996, the Bank
(including its consolidated subsidiaries) had total assets of $326.7 billion and
equity capital and reserves of $17.1 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.
U.S. EQUITY FUND. While many investment advisers evaluate companies
primarily on their earnings and their price/earnings ratio, the Adviser uses a
different investment approach. The Adviser believes that dividend yields, rather
than earnings, are the best indicators of future performance. Consequently, the
Adviser will select attractively priced stocks with high dividends. In addition,
the Adviser's analysts often meet with company managers, often contact a
company's suppliers, review the business operations and financial statements of
companies and try to 'get behind' the numbers to gain a true sense of a
company's value.
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.
The Sub-Adviser is a registered investment adviser under the Investment
Advisers Act of 1940, as amended.
SAI-16
<PAGE>
<PAGE>
The Prospectus for each of the Funds contains a description of fees payable
to the Adviser. For the period April 2, 1996 (commencement of operations)
through December 31, 1996, the Bond Portfolio, U.S. Equity Portfolio and
International Equity Portfolio paid investment advisory fees equal to $0, $0 and
$13,839, respectively. The High Yield Bond Portfolio, Small Cap Portfolio and
Large Cap Growth Portfolios had not commenced operations as of December 31,
1996.
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, U.S. Equity Fund, Institutional International Equity
Fund, International Equity Fund, Small Cap Fund and Large Cap Growth Fund
exceed, on an annual basis, 0.80%, 0.90%, 0.90%, 0.95%, 1.40%, 1.20% and 1.00%,
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 period April 2, 1996
(commencement of operations) through December 31, 1996, UBS reimbursed the Bond
Fund, U.S. Equity Fund and International Equity Fund for expenses totaling
$80,050, $93,511 and $52,899, respectively. The High Yield Bond Fund,
Institutional International Equity Fund, Small Cap Fund and Large Cap Growth
Fund had not commenced operations as of December 31, 1996.
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 and High
Yield Bond 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 period April 2, 1996
(commencement of operations) through December 31, 1996, the Adviser paid
$154,659 to the UBSII on behalf of the International Equity Portfolio.
Under the Sub-Advisory Agreements with UBSAM NY, the Adviser has agreed to
pay UBSAM NY 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
</TABLE>
The Adviser is solely responsible for paying this fee to UBSAM NY. The High
Yield Bond, Small Cap and Large Cap Growth Portfolios had not yet commenced
operations as of December 31, 1996.
The Investment Advisory and Sub-Advisory Agreements will each continue in
effect until February 1998, and thereafter will be subject to annual approval by
the Trustees or the vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of each Portfolio, provided that in either case the
continuance also is approved by a majority of the Trustees who are not
interested persons (as defined in the 1940 Act) of the Trust by vote cast in
person at a meeting called for the purpose of voting on such approval. The
Investment Advisory and Sub-Advisory Agreements will terminate automatically if
assigned and are terminable at any time without penalty by a vote of a majority
of the Trustees or by a vote of the holders of a majority (as defined in the
1940 Act) of the Portfolio's outstanding shares on 60 days' written notice to
the Adviser or Sub-Adviser as applicable. Whenever a Fund, as a shareholder of a
Portfolio, is required by the 1940 Act to vote its Portfolio interest, the
Company will hold a meeting of that Fund's shareholders and will vote its
Portfolio interests proportionately as instructed by that Fund's shareholders.
See 'Organization'. Each Investment Advisory and Sub-Advisory Agreement is also
SAI-17
<PAGE>
<PAGE>
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 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. The Trust and the Company employ 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, the 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 April 2, 1996 (commencement of operations) through March
13, 1997, Signature Broker-Dealer Services, Inc. ('Signature') and Signature
Financial Group (Grand Cayman) Ltd. served as
SAI-18
<PAGE>
<PAGE>
Administrators to the Portfolio and Company, respectively. During the period
April 2, 1996 (commencement of operations) through December 31, 1996, the Bond
Portfolio, U.S. Equity Portfolio and International Equity Portfolio paid
Signature administrative fees of $14,594, $7,036 and $11,712, respectively,
while the Bond Fund, U.S. Equity Fund and International Equity Fund paid
Signature administrative fees of $1,526, $2,593 and $4,131, respectively.
The Administration Agreements may be renewed or amended by the Directors or
Trustees, as applicable, without 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 and
transfer and dividend disbursing agent for the Funds and the Portfolios.
Pursuant to the Custodian Agreements with the Trust, on behalf of each
Portfolio, and the Company, on behalf of each Fund, the Custodian is responsible
for maintaining the books and records of portfolio transactions and holding
portfolio securities and cash. As transfer agent and dividend disbursing agent,
the Custodian is responsible for maintaining account records detailing the
ownership of Portfolio and Fund interests and for crediting income, capital
gains and other changes in share ownership to investors' accounts. The Custodian
will perform its duties as the Portfolios' transfer agent and dividend
disbursing agent from its offices located at 1 First Canadian Place, Suite 2800,
Toronto, Ontario M5X1C8, while its duties as the Funds' transfer agent and
dividend disbursing agent will be performed at its offices located at 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,
SAI-19
<PAGE>
<PAGE>
arranging for the wiring or other transfer of funds to and from
customer accounts in connection with orders to purchase or redeem Fund
shares, verifying purchase and redemption orders, transfers among and changes in
accounts and providing other related services. In return for these services,
each Fund has agreed to pay 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, U.S. Equity Fund and International Equity Fund amounted
to $7,632, $12,965 and $20,658, respectively, all of which were waived.
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 Prospectus.
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.
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
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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 the Prospectus
under 'Redemption of Shares'.
If the Directors and Trustees determine that it would be detrimental to the
best interest of the remaining shareholders of a Fund or Portfolio to effect
redemptions wholly or partly in cash, payment of the redemption price may be
made in whole or in part by an in-kind distribution of securities from the
Portfolio, in lieu of cash, in conformity with the applicable rules of the SEC.
If shares are redeemed in-kind, the redeeming shareholder might incur
transaction costs in converting the securities into cash. The methods of valuing
portfolio securities distributed to a shareholder are described under 'Net Asset
Value', and such valuations will be made as of the same time the redemption
price is determined.
FURTHER REDEMPTION INFORMATION. The right of redemption may be suspended or
the date of payment postponed, in the case of the Company and the Trust: (i)
during periods when the New York Stock Exchange (the 'NYSE') is closed for other
than weekends and holidays or when trading on the NYSE is suspended or
restricted; (ii) during periods in which an emergency exists, as determined by
the SEC, which causes disposal by a Portfolio of, or evaluation of the net asset
value of, its securities to be unreasonable or impracticable; or (iii) for such
other periods as the 1940 Act or the SEC may permit.
EXCHANGE OF SHARES
An investor may exchange Fund shares for shares of any other series of the
Company as described under 'Exchange of Shares' in the Prospectuses. Investors
considering an exchange of Fund shares for shares of another Company series
should read the prospectus of the series into which the transfer is being made
prior to such exchange (see 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 discontinue, alter or limit this exchange privilege
at any time. Shares of the Institutional International Equity Fund
are not eligible for the exchange privilege.
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DIVIDENDS AND DISTRIBUTIONS
Each Fund will declare and pay dividends and distributions as described
under 'Dividends and Distributions' in its Prospectus.
Determination of the net income for the Bond Fund is made at the times
described in that Prospectus; in addition, net investment income for days other
than business days is determined at the time net asset value is determined on
the prior business day.
NET ASSET VALUE
Each Fund computes its net asset value once daily at the close of business
on Monday through Friday as described under 'Net Asset Value' in the Prospectus.
The net asset value will not be computed on a day in which no orders to purchase
or redeem Fund shares have been received or on any day on which the NYSE is
closed, including the following legal holidays: New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. On days when U.S. trading markets close early in observance of
these holidays, the Funds and the Portfolios would expect to close for purchases
and redemptions at the same time. The days on which net asset value is
determined are the Funds' business days.
The net asset value per share of each Fund equals the value of that Fund's
pro rata interest in its corresponding Portfolio plus the value of all its other
assets not invested in the Portfolio, if any, less its total liabilities,
divided by the number of outstanding shares of that Fund. The following is a
discussion of the procedures used by the Portfolios in valuing their assets.
In the case of the Bond 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 U.S. Equity, Small Cap, Large Cap Growth and
International Equity Portfolios, securities listed on domestic exchanges, other
than options on stock indices, are valued using the last sales price on the most
representative exchange at 4:00 p.m. New York time or, in the absence of
recorded sales, at the average of readily available closing bid and asked prices
on such exchange or, in the absence of such prices, at the readily available
closing bid price on such exchange. Securities listed on foreign exchanges are
valued at the last quoted sale price available before the time when net assets
are valued or, in the absence of such recorded sales, at the average of readily
available closing bid and asked prices on such exchange or, in the absence of
such prices, at the readily available closing bid price on such exchange.
Unlisted securities are valued at the average of the quoted bid and asked prices
in the over-the-counter market. The value of each security for which readily
available market quotations exist is based on a decision as to the broadest and
most representative market for such security. For purposes of calculating net
asset value per share, all assets and liabilities initially expressed in foreign
currencies will be converted into U.S. dollars at the prevailing market rates
available at the time of valuation.
Options on stock indices traded on national securities exchanges are valued
at the close of options trading on such exchanges, which is currently 4:10 p.m.,
New York time. Stock index futures and related options traded on commodities
exchanges are valued at their last sales price as of the close of such
commodities exchanges, which is currently 4:15 p.m., New York time. Securities
or other assets for which market quotations are not readily available are
valued at fair value in accordance with procedures established by and under the
general supervision of the Trustees. Such procedures include the use of
independent pricing services, indications as to values from dealers and general
market conditions. Short-
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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 Prospectus.
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 Prospectus.
TOTAL RETURN QUOTATIONS. As required by SEC regulations, the average annual
total return of the Bond, High Yield Bond, U.S. Equity, Small Cap, Large Cap
Growth, International Equity and Institutional International Equity 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 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.
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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. The annual portfolio
turnover rate for the Bond and High Yield Bond Portfolios is expected to be
under 100%. For the period April 2, 1996 (commencement of operations) through
December 31, 1996, the portfolio turnover rate for the Bond Portfolio was 100%.
The High Yield Bond Portfolio had not commenced operations as of December 31,
1996.
In connection with portfolio transactions for the U.S. Equity, Small Cap,
Large Cap Growth and International Equity Portfolios, the overriding objective
is to obtain the best possible execution of purchase and sale orders. Portfolio
turnover may vary from year to year, as well as within a year. The annual
portfolio turnover rate for the U.S. Equity Small Cap, Large Cap Growth and
International Equity Portfolios is expected to be under 100%. For the period
April 2, 1996 (commencement of operations) through December 31, 1996, the
portfolio turnover rate for the U.S. Equity Portfolio and International Equity
Portfolio was 19% and 42%, respectively. The Small Cap, Large Cap Growth and
Institutional International Equity Portfolios had not commenced operations as of
December 31, 1996.
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 period April
2, 1996 (commencement of operations) through December 31, 1996, the Trust paid
brokerage commissions on behalf of U.S. Equity Portfolio and International
Equity Portfolio of $32,099, and $139,846, respectively.
The Small Cap, Large Cap Growth and Institutional International Equity
Portfolios had not commenced operations as of December 31, 1996.
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
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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 eight
series: The UBS Bond Fund Series; The UBS Tax Exempt Bond Fund Series; The UBS
U.S. 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; and The UBS Large Cap Growth 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
eight current series. Under Maryland law, the Board has the authority to
increase the number of shares of stock that the Company has the authority to
issue. Each share has one vote (and fractional shares have a corresponding
fractional vote) with respect to matters upon which shareholder vote is
required; stockholders have no cumulative voting rights with respect to their
shares. Shares of all series vote together as a single class except that if the
matter being voted upon affects only a particular series then it will be voted
on only by that series. If a matter affects a particular series
differently from other series, that series will vote separately on such
matter. Each share is entitled to participate equally in dividends and
distributions declared by the Directors with respect to the relevant series, and
in the net distributable assets of such series on liquidation.
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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, six
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; (b) derive less than
30% of its gross income from the sale or other disposition of stock, securities,
options, futures or forward contracts (other than options, futures or forward
contracts on foreign currencies) held less than three months; and (c) diversify
its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the
value of the Fund's total assets is represented by cash, U.S. Government
securities, investments in other RICs and other securities limited in respect of
any one issuer, to an amount not greater than 5% of the Fund's total assets, and
10% of the outstanding voting securities of such issuer and (ii) not more than
25% of the value of its total assets is invested in the securities of any one
issuer (other than U.S. Government securities or the securities of other RICs).
As a RIC, a Fund (as opposed to its shareholders) will not be subject to federal
income taxes on the net investment income and capital gains that it distributes
to its shareholders, provided that at least 90% of its net investment income and
realized net short-term capital gains in excess of net long-term capital losses
for the taxable year is distributed.
For federal income tax purposes, dividends that are declared by a Fund in
October, November or December as of a record date in such month and actually
paid in January of the following year will be treated as if they were paid on
December 31 of the year declared. Therefore, such dividends will generally be
taxable to a shareholder in the year declared rather than the year paid.
Gains or losses on sales of securities by a Portfolio will be treated as
long-term capital gains or losses if the securities have been held by it for
more than one year except in certain cases where, if applicable, a Portfolio
acquires a put or writes a call thereon. Other gains or losses on the sale of
securities will be short-term capital gains or losses. Gains and losses on the
sale, lapse or other termination of options on securities will be treated as
gains and losses from the sale of securities. If an option written by a
Portfolio lapses or is terminated through a closing transaction, such as a
repurchase by the Portfolio of the option from its holder, the Portfolio will
realize a short-term capital gain or loss, depending on whether the premium
income is greater or less than the amount paid by the Portfolio in the closing
transaction. If securities are purchased by a Portfolio pursuant to the
exercise of a put option written by it, the Portfolio will subtract the premium
received from its cost basis in the securities purchased.
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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. 'Straddles' may also result in the loss of the holding
period of underlying securities for purposes of the 30% of gross income test
described above, and therefore, a Portfolio's ability to enter into forward
currency contracts, options and futures contracts may be limited.
Certain options, futures and foreign currency contracts held by a Portfolio
at the end of each fiscal year will be required to be 'marked to market' for
federal income tax purposes -- i.e., treated as having been sold at market
value. For such options and futures contracts, 60% of any gain or loss
recognized on these deemed sales and on actual dispositions will be treated as
long-term capital gain or loss, and the remainder will be treated as short-term
capital gain or loss regardless of how long the Portfolio has held such options
or futures. Any gain or loss recognized on foreign currency contracts will be
treated as ordinary income.
FOREIGN SHAREHOLDERS. Distributions of net investment income and realized
net short-term capital gains in excess of net long-term capital losses to a
shareholder who, as to the United States, is a non-resident alien individual,
fiduciary of a foreign trust or estate, foreign corporation or foreign
partnership (a 'foreign shareholder') will be subject to U.S. withholding tax at
the rate of 30% (or lower treaty rate) unless the dividends are effectively
connected with a U.S. trade or business of the shareholder, in which case the
dividends will be subject to tax on a net income basis at the graduated rates
applicable to U.S. individuals or domestic corporations. Distributions of net
long-term capital gains to foreign shareholders will not be subject to U.S. tax
unless the distributions are effectively connected with the shareholder's trade
or business in the United States or, in the case of a shareholder who is a
non-resident alien individual, the shareholder was present in the United States
for more than 182 days during the taxable year and certain other conditions are
met.
In the case of a foreign shareholder who is a nonresident alien individual
and who is not otherwise subject to withholding as described above, a Fund may
be required to withhold U.S. federal income tax at the rate of 31% unless IRS
Form W-8 is provided. See 'Taxes' in the Prospectus. Transfers by gift of shares
of a Fund by a foreign shareholder who is a nonresident alien individual will
not be subject to U.S. federal gift tax, but the value of shares of the Fund
held by such a shareholder at his or her death will be includible in his or her
gross estate for U.S. federal estate tax purposes.
FOREIGN TAXES. It is expected that the International Equity Portfolio may
be subject to foreign withholding taxes with respect to income received from
sources within foreign countries. In the case of the International Equity
Portfolio, so long as more than 50% in value of the Portfolio's total assets at
the close of any taxable year consists of stock or securities of foreign
corporations, the Portfolio may elect to treat any foreign income taxes paid by
it as paid directly by its shareholders. The Portfolio will make such an
election only if it deems it to be in the best interest of its shareholders. The
Portfolio will notify its shareholders in writing each year if they make the
election and of the amount of foreign income taxes, if any, to be treated as
paid by the shareholders. If the Portfolio makes the election, each shareholder
of the International Equity Fund will be required to include in his or her
income their proportionate share of the amount of foreign income taxes paid by
the Portfolio and will be entitled to claim either a credit (subject to the
limitations discussed below), or, if he or she itemizes deductions, a deduction
for his or her share of the foreign income taxes in computing federal income tax
liability. (No deduction will be permitted in computing an individual's
alternative minimum tax liability.) A shareholder who is a nonresident alien
individual or a foreign corporation may be subject to U.S. withholding tax on
the
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income resulting from the election described in this paragraph,
but may not be able to claim a credit or deduction against
such U.S. tax for the foreign taxes treated as having been paid by such
shareholder. A tax-exempt shareholder will not ordinarily benefit from this
election. Shareholders who choose to utilize a credit (rather than a deduction)
for foreign taxes will be subject to the limitation that the credit may not
exceed the shareholder's U.S. tax (determined without regard to the availability
of the credit) attributable to his or her total foreign source taxable income.
For this purpose, the portion of dividends and distributions paid by the
International Equity 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, 1996 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 Institutional International Equity
Fund, Small Cap Fund, Large Cap Growth Fund and High Yield Bond Fund had not
commenced operations as of December 31, 1996. Consequently, financial statements
for these Funds are not included in the Annual Report. Unaudited financials for
the six months ended June 30, 1997 are also included for these Funds.
Unaudited financials for the six months ended August 29, 1997 for the
Institutional International Equity Fund are also included herein. The Small Cap
Fund, Large Cap Growth Fund and High Yield Bond Fund had not commenced
operations as of August 29, 1997, consequently, no financial statements are
available for these Funds.
SAI-28
<PAGE>
<PAGE>
UBS Bond Fund
Statement of Assets and Liabilities
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in UBS Investor Portfolios Trust -- UBS Bond
Portfolio, at value.......................................................... $7,554,365
Receivable from Adviser........................................................ 6,387
Deferred organization expenses and other assets................................ 63,262
----------
Total Assets......................................................... 7,624,014
----------
LIABILITIES:
Administrative services fees payable........................................... 294
Directors' fees payable........................................................ 2,490
Dividends payable.............................................................. 33,772
Organization expenses payable.................................................. 32,742
Other accrued expenses......................................................... 54,426
----------
Total Liabilities.................................................... 123,724
----------
NET ASSETS..................................................................... $7,500,290
----------
----------
SHARES OUTSTANDING ($0.001 par value, 10 million shares authorized)............ 74,906
----------
----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE................. $100.13
----------
----------
COMPOSITION OF NET ASSETS:
Shares of common stock, at par................................................. $ 75
Additional paid-in capital..................................................... 7,495,002
Net unrealized appreciation of investments, foreign currency contracts and
foreign currency translations................................................ 621
Accumulated net investment loss................................................ (4,086)
Accumulated undistributed net realized gains on securities and foreign currency
transactions................................................................. 8,678
----------
Net Assets........................................................... $7,500,290
----------
----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-29
<PAGE>
<PAGE>
UBS Bond Fund
Statement of Operations
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Investment Income and Expenses allocated from UBS Investor
Portfolios Trust -- UBS Bond Portfolio
Interest....................................................... $195,583
Total expenses................................................. $ 28,341
Less: Fee waiver............................................... (13,889)
--------
Net expenses................................................... 14,452
--------
Net Investment Income from UBS Investor Portfolios Trust -- UBS Bond
Portfolio......................................................... 181,131
EXPENSES
Shareholder service fees............................................ 7,632
Administrative services fees........................................ 1,526
Reports to shareholders expense..................................... 22,333
Transfer agent fees................................................. 15,763
Audit fees.......................................................... 11,259
Amortization of organization expenses............................... 10,886
Fund accounting fees................................................ 8,006
Legal fees.......................................................... 7,508
Directors' fees..................................................... 6,006
Registration fees................................................... 3,065
Miscellaneous expenses.............................................. 3,669
--------
Total expenses................................................. 97,653
Less: Fee waiver and expense reimbursements.................... (87,682)
--------
Net expenses................................................... 9,971
--------
Net investment income............................................... 171,160
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM UBS
INVESTOR PORTFOLIOS TRUST -- UBS BOND PORTFOLIO
Net realized gain on securities transactions........................ 9,932
Net realized loss on foreign currency transactions.................. (6,025)
Net change in unrealized depreciation of investments................ (13,586)
Net change in unrealized appreciation of foreign currency contracts
and translations.................................................. 14,207
--------
Net realized and unrealized gain on investments from UBS Investor
Portfolios Trust -- UBS Bond Portfolio............................ 4,528
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................ $175,688
--------
--------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-30
<PAGE>
<PAGE>
UBS Bond Fund
Statement of Changes in Net Assets
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income............................................................ $ 171,160
Net realized gain on securities and foreign currency transactions................ 3,907
Net change in unrealized appreciation of investments, foreign currency contracts
and foreign currency translations.............................................. 621
----------
Net increase in net assets resulting from operations............................. 175,688
----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................................................ (170,408)
Net realized gains on investments................................................ (1,273)
----------
Total dividends and distributions to shareholders................................ (171,681)
----------
TRANSACTIONS IN SHARES OF COMMON STOCK:
Net proceeds from sale of shares................................................. 10,846,978
Net asset value of shares issued to shareholders in reinvestment of dividends and
distributions.................................................................. 127,366
Cost of shares redeemed.......................................................... (3,503,061)
----------
Net increase in net assets from transactions in shares of common stock........... 7,471,283
----------
NET INCREASE IN NET ASSETS....................................................... 7,475,290
NET ASSETS:
Beginning of period.............................................................. 25,000
----------
End of period (including net investment loss of $4,086).......................... $7,500,290
----------
----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-31
<PAGE>
<PAGE>
UBS Bond Fund
Financial Highlights
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
FOR A SHARE OUTSTANDING FOR THE PERIOD
Net asset value, beginning of period...................................... $100.00
-------
Income from investment operations:
Net investment income................................................ 4.12
Net realized and unrealized gain on investments, foreign currency
contracts and foreign currency translations........................ 0.14
-------
Total income from investment operations.............................. 4.26
-------
Less Dividends and Distributions to Shareholders:
Dividends from net investment income................................. (4.11)
Distributions from net realized gains................................ (0.02)
-------
Total dividends and distributions.................................... (4.13)
-------
Net asset value, end of period............................................ $100.13
-------
-------
Total Return.............................................................. 4.36%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)............................. $ 7,500
Ratio of expenses to average net assets(2)........................... 0.80%(3)
Ratio of net investment income to average net assets(2).............. 5.61%(3)
</TABLE>
- ------------------------
(1) Not annualized.
(2) Includes the Fund's share of UBS Investor Portfolio Trust -- UBS Bond
Portfolio expenses and net of fee waivers and expense reimbursements. Such
fee waivers and expense reimbursements had the effect of reducing the ratio
of expenses to average net assets and increasing the ratio of net
investment income to average net assets by 3.33% (annualized).
(3) Annualized.
See notes to financial statements.
SAI-32
<PAGE>
<PAGE>
UBS Bond Fund
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------
1. GENERAL
UBS Bond Fund (the 'Fund') is a diversified, no-load mutual fund registered
under the Investment Company Act of 1940. The Fund is a series of UBS Private
Investor Funds, Inc. (the 'Company'), an open-end management investment company
organized as a corporation under Maryland law. At December 31, 1996, the Company
included two other funds, UBS U.S. Equity Fund and UBS International Equity
Fund. These financial statements relate only to the Fund.
The Fund had no operations prior to April 2, 1996 other than the sale to
Signature Financial Group, Inc. of 250 shares of common stock for $25,000.
The Fund seeks to achieve its investment objective by investing substantially
all of its investable assets in the UBS Bond Portfolio of UBS Investor
Portfolios Trust (the 'Portfolio'), an open-end management investment company
that has the same investment objective as that of the Fund.
Signature Broker-Dealer Services, Inc. ('Signature'), a wholly-owned subsidiary
of Signature Financial Group, Inc., serves as the Fund's administrator and
distributor. Union Bank of Switzerland, New York Branch ('UBS') serves as the
fund services agent to the Fund.
The financial statements of the Portfolio, including its Schedule of
Investments, are included elsewhere within this report and should be read in
conjunction with the Fund's financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. Significant accounting policies
followed by the Fund are as follows:
A. INVESTMENT VALUATION -- The value of the Fund's investment in the Portfolio
included in the accompanying Statement of Assets and Liabilities reflects the
Fund's proportionate beneficial interest in the net assets of the Portfolio
(14.3% at December 31, 1996). Valuation of securities by the Portfolio is
discussed in Note 2A of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B. INVESTMENT INCOME, EXPENSES AND REALIZED AND UNREALIZED GAINS AND LOSSES --
The Fund records its share of the investment income, expenses and realized and
unrealized gains and losses recorded by the Portfolio on a daily basis. The
investment income, expenses and realized and unrealized gains and losses are
allocated daily to investors of the Portfolio based upon the amount of their
investment in the Portfolio.
C. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies, including
the requirement to distribute substantially all of its taxable income, including
any net realized capital gains on investment transactions, to its shareholders.
Accordingly, no provision for federal income or excise taxes is necessary.
D. DIVIDENDS AND DISTRIBUTIONS -- The Fund declares dividends from net
investment income to shareholders of record on the day of declaration. Such
dividends are declared daily and paid monthly. Net realized gains, if any, will
be distributed at least annually. However, to the extent that net realized gains
of the Fund can be reduced by capital loss carryovers, such gains will not be
distributed. Dividends and distributions are recorded on the ex-dividend date.
The amounts of dividends from net investment income and distributions from net
realized gains are determined in accordance with federal income tax regulations
which may differ from generally accepted accounting principles. These 'book/tax'
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the composition of net assets based upon their federal tax-basis
treatment; temporary differences do not require reclassification. For
SAI-33
<PAGE>
<PAGE>
UBS Bond Fund
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------
the fiscal year ended December 31, 1996, the Fund increased accumulated
undistributed net realized gains by $6,044, reduced accumulated undistributed
net investment income by $4,838 and decreased paid-in capital by $1,206. Net
investment income, net realized gains and net assets were not affected by this
change.
E. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Fund in connection
with its organization in the amount of $72,500 have been deferred and are being
amortized on a straight line basis over five years from the Fund's commencement
of operations (April 2, 1996).
F. OTHER -- The Fund bears all costs of its operations other than expenses
specifically assumed by Signature and UBS. Expenses incurred by the Company on
behalf of any two or more funds are allocated in proportion to the net assets of
each fund, except when allocations of direct expenses to each fund can otherwise
be made fairly. Expenses directly attributable to the Fund are charged directly
to the Fund.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. ADMINISTRATIVE SERVICES AGREEMENT -- Under the terms of an Administrative
Services Agreement with the Company, Signature provides overall administrative
services and general office facilities. As compensation for such services, the
Company has agreed to pay Signature a fee, accrued daily and payable monthly, at
an annual rate of 0.05% of the Fund's first $100 million average daily net
assets and 0.025% of the next $100 million average daily net assets. Signature
does not receive a fee on average daily net assets in excess of $200 million.
For the period April 2, 1996 (commencement of operations) through December 31,
1996, the administrative services fee amounted to $1,526.
B. DISTRIBUTION AGREEMENT -- Under the terms of a Distribution Agreement,
Signature serves as the distributor of Fund shares. Signature does not receive
any additional fees for services provided pursuant to this agreement.
C. SHAREHOLDER SERVICES AGREEMENT -- The Fund has entered into a Shareholder
Services Agreement with UBS pursuant to which UBS provides certain services to
shareholders of the Fund. The Fund has agreed to pay UBS a fee for these
services, accrued daily and payable monthly, at an annual rate of 0.25% of the
average daily net assets of the Fund. For the period April 2, 1996 (commencement
of operations) through December 31, 1996, the shareholder service fee amounted
to $7,632, all of which was waived.
D. FUND SERVICES AGREEMENT -- Under the terms of a Fund Services Agreement with
the Company, UBS has agreed to provide certain administrative services to the
Fund. UBS is not entitled to any additional compensation pursuant to this
agreement.
E. EXPENSE REIMBURSEMENTS -- UBS has voluntarily agreed to limit the total
operating expenses of the Fund, including its share of the Portfolio's expenses
and excluding extraordinary expenses, to an annual rate of 0.80% of the Fund's
average daily net assets. For the period April 2, 1996 (commencement of
operations) through December 31, 1996, UBS reimbursed the Fund for expenses
totaling $80,050 in connection with this voluntary limitation. UBS may modify or
discontinue this voluntary expense limitation at any time with 30 days' advance
notice to the Fund.
SAI-34
<PAGE>
<PAGE>
UBS Bond Fund
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS
At December 31, 1996 there were 500 million shares of the Company's common stock
authorized, of which 10 million shares were classified as common stock of the
Fund. Transactions in shares of the Fund for the period April 2, 1996
(commencement of operations) through December 31, 1996 were as follows:
Shares subscribed........................... 108,567
Shares issued in reinvestment of dividends
and distributions......................... 1,278
Shares redeemed............................. (35,189)
-------
Net increase in shares outstanding.......... 74,656
-------
-------
SAI-35
<PAGE>
<PAGE>
UBS Bond Fund
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors and
Shareholders of UBS Private Investor Funds, Inc.
In our opinion, the accompanying statement of assets and liabilities, and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the UBS Bond Fund (the 'Fund') (one of the funds constituting the UBS Private
Investor Funds, Inc.) at December 31, 1996, and the results of its operations,
the changes in its net assets and the financial highlights for the period April
2, 1996 (commencement of operations) through December 31, 1996, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as 'financial statements') are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 21, 1997
SAI-36
<PAGE>
<PAGE>
UBS Bond Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE COUPON MATURITY
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- ---------- ------------------------------------------------------------ ------ -------- -----------
<S> <C> <C> <C> <C>
U.S. TREASURY & U.S. GOVERNMENT AGENCY OBLIGATIONS -- 60.7%
U.S. TREASURY OBLIGATIONS -- 56.3%
$ 150,000 U.S. Treasury Note.......................................... 6.25% 1/31/97 $ 150,070
25,000 U.S. Treasury Note.......................................... 6.125% 5/31/97 25,070
50,000 U.S. Treasury Note.......................................... 6.375% 6/30/97 50,258
1,000,000 U.S. Treasury Note.......................................... 6.00% 8/31/97 1,002,810
1,170,000 U.S. Treasury Note.......................................... 5.125% 6/30/98 1,159,400
1,290,000 U.S. Treasury Note.......................................... 5.25% 7/31/98 1,279,319
100,000 U.S. Treasury Note.......................................... 7.00% 4/15/99 102,234
150,000 U.S. Treasury Note.......................................... 6.75% 5/31/99 152,555
5,200,000 U.S. Treasury Note.......................................... 6.375% 7/15/99 5,247,112
155,000 U.S. Treasury Note.......................................... 6.875% 8/31/99 158,246
145,000 U.S. Treasury Note.......................................... 7.125% 9/30/99 149,010
1,500,000 U.S. Treasury Bond.......................................... 5.875% 11/15/99 1,494,135
1,203,000 U.S. Treasury Bond.......................................... 7.75% 1/31/00 1,258,831
2,600,000 U.S. Treasury Note.......................................... 7.125% 2/29/00 2,676,778
505,000 U.S. Treasury Note.......................................... 6.75% 4/30/00 514,550
1,344,000 U.S. Treasury Note.......................................... 6.25% 5/31/00 1,349,457
1,700,000 U.S. Treasury Note.......................................... 6.125% 7/31/00 1,700,000
650,000 U.S. Treasury Note.......................................... 6.125% 9/30/00 649,590
2,250,000 U.S. Treasury Note.......................................... 5.75% 10/31/00 2,220,120
1,000,000 U.S. Treasury Note.......................................... 5.50% 12/31/00 976,870
775,000 U.S. Treasury Bond.......................................... 6.25% 4/30/01 776,697
1,500,000 U.S. Treasury Note.......................................... 6.625% 7/31/01 1,523,910
1,200,000 U.S. Treasury Note.......................................... 6.25% 10/31/01 1,201,128
500,000 U.S. Treasury Note.......................................... 7.50% 11/15/01 526,330
170,000 U.S. Treasury Note.......................................... 7.50% 5/15/02 179,748
800,000 U.S. Treasury Note.......................................... 6.375% 8/15/02 805,248
70,000 U.S. Treasury Note.......................................... 6.25% 2/15/03 69,913
450,000 U.S. Treasury Note.......................................... 5.75% 8/15/03 436,500
419,000 U.S. Treasury Note.......................................... 7.25% 5/15/04 440,868
100,000 U.S. Treasury Note.......................................... 7.25% 8/15/04 105,250
1,450,000 U.S. Treasury Note.......................................... 6.50% 10/15/06 1,457,932
-----------
29,839,939
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 4.4%
1,400,000 Federal Home Loan Mortgage Corp............................. 5.96% 10/20/00 1,385,342
995,400 Federal National Mortgage Assc., Pool #250576............... 7.00% 6/01/26 973,680
-----------
2,359,022
-----------
TOTAL U.S. TREASURY & U.S. GOVERNMENT AGENCY
OBLIGATIONS (COST $32,115,403)............................ 32,198,961
-----------
CORPORATE OBLIGATIONS -- 27.5%
CORPORATE OBLIGATIONS -- DOMESTIC -- 24.5%
AEROSPACE/DEFENSE -- 1.0%
500,000 Lockheed Martin............................................. 6.55% 5/15/99 502,226
-----------
BANKING -- 3.9%
500,000 BanPonce Corp............................................... 6.75% 4/26/00 502,195
500,000 Capital One Bank............................................ 6.87% 8/16/99 502,605
250,000 Capital One Bank............................................ 6.95% 6/14/00 251,078
720,000 J.P. Morgan & Co............................................ 8.50% 8/15/03 785,124
-----------
2,041,002
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-37
<PAGE>
<PAGE>
UBS Bond Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE COUPON MATURITY
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- ---------- ------------------------------------------------------------ ------ -------- -----------
<S> <C> <C> <C> <C>
BROKERAGE -- 3.2%
$ 500,000 Goldman Sachs............................................... 6.25% 2/01/03 $ 486,795
600,000 Lehman Brothers Inc......................................... 7.14% 9/24/99 606,666
200,000 Lehman Brothers Inc......................................... 7.25% 4/15/03 201,266
400,000 Salomon Inc................................................. 7.25% 5/01/01 403,549
-----------
1,698,276
-----------
CHEMICALS -- 0.5%
250,000 Praxair..................................................... 6.70% 4/15/01 250,785
-----------
ENERGY -- 0.8%
400,000 Oryx Energy Co.............................................. 10.00% 4/01/01 439,076
-----------
FINANCING & LEASING -- 4.8%
950,000 Associates Corp N.A......................................... 8.50% 1/10/00 1,005,347
500,000 CIT Group Holdings.......................................... 6.50% 7/13/98 504,220
750,000 Countrywide Home Loan....................................... 7.45% 9/16/03 764,663
265,000 General Electric Capital Corp............................... 6.875% 4/15/00 270,239
-----------
2,544,469
-----------
INDUSTRIAL -- CAPTIVE FINANCE -- 3.2%
600,000 Caterpillar Financial....................................... 6.77% 12/29/00 605,274
500,000 Pitney Bowes Credit......................................... 6.54% 7/15/99 503,590
600,000 Sears Roebuck Acceptance Corp............................... 5.59% 2/16/01 578,790
-----------
1,687,654
-----------
MEDIA/CABLE -- 2.8%
600,000 News America Holdings....................................... 7.50% 3/01/00 613,716
200,000 Paramount Communications.................................... 7.50% 1/15/02 199,834
650,000 Tele-Communications Inc..................................... 7.375% 2/15/00 646,503
-----------
1,460,053
-----------
NATURAL GAS -- 1.1%
600,000 Kern River Funding (a)...................................... 6.72% 9/30/01 599,172
-----------
REAL ESTATE -- 1.4%
650,000 Franchise Finance........................................... 7.02% 2/20/03 638,950
125,000 Susa Partnership LP......................................... 7.125% 11/01/03 123,581
-----------
762,531
-----------
TECHNOLOGY -- 0.9%
500,000 CSC Enterprises (a)......................................... 6.50% 11/15/01 496,355
-----------
UTILITIES -- 0.9%
464,000 BVPS II Funding Corp........................................ 7.38% 12/01/99 466,320
-----------
TOTAL CORPORATE OBLIGATIONS -- DOMESTIC (COST
$12,864,655).............................................. 12,947,919
-----------
CORPORATE OBLIGATIONS -- FOREIGN -- 2.7%
BANKING -- 1.7%
500,000 Banco Central Hispano....................................... 7.50% 6/15/05 509,585
400,000 Spintab (a)................................................. 7.50% 8/14/49 403,120
-----------
912,705
-----------
PAPER & FOREST PRODUCTS -- 1.0%
500,000 Canadian Pacific Forest..................................... 10.25% 1/15/03 528,550
-----------
TOTAL CORPORATE OBLIGATIONS -- FOREIGN (COST $1,473,146).... 1,441,255
-----------
CORPORATE OBLIGATIONS -- EURODOLLAR -- 0.3%
ENERGY -- 0.1%
50,000 BP America Inc.............................................. 9.75% 3/01/99 53,531
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-38
<PAGE>
<PAGE>
UBS Bond Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE COUPON MATURITY
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- ---------- ------------------------------------------------------------ ------ -------- -----------
<S> <C> <C> <C> <C>
INDUSTRIAL -- CAPTIVE FINANCE -- 0.2%
$ 40,000 Ford Capital BV............................................. 9.75% 6/05/97 $ 40,625
80,000 Unilever Capital............................................ 9.25% 3/29/00 87,000
-----------
127,625
-----------
TOTAL CORPORATE OBLIGATIONS -- EURODOLLAR (COST $180,661)... 181,156
-----------
TOTAL CORPORATE OBLIGATIONS (COST $14,518,462).............. 14,570,330
-----------
FOREIGN GOVERNMENT OBLIGATIONS -- 5.5%
CANADA -- 4.2%
1,750,000* Canada Government........................................... 7.50% 9/01/00 1,376,538
1,000,000* Canada Government........................................... 7.00% 9/01/01 775,493
50,000 Province of Ontario......................................... 7.375% 1/27/03 52,107
50,000 Province of Quebec.......................................... 9.125% 8/22/01 54,875
-----------
2,259,013
-----------
ITALY -- 0.1%
20,000 Italy (Euro Bond)........................................... 9.375% 4/03/97 20,200
-----------
JAPAN -- 1.2%
355,000 Japan Finance Corp.......................................... 9.125% 10/11/00 382,587
250,000 Japan Finance Corp. for Municipal Enterprises............... 6.85% 4/15/06 252,145
-----------
634,732
-----------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS (COST $2,922,758)...... 2,913,945
-----------
ASSET BACKED SECURITIES -- 1.8%
CREDIT CARD RECEIVABLES -- 1.8%
440,000 First Omni Bank Credit Card Trust, Series 96-A.............. 6.65% 9/15/03 443,709
500,000 Sears Credit Account Master Trust Series 96-3............... 7.00% 7/16/08 510,000
-----------
TOTAL ASSET BACKED SECURITIES (COST $937,838)............... 953,709
-----------
TOTAL INVESTMENTS AT MARKET VALUE -- 95.5%
(COST $50,494,461)..................................................... 50,636,945
OTHER ASSETS IN EXCESS OF LIABILITIES -- 4.5%............................ 2,363,907
-----------
NET ASSETS -- 100.0%..................................................... $53,000,852
-----------
-----------
</TABLE>
- ------------------------
* Securities denominated in Canadian dollars.
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
1996, the total value of such securities amounted to $1,498,647 or 2.8% of
net assets.
SUMMARY OF OPEN FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
U.S. DOLLAR
FOREIGN U.S. DOLLAR NET UNREALIZED
CURRENCY UNITS U.S. DOLLAR VALUE AT APPRECIATION/
CURRENCY AND SETTLEMENT DATE PURCHASED/SOLD COST/PROCEEDS DECEMBER 31, 1996 (DEPRECIATION)
- ------------------------------------------------ -------------- ------------- ------------------ --------------
<S> <C> <C> <C> <C>
PURCHASE CONTRACT
German Deutsche Mark, 1/14/97................... 1,342,000 $ 863,578 $ 873,102 $ 9,524
SALE CONTRACTS
Canadian Dollar, 1/13/97........................ 2,145,000 1,617,464 1,567,696 49,768
Canadian Dollar, 1/13/97........................ 874,767 646,539 639,333 7,206
German Deutsche Mark, 1/14/97................... 1,342,000 892,198 873,102 19,096
-------
$ 85,594
-------
-------
</TABLE>
Note: Based on the cost of investments of $50,516,946 for Federal Income Tax
purposes at December 31, 1996, the aggregate gross unrealized appreciation
and depreciation was $246,232 and $126,233, respectively, resulting in net
unrealized appreciation of $119,999.
See notes to financial statements.
SAI-39
<PAGE>
<PAGE>
UBS Bond Portfolio
Statement of Assets and Liabilities
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment, at value (cost $50,494,461).................................... $50,636,945
Cash....................................................................... 1,443,320
Interest receivable........................................................ 905,546
Unrealized appreciation on open forward foreign currency contracts......... 85,594
Deferred organization expenses and other assets............................ 44,038
-----------
Total Assets.......................................................... 53,115,443
-----------
LIABILITIES:
Administrative services fees payable....................................... 2,061
Trustees' fees payable..................................................... 877
Organization expenses payable.............................................. 42,733
Other accrued expenses..................................................... 68,920
-----------
Total Liabilities..................................................... 114,591
-----------
NET ASSETS................................................................. $53,000,852
-----------
-----------
COMPOSITION OF NET ASSETS:
Paid-in capital for beneficial interests................................... $53,000,852
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-40
<PAGE>
<PAGE>
UBS Bond Portfolio
Statement of Operations
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest...................................................... $ 1,848,040
EXPENSES:
Investment advisory fees...................................... $ 131,348
Administrative services fees.................................. 14,594
Audit fees.................................................... 39,357
Custodian fees and expenses................................... 27,616
Fund accounting fees.......................................... 19,348
Legal fees.................................................... 18,766
Amortization of organization expenses......................... 7,508
Trustees' fees................................................ 7,508
Insurance expense............................................. 4,151
Miscellaneous expenses........................................ 6,110
---------
Total expenses........................................... 276,306
Less: Fee waiver......................................... (131,348)
---------
Net expenses............................................. 144,958
-----------
Net investment income......................................... 1,703,082
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities transactions.................. 113,360
Net realized loss on foreign currency transactions............ (68,736)
Net change in unrealized appreciation of investments.......... 142,484
Net change in unrealized appreciation of foreign currency
contracts and translations.................................. 84,921
-----------
Net realized and unrealized gain on investments............... 272,029
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......... $ 1,975,111
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-41
<PAGE>
<PAGE>
UBS Bond Portfolio
Statement of Changes in Net Assets
For the period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income......................................................... $ 1,703,082
Net realized gain on securities and foreign currency transactions............. 44,624
Net change in unrealized appreciation of investments, foreign currency
contracts and foreign currency translations................................. 227,405
-----------
Net increase in net assets resulting from operations.......................... 1,975,111
-----------
CAPITAL TRANSACTIONS:
Proceeds from contributions................................................... 59,142,218
Value of withdrawals.......................................................... (8,116,477)
-----------
Net increase in net assets from capital transactions.......................... 51,025,741
-----------
NET INCREASE IN NET ASSETS.................................................... 53,000,852
NET ASSETS:
Beginning of period........................................................... --
-----------
End of period................................................................. $53,000,852
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-42
<PAGE>
<PAGE>
UBS Bond Portfolio
Financial Highlights
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)................................ $53,001
Ratio of expenses to average net assets(1)............................... 0.50%(2)
Ratio of net investment income to average net assets(1).................. 5.83%(2)
Portfolio turnover....................................................... 100%
</TABLE>
- ------------------------
(1) Net of fee waivers. Such fee waivers had the effect of reducing the ratio of
expenses to average net assets and increasing the ratio of net investment
income to average net assets by 0.45% (annualized).
(2) Annualized.
See notes to financial statements.
SAI-43
<PAGE>
<PAGE>
UBS Bond Portfolio
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------
1. GENERAL
UBS Bond Portfolio (the 'Portfolio'), a separate series of UBS Investor
Portfolios Trust (the 'Trust'), is registered under the Investment Company Act
of 1940, as a diversified, open-end management investment company. The Trust is
organized as a trust under the laws of the State of New York.
The investment adviser of the Portfolio is Union Bank of Switzerland, New York
Branch ('UBS'). Signature Financial Group (Grand Cayman), Ltd. ('SFG'), a
wholly-owned subsidiary of Signature Financial Group, Inc., acts as the
Portfolio's administrator and placement agent.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements:
A. INVESTMENT VALUATION -- Debt securities with a remaining maturity of more
than 60 days are normally valued by a pricing service approved by the Board of
Trustees (the 'Trustees'). Such pricing service will consider various factors
when arriving at a valuation for a security. Such factors include yields and
prices of comparable securities, indications as to values from dealers in such
securities and general market conditions. In the event a pricing service is
unable to price a security, the security will be valued by taking the average of
the bid and ask prices as provided by a dealer in such security.
Debt securities that mature in 60 days or less are valued at amortized cost,
which approximates market value. The amortized cost method involves valuing a
security at its cost on the date of purchase or, in the case of securities
purchased with more than 60 days until maturity, at their market value each day
until the 61st day prior to maturity, and thereafter assuming a constant
amortization to maturity of the difference between the principal amount due at
maturity and such valuation.
Securities or other assets for which market quotations are not readily available
are valued at fair value in accordance with procedures established by and under
the general supervision of the Trustees.
B. FOREIGN CURRENCY TRANSLATION -- The accounting records of the Portfolio are
maintained in U.S. dollars. Assets, including investment securities, and
liabilities denominated in foreign currency are translated into U.S. dollars at
the prevailing rate of exchange at year end. Purchases and sales of securities,
income and expenses are translated at the prevailing rate of exchange on the
respective dates of such transactions. Gain/loss on translation of foreign
currency includes net exchange gains and losses, gains and losses on disposition
of foreign currency and adjustments to the amount of foreign taxes withheld.
The assets and liabilities are presented at the exchange rates and market values
at the close of the year. The changes in net assets arising from changes in
exchange rates and the changes in net assets resulting from changes in market
prices of securities held at year-end are not separately presented. However,
gains and losses from certain foreign currency transactions are treated as
ordinary income for U.S. Federal income tax purposes.
C. FORWARD FOREIGN CURRENCY CONTRACTS -- The Portfolio may enter into forward
foreign currency contracts in connection with planned purchases or sales of
securities or to hedge the U.S. dollar value of portfolio securities denominated
in a particular currency. The Portfolio could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts
and from unanticipated movements in the value of a foreign currency relative to
the U.S. dollar. The forward foreign currency contracts are marked-to-market
daily using the daily exchange rate of the underlying currency and any resulting
gains or losses are recorded for financial statement purposes as unrealized
gains or losses until the contract settlement date.
SAI-44
<PAGE>
<PAGE>
UBS Bond Portfolio
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------
The Portfolio's use of forward contracts involves, to varying degrees, elements
of market risk in excess of the amount recognized in the statement of assets and
liabilities. The contract or notional amounts reflect the extent of the
Portfolio's involvement in these financial instruments. Risks arise from the
possible movements in the foreign exchange rates underlying these instruments.
The unrealized appreciation/depreciation on forward contracts reflects the
Portfolio's exposure at year end to credit loss in the event of a counterparty's
failure to perform its obligations.
D. ACCOUNTING FOR INVESTMENTS -- Securities transactions are accounted for on
trade date. Realized gains and losses on security transactions are determined on
the identified cost basis. Interest income, adjusted for amortization of
premiums and accretion of discounts on investments, is accrued daily.
E. U.S. FEDERAL INCOME TAXES -- The Portfolio is considered a partnership under
the U. S. Internal Revenue Code (the 'Code'). As such, each investor in the
Portfolio will be taxed on its share of the Portfolio's ordinary income and
capital gains. Accordingly, no provision for federal income taxes is necessary.
It is intended that the Portfolio will be managed in such a way that an investor
will be able to satisfy the requirements of the Code applicable to regulated
investment companies.
F. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Portfolio in
connection with its organization in the amount of $50,000 have been deferred and
are being amortized on a straight line basis over five years from the
Portfolio's commencement of operations (April 2, 1996).
G. OTHER -- The Portfolio bears all costs of its operations other than expenses
specifically assumed by UBS and SFG. Expenses incurred by the Trust on behalf of
any two or more portfolios are allocated in proportion to the net assets of each
portfolio, except when allocations of direct expenses to each portfolio can
otherwise be made fairly. Expenses directly attributable to the Portfolio are
charged directly to the Portfolio.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. INVESTMENT ADVISORY AGREEMENT -- The Portfolio has retained the services of
UBS as investment adviser. UBS makes the Portfolio's day-to-day investment
decisions, arranges for the execution of portfolio transactions and generally
manages the Portfolio's investments and operations. As compensation for overall
investment management services the Trust has agreed to pay UBS an investment
advisory fee, accrued daily and payable monthly, at an annual rate of 0.45% of
the Portfolio's average daily net assets. For the period April 2, 1996
(commencement of operations) through December 31, 1996, UBS voluntarily agreed
to waive the entire investment advisory fee. Such waiver amounted to $131,348.
B. ADMINISTRATIVE SERVICES AGREEMENT -- Under the terms of an Administrative
Services Agreement with the Trust, SFG provides overall administrative services
and general office facilities to the Portfolio and the Trust. As compensation
for such services, the Portfolio has agreed to pay SFG an administrative
services fee, accrued daily and payable monthly, at an annual rate of 0.05% of
the Portfolio's average daily net assets. For the period from April 2, 1996
(commencement of operations) through December 31, 1996, the administrative
services fee amounted to $14,594.
C. EXCLUSIVE PLACEMENT AGENT AGREEMENT -- Under the terms of an Exclusive
Placement Agent Agreement with the Trust, SFG has agreed to act as the Trust's
placement agent. SFG does not receive any additional fees for services provided
pursuant to this agreement.
4. PURCHASES AND SALES OF INVESTMENTS
For the period April 2, 1996 (commencement of operations) through December 31,
1996, purchases and sales of investment securities, excluding short-term
investments, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
U.S. Government Securities......................................... $60,905,077 $30,940,595
Corporate obligations.............................................. 28,583,638 7,953,111
----------- -----------
Total.................................................... $89,488,715 $38,893,706
----------- -----------
----------- -----------
</TABLE>
SAI-45
<PAGE>
<PAGE>
UBS BOND PORTFOLIO
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Trustees and
Investors of UBS Investor Portfolios Trust
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the UBS Bond Portfolio (the
'Portfolio') (one of the portfolios constituting the UBS Investor Portfolios
Trust) at December 31, 1996, and the results of its operations, the changes in
its net assets and the financial highlights for the period April 2, 1996
(commencement of operations) through December 31, 1996, in conformity with
generally accepted accounting principles in the United States. These financial
statements and financial highlights (hereafter referred to as 'financial
statements') are the responsibility of the Portfolio's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards in the United States which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit, which included confirmation
of securities at December 31, 1996 by correspondence with the custodian,
provides a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Chartered Accountants
Toronto, Ontario
February 21, 1997
SAI-46
<PAGE>
<PAGE>
UBS U.S. Equity Fund
Statement of Assets and Liabilities
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in UBS Investor Portfolios Trust -- UBS U.S. Equity Portfolio, at
value........................................................................ $9,486,697
Receivable from Adviser........................................................ 6,340
Deferred organization expenses and other assets................................ 63,344
----------
Total Assets......................................................... 9,556,381
----------
LIABILITIES:
Administrative services fees payable........................................... 341
Directors' fees payable........................................................ 1,688
Organization expenses payable.................................................. 32,538
Other accrued expenses......................................................... 56,118
----------
Total Liabilities.................................................... 90,685
----------
NET ASSETS..................................................................... $9,465,696
----------
----------
SHARES OUTSTANDING ($0.001 par value, 10 million shares authorized)............ 88,712
----------
----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE................. $106.70
----------
----------
COMPOSITION OF NET ASSETS:
Shares of common stock, at par................................................. $ 89
Additional paid-in capital..................................................... 8,765,869
Net unrealized appreciation of investments..................................... 684,896
Accumulated undistributed net investment income................................ 1,157
Accumulated undistributed net realized gains on investments.................... 13,685
----------
Net Assets........................................................... $9,465,696
----------
----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-47
<PAGE>
<PAGE>
UBS U.S. Equity Fund
Statement of Operations
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Investment Income and Expenses from UBS Investor Portfolios
Trust -- UBS U.S. Equity Portfolio
Dividends..................................................... $191,173
Interest...................................................... 13,296
--------
Investment income............................................. 204,469
Total expenses................................................ $ 77,806
Less: Fee waiver.............................................. (31,133)
---------
Net expenses.................................................. 46,673
--------
Net Investment Income from UBS Investor Portfolios Trust -- UBS
U.S. Equity Portfolio............................................ 157,796
EXPENSES
Shareholder service fees........................................... 12,965
Administrative services fees....................................... 2,593
Reports to shareholders expense.................................... 22,333
Transfer agent fees................................................ 15,763
Audit fees......................................................... 11,259
Amortization of organization expenses.............................. 10,886
Fund accounting fees............................................... 8,006
Legal fees......................................................... 7,508
Directors' fees.................................................... 6,006
Registration fees.................................................. 4,939
Miscellaneous expenses............................................. 4,218
---------
Total expenses................................................ 106,476
Less: Fee waiver and expense reimbursements................... (106,476)
---------
Net expenses.................................................. --
--------
Net investment income.............................................. 157,796
--------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS FROM UBS INVESTOR
PORTFOLIOS TRUST -- UBS U.S. EQUITY PORTFOLIO
Net realized gain on securities transactions....................... 13,685
Net change in unrealized appreciation of investments............... 684,896
--------
Net realized and unrealized gain on investments from UBS Investor
Portfolios Trust -- UBS U.S. Equity Portfolio.................... 698,581
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $856,377
--------
--------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-48
<PAGE>
<PAGE>
UBS U.S. Equity Fund
Statement of Changes in Net Assets
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income............................................................ $ 157,796
Net realized gain on securities transactions..................................... 13,685
Net change in unrealized appreciation of investments............................. 684,896
-----------
Net increase in net assets resulting from operations............................. 856,377
-----------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income............................................................ (156,639)
-----------
TRANSACTIONS IN SHARES OF COMMON STOCK:
Net proceeds from sale of shares................................................. 13,752,890
Net asset value of shares issued to shareholders in reinvestment of dividends.... 156,639
Cost of shares redeemed.......................................................... (5,168,571)
-----------
Net increase in net assets from transactions in shares of common stock........... 8,740,958
-----------
NET INCREASE IN NET ASSETS....................................................... 9,440,696
NET ASSETS:
Beginning of period.............................................................. 25,000
-----------
End of period (including undistributed net investment income of $1,157).......... $ 9,465,696
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-49
<PAGE>
<PAGE>
UBS U.S. Equity Fund
Financial Highlights
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
FOR A SHARE OUTSTANDING FOR THE PERIOD
Net asset value, beginning of period..................................... $100.00
-------
Income from investment operations:
Net investment income............................................... 2.05
Net realized and unrealized gain on investments..................... 6.69
-------
Total income from investment operations............................. 8.74
-------
Less dividends to shareholders:
Dividends from net investment income................................ (2.04)
-------
Net asset value, end of period........................................... $106.70
-------
-------
Total return............................................................. 8.74%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)........................... $ 9,466
Ratio of expenses to average net assets(2).......................... 0.90%(3)
Ratio of net investment income to average net assets(2)............. 3.04%(3)
</TABLE>
- ------------------------
(1) Not annualized.
(2) Includes the Fund's share of UBS Investor Portfolio Trust -- UBS U.S.
Equity Portfolio expenses and net of fee waivers and expense
reimbursements. Such fee waivers and expense reimbursements had the effect
of reducing the ratio of expenses to average net assets and increasing the
ratio of net investment income to average net assets by 2.65% (annualized).
(3) Annualized.
See notes to financial statements.
SAI-50
<PAGE>
<PAGE>
UBS U.S. Equity Fund
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------
1. GENERAL
UBS U.S. Equity Fund (the 'Fund') is a diversified, no-load mutual fund
registered under the Investment Company Act of 1940. The Fund is a series of UBS
Private Investor Funds, Inc. (the 'Company'), an open-end management investment
company organized as a corporation under Maryland law. At December 31, 1996, the
Company included two other funds, UBS Bond Fund and UBS International Equity
Fund. These financial statements relate only to the Fund.
The Fund had no operations prior to April 2, 1996 other than the sale to
Signature Financial Group, Inc. of 250 shares of common stock for $25,000.
The Fund seeks to achieve its investment objective by investing substantially
all of its investable assets in the UBS U.S. Equity Portfolio of UBS Investor
Portfolios Trust (the 'Portfolio'), an open-end management investment company
that has the same investment objective as that of the Fund.
Signature Broker-Dealer Services, Inc. ('Signature'), a wholly-owned subsidiary
of Signature Financial Group, Inc., serves as the Fund's administrator and
distributor. Union Bank of Switzerland, New York Branch ('UBS') serves as the
fund services agent to the Fund.
The financial statements of the Portfolio, including its Schedule of
Investments, are included elsewhere within this report and should be read in
conjunction with the Fund's financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. Significant accounting policies
followed by the Fund are as follows:
A. INVESTMENT VALUATION -- The value of the Fund's investment in the Portfolio
included in the accompanying Statement of Assets and Liabilities reflects the
Fund's proportionate beneficial interest in the net assets of the Portfolio
(37.3% at December 31, 1996). Valuation of securities by the Portfolio is
discussed in Note 2A of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B. INVESTMENT INCOME, EXPENSES AND REALIZED AND UNREALIZED GAINS AND LOSSES --
The Fund records its share of the investment income, expenses and realized and
unrealized gains and losses recorded by the Portfolio on a daily basis. The
investment income, expenses and realized and unrealized gains and losses are
allocated daily to investors of the Portfolio based upon the amount of their
investment in the Portfolio.
C. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies, including
the requirement to distribute substantially all of its taxable income, including
any net realized capital gains on investment transactions, to its shareholders.
Accordingly, no provision for federal income or excise taxes is necessary.
D. DIVIDENDS AND DISTRIBUTIONS -- The Fund declares dividends from net
investment income to shareholders of record on the day of declaration. Such
dividends are declared and paid annually. Net realized gains, if any, will be
distributed at least annually. However, to the extent that net realized gains of
the Fund can be reduced by capital loss carryovers, such gains will not be
distributed. Dividends and distributions are recorded on the ex-dividend date.
The amounts of dividends from net investment income and distributions from net
realized gains are determined in accordance with federal income tax regulations
which may differ from generally accepted accounting principles. These 'book/tax'
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the composition of net assets based upon their federal tax-basis
treatment; temporary differences do not require reclassification.
SAI-51
<PAGE>
<PAGE>
UBS U.S. Equity Fund
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------
E. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Fund in connection
with its organization in the amount of $72,500 have been deferred and are being
amortized on a straight line basis over five years from the Fund's commencement
of operations (April 2, 1996).
F. OTHER -- The Fund bears all cost of its operations other than expenses
specifically assumed by UBS and Signature. Expenses incurred by the Company on
behalf of any two or more funds are allocated in proportion to the net assets of
each fund, except when allocations of direct expenses to each fund can otherwise
be made fairly. Expenses directly attributable to the Fund are charged directly
to the Fund.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. ADMINISTRATIVE SERVICES AGREEMENT -- Under the terms of an Administrative
Services Agreement with the Company, Signature provides overall administrative
services and general office facilities. As compensation for such services, the
Company has agreed to pay Signature a fee, accrued daily and payable monthly, at
an annual rate of 0.05% of the Fund's first $100 million average daily net
assets and 0.025% of the next $100 million average daily net assets. Signature
does not receive a fee on average net assets in excess of $200 million. For the
period April 2, 1996 (commencement of operations) through December 31, 1996, the
administrative services fee amounted to $2,593.
B. DISTRIBUTION AGREEMENT -- Under the terms of a Distribution Agreement with
the Company, Signature serves as the distributor of Fund shares. Signature does
not receive any additional fees for services provided pursuant to this
agreement.
C. SHAREHOLDER SERVICES AGREEMENT -- The Fund has entered into a Shareholder
Services Agreement with UBS pursuant to which UBS provides certain services to
shareholders of the Fund. The Fund has agreed to pay UBS a fee for these
services, accrued daily and payable monthly, at an annual rate of 0.25% of the
average daily net assets of the Fund. For the period April 2, 1996 (commencement
of operations) through December 31, 1996, the shareholder service fee amounted
to $12,965, all of which was waived.
D. FUND SERVICES AGREEMENT -- Under the terms of a Fund Services Agreement with
the Company, UBS has agreed to provide certain administrative services to the
Fund. UBS is not entitled to any additional compensation pursuant to this
agreement.
E. EXPENSE REIMBURSEMENTS -- UBS has voluntarily agreed to limit the total
operating expenses of the Fund, including its share of the Portfolio's expenses
and excluding extraordinary expenses, to an annual rate of 0.90% of the Fund's
average daily net assets. For the period April 2, 1996 (commencement of
operations) through December 31, 1996, UBS reimbursed the Fund for expenses
totaling $93,511 in connection with this voluntary limitation. UBS may modify or
discontinue this voluntary expense limitation at any time with 30 days' advance
notice to the Fund.
4. CAPITAL SHARE TRANSACTIONS
At December 31, 1996 there were 500 million shares of the Company's common stock
authorized, of which 10 million shares were classified as common stock of the
Fund. Transactions in shares of the Fund for the period April 2, 1996
(commencement of operations) through December 31, 1996 were as follows:
Shares subscribed........................... 137,339
Shares issued to shareholders in
reinvestment of dividends................. 1,465
Shares redeemed............................. (50,342)
-------
Net increase in shares outstanding.......... 88,462
-------
-------
SAI-52
<PAGE>
<PAGE>
UBS U.S. Equity Fund
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors and
Shareholders of UBS Private Investor Funds, Inc.
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the UBS U.S. Equity Fund (the 'Fund') (one of the funds constituting the UBS
Private Investor Funds, Inc.) at December 31, 1996, and the results of its
operations, the changes in its net assets and the financial highlights for the
period April 2, 1996 (commencement of operations) through December 31, 1996, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as 'financial
statements') are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audit. We
conducted our audit of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 21, 1997
SAI-53
<PAGE>
<PAGE>
UBS U.S. Equity Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- -------- ------------------------------------------------------------------------------------ -----------
<S> <C> <C>
COMMON STOCK -- 97.6%
BANKING & FINANCIAL INSTITUTIONS -- 14.4%
1,100 BankAmerica Corp.................................................................... $ 109,725
9,200 Corestates Financial Corp........................................................... 477,250
13,100 Great Western Financial............................................................. 379,900
10,050 J. P. Morgan & Co. Inc.............................................................. 981,131
14,000 Mellon Bank Corp.................................................................... 994,000
10,700 U.S. Bancorp........................................................................ 480,831
4,300 Wachovia Corp....................................................................... 242,950
-----------
3,665,787
-----------
CHEMICALS -- 4.2%
5,690 Dow Chemical Company................................................................ 445,954
20,800 Witco Corp.......................................................................... 634,400
-----------
1,080,354
-----------
CONSUMER FOODS -- 7.4%
17,870 General Mills Co.................................................................... 1,132,511
21,075 H. J. Heinz Co...................................................................... 753,431
-----------
1,885,942
-----------
CONSUMER GOODS & SERVICES -- 4.8%
23,750 H&R Block Inc....................................................................... 688,750
13,500 Readers Digest Association Inc...................................................... 543,375
-----------
1,232,125
-----------
COSMETICS -- 2.5%
14,010 International Flavors & Fragrances.................................................. 630,450
-----------
DRUGS & PHARMACEUTICALS -- 10.9%
12,960 American Home Products Corp......................................................... 759,780
8,500 Baxter International................................................................ 348,500
8,300 Bristol-Myers Squibb Co............................................................. 902,625
18,977 Pharmacia & Upjohn Inc.............................................................. 751,964
-----------
2,762,869
-----------
INSURANCE -- 5.4%
12,600 American General Corp............................................................... 515,025
4,250 Marsh & McLennan Cos. Inc........................................................... 442,000
10,700 Safeco Corp......................................................................... 421,981
-----------
1,379,006
-----------
LUMBER, PAPER & BUILDING SUPPLIES -- 7.6%
10,550 Potlatch Corp....................................................................... 453,650
6,200 Union Camp Corp..................................................................... 296,050
24,800 Weyerhauser Co...................................................................... 1,174,900
-----------
1,924,600
-----------
MANUFACTURING -- 3.7%
11,510 Minnesota Mining & Manufacturing.................................................... 953,891
-----------
NATURAL GAS -- 0.8%
6,000 NICOR Inc........................................................................... 214,500
-----------
</TABLE>
See notes to financial statements.
SAI-54
<PAGE>
<PAGE>
UBS U.S. Equity Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- -------- ------------------------------------------------------------------------------------ -----------
<S> <C> <C>
OFFICE EQUIPMENT AND SUPPLIES -- 1.6%
7,250 Pitney Bowes, Inc................................................................... $ 395,125
-----------
PETROLEUM PRODUCTION & SALES -- 7.7%
4,700 Amoco Corporation................................................................... 378,350
5,650 Atlantic Richfield Co............................................................... 748,625
7,800 Chevron Corporation................................................................. 507,000
2,300 Exxon Corporation................................................................... 225,400
1,120 Texaco Inc.......................................................................... 109,900
-----------
1,969,275
-----------
PRINTING & PUBLISHING -- 0.9%
9,200 Dun & Bradstreet Corporation........................................................ 218,500
-----------
RETAIL -- 4.1%
21,220 J. C. Penney Company, Inc........................................................... 1,034,475
-----------
TELECOMMUNICATIONS -- 11.0%
15,200 Bell Atlantic Corp.................................................................. 984,200
22,350 GTE Corporation..................................................................... 1,016,925
4,700 SBC Communications.................................................................. 243,225
16,800 US West Inc......................................................................... 541,800
-----------
2,786,150
-----------
TOBACCO -- 8.0%
9,600 American Brands, Inc................................................................ 476,400
10,150 Philip Morris Companies, Inc........................................................ 1,143,144
12,600 UST, Inc............................................................................ 407,925
-----------
2,027,469
-----------
UTILITIES -- 2.6%
10,750 Baltimore Gas and Electric.......................................................... 287,563
5,860 Central & South West Corp........................................................... 150,163
8,200 Wisconsin Energy Corp............................................................... 220,375
-----------
658,101
-----------
TOTAL INVESTMENTS AT MARKET VALUE -- 97.6%
(COST $23,144,284).......................................................................... 24,818,619
OTHER ASSETS IN EXCESS OF LIABILITIES -- 2.4%................................................. 607,114
-----------
NET ASSETS -- 100.0%.......................................................................... $25,425,733
-----------
-----------
</TABLE>
- ------------------------
Note: Based upon the cost of investments of $23,146,237 for Federal Income Tax
purposes at December 31, 1996, the aggregate gross unrealized appreciation
and depreciation was $2,047,624 and $375,242, respectively, resulting in
net unrealized appreciation of $1,672,382.
- ------------------------
See notes to financial statements.
SAI-55
<PAGE>
<PAGE>
UBS U.S. Equity Portfolio
Statement of Assets and Liabilities
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment, at value (cost $23,144,284)........................................ $24,818,619
Cash........................................................................... 2,980,844
Dividends and interest receivable.............................................. 81,913
Deferred organization expenses and other assets................................ 43,094
-----------
Total Assets.............................................................. 27,924,470
-----------
LIABILITIES:
Administrative services fees payable........................................... 964
Trustees' fees payable......................................................... 1,929
Payable for investment securities purchased.................................... 2,382,507
Organization expenses payable.................................................. 42,733
Other accrued expenses......................................................... 70,604
-----------
Total Liabilities......................................................... 2,498,737
-----------
NET ASSETS..................................................................... $25,425,733
-----------
-----------
NET ASSETS CONSIST OF:
Paid-in capital for beneficial interests....................................... $25,425,733
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-56
<PAGE>
<PAGE>
UBS U.S. Equity Portfolio
Statement of Operations
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends........................................................ $524,846
Interest......................................................... 35,449
--------
Investment income........................................... $ 560,295
EXPENSES
Investment advisory fees......................................... 84,435
Administrative services fees..................................... 7,036
Audit fees....................................................... 39,357
Custodian fees and expenses...................................... 24,387
Fund accounting fees............................................. 19,348
Legal fees....................................................... 15,273
Amortization of organization expenses............................ 7,508
Trustees' fees................................................... 7,508
Insurance expense................................................ 1,647
Miscellaneous expenses........................................... 6,110
--------
Total expenses.............................................. 212,609
Less: Fee waiver............................................ (84,435)
--------
Net expenses................................................ 128,174
----------
Net investment income............................................ 432,121
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on securities transactions..................... 1,679
Net change in unrealized appreciation of investments............. 1,674,335
----------
Net realized and unrealized gain on investments.................. 1,676,014
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............. $2,108,135
----------
----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-57
<PAGE>
<PAGE>
UBS U.S. Equity Portfolio
Statement of Changes in Net Assets
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income.......................................................... $ 432,121
Net realized gain on securities transactions................................... 1,679
Net change in unrealized appreciation of investments........................... 1,674,335
-----------
Net increase in net assets resulting from operations........................... 2,108,135
-----------
CAPITAL TRANSACTIONS:
Proceeds from contributions.................................................... 30,786,561
Value of withdrawals........................................................... (7,468,963)
-----------
Net increase in net assets from capital transactions........................... 23,317,598
-----------
NET INCREASE IN NET ASSETS..................................................... 25,425,733
NET ASSETS:
Beginning of period............................................................ --
-----------
End of period.................................................................. $25,425,733
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-58
<PAGE>
<PAGE>
UBS U.S. Equity Portfolio
Financial Highlights
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's omitted).................................. $25,426
Average commission per share............................................... $ 0.06
Ratio of expenses to average net assets(1)................................. 0.91%(2)
Ratio of net investment income to average net assets(1).................... 3.07%(2)
Portfolio turnover......................................................... 19%
</TABLE>
- ------------------------
(1) Net of fee waivers. Such fee waivers had the effect of reducing the ratio
of expenses to average net assets and increasing the ratio of net
investment income to average net assets by 0.60% (annualized).
(2) Annualized.
- ------------------------
See notes to financial statements.
SAI-59
<PAGE>
<PAGE>
UBS U.S. Equity Portfolio
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------
1. GENERAL
UBS U.S. Equity Portfolio (the 'Portfolio'), a separate series of UBS Investor
Portfolios Trust (the 'Trust'), is registered under the Investment Company Act
of 1940, as a diversified, open-end management investment company. The Trust is
organized as a trust under the laws of the State of New York.
The investment adviser of the Portfolio is Union Bank of Switzerland, New York
Branch ('UBS'). Signature Financial Group (Grand Cayman), Ltd. ('SFG'), a
wholly-owned subsidiary of Signature Financial Group, Inc., acts as the
Portfolio's administrator and placement agent.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements:
A. INVESTMENT VALUATION -- Equity securities in the portfolio are valued at
their last sale price on the exchange on which they are primarily traded, or in
the absence of recorded sales, at the average of readily available closing bid
and asked prices, or at the quoted bid price. Unlisted securities are valued at
the average of the quoted bid and asked prices in the over-the-counter market.
Options on stock indices traded on national securities exchanges are valued at
their last sale price as of the close of options trading on such exchanges.
Stock index futures and related options traded on commodities exchanges are
valued at their last sales price as of the close of such exchanges.
Securities or other assets for which market quotations are not readily available
are valued at fair value in accordance with procedures established by and under
the general supervision of the Portfolio's Board of Trustees (the 'Trustees').
Debt securities that mature in 60 days or less are valued at amortized cost,
which approximates market value. The amortized cost method involves valuing a
security at its cost on the date of purchase or, in the case of securities
purchased with more than 60 days until maturity, at their market value each day
until the 61st day prior to maturity, and thereafter assuming a constant
amortization to maturity of the difference between the principal amount due at
maturity and such valuation.
B. ACCOUNTING FOR INVESTMENTS -- Securities transactions are accounted for on
trade date. Realized gains and losses on security transactions are determined on
the identified cost basis. Dividend income and other distributions from
portfolio securities are recorded on the ex-dividend date. Interest income,
adjusted for amortization of premiums and accretion of discounts on investments,
is accrued daily.
C. U. S. FEDERAL INCOME TAXES -- The Portfolio is considered a partnership under
the U. S. Internal Revenue Code (the 'Code'). As such, each investor in the
Portfolio will be taxed on its share of the Portfolio's ordinary income and
capital gains. Accordingly, no provision for federal income taxes is necessary.
It is intended that the Portfolio will be managed in such a way that an investor
will be able to satisfy the requirements of the Code applicable to regulated
investment companies.
D. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Portfolio in
connection with its organization in the amount of $50,000 have been deferred and
are being amortized on a straight line basis over five years from the
Portfolio's commencement of operations (April 2, 1996).
E. OTHER -- The Portfolio bears all costs of its operations other than expenses
specifically assumed by UBS and SFG. Expenses incurred by the Trust on behalf of
any two or more portfolios are allocated in proportion to the
SAI-60
<PAGE>
<PAGE>
UBS U.S. Equity Portfolio
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------
net assets of each portfolio, except when allocations of direct expenses to each
portfolio can otherwise be made fairly. Expenses directly attributable to the
Portfolio are charged directly to the Portfolio.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. INVESTMENT ADVISORY AGREEMENT -- The Portfolio has retained the services of
UBS as investment adviser. UBS makes the Portfolio's day-to-day investment
decisions, arranges for the execution of portfolio transactions and generally
manages the Portfolio's investments and operations. As compensation for overall
investment management services the Trust has agreed to pay UBS an investment
advisory fee, accrued daily and payable monthly, at an annual rate of 0.60% of
the Portfolio's average daily net assets. For the period April 2, 1996
(commencement of operations) through December 31, 1996, UBS voluntarily agreed
to waive the entire investment advisory fee. Such waiver amounted to $84,435.
B. ADMINISTRATIVE SERVICES AGREEMENT -- Under the terms of an Administrative
Services Agreement with the Trust, SFG provides overall administrative services
and general office facilities to the Portfolio and the Trust. As compensation
for such services, the Portfolio has agreed to pay SFG an administrative
services fee, accrued daily and payable monthly, at an annual rate of 0.05% of
the Portfolio's average daily net assets. For the period April 2, 1996
(commencement of operations) through December 31, 1996, the administrative
services fee amounted to $7,036.
C. EXCLUSIVE PLACEMENT AGENT AGREEMENT -- Under the terms of an Exclusive
Placement Agent Agreement with the Trust, SFG has agreed to act as the Trust's
placement agent. SFG does not receive any additional fees for services provided
pursuant to this agreement.
4. PURCHASES AND SALES OF INVESTMENTS
For the period April 2, 1996 (commencement of operations) through December 31,
1996, purchases and sales of investment securities, excluding short-term
investments, aggregated $26,712,324 and $3,569,719, respectively.
SAI-61
<PAGE>
<PAGE>
UBS U.S. Equity Portfolio
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Trustees and
Investors of UBS Investor Portfolios Trust
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position, of the UBS U.S. Equity Portfolio (the
'Portfolio') (one of the portfolios constituting the UBS Investor Portfolio
Trust) at December 31, 1996, and the results of its operations, the changes in
its net assets and the financial highlights for the period April 2, 1996
(commencement of operations) through December 31, 1996, in conformity with
generally accepted accounting principles in the United States. These financial
statements and financial highlights (hereafter referred to as 'financial
statements') are the responsibility of the Portfolio's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards in the United States which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit, which included confirmation
of securities at December 31, 1996 by correspondence with the custodian and
brokers, provides a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
Chartered Accountants
Toronto, Ontario
February 21, 1997
SAI-62
<PAGE>
<PAGE>
UBS International Equity Fund
Statement of Assets and Liabilities
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in UBS Investor Portfolios Trust -- UBS International Equity
Portfolio, at value......................................................... $26,610,544
Receivable from Adviser....................................................... 7,091
Tax reclaim receivable........................................................ 29,290
Deferred organization expenses and other assets............................... 63,600
-----------
Total Assets........................................................ 26,710,525
-----------
LIABILITIES:
Administrative services fees payable.......................................... 568
Directors' fees payable....................................................... 341
Organization expenses payable................................................. 32,509
Other accrued expenses........................................................ 53,378
-----------
Total Liabilities................................................... 86,796
-----------
NET ASSETS.................................................................... $26,623,729
-----------
-----------
SHARES OUTSTANDING ($0.001 par value, 10 million shares authorized)........... 258,877
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE................ $102.84
COMPOSITION OF NET ASSETS:
Shares of common stock, at par................................................ $ 259
Additional paid-in capital.................................................... 26,227,022
Net unrealized appreciation of investments, foreign currency contracts and
foreign currency translations............................................... 340,608
Accumulated undistributed net investment income............................... 18,022
Accumulated undistributed net realized gains on securities and foreign
currency translations....................................................... 37,818
-----------
Net Assets.......................................................... $26,623,729
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-63
<PAGE>
<PAGE>
UBS International Equity Fund
Statement of Operations
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Investment Income and Expenses allocated from UBS Investor
Portfolios Trust -- UBS International Equity Portfolio
Dividends (net of foreign withholding tax of $14,285)......... $194,621
Interest...................................................... 66,737
--------
Investment income............................................. 261,358
Total expenses................................................ $137,406
Less: Fee waiver.............................................. (63,711)
--------
Net expenses.................................................. 73,695
--------
Net Investment Income from UBS Investor Portfolios Trust -- UBS
International Equity Portfolio................................... 187,663
EXPENSES
Shareholder service fees...................................... 20,658
Administrative services fees.................................. 4,131
Reports to shareholders expense............................... 22,333
Transfer agent fees........................................... 15,763
Audit fees.................................................... 11,259
Amortization of organization expenses......................... 10,886
Fund accounting fees.......................................... 8,006
Legal fees.................................................... . 7,508
Directors' fees............................................... 6,006
Registration fees............................................. 2,944
Miscellaneous expenses........................................ 4,849
--------
Total expenses........................................... 114,343
Less: Fee waiver and expense reimbursements.............. (73,557)
--------
Net expenses............................................. 40,786
--------
Net investment income.............................................. 146,877
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM UBS
INVESTOR PORTFOLIOS TRUST -- INTERNATIONAL
EQUITY PORTFOLIO
Net realized gain on securities transactions....................... 132,573
Net realized gain on foreign currency transactions................. 2,984
Net change in unrealized appreciation of investments............... 342,866
Net change in unrealized depreciation of foreign currency contracts
and translations................................................. (2,258)
--------
Net realized and unrealized gain on investments from UBS Investor
Portfolios Trust -- UBS International Equity Portfolio........... 476,165
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $623,042
--------
--------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-64
<PAGE>
<PAGE>
UBS International Equity Fund
Statement of Changes in Net Assets
For the period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income............................................................ $ 146,877
Net realized gain on securities and foreign currency transactions................ 135,557
Net change in unrealized appreciation of investments, foreign currency contracts
and foreign currency translations.............................................. 340,608
-----------
Net increase in net assets resulting from operations............................. 623,042
-----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................................................ (136,578)
Net realized gains on investments................................................ (94,755)
-----------
Total dividends and distributions to shareholders................................ (231,333)
-----------
TRANSACTIONS IN SHARES OF COMMON STOCK:
Net proceeds from sale of shares................................................. 30,851,057
Net asset value of shares issued to shareholders in reinvestment of dividends and
distributions.................................................................. 229,580
Cost of shares redeemed.......................................................... (4,873,617)
-----------
Net increase in net assets from transactions in shares of common stock........... 26,207,020
-----------
NET INCREASE IN NET ASSETS....................................................... 26,598,729
NET ASSETS:
Beginning of period.............................................................. 25,000
-----------
End of period (including undistributed net investment income of $18,022)......... $26,623,729
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-65
<PAGE>
<PAGE>
UBS International Equity Fund
Financial Highlights
For the period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
FOR A SHARE OUTSTANDING FOR THE PERIOD
Net asset value, beginning of period.................................... $100.00
-------
Income from Investment Operations:
Net investment income.............................................. 1.08
Net realized and unrealized gain on investments, foreign currency
contracts and foreign currency translations...................... 3.54
-------
Total income from investment operations............................ 4.62
-------
Less Dividends and Distributions to Shareholders:
Dividends from net investment income............................... (1.05)
Distributions from net realized gains.............................. (0.73)
-------
Total dividends and distributions.................................. (1.78)
-------
Net asset value, end of period.......................................... $102.84
-------
-------
Total Return............................................................ 4.65%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)........................... $26,624
Ratio of expenses to average net assets(2)......................... 1.39%(3)
Ratio of net investment income to average net assets(2)............ 1.78%(3)
</TABLE>
- ------------------------
(1) Not annualized.
(2) Includes the Fund's share of UBS Investor Portfolio Trust -- UBS
International Equity Portfolio expenses and net of fee waivers and expense
reimbursements. Such fee waivers and expense reimbursements had the effect
of reducing the ratio of expenses to average net assets and increasing the
ratio of net investment income to average net assets by 1.66% (annualized).
(3) Annualized.
See notes to financial statements.
SAI-66
<PAGE>
<PAGE>
UBS International Equity Fund
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------
1. GENERAL
UBS International Equity Fund (the 'Fund') is a diversified, no-load mutual fund
registered under the Investment Company Act of 1940. The Fund is a series of UBS
Private Investor Funds, Inc. (the 'Company'), an open-end management investment
company organized as a corporation under Maryland law. At December 31, 1996, the
Company included two other funds, UBS Bond Fund and UBS U.S. Equity Fund. These
financial statements relate only to the Fund.
The Fund had no operations prior to April 2, 1996 other than the sale to
Signature Financial Group, Inc. of 250 shares of common stock for $25,000.
The Fund seeks to achieve its investment objective by investing substantially
all of its investable assets in the UBS International Equity Portfolio of UBS
Investor Portfolios Trust (the 'Portfolio'), an open-end management investment
company that has the same investment objective as that of the Fund.
Signature Broker-Dealer Services, Inc. ('Signature'), a wholly-owned subsidiary
of Signature Financial Group, Inc., serves as the Fund's administrator and
distributor. Union Bank of Switzerland, New York Branch ('UBS') serves as the
fund services agent to the Fund.
The financial statements of the Portfolio, including its Schedule of
Investments, are included elsewhere within this report and should be read in
conjunction with the Fund's financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. Significant accounting policies
followed by the Fund are as follows:
A. INVESTMENT VALUATION -- The value of the Fund's investment in the Portfolio
included in the accompanying Statement of Assets and Liabilities reflects the
Fund's proportionate beneficial interest in the net assets of the Portfolio
(64.0% at December 31, 1996). Valuation of securities by the Portfolio is
discussed in Note 2A of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B. INVESTMENT INCOME, EXPENSES AND REALIZED AND UNREALIZED GAINS AND LOSSES --
The Fund records its share of the investment income, expenses and realized and
unrealized gains and losses recorded by the Portfolio on a daily basis. The
investment income, expenses and realized and unrealized gains and losses are
allocated daily to investors of the Portfolio based upon the amount of their
investment in the Portfolio. The amount of foreign withholding taxes deducted
from the dividend income allocated to the Fund from the Portfolio is net of
amounts the Fund expects to recover from foreign tax authorities.
C. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies, including
the requirement to distribute substantially all of its taxable income, including
any net realized capital gains on investment transactions, to its shareholders.
Accordingly, no provision for federal income or excise taxes is necessary.
D. DIVIDENDS AND DISTRIBUTIONS -- The Fund declares dividends from net
investment income to shareholders of record on the day of declaration. Such
dividends are declared and paid annually. Net realized gains, if any, will be
distributed at least annually. However, to the extent that net realized gains of
the Fund can be reduced by capital loss carryovers, such gains will not be
distributed. Dividends and distributions are recorded on the ex-dividend date.
The amounts of dividends from net investment income and distributions from net
realized gains are determined in accordance with federal income tax regulations
which may differ from generally accepted
SAI-67
<PAGE>
<PAGE>
UBS International Equity Fund
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------
accounting principles. These 'book/tax' differences are either considered
temporary or permanent in nature. To the extent these differences are permanent
in nature, such amounts are reclassified within the composition of net assets
based upon their federal tax-basis treatment; temporary differences do not
require reclassification. For the fiscal year ended December 31, 1996, the Fund
increased accumulated undistributed net investment income by $7,723, decreased
accumulated undistributed net realized gains by $2,984 and decreased paid-in
capital by $4,739. Net investment income, net realized gains and net assets were
not affected by this change.
E. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Fund in connection
with its organization in the amount of $72,500 have been deferred and are being
amortized on a straight line basis over five years from the Fund's commencement
of operations (April 2, 1996).
F. OTHER -- The Fund bears all costs of its operations other than expenses
specifically assumed by Signature and UBS. Expenses incurred by the Company on
behalf of any two or more funds are allocated in proportion to the net assets of
each fund, except when allocations of direct expenses to each fund can otherwise
be made fairly. Expenses directly attributable to the Fund are charged directly
to the Fund.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. ADMINISTRATIVE SERVICES AGREEMENT -- Under the terms of an Administrative
Services Agreement with the Company, Signature provides overall administrative
services and general office facilities. As compensation for such services, the
Company has agreed to pay Signature a fee, accrued daily and payable monthly, at
an annual rate of 0.05% of the Fund's first $100 million average daily net
assets and 0.025% of the next $100 million average daily net assets. Signature
does not receive a fee on average daily net assets in excess of $200 million.
For the period April 2, 1996 (commencement of operations) through December 31,
1996, the administrative services fee amounted to $4,131.
B. DISTRIBUTION AGREEMENT -- Under the terms of a Distribution Agreement with
the Company, Signature serves as the distributor of Fund shares. Signature does
not receive any additional fees for services provided pursuant to this
agreement.
C. SHAREHOLDER SERVICES AGREEMENT -- The Fund has entered into a Shareholder
Services Agreement with UBS pursuant to which UBS provides certain services to
shareholders of the Fund. The Fund has agreed to pay UBS a fee for these
services, accrued daily and payable monthly, at an annual rate of 0.25% of the
average daily net assets of the Fund. For the period April 2, 1996 (commencement
of operations) through December 31, 1996, the shareholder service fee amounted
to $20,658, all of which was waived.
D. FUND SERVICES AGREEMENT -- Under the terms of a Fund Services Agreement with
the Company, UBS has agreed to provide certain administrative services to the
Fund. UBS is not entitled to any additional compensation pursuant to this
agreement.
E. EXPENSE REIMBURSEMENTS -- UBS has voluntarily agreed to limit the total
operating expenses of the Fund, including its share of the Portfolio's expenses
and excluding extraordinary expenses. For the period April 2, 1996 (commencement
of operations) through December 26, 1996, the Fund's total operating expenses
were limited to an annual rate of 1.40%. Effective December 27, 1996, this
expense limitation was reduced to an annual rate of 0.95% of the Fund's average
daily net assets. For the period April 2, 1996 (commencement of operations)
through December 31, 1996, UBS reimbursed the Fund for expenses totaling $52,899
in connection with this voluntary limitation. The Adviser may modify or
discontinue this voluntary expense limitation at any time with 30 days' advance
notice to the Fund.
SAI-68
<PAGE>
<PAGE>
UBS International Equity Fund
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS
At December 31, 1996 there were 500 million shares of the Company's common stock
authorized, of which 10 million shares were classified as common stock of the
Fund. Transactions in shares of the Fund for the period April 2, 1996
(commencement of operations) through December 31, 1996 were as follows:
<TABLE>
<S> <C>
Shares subscribed..................................... 304,954
Shares issued to shareholders in reinvestment
of dividends and distributions...................... 2,281
Shares redeemed....................................... (48,608)
-------
Net increase in shares outstanding.................... 258,627
-------
-------
</TABLE>
SAI-69
<PAGE>
<PAGE>
UBS International Equity Fund
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors
and Shareholders of
UBS PRIVATE INVESTOR FUNDS, INC.
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the UBS International Equity Fund (the 'Fund') (one of the funds constituting
UBS Private Investor Funds, Inc.) at December 31, 1996, and the results of its
operations, the changes in its net assets and the financial highlights for the
period April 2, 1996 (commencement of operations) through December 31, 1996, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as 'financial
statements') are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audit. We
conducted our audit of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY
February 21, 1997
SAI-70
<PAGE>
<PAGE>
UBS International Equity Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ----------- --------------------------------------------------------------------------------------- -----------
<S> <C> <C>
COMMON STOCK -- 83.1%
AUSTRALIA -- 6.2%
32,000 Australia & New Zealand Bank Group (Banking & Finance)................................. $ 201,701
15,800 Australian National Industries (Metals & Mining)....................................... 15,698
249,171 Burns Philp & Co. (Food)............................................................... 443,640
62,500 Coles Myer Ltd. (Retail)............................................................... 257,333
159,400 Fosters Brewing Group (Beverages)...................................................... 323,083
189,100 Goodman Fielder Limited (Food)......................................................... 234,478
565,638 MIM Holdings (Metals & Mining)......................................................... 791,291
89,000 Pacific Dunlop Ltd. (Diversified)...................................................... 226,373
50,000 Pasminco Limited (Metals & Mining)..................................................... 78,690
-----------
2,572,287
-----------
DENMARK -- 1.7%
2,700 BG Bank A/S (Banking & Finance)........................................................ 126,541
10,500 Tele Danmark -- B shares (Telecommunications).......................................... 579,470
-----------
706,011
-----------
FRANCE -- 14.2%
8,800 Alcatel Alsthom SA (Electrical & Electronics).......................................... 708,009
3,060 AXA Company (Banking & Finance)........................................................ 194,923
5,358 Banque Nationale de Paris (Banking & Finance).......................................... 207,680
4,500 Casino-Guichard-PE (Etabl Econ) (Food)................................................. 209,864
4,200 Compagnie Financiere de Suez (Banking & Finance)....................................... 178,848
6,130 Groupe Danone (Food)................................................................... 855,514
22,600 Moulinex (Household Appliances)*....................................................... 521,320
5,100 Pechiney SA -- A Shares (Metals & Mining).............................................. 214,022
4,300 Pernod-Ricard SA (Beverages)........................................................... 238,220
2,050 Peugeot SA (Automotive)................................................................ 231,097
1,460 Sefimeg (Societe Francaise d'Investissements Immobiliers et de Gestion) (Real
Estate).............................................................................. 105,967
10,000 Societe Nationale Elf-Aquitaine (Energy Sources)....................................... 911,688
18,300 Thomson CSF (Defense Electronics)...................................................... 594,516
9,070 Total Cie Francaise des Petroles -- B shares (Energy Sources).......................... 738,836
-----------
5,910,504
-----------
GERMANY -- 8.1%
26,000 Bayer AG (Chemicals)................................................................... 1,061,294
13,500 Deutsche Bank AG (Banking & Finance)................................................... 630,907
770 Schmalbach-Lubeca AG (Packaging)*...................................................... 189,184
11,500 Veba AG (Diversified).................................................................. 665,258
2,000 Volkswagen AG (Automotive)............................................................. 831,979
-----------
3,378,622
-----------
GREAT BRITAIN -- 13.9%
86,320 Allied Domecq PLC (Food & Beverages)................................................... 675,630
81,900 B.A.T. Industries (Tobacco)............................................................ 680,310
115,700 BTR Limited (Diversified).............................................................. 562,773
15,840 Bass PLC (Beverages)................................................................... 222,731
247,200 British Gas Corp. (Energy Sources)..................................................... 952,604
16,800 British Petroleum Co. PLC (Energy Sources)............................................. 201,557
53,000 MEPC British Registered (Real Estate).................................................. 393,955
178,000 Marley PLC (Building Materials)........................................................ 385,649
123,550 Northern Foods PLC (Food).............................................................. 427,440
43,950 Peninsular & Orient Steam (Transportation)............................................. 444,112
</TABLE>
- ------------------------
See notes to financial statements.
SAI-71
<PAGE>
<PAGE>
UBS International Equity Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ----------- --------------------------------------------------------------------------------------- -----------
<S> <C> <C>
17,700 South West Water PLC (Utilities)....................................................... $ 182,798
209,750 Tarmac PLC (Building Materials)........................................................ 352,054
30,040 Thames Water PLC (Utilities)........................................................... 316,415
-----------
5,798,028
-----------
HONG KONG -- 0.3%
548,000 Yizheng Chemical Fibre Co. (Chemicals)................................................. 133,201
-----------
INDONESIA -- 0.3%
47,000 PT Astra International (Automotive).................................................... 129,340
-----------
JAPAN -- 21.1%
11,000 Dai Nippon Printing Co. (Printing)..................................................... 192,816
13,000 Fuji Photo Film Co. (Photographic Equipment & Supplies)................................ 428,806
80,000 Hitachi Ltd. (Hit. Seisakusho) (Electrical & Electronics).............................. 746,050
96,000 Ishikawajima Harima Heavy Industries (Machinery)....................................... 426,906
20,000 JGC Engineering & Construction Corp. (Engineering)..................................... 150,073
68 Japan Tobacco Inc. (Tobacco)........................................................... 460,927
41,000 Japan Wool Textile Co. (Apparel & Textiles)............................................ 338,451
49,000 Kansai Paint Co. (Chemicals)........................................................... 220,016
14,000 Kao Corp. (Household Products)......................................................... 163,198
33,000 Koito Manufacturing Co., Ltd. (Automotive -- Parts & Equipment)........................ 220,836
36,000 Marudai Food Co., Ltd. (Food).......................................................... 192,419
22,000 Matsushita Electric Industries (Electrical & Electronics).............................. 359,036
105,000 Mitsubishi Chemical Corp. (Chemicals)*................................................. 339,997
38,000 Mitsubishi Estate Co. (Real Estate).................................................... 390,467
27,000 Mitsubishi Heavy Industries (Aerospace/Defense Equipment).............................. 214,489
38,000 Nihon Cement Co. (Building Materials).................................................. 193,921
77,000 Nippon Yusen Kabushiki Kaish (Shipping)................................................ 348,398
36,000 Nissan Fire & Marine Insurance (Insurance)............................................. 198,947
47,000 Nisshinbo Industries Inc. (Apparel & Textiles)......................................... 366,065
3,900 Sony Corp. (Electrical & Electronics).................................................. 255,600
53,000 Sumitomo Marine & Fire (Insurance)..................................................... 329,505
1,000 Takashimaya Co. (Retail)............................................................... 12,002
69,000 Toray Industries Inc. (Chemicals)...................................................... 425,999
13,000 Uny Co. (Retail)....................................................................... 237,976
115 West Japan Railway (Transportation).................................................... 372,377
35,000 Yamaha Motor Co. (Automotive).......................................................... 314,308
42,000 Yamanouchi Pharmaceutical (Pharmaceuticals)............................................ 863,138
-----------
8,762,723
-----------
NETHERLANDS -- 2.3%
12,400 Internationale Nederlanden Groep NV (Banking & Finance)................................ 446,730
14,500 Koninklijke Papierfabrieken BT NV (Paper & Forest Product)............................. 316,623
5,040 Royal PTT Nederland (Telecommunications)............................................... 192,375
-----------
955,728
-----------
NEW ZEALAND -- 0.8%
10,300 Ceramco Corp. Ltd. (Diversified)....................................................... 9,830
116,000 Fletcher Challenge Paper Shares (Paper & Forest Products).............................. 238,638
39,200 Fletcher Challenge Forestry Shares (Forest Products)................................... 65,679
-----------
314,147
-----------
NORWAY -- 0.5%
8,100 Bergesen D.Y. ASA (Transportation)..................................................... 196,117
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-72
<PAGE>
<PAGE>
UBS International Equity Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ----------- --------------------------------------------------------------------------------------- -----------
<S> <C> <C>
SINGAPORE -- 1.9%
280,579 Dairy Farm International Holdings (Food)............................................... $ 225,866
121,898 Hong Kong Land Holdings (Real Estate).................................................. 338,876
34,965 Jardine Matheson Holdings (Diversified)................................................ 230,769
-----------
795,511
-----------
SOUTH KOREA -- 0.3%
18,000 Hyundai Motor Co. GDR (Automotive)*.................................................... 134,100
-----------
SPAIN -- 0.9%
46,530 Uralita (Building Materials)........................................................... 363,782
-----------
SWEDEN -- 3.9%
11,050 Electrolux (Household Appliances)...................................................... 642,588
13,020 SKF AB -- B shares (Manufacturing)..................................................... 308,787
47,300 Stora Kopparbergs -- A Shares (Paper & Forest Products)................................ 652,926
-----------
1,604,301
-----------
SWITZERLAND -- 6.3%
600 Forbo Holding (Building Materials)..................................................... 242,062
1,100 Nestle SA (Food & Beverages)........................................................... 1,180,949
729 Novartis (Pharmaceuticals)*............................................................ 834,932
600 Winterthur Schweiz Vers-R (Insurance).................................................. 346,956
-----------
2,604,899
-----------
THAILAND -- 0.4%
12,300 Shinawatra Computer Company (Technology)............................................... 148,678
-----------
TOTAL COMMON STOCK (COST $34,119,162).................................................. 34,507,979
-----------
CONVERTIBLE PREFERRED STOCK -- 0.6%
JAPAN -- 0.6%
30,000,000 Sakura Finance, Series II, 0.75%, due 10/01/01** (Banking & Finance)
(Cost $282,056)...................................................................... 267,140
-----------
CONTINGENT VALUE RIGHTS -- 0.0%
FRANCE -- 0.0%
3,060 AXA Company (Banking & Finance) (Cost $0)***........................................... 0
-----------
TOTAL INVESTMENTS AT MARKET VALUE -- 83.7%
(COST $34,401,218)................................................................................ 34,775,119
OTHER ASSETS IN EXCESS OF LIABILITIES -- 16.3%...................................................... 6,771,460
-----------
NET ASSETS -- 100.0%................................................................................ $41,546,579
-----------
-----------
</TABLE>
- ------------------------
GDR -- Global Depository Receipts.
* Non-income producing security.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At December 31, 1996, the value
of this security amounted to $267,140 or 0.6% of net assets.
*** This security did not commence trading until January 14, 1997. At December
31, 1996 there was no market for this security.
Note: Based on the cost of investments of $34,401,218 for Federal Income Tax
purposes at December 31, 1996, the aggregate gross unrealized appreciation
and depreciation was $1,866,903 and $1,493,002, respectively, resulting in
net unrealized appreciation of $373,901.
See notes to financial statements.
SAI-73
<PAGE>
<PAGE>
UBS International Equity Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------
SUMMARY OF INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY DIVERSIFICATION (UNAUDITED) NET ASSETS
- ------------------------------------------------------------------------------------------------------ -----------
<S> <C>
Energy Sources........................................................................................ 6.8%
Food.................................................................................................. 6.2%
Banking & Finance..................................................................................... 5.4%
Chemicals............................................................................................. 5.2%
Electrical & Electronics.............................................................................. 5.0%
Food & Beverages...................................................................................... 4.5%
Pharmaceuticals....................................................................................... 4.1%
Diversified........................................................................................... 4.1%
Automotive............................................................................................ 4.0%
Building Materials.................................................................................... 3.7%
Real Estate........................................................................................... 3.0%
Paper & Forest Products............................................................................... 2.9%
Household Appliances.................................................................................. 2.8%
Tobacco............................................................................................... 2.7%
Metals & Mining....................................................................................... 2.6%
Transportation........................................................................................ 2.4%
Insurance............................................................................................. 2.1%
Beverages............................................................................................. 1.9%
Telecommunications.................................................................................... 1.9%
Apparel & Textiles.................................................................................... 1.7%
Defense Electronics................................................................................... 1.4%
Retail................................................................................................ 1.2%
Utilities............................................................................................. 1.2%
Photographic Equipment & Supplies..................................................................... 1.0%
Machinery............................................................................................. 1.0%
Shipping.............................................................................................. 0.8%
Manufacturing......................................................................................... 0.7%
Automotive -- Parts & Equipment....................................................................... 0.5%
Aerospace / Defense Equipment......................................................................... 0.5%
Packaging............................................................................................. 0.5%
Printing.............................................................................................. 0.5%
Household Products.................................................................................... 0.4%
Engineering........................................................................................... 0.4%
Technology............................................................................................ 0.4%
Forest Products....................................................................................... 0.2%
-----------
Total Portfolio Holdings.............................................................................. 83.7%
Other assets in excess of liabilities................................................................. 16.3%
-----------
Total Net Assets...................................................................................... 100.0%
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-74
<PAGE>
<PAGE>
UBS International Equity Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------
SUMMARY OF OPEN FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
U.S. DOLLAR
FOREIGN U.S. DOLLAR NET UNREALIZED
CURRENCY UNITS U.S. DOLLAR VALUE AT APPRECIATION/
CURRENCY AND SETTLEMENT DATE PURCHASED/SOLD COST/PROCEEDS DECEMBER 31, 1996 (DEPRECIATION)
- ------------------------------------------------------ -------------- ------------- ----------------- --------------
<S> <C> <C> <C> <C>
PURCHASE CONTRACTS
Australian Dollar, 1/07/97............................ 562,647 $ 448,711 $ 447,175 ($ 1,536)
Australian Dollar, 1/08/97............................ 111,016 88,480 88,231 (249)
Swiss Franc, 1/06/97.................................. 1,219,183 903,098 911,436 8,338
German Deutsche Mark, 1/06/97......................... 1,692,482 1,088,973 1,100,531 11,558
Danish Krone, 1/06/97................................. 1,399,769 235,810 237,770 1,960
Spanish Peseta, 1/09/97............................... 15,642,120 119,615 120,457 842
French Franc, 1/31/97................................. 9,045,738 1,728,711 1,749,415 20,704
British Pound, 1/07/97................................ 866,020 1,468,935 1,483,015 14,080
Hong Kong Dollar, 1/03/97............................. 275,087 35,564 35,567 3
Japanese Yen, 1/08/97................................. 362,927,155 3,129,155 3,137,482 8,327
Dutch Guilder, 1/06/97................................ 534,289 306,587 309,590 3,003
Norwegian Krone, 1/06/97.............................. 419,630 65,252 65,148 (104)
New Zealand Dollar, 1/08/97........................... 89,738 63,534 63,407 (127)
Swedish Krona, 1/07/97................................ 3,675,096 534,249 539,855 5,606
Thai Baht, 1/06/97.................................... 938,788 36,628 36,606 (22)
SALE CONTRACTS
Japanese Yen, 1/07/97................................. 60,000 517 519 (2)
--------
$ 72,381
--------
--------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-75
<PAGE>
<PAGE>
UBS International Equity Portfolio
Statement of Assets and Liabilities
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $34,401,218).......................................... $34,775,119
Cash.............................................................................. 17,165,268
Foreign currency (cost $1,237).................................................... 1,247
Dividends receivable.............................................................. 73,763
Interest receivable............................................................... 25,636
Unrealized appreciation on open forward foreign currency contracts................ 72,381
Deferred organization expenses and other assets................................... 44,063
-----------
Total Assets................................................................. 52,157,477
-----------
LIABILITIES:
Advisory fees payable............................................................. 13,839
Administrative services fees payable.............................................. 1,151
Trustees' fees payable............................................................ 582
Payable for investment securities purchased....................................... 10,476,488
Organization expenses payable..................................................... 32,933
Other accrued expenses............................................................ 85,905
-----------
Total Liabilities............................................................ 10,610,898
-----------
NET ASSETS........................................................................ $41,546,579
-----------
-----------
COMPOSITION OF NET ASSETS:
Paid-in capital for beneficial interests.......................................... $41,546,579
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-76
<PAGE>
<PAGE>
UBS International Equity Portfolio
Statement of Operations
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $141,935).................... $500,868
Interest.................................................................. 189,623
--------
Investment income.................................................... $ 690,491
EXPENSES:
Investment advisory fees.................................................. 199,112
Administrative services fees.............................................. 11,712
Custodian fees and expenses............................................... 60,563
Audit fees................................................................ 39,357
Fund accounting fees...................................................... 35,843
Legal fees................................................................ 18,766
Amortization of organization expenses..................................... 7,508
Trustees' fees............................................................ 7,508
Insurance expense......................................................... 4,053
Miscellaneous expenses.................................................... 7,508
--------
Total expenses....................................................... 391,930
Less: Fee waiver..................................................... (185,273)
--------
Net expenses......................................................... 206,657
----------
Net investment income..................................................... 483,834
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on securities transactions.............................. 361,151
Net realized gain on foreign currency transactions........................ 11,064
Net change in unrealized appreciation of investments...................... 373,901
Net change in unrealized depreciation of foreign currency contracts and
translations............................................................ (6,329)
----------
Net realized and unrealized gain on investments........................... 739,787
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................... $1,223,621
----------
----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-77
<PAGE>
<PAGE>
UBS International Equity Portfolio
Statement of Changes in Net Assets
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income................................................................ $ 483,834
Net realized gain on securities and foreign currency transactions.................... 372,215
Net change in unrealized appreciation of investments, foreign currency contracts and
foreign currency translations...................................................... 367,572
-----------
Net increase in net assets resulting from operations................................. 1,223,621
-----------
CAPITAL TRANSACTIONS:
Proceeds from contributions.......................................................... 60,373,286
Value of withdrawals................................................................. (20,050,328)
-----------
Net increase in net assets from capital transactions................................. 40,322,958
-----------
NET INCREASE IN NET ASSETS........................................................... 41,546,579
NET ASSETS:
Beginning of period.................................................................. --
-----------
End of period........................................................................ $41,546,579
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-78
<PAGE>
<PAGE>
UBS International Equity Portfolio
Financial Highlights
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's omitted)...................................... $41,547
Average commission rate per share(1)........................................... $ 0.02
Ratio of expenses to average net assets(2)..................................... 0.88%(3)
Ratio of net investment income to average net assets(2)........................ 2.07%(3)
Portfolio turnover............................................................. 42%
</TABLE>
- ------------------------
(1) Most foreign securities markets do not charge commissions based on a rate
per share but as a percentage of the principal value of the transaction. As
a result, the above rate is not indicative of the commission arrangements
currently in effect.
(2) Net of fee waivers. Such fee waivers had the effect of reducing the ratio
of expenses to average net assets and increasing the ratio of net
investment income to average net assets by 0.79% (annualized).
(3) Annualized.
See notes to financial statements.
SAI-79
<PAGE>
<PAGE>
UBS International Equity Portfolio
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------
1. GENERAL
UBS International Equity Portfolio (the 'Portfolio'), a separate series of UBS
Investor Portfolios Trust (the 'Trust'), is registered under the Investment
Company Act of 1940, as a diversified, open-end management investment company.
The Trust is organized as a trust under the laws of the State of New York.
The investment adviser of the Portfolio is Union Bank of Switzerland, New York
Branch ('UBS'); UBS International Investment London Limited ('UBSII') is the
sub-adviser of the Portfolio. Signature Financial Group (Grand Cayman), Ltd.
('SFG'), a wholly-owned subsidiary of Signature Financial Group, Inc., acts as
the Portfolio's administrator and placement agent.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements:
A. INVESTMENT VALUATION -- Equity securities in the portfolio are valued at the
last sale price on the exchange on which they are primarily traded, or in the
absence of recorded sales, at the average of readily available closing bid and
asked prices, or at the quoted bid price. Unlisted securities are valued at the
average of the quoted bid and asked prices in the over-the-counter market.
Options on stock indices traded on national securities exchanges are valued at
their last sale price as of the close of options trading on such exchanges.
Stock index futures and related options traded on commodities exchanges are
valued at their last sales price as of the close of trading on such exchanges.
Securities or other assets for which market quotations are not readily available
are valued at fair value in accordance with procedures established by and under
the general supervision of the Portfolio's Board of Trustees (the 'Trustees').
Debt securities that mature in 60 days or less are valued at amortized cost,
which approximates market value. The amortized cost method involves valuing a
security at its cost on the date of purchase or, in the case of securities
purchased with more than 60 days until maturity, at their market value each day
until the 61st day prior to maturity, and thereafter assuming a constant
amortization to maturity of the difference between the principal amount due at
maturity and such valuation.
Trading in securities on most foreign exchanges and over-the-counter markets is
normally completed before the close of the New York Stock Exchange and may also
take place on days on which the New York Stock Exchange is closed. If events
materially affecting the value of foreign securities occur between the time when
the exchange on which they are traded closes and the pricing of the Portfolio,
such securities will be valued at fair value in accordance with procedures
established by and under the general supervision of the Trustees.
B. FOREIGN CURRENCY TRANSLATION -- The accounting records of the Portfolio are
maintained in U.S. dollars. Assets, including investment securities, and
liabilities denominated in foreign currency are translated into U.S. dollars at
the prevailing rate of exchange at year end. Purchases and sales of securities,
income and expenses are translated at the prevailing rate of exchange on the
respective dates of such transactions. Gain/loss on translation of foreign
currency includes net exchange gains and losses, gains and losses on disposition
of foreign currency and adjustments to the amount of foreign taxes withheld.
The assets and liabilities are presented at the exchange rates and market values
at the close of the year. The changes in net assets arising from changes in
exchange rates and the changes in net assets resulting from changes in market
prices of securities at year end are not separately presented. However, gains
and losses from certain foreign currency transactions are treated as ordinary
income for U.S. Federal income tax purposes.
C. FORWARD FOREIGN CURRENCY CONTRACTS -- The Portfolio may enter into forward
foreign currency contracts in connection with planned purchases or sales of
securities or to hedge the U.S. dollar value of portfolio securities denominated
in a particular currency. The Portfolio could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts
and from unanticipated movements in the value of a foreign currency relative to
the U.S. dollar. The forward foreign currency contracts are marked-to-market
daily using the daily exchange rate of the underlying currency and any resulting
gains or losses are recorded for financial statement purposes as unrealized
gains or losses until the contract settlement date.
SAI-80
<PAGE>
<PAGE>
UBS International Equity Portfolio
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------
The Portfolio's use of forward contracts involves, to varying degrees, elements
of market risk in excess of the amount recognized in the statement of assets and
liabilities. The contract or notional amounts reflect the extent of the
Portfolio's involvement in these financial instruments. Risks arise from the
possible movements in the foreign exchange rates underlying these instruments.
The unrealized appreciation/depreciation on forward contracts reflects the
Portfolio's exposure at year end to credit loss in the event of a counterparty's
failure to perform its obligations.
D. ACCOUNTING FOR INVESTMENTS -- Securities transactions are accounted for on
trade date. Realized gains and losses on security transactions are determined on
the identified cost basis. Dividend income and other distributions from
portfolio securities are recorded on the ex-dividend date, except, if the
ex-dividend date has passed, certain dividends from foreign securities are
recorded as soon as the Portfolio is informed of the ex-dividend date. Dividend
income is recorded net of foreign taxes withheld where recovery of such taxes is
not assured. Withholding taxes on foreign dividends have been provided for in
accordance with the Portfolio's understanding of the applicable countries' tax
rules and rates. Recoveries of foreign taxes withheld from the Portfolio's
income are generally recorded, where applicable, by the funds investing in the
Portfolio. Interest income, adjusted for amortization of premiums and accretion
of discounts on investments, is accrued daily.
E. U. S. FEDERAL INCOME TAXES -- The Portfolio is considered a partnership under
the U.S. Internal Revenue Code (the 'Code'). As such, each investor in the
Portfolio will be taxed on its share of the Portfolio's ordinary income and
capital gains. Accordingly, no provision for federal income taxes is necessary.
It is intended that the Portfolio will be managed in such a way that an investor
will be able to satisfy the requirements of the Code applicable to regulated
investment companies.
F. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Portfolio in
connection with its organization in the amount of $50,000 have been deferred and
are being amortized on a straight line basis over five years from the
Portfolio's commencement of operations (April 2, 1996).
G. OTHER -- The Portfolio bears all costs of its operations other than expenses
specifically assumed by UBS and SFG. Expenses incurred by the Trust on behalf of
any two or more portfolios are allocated in proportion to net assets of each
portfolio, except when allocations of direct expenses to each portfolio can
otherwise be made fairly. Expenses directly attributable to the Portfolio are
charged directly to the Portfolio.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. INVESTMENT ADVISORY AGREEMENT -- The Portfolio has retained the services of
UBS as investment adviser and UBSII as investment sub-adviser. UBSII 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 subject to the supervision of UBS and the Trustees. As compensation
for overall investment management services the Trust has agreed to pay UBS an
investment advisory fee, accrued daily and payable monthly, at an annual rate of
0.85% of the Portfolio's average daily net assets. UBS, in turn, has agreed to
pay UBSII a fee, accrued daily and payable monthly, at an annual rate of 0.75%
of the Portfolio's first $20 million average daily net assets, 0.50% of the next
$30 million average daily net assets and 0.40% of the Portfolio's average daily
net assets in excess of $50 million. For the period April 2, 1996 (commencement
of operations) through December 31, 1996, the investment advisory fee amounted
to $199,112. UBS voluntarily agreed to waive $185,273 of this amount.
B. ADMINISTRATIVE SERVICES AGREEMENT -- Under the terms of an Administrative
Services Agreement with the Trust, SFG provides overall administrative services
and general office facilities to the Portfolio and the Trust. As compensation
for such services, the Portfolio has agreed to pay SFG an administrative
services fee, accrued daily and payable monthly, at an annual rate of 0.05% of
the Portfolio's average daily net assets. For the period April 2, 1996
(commencement of operations) through December 31, 1996, the administrative
services fee amounted to $11,712.
C. EXCLUSIVE PLACEMENT AGENT AGREEMENT -- Under the terms of an Exclusive
Placement Agent Agreement with the Trust, SFG has agreed to act as the Trust's
placement agent. SFG does not receive any additional fees for services provided
pursuant to this agreement.
4. PURCHASES AND SALES OF INVESTMENTS
For the period April 2, 1996 (commencement of operations) through December 31,
1996, purchases and sales of investment securities, excluding short-term
investments, aggregated $45,726,468 and $11,686,401, respectively.
SAI-81
<PAGE>
<PAGE>
UBS International Equity Portfolio
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Trustees and
Investors of UBS Investor Portfolios Trust
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the UBS International Equity
Portfolio (the 'Portfolio') (one of the portfolios constituting the UBS Investor
Portfolios Trust) at December 31, 1996, and the results of its operations, the
changes in its net assets and the financial highlights for the period April 2,
1996 (commencement of operations) through December 31, 1996, in conformity with
generally accepted accounting principles in the United States. These financial
statements and financial highlights (hereafter referred to as 'financial
statements') are the responsibility of the Portfolio's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards in the United States which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit, which included confirmation
of securities at December 31, 1996 by correspondence with the custodian and
brokers, and the application of alternative auditing procedures where
confirmations from brokers were not received provides a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE
Chartered Accountants
Toronto, Ontario
February 21, 1997
SAI-82
<PAGE>
<PAGE>
UBS Bond Fund
Statement of Assets and Liabilities
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in UBS Investor Portfolios Trust -- UBS Bond
Portfolio, at value................................................................ $7,882,232
Receivable from funds services agent................................................. 10,224
Deferred organization expenses and other assets...................................... 106,171
----------
Total Assets............................................................... 7,998,627
----------
LIABILITIES:
Administrative services fees payable................................................. 913
Dividends payable.................................................................... 250
Other accrued expenses............................................................... 14,561
----------
Total Liabilities.......................................................... 15,724
----------
NET ASSETS........................................................................... $7,982,903
----------
----------
SHARES OUTSTANDING ($0.001 par value, 10 million shares authorized).................. 79,955
----------
----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE....................... $99.84
----------
----------
COMPOSITION OF NET ASSETS:
Shares of common stock, at par....................................................... $ 80
Additional paid-in capital........................................................... 8,043,010
Net unrealized depreciation of investments, foreign currency contracts and foreign
currency translations.............................................................. (65,969)
Accumulated undistributed net investment income...................................... 703
Accumulated undistributed net realized gains on securities and foreign currency
transactions....................................................................... 5,079
----------
Net Assets................................................................. $7,982,903
----------
----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-83
<PAGE>
<PAGE>
UBS Bond Fund
Statement of Operations
For the Six Months Ended June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Investment Income and Expenses allocated from UBS Investor Portfolios
Trust -- UBS Bond Portfolio
Interest............................................................ $259,110
Dividends........................................................... 8,483
--------
Investment income.............................................. $267,593
Total expenses...................................................... 31,126
Less: Fee waiver.................................................... (10,361)
--------
Net expenses........................................................ 20,765
--------
Net Investment Income from UBS Investor Portfolios Trust -- UBS Bond
Portfolio.............................................................. 246,828
EXPENSES:
Shareholder service fees................................................. 10,408
Administrative services fees............................................. 2,369
Amortization of organization expenses.................................... 9,708
Reports to shareholders expense.......................................... 9,350
Audit fees............................................................... 5,434
Transfer agent fees...................................................... 5,200
Legal fees............................................................... 4,837
Registration fees........................................................ 4,150
Fund accounting fees..................................................... 3,841
Directors' fees.......................................................... 2,976
Miscellaneous expenses................................................... 1,389
--------
Total expenses...................................................... 59,662
Less: Fee waiver and expense reimbursements......................... (47,121)
--------
Net expenses........................................................ 12,541
--------
Net investment income.................................................... 234,287
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM UBS INVESTOR
PORTFOLIOS TRUST -- UBS BOND PORTFOLIO
Net realized loss on securities transactions............................. (18,384)
Net realized gain on foreign currency transactions....................... 25,864
Net change in unrealized depreciation of investments..................... (58,210)
Net change in unrealized appreciation of foreign currency contracts and
translations........................................................... (8,380)
--------
Net realized and unrealized loss on investments from UBS Investor
Portfolios Trust -- UBS Bond Portfolio................................. (59,110)
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $175,177
--------
--------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-84
<PAGE>
<PAGE>
UBS Bond Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 2, 1996*
JUNE 30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income.......................................................... $ 234,287 $ 171,160
Net realized gain on securities and foreign currency transactions.............. 7,480 3,907
Net change in unrealized appreciation of investments, foreign currency
contracts and foreign currency translations.................................. (66,590) 621
------------- --------------
Net increase in net assets resulting from operations........................... 175,177 175,688
------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.......................................................... (229,498) (170,408)
Net realized gains............................................................. (11,079) (1,273)
------------- --------------
Total dividends and distributions to shareholders.............................. (240,577) (171,681)
------------- --------------
TRANSACTIONS IN SHARES OF COMMON STOCK:
Net proceeds from sale of shares............................................... 4,198,955 10,846,978
Net asset value of shares issued to shareholders in reinvestment of dividends
and distributions............................................................ 221,462 127,366
Cost of shares redeemed........................................................ (3,872,404) (3,503,061)
------------- --------------
Net increase in net assets from transactions in shares of common stock......... 548,013 7,471,283
------------- --------------
NET INCREASE IN NET ASSETS..................................................... 482,613 7,475,290
NET ASSETS:
Beginning of period............................................................ 7,500,290 25,000
------------- --------------
End of period (including undistributed net investment income of $703 and
accumulated net investment loss of $4,086, respectively)..................... $ 7,982,903 $ 7,500,290
------------- --------------
------------- --------------
</TABLE>
- ------------------------
* Commencement of operations.
See notes to financial statements.
SAI-85
<PAGE>
<PAGE>
UBS Bond Fund
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 2, 1996*
JUNE 30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
FOR A SHARE OUTSTANDING FOR THE PERIOD
Net asset value, beginning of period............................................ $100.13 $100.00
------------- --------
Income from investment operations:
Net investment income...................................................... 2.79 4.12
Net realized and unrealized (loss) gain on investments, foreign currency
contracts and foreign currency translations.............................. (0.25) 0.14
------------- --------
Total income from investment operations.................................... 2.54 4.26
------------- --------
Less dividends and distributions to shareholders:
Dividends from net investment income....................................... (2.72) (4.11)
Distributions from net realized gains...................................... (0.11) (0.02)
------------- --------
Total dividends and distributions.......................................... (2.83) (4.13)
------------- --------
Net asset value, end of period.................................................. $ 99.84 $100.13
------------- --------
------------- --------
Total return.................................................................... 2.58%(1) 4.36%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)................................... $ 7,983 $ 7,500
Ratio of expenses to average net assets(2)................................. 0.80%(3) 0.80%(3)
Ratio of net investment income to average net assets(2).................... 5.63%(3) 5.61%(3)
</TABLE>
- ------------------------
* Commencement of operations.
(1) Not annualized.
(2) Includes the Fund's share of UBS Investor Portfolios Trust -- UBS Bond
Portfolio expenses and net of fee waivers and expense reimbursements. Such
fee waivers and expense reimbursements had the effect of reducing the ratio
of expenses to average net assets and increasing the ratio of net investment
income to average net assets by 1.38% (annualized) and 3.33% (annualized)
for the respective periods.
(3) Annualized.
See notes to financial statements.
SAI-86
<PAGE>
<PAGE>
UBS Bond Fund
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
1. GENERAL
UBS Bond Fund (the 'Fund') is a diversified, no-load mutual fund registered
under the Investment Company Act of 1940. The Fund is a series of UBS Private
Investor Funds, Inc. (the 'Company'), an open-end management investment company
organized as a corporation under Maryland law. At June 30, 1997, the Company
included three other funds, UBS U.S. Equity Fund, UBS International Equity Fund
and UBS Institutional International Equity Fund. These financial statements
relate only to the Fund.
The Fund seeks to achieve its investment objective by investing substantially
all of its investable assets in the UBS Bond Portfolio of UBS Investor
Portfolios Trust (the 'Portfolio'), an open-end management investment company
that has the same investment objective as that of the Fund.
Investors Bank & Trust Company ('IBT') serves as the Fund's administrator and
First Fund Distributors, Inc. ('FFDI') serves as the Fund's distributor. Union
Bank of Switzerland, New York Branch ('UBS') serves as the funds services agent
to the Fund.
The financial statements of the Portfolio, including its Schedule of
Investments, are included elsewhere within this report and should be read in
conjunction with the Fund's financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. Significant accounting policies
followed by the Fund are as follows:
A. INVESTMENT VALUATION -- The value of the Fund's investment in the Portfolio
included in the accompanying Statement of Assets and Liabilities reflects the
Fund's proportionate beneficial interest in the net assets of the Portfolio
(13.7% at June 30, 1997). Valuation of securities by the Portfolio is discussed
in Note 2A of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report.
B. INVESTMENT INCOME, EXPENSES AND REALIZED AND UNREALIZED GAINS AND
LOSSES -- The Fund records its share of the investment income, expenses and
realized and unrealized gains and losses recorded by the Portfolio on a daily
basis. The investment income, expenses and realized and unrealized gains and
losses are allocated daily to investors of the Portfolio based upon the amount
of their investment in the Portfolio.
C. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies, including
the requirement to distribute substantially all of its taxable income, including
any net realized capital gains on investment transactions, to its shareholders.
Accordingly, no provision for federal income or excise taxes is necessary.
D. DIVIDENDS AND DISTRIBUTIONS -- The Fund declares dividends from net
investment income to shareholders of record on the day of declaration. Such
dividends are declared daily and paid monthly. Net realized gains, if any, will
be distributed at least annually. However, to the extent that net realized gains
of the Fund can be reduced by capital loss carryovers, such gains will not be
distributed. Dividends and distributions are recorded on the ex-dividend date.
The amounts of dividends from net investment income and distributions from net
realized gains are determined in accordance with federal income tax regulations
which may differ from generally accepted accounting principles. These 'book/tax'
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the
SAI-87
<PAGE>
<PAGE>
UBS Bond Fund
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
composition of net assets based upon their federal tax-basis treatment;
temporary differences do not require reclassification. For the fiscal year ended
December 31, 1996, the Fund increased accumulated undistributed net realized
gains by $6,044, reduced accumulated undistributed net investment income by
$4,838 and decreased paid-in capital by $1,206. Net investment income, net
realized gains and net assets were not affected by this change.
E. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Fund in connection
with its organization in the amount of approximately $107,000 have been deferred
and are being amortized on a straight line basis over five years from the Fund's
commencement of operations (April 2, 1996).
F. OTHER -- The Fund bears all costs of its operations other than expenses
specifically assumed by IBT, FFDI and UBS. Expenses incurred by the Company on
behalf of any two or more funds are allocated in proportion to the net assets of
each fund, except when allocations of direct expenses to each fund can otherwise
be made fairly. Expenses directly attributable to the Fund are charged directly
to the Fund.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. ADMINISTRATION AGREEMENT -- Under the terms of an Administration Agreement
with the Company effective March 13, 1997, IBT provides overall administrative
services and general office facilities. As compensation for such services, the
Company has agreed to pay IBT a fee, accrued daily and payable monthly, at an
annual rate of 0.065% of the Fund's first $100 million average daily net assets
and 0.025% of the next $100 million average daily net assets. IBT does not
receive a fee on average daily net assets in excess of $200 million. Prior to
March 13, 1997, Signature Broker-Dealer Services, Inc. ('Signature') provided
overall administrative services and general office facilities. As compensation
for such services, the Company had agreed to pay Signature a fee, accrued daily
and paid monthly, at an annual rate of 0.05% of the Fund's first $100 million
average daily net assets and 0.025% of the next $100 million average daily net
assets. Signature did not receive a fee on average daily net assets in excess of
$200 million. For the six months ended June 30, 1997, the administrative
services fee amounted to $2,369.
B. DISTRIBUTION AGREEMENT -- Under the terms of a Distribution Agreement
effective March 13, 1997, FFDI serves as the distributor of Fund shares. FFDI
does not receive any fees from the Fund for services provided pursuant to this
agreement. Prior to March 13, 1997, Signature served as the distributor of Fund
shares. Signature did not receive any additional fees for services provided as
the distributor.
C. SHAREHOLDER SERVICING AGREEMENT -- The Fund has entered into a Shareholder
Servicing Agreement with UBS pursuant to which UBS provides certain services to
shareholders of the Fund. The Fund has agreed to pay UBS a fee for these
services, accrued daily and payable monthly, at an annual rate of 0.25% of the
average daily net assets of the Fund. For the six months ended June 30, 1997,
the shareholder service fee amounted to $10,408, all of which was waived.
D. FUNDS SERVICES AGREEMENT -- Under the terms of a Funds Services Agreement
with the Company, UBS has agreed to provide certain administrative services to
the Fund. UBS is not entitled to any additional compensation pursuant to this
agreement.
E. EXPENSE REIMBURSEMENTS -- UBS has voluntarily agreed to limit the total
operating expenses of the Fund, including its share of the Portfolio's expenses
and excluding extraordinary expenses, to an annual rate of 0.80% of the Fund's
average daily net assets. For the six months ended June 30, 1997, UBS reimbursed
the Fund for expenses totaling $36,713 in connection with this voluntary
limitation. UBS may modify or discontinue this voluntary expense limitation at
any time with 30 days' advance notice to the Fund.
SAI-88
<PAGE>
<PAGE>
UBS Bond Fund
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS
At June 30, 1997 there were 500 million shares of the Company's common stock
authorized, of which 10 million shares were classified as common stock of the
Fund. Transactions in shares of the Fund were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD FROM APRIL 2, 1996
JUNE 30, 1997 (COMMENCEMENT OF OPERATIONS)
(UNAUDITED) THROUGH DECEMBER 31, 1996
------------- ----------------------------
<S> <C> <C>
Shares subscribed.................................... 42,085 108,567
Shares issued in reinvestment of dividends and
distributions...................................... 2,226 1,278
Shares redeemed...................................... (39,262) (35,189)
------------- ----------
Net increase in shares outstanding................... 5,049 74,656
------------- ----------
------------- ----------
</TABLE>
SAI-89
<PAGE>
<PAGE>
UBS Bond Portfolio
Schedule of Investments
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE COUPON MATURITY
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- ----------- ---------------------------------------------------------------- ------ -------- -----------
<S> <C> <C> <C> <C>
U.S. TREASURY & U.S. GOVERNMENT AGENCY OBLIGATIONS -- 54.9%
U.S. TREASURY OBLIGATIONS -- 50.9%
$10,800,000 U.S. Treasury Bond.............................................. 5.88% 11/15/99 $10,730,772
1,203,000 U.S. Treasury Bond.............................................. 7.75% 1/31/00 1,246,801
1,375,000 U.S. Treasury Bond.............................................. 6.25% 4/30/01 1,371,136
1,150,000 U.S. Treasury Bond.............................................. 6.75% 8/15/26 1,138,144
1,000,000 U.S. Treasury Note.............................................. 6.00% 8/31/97 1,000,620
790,000 U.S. Treasury Note.............................................. 5.25% 7/31/98 785,063
100,000 U.S. Treasury Note.............................................. 7.00% 4/15/99 101,578
1,100,000 U.S. Treasury Note.............................................. 6.50% 4/30/99 1,108,250
1,255,000 U.S. Treasury Note.............................................. 6.38% 4/30/99 1,261,664
150,000 U.S. Treasury Note.............................................. 6.75% 5/31/99 151,734
1,700,000 U.S. Treasury Note.............................................. 6.38% 7/15/99 1,709,299
155,000 U.S. Treasury Note.............................................. 6.88% 8/31/99 157,300
145,000 U.S. Treasury Note.............................................. 7.13% 9/30/99 147,968
375,000 U.S. Treasury Note.............................................. 5.88% 2/15/00 372,011
1,950,000 U.S. Treasury Note.............................................. 7.13% 2/29/00 1,992,647
505,000 U.S. Treasury Note.............................................. 6.75% 4/30/00 511,626
800,000 U.S. Treasury Note.............................................. 5.50% 12/31/00 779,872
500,000 U.S. Treasury Note.............................................. 6.63% 7/31/01 504,685
1,000,000 U.S. Treasury Note.............................................. 6.25% 2/28/02 994,370
1,514,000 U.S. Treasury Note.............................................. 7.50% 5/15/02 1,584,260
1,170,000 U.S. Treasury Note.............................................. 6.38% 8/15/02 1,169,637
419,000 U.S. Treasury Note.............................................. 7.25% 5/15/04 436,740
100,000 U.S. Treasury Note.............................................. 7.25% 8/15/04 104,250
-----------
29,360,427
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 4.0%
1,400,000 Federal Home Loan Mortgage Corp................................. 5.96% 10/20/00 1,380,974
975,758 Federal National Mortgage Assc., Pool #250576................... 7.00% 6/01/26 957,882
-----------
2,338,856
-----------
TOTAL U.S. TREASURY & U.S. GOVERNMENT AGENCY
OBLIGATIONS (COST $31,647,493)................................ 31,699,283
-----------
CORPORATE OBLIGATIONS -- 31.5%
CORPORATE OBLIGATIONS -- DOMESTIC -- 30.5%
AEROSPACE/DEFENSE -- 0.9%
500,000 Lockheed Martin................................................. 6.55% 5/15/99 501,668
-----------
BANKING -- 3.3%
500,000 BanPonce Corp. ................................................. 6.75% 4/26/00 501,215
600,000 First USA Bank.................................................. 7.00% 8/20/01 601,776
720,000 J.P. Morgan & Co. .............................................. 8.50% 8/15/03 776,138
-----------
1,879,129
-----------
BROKERAGE -- 3.9%
1,000,000 Goldman Sachs (a)............................................... 7.80% 7/15/02 1,037,770
750,000 Lehman Brothers Inc. ........................................... 6.89% 10/10/00 752,093
200,000 Lehman Brothers Inc. ........................................... 7.25% 4/15/03 200,788
250,000 Salomon Inc. ................................................... 7.30% 5/15/02 252,008
-----------
2,242,659
-----------
BUILDING SUPPLIES -- 0.9%
500,000 Sherwin Williams................................................ 6.25% 2/01/00 498,909
-----------
CAPITAL EQUIPMENT -- 1.4%
800,000 Case Corp. ..................................................... 7.25% 8/01/05 805,336
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-90
<PAGE>
<PAGE>
UBS Bond Portfolio
Schedule of Investments
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE COUPON MATURITY
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- ----------- ---------------------------------------------------------------- ------ -------- -----------
<S> <C> <C> <C> <C>
FINANCING & LEASING -- 6.1%
$ 950,000 Associates Corp. N.A............................................ 8.50% 1/10/00 $ 993,976
500,000 CIT Group Holdings.............................................. 6.70% 6/02/00 503,399
1,000,000 Chrysler Finance................................................ 6.53% 6/19/00 1,001,280
750,000 Countrywide Home Loan........................................... 7.45% 9/16/03 764,550
265,000 General Electric Capital Corp................................... 6.88% 4/15/00 268,567
-----------
3,531,772
-----------
FOOD -- 0.4%
200,000 Foodbrands America, Inc. ....................................... 10.75% 5/15/06 234,464
-----------
FUNERAL SERVICES -- 1.0%
600,000 Loewen Group International, Inc. ............................... 7.50% 4/15/01 607,547
-----------
INDUSTRIAL -- CAPTIVE FINANCE -- 3.8%
600,000 Caterpillar Financial........................................... 6.77% 12/29/00 601,860
1,000,000 Pitney Bowes Credit............................................. 6.54% 7/15/99 1,003,740
600,000 Sears Roebuck Acceptance Corp................................... 5.59% 2/16/01 578,994
-----------
2,184,594
-----------
MEDIA/CABLE -- 2.1%
600,000 News America Holdings........................................... 7.50% 3/01/00 611,916
400,000 Turner Broadcasting............................................. 7.40% 2/01/04 401,203
200,000 Viacom, Inc. ................................................... 6.75% 1/15/03 192,320
-----------
1,205,439
-----------
REAL ESTATE -- 1.4%
700,000 Chelsea GCA Realty.............................................. 7.75% 1/26/01 710,927
125,000 Susa Partnership LP............................................. 7.13% 11/01/03 123,217
-----------
834,144
-----------
TELECOMMUNICATIONS -- 1.9%
400,000 U.S. West Capital Funding....................................... 6.85% 1/15/02 399,572
700,000 WorldCom Inc. .................................................. 7.55% 4/01/04 713,104
-----------
1,112,676
-----------
TRANSPORTATION -- 0.5%
300,000 Norfolk Southern Corporation.................................... 6.95% 5/01/02 301,749
-----------
UTILITIES -- 2.9%
426,000 BVPS II Funding Corp. .......................................... 7.38% 12/01/99 426,000
700,000 Centerior Energy Corp. (a)...................................... 7.67% 7/01/04 702,415
550,000 Connecticut Light and Power (a)................................. 7.75% 6/01/02 547,635
-----------
1,676,050
-----------
TOTAL CORPORATE OBLIGATIONS -- DOMESTIC (COST $17,547,820)...... 17,616,136
-----------
CORPORATE OBLIGATIONS -- FOREIGN -- 0.7%
BANKING -- 0.7%
400,000 Spintab (a) (Cost $402,326)..................................... 7.50% 8/14/49 402,044
-----------
CORPORATE OBLIGATIONS -- EURODOLLAR -- 0.3%
ENERGY -- 0.1%
50,000 BP America Inc. ................................................ 9.75% 3/01/99 52,576
-----------
INDUSTRIAL -- CAPTIVE FINANCE -- 0.2%
80,000 Unilever Capital................................................ 9.25% 3/29/00 85,149
-----------
TOTAL CORPORATE OBLIGATIONS -- EURODOLLAR (COST $138,314)....... 137,725
-----------
TOTAL CORPORATE OBLIGATIONS (COST $18,088,460).................. 18,155,905
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-91
<PAGE>
<PAGE>
UBS Bond Portfolio
Schedule of Investments
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE COUPON MATURITY
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- ----------- ---------------------------------------------------------------- ------ -------- -----------
<S> <C> <C> <C> <C>
FOREIGN GOVERNMENT OBLIGATIONS -- 8.3%
CANADA -- 2.5%
$ 910,000* Canada Government............................................... 7.50% 9/01/00 $ 699,772
800,000* Canada Government............................................... 7.50% 3/01/01 617,154
50,000 Province of Ontario............................................. 7.38% 1/27/03 51,479
50,000 Province of Quebec.............................................. 9.13% 8/22/01 53,833
-----------
1,422,238
-----------
GERMANY -- 4.7%
2,100,000* German Unity Fund............................................... 8.00% 1/21/02 1,370,076
2,140,000* Treuhandanstalt................................................. 7.13% 1/29/03 1,356,265
-----------
2,726,341
-----------
JAPAN -- 1.1%
355,000 Japan Finance Corp. ............................................ 9.13% 10/11/00 379,435
250,000 Japan Finance Corp. for Municipal Enterprises................... 6.85% 4/15/06 250,513
-----------
629,948
-----------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS (COST $4,881,407).......... 4,778,527
-----------
ASSET BACKED SECURITIES -- 1.6%
CREDIT CARD RECEIVABLES -- 1.6%
440,000 First Omni Bank Credit Card Trust, Series 96-A.................. 6.65% 9/15/03 441,100
500,000 Sears Credit Account Master Trust, Series 96-3.................. 7.00% 7/16/08 506,875
-----------
TOTAL ASSET BACKED SECURITIES (COST $937,838)................... 947,975
-----------
<CAPTION>
SHARES
- -----------
<S> <C> <C> <C> <C>
PREFERRED STOCK -- 1.0%
REAL ESTATE -- 1.0%
600 1585 Broadway Corp. (a) (Cost $601,530)......................... 593,250
-----------
TOTAL INVESTMENTS AT MARKET VALUE -- 97.3%
(COST $56,156,728).......................................................... 56,174,940
OTHER ASSETS IN EXCESS OF LIABILITIES -- 2.7%................................. 1,563,254
-----------
NET ASSETS -- 100.0%.......................................................... $57,738,194
-----------
-----------
</TABLE>
- ------------------------
* Securities denominated in foreign currency.
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30, 1997,
the value of these securities amounted to $3,283,114 or 5.7% of net assets.
SUMMARY OF OPEN FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
U.S. DOLLAR
FOREIGN U.S. DOLLAR NET UNREALIZED
CURRENCY UNITS U.S. DOLLAR VALUE AT APPRECIATION/
CURRENCY AND SETTLEMENT DATE SOLD PROCEEDS JUNE 30, 1997 (DEPRECIATION)
- ---------------------------------------------------------- -------------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
SALE CONTRACTS
Canadian Dollar, 7/16/97.................................. 1,880,000 $1,362,319 $1,362,841 ($ 522)
German Deutsche Mark, 7/16/97............................. 4,915,000 2,848,780 2,823,781 24,999
-------
$ 24,477
-------
-------
</TABLE>
Note: Based upon the cost of investments of $56,156,728 for Federal Income Tax
purposes at June 30, 1997, the aggregate gross unrealized appreciation and
depreciation was $200,043 and $181,831, respectively, resulting in net
unrealized appreciation of $18,212.
See notes to financial statements.
SAI-92
<PAGE>
<PAGE>
UBS Bond Portfolio
Statement of Assets and Liabilities
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $56,156,728)......................................... $56,174,940
Cash............................................................................. 1,243,409
Dividends and interest receivable................................................ 954,022
Receivable for investment securities sold........................................ 520,295
Unrealized appreciation on open forward foreign currency contracts............... 24,477
Deferred organization expenses and other assets.................................. 22,481
-----------
Total Assets................................................................ 58,939,624
-----------
LIABILITIES:
Administrative services fees payable............................................. 11,480
Investment advisory fees payable................................................. 9,474
Payable for investment securities purchased...................................... 1,120,119
Other accrued expenses........................................................... 60,357
-----------
Total Liabilities........................................................... 1,201,430
-----------
NET ASSETS....................................................................... $57,738,194
-----------
-----------
COMPOSITION OF NET ASSETS:
Paid-in capital for beneficial interests......................................... $57,738,194
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-93
<PAGE>
<PAGE>
UBS Bond Portfolio
Statement of Operations
For the Six Months Ended June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends........................................................... $ 61,847
Interest............................................................ 1,764,042
----------
Total income................................................... $1,825,889
EXPENSES
Investment advisory fees............................................ 127,063
Administrative services fees........................................ 16,980
Audit fees.......................................................... 19,701
Custodian fees and expenses......................................... 18,000
Fund accounting fees................................................ 12,989
Amortization of organization expenses............................... 4,478
Legal fees.......................................................... 4,010
Trustees' fees...................................................... 3,968
Insurance expense................................................... 3,253
Miscellaneous expenses.............................................. 2,015
----------
Total expenses................................................. 212,457
Less: Fee waiver............................................... (70,590)
----------
Net expenses................................................... 141,867
----------
Net investment income............................................... 1,684,022
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities transactions........................ (133,399)
Net realized gain on foreign currency transactions.................. 189,961
Net change in unrealized appreciation of investments................ (124,272)
Net change in unrealized appreciation of foreign currency contracts
and translations.................................................. (63,414)
----------
Net realized and unrealized loss on investments..................... (131,124)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................ $1,552,898
----------
----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-94
<PAGE>
<PAGE>
UBS Bond Portfolio
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 2, 1996*
JUNE 30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income......................................................... $ 1,684,022 $ 1,703,082
Net realized gain on securities and foreign currency transactions............. 56,562 44,624
Net change in unrealized appreciation of investments, foreign currency
contracts and foreign currency translations................................. (187,686) 227,405
------------- -----------------
Net increase in net assets resulting from operations.......................... 1,552,898 1,975,111
------------- -----------------
CAPITAL TRANSACTIONS:
Proceeds from contributions................................................... 13,452,359 59,142,218
Value of withdrawals.......................................................... (10,267,915) (8,116,477)
------------- -----------------
Net increase in net assets from capital transactions.......................... 3,184,444 51,025,741
------------- -----------------
NET INCREASE IN NET ASSETS.................................................... 4,737,342 53,000,852
NET ASSETS:
Beginning of period........................................................... 53,000,852 --
------------- -----------------
End of period................................................................. $ 57,738,194 $53,000,852
------------- -----------------
------------- -----------------
</TABLE>
- ------------------------
* Commencement of operations.
See notes to financial statements.
SAI-95
<PAGE>
<PAGE>
UBS Bond Portfolio
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 2, 1996*
JUNE 30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)................................... $57,738 $53,001
Ratio of expenses to average net assets(1)................................. 0.50%(2) 0.50%(2)
Ratio of net investment income to average net assets(1).................... 5.96%(2) 5.83%(2)
Portfolio turnover......................................................... 74% 100%
</TABLE>
- ------------------------
* Commencement of operations.
(1) Net of fee waivers. Such fee waivers had the effect of reducing the ratio of
expenses to average net assets and increasing the ratio of net investment
income to average net assets by 0.25% (annualized) and 0.45% (annualized)
for the respective periods.
(2) Annualized.
See notes to financial statements.
SAI-96
<PAGE>
<PAGE>
UBS Bond Portfolio
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
1. GENERAL
UBS Bond Portfolio (the 'Portfolio'), a separate series of UBS Investor
Portfolios Trust (the 'Trust'), is registered under the Investment Company Act
of 1940, as a diversified, open-end management investment company. The Trust is
organized as a trust under the laws of the State of New York.
The investment adviser of the Portfolio is Union Bank of Switzerland, New York
Branch ('UBS'). Investors Fund Services (Ireland) Limited ('IBT Ireland') acts
as the Portfolio's administrator.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements:
A. INVESTMENT VALUATION -- Debt securities with remaining maturities of more
than 60 days are normally valued by a pricing service approved by the Board of
Trustees (the 'Trustees'). Such pricing service will consider various factors
when arriving at a valuation for a security. Such factors include yields and
prices of comparable securities, indications as to values from dealers in such
securities and general market conditions. In the event a pricing service is
unable to price a security, the security will be valued by taking the average of
the bid and ask prices as provided by a dealer in such security.
Debt securities that mature in 60 days or less are valued at amortized cost,
which approximates market value. The amortized cost method involves valuing a
security at its cost on the date of purchase or, in the case of securities
purchased with more than 60 days until maturity, at their market value each day
until the 61st day prior to maturity, and thereafter assuming a constant
amortization to maturity of the difference between the principal amount due at
maturity and such valuation.
Securities or other assets for which market quotations are not readily available
are valued at fair value in accordance with procedures established by and under
the general supervision of the Trustees.
B. FOREIGN CURRENCY TRANSLATION -- The accounting records of the Portfolio are
maintained in U.S. dollars. Assets, including investment securities, and
liabilities denominated in foreign currency are translated into U.S. dollars at
the prevailing rate of exchange at period-end. Purchases and sales of
securities, income and expenses are translated at the prevailing rate of
exchange on the respective dates of such transactions. Gain/loss on translation
of foreign currency includes net exchange gains and losses, gains and losses on
disposition of foreign currency and adjustments to the amount of foreign taxes
withheld.
The assets and liabilities are presented at the exchange rates and market values
at the close of the period. The changes in net assets arising from changes in
exchange rates and the changes in net assets resulting from changes in market
prices of securities held at period-end are not separately presented. However,
gains and losses from certain foreign currency transactions are treated as
ordinary income for U.S. Federal income tax purposes.
C. FORWARD FOREIGN CURRENCY CONTRACTS -- The Portfolio may enter into forward
foreign currency contracts in connection with planned purchases or sales of
securities or to hedge the U.S. dollar value of portfolio securities denominated
in a particular currency. The Portfolio could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts
and from unanticipated movements in the value of a foreign currency relative to
the U.S. dollar. The forward foreign currency contracts are marked-to-market
daily using the daily exchange rate of the underlying currency and any
SAI-97
<PAGE>
<PAGE>
UBS Bond Portfolio
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
resulting gains or losses are recorded for financial statement purposes as
unrealized gains or losses until the contract settlement date.
The Portfolio's use of forward contracts involves, to varying degrees, elements
of market risk in excess of the amount recognized in the statement of assets and
liabilities. The contract or notional amounts reflect the extent of the
Portfolio's involvement in these financial instruments. Risks arise from the
possible movements in the foreign exchange rates underlying these instruments.
The unrealized appreciation/depreciation on forward contracts reflects the
Portfolio's exposure at period-end to credit loss in the event of a
counterparty's failure to perform its obligations.
D. ACCOUNTING FOR INVESTMENTS -- Securities transactions are accounted for on
trade date. Realized gains and losses on security transactions are determined on
the identified cost basis. Interest income, adjusted for amortization of
premiums and accretion of discounts on investments, is accrued daily.
E. U.S. FEDERAL INCOME TAXES -- The Portfolio is considered a partnership under
the U.S. Internal Revenue Code (the 'Code'). As such, each investor in the
Portfolio will be taxed on its share of the Portfolio's ordinary income and
capital gains. Accordingly, no provision for federal income taxes is necessary.
It is intended that the Portfolio will be managed in such a way that an investor
will be able to satisfy the requirements of the Code applicable to regulated
investment companies.
F. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Portfolio in
connection with its organization in the amount of approximately $30,000 have
been deferred and are being amortized on a straight line basis over five years
from the Portfolio's commencement of operations (April 2, 1996).
G. OTHER -- The Portfolio bears all costs of its operations other than expenses
specifically assumed by UBS and SFG. Expenses incurred by the Trust on behalf of
any two or more portfolios are allocated in proportion to the net assets of each
portfolio, except when allocations of direct expenses to each portfolio can
otherwise be made fairly. Expenses directly attributable to the Portfolio are
charged directly to the Portfolio.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. INVESTMENT ADVISORY AGREEMENT -- The Portfolio has retained the services of
UBS as investment adviser. UBS makes the Portfolio's day-to-day investment
decisions, arranges for the execution of portfolio transactions and generally
manages the Portfolio's investments and operations. As compensation for overall
investment management services, the Trust has agreed to pay UBS an investment
advisory fee, accrued daily and payable monthly, at an annual rate of 0.45% of
the Portfolio's average daily net assets. For the six months ended June 30,
1997, UBS voluntarily agreed to waive a portion of its investment advisory fee.
Such waiver amounted to $70,590.
B. ADMINISTRATION AGREEMENT -- Under the terms of an Administration Agreement
with the Trust, effective March 13, 1997, IBT Ireland provides overall
administrative services and general office facilities to the Portfolio and the
Trust. As compensation for such services, the Portfolio has agreed to pay IBT
Ireland an administrative services fee, accrued daily and payable monthly, at an
annual rate of 0.07% of the Portfolio's first $100 million average daily net
assets and 0.05% of the Portfolio's average daily net assets in excess of $100
million. Prior to March 13, 1997, Signature Financial Group (Grand Cayman), Ltd.
('SFG') provided overall administrative services and general office facilities
to the Portfolio and the Trust. As compensation for such services, the Portfolio
had agreed to pay SFG an administrative services fee, accrued daily and paid
monthly, at an annual rate of 0.05% of the Portfolio's average daily net assets.
For the six months ended June 30, 1997, the administrative services fee amounted
to $16,980.
SAI-98
<PAGE>
<PAGE>
UBS Bond Portfolio
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
4. PURCHASES AND SALES OF INVESTMENTS
For the six months ended June 30, 1997, purchases and sales of investment
securities, excluding short-term investments, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
U.S. Government Securities............................................... $24,162,513 $24,289,047
Corporate obligations.................................................... 22,182,754 15,903,047
----------- -----------
Total.......................................................... $46,345,267 $40,192,094
----------- -----------
----------- -----------
</TABLE>
SAI-99
<PAGE>
<PAGE>
UBS U.S. Equity Fund
Statement of Assets and Liabilities
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in UBS Investor Portfolios Trust -- UBS U.S. Equity Portfolio, at
value............................................................................. $19,652,620
Receivable from Funds services agent................................................ 4,714
Deferred organization expenses and other assets..................................... 106,913
-----------
Total Assets.............................................................. 19,764,247
-----------
LIABILITIES:
Administrative services fees payable................................................ 1,725
Other accrued expenses.............................................................. 17,546
-----------
Total Liabilities......................................................... 19,271
-----------
NET ASSETS.......................................................................... $19,744,976
-----------
-----------
SHARES OUTSTANDING ($0.001 par value, 10 million shares authorized)................. 159,808
-----------
-----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE...................... $123.55
COMPOSITION OF NET ASSETS: -----------
-----------
Shares of common stock, at par...................................................... $ 160
Additional paid-in capital.......................................................... 16,700,826
Net unrealized appreciation of investments.......................................... 2,786,419
Accumulated undistributed net investment income..................................... 178,812
Accumulated undistributed net realized gains........................................ 78,759
-----------
Net Assets................................................................ $19,744,976
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-100
<PAGE>
<PAGE>
UBS U.S. Equity Fund
Statement of Operations
For the Six Months Ended June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Investment Income and Expenses from UBS Investor Portfolios
Trust -- UBS U.S. Equity Portfolio
Dividends......................................................... $234,867
Interest.......................................................... 9,615
--------
Investment income............................................ $ 244,482
Total expenses.................................................... 72,954
Less: Fee waiver.................................................. (40,835)
--------
Net expenses...................................................... 32,119
----------
Net Investment Income from UBS Investor Portfolios Trust -- UBS U.S.
Equity Portfolio..................................................... 212,363
EXPENSES
Shareholder service fees............................................... 17,879
Administrative services fees........................................... 4,219
Reports to shareholders expense........................................ 11,057
Amortization of organization expenses.................................. 9,717
Audit fees............................................................. 5,434
Transfer agent fees.................................................... 5,200
Legal fees............................................................. 4,837
Registration fees...................................................... 3,952
Fund accounting fees................................................... 3,840
Directors' fees........................................................ 2,976
Miscellaneous expenses................................................. 1,696
--------
Total expenses.................................................... 70,807
Less: Fee waiver and expense reimbursements....................... (37,218)
--------
Net expenses...................................................... 33,589
----------
Net investment income............................................. 178,774
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS FROM
UBS INVESTOR PORTFOLIOS TRUST -- UBS U.S. EQUITY PORTFOLIO
Net realized gain on securities transactions........................... 79,126
Net change in unrealized appreciation of investments................... 2,101,523
----------
Net realized and unrealized gain on investments from
UBS Investor Portfolios Trust -- UBS U.S. Equity Portfolio........... 2,180,649
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $2,359,423
----------
----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-101
<PAGE>
<PAGE>
UBS U.S. Equity Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 2, 1996*
JUNE 30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income...................................................... $ 178,774 $ 157,796
Net realized gain on securities transactions............................... 79,126 13,685
Net change in unrealized appreciation of investments....................... 2,101,523 684,896
------------- -----------------
Net increase in net assets resulting from operations....................... 2,359,423 856,377
------------- -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income...................................................... (1,119) (156,639)
Net realized gains......................................................... (14,052) --
------------- -----------------
Total dividends and distributions to shareholders.......................... (15,171) (156,639)
------------- -----------------
TRANSACTIONS IN SHARES OF COMMON STOCK:
Net proceeds from sale of shares........................................... 10,200,929 13,752,890
Net asset value of shares issued to shareholders in reinvestment of
dividends and distributions.............................................. 14,711 156,639
Cost of shares redeemed.................................................... (2,280,612) (5,168,571)
------------- -----------------
Net increase in net assets from transactions in shares of common stock..... 7,935,028 8,740,958
------------- -----------------
NET INCREASE IN NET ASSETS................................................. 10,279,280 9,440,696
NET ASSETS:
Beginning of period........................................................ 9,465,696 25,000
------------- -----------------
End of period (including undistributed net investment income of $178,812
and $1,157, respectively)................................................ $ 19,744,976 $ 9,465,696
------------- -----------------
------------- -----------------
</TABLE>
- ------------------------
* Commencement of operations.
See notes to financial statements.
SAI-102
<PAGE>
<PAGE>
UBS U.S. Equity Fund
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 2, 1996*
JUNE 30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
FOR A SHARE OUTSTANDING FOR THE PERIOD
Net asset value, beginning of period..................................... $106.70 $100.00
------------- -----------------
Income from investment operations:
Net investment income............................................... 1.13 2.05
Net realized and unrealized gain on investments..................... 15.84 6.69
------------- -----------------
Total income from investment operations............................. 16.97 8.74
------------- -----------------
Less dividends and distributions to shareholders:
Dividends from net investment income................................ (0.01) (2.04)
Distributions from net realized gains............................... (0.11) --
------------- -----------------
Total dividends and distributions................................... (0.12) (2.04)
------------- -----------------
Net asset value, end of period........................................... $123.55 $106.70
------------- -----------------
------------- -----------------
Total return............................................................. 15.92%(1) 8.74%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)............................ $19,745 $ 9,466
Ratio of expenses to average net assets(2).......................... 0.92%(3) 0.90%(3)
Ratio of net investment income to average net assets(2)............. 2.50%(3) 3.04%(3)
</TABLE>
- ------------------------
* Commencement of operations.
(1) Not annualized.
(2) Includes the Fund's share of UBS Investor Portfolios Trust -- UBS U.S.
Equity Portfolio expenses and net of fee waivers and expense reimbursements.
Such fee waivers and expense reimbursements had the effect of reducing the
ratio of expenses to average net assets and increasing the ratio of net
investment income to average net assets by 1.09% (annualized) and 2.65%
(annualized) for the respective periods.
(3) Annualized.
See notes to financial statements.
SAI-103
<PAGE>
<PAGE>
UBS U.S. Equity Fund
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
1. GENERAL
UBS U.S. Equity Fund (the 'Fund') is a diversified, no-load mutual fund
registered under the Investment Company Act of 1940. The Fund is a series of UBS
Private Investor Funds, Inc. (the 'Company'), an open-end management investment
company organized as a corporation under Maryland law. At June 30, 1997, the
Company included three other funds, UBS Bond Fund, UBS International Equity Fund
and UBS Institutional International Equity Fund. These financial statements
relate only to the Fund.
The Fund seeks to achieve its investment objective by investing substantially
all of its investable assets in the UBS U.S. Equity Portfolio of UBS Investor
Portfolios Trust (the 'Portfolio'), an open-end management investment company
that has the same investment objective as that of the Fund.
Investors Bank & Trust Company ('IBT') serves as the Fund's administrator and
First Fund Distributors, Inc. ('FFDI') serves as the Fund's distributor. Union
Bank of Switzerland, New York Branch ('UBS') serves as the funds services agent
to the Fund.
The financial statements of the Portfolio, including its Schedule of
Investments, are included elsewhere within this report and should be read in
conjunction with the Fund's financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. Significant accounting policies
followed by the Fund are as follows:
A. INVESTMENT VALUATION -- The value of the Fund's investment in the Portfolio
included in the accompanying Statement of Assets and Liabilities reflects the
Fund's proportionate beneficial interest in the net assets of the Portfolio
(49.8% at June 30, 1997). Valuation of securities by the Portfolio is discussed
in Note 2A of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report.
B. INVESTMENT INCOME, EXPENSES AND REALIZED AND UNREALIZED GAINS AND
LOSSES -- The Fund records its share of the investment income, expenses and
realized and unrealized gains and losses recorded by the Portfolio on a daily
basis. The investment income, expenses and realized and unrealized gains and
losses are allocated daily to investors of the Portfolio based upon the amount
of their investment in the Portfolio.
C. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies, including
the requirement to distribute substantially all of its taxable income, including
any net realized capital gains on investment transactions, to its shareholders.
Accordingly, no provision for federal income or excise taxes is necessary.
D. DIVIDENDS AND DISTRIBUTIONS -- The Fund declares dividends from net
investment income to shareholders of record on the day of declaration. Such
dividends are declared and paid annually. Net realized gains, if any, will be
distributed at least annually. However, to the extent that net realized gains of
the Fund can be reduced by capital loss carryovers, such gains will not be
distributed. Dividends and distributions are recorded on the ex-dividend date.
The amounts of dividends from net investment income and distributions from net
realized gains are determined in accordance with federal income tax regulations
which may differ from generally accepted accounting principles. These 'book/tax'
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the
SAI-104
<PAGE>
<PAGE>
UBS U.S. Equity Fund
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
composition of net assets based upon their federal tax-basis treatment;
temporary differences do not require reclassification.
E. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Fund in connection
with its organization in the amount of approximately $107,500 have been deferred
and are being amortized on a straight line basis over five years from the Fund's
commencement of operations (April 2, 1996).
F. OTHER -- The Fund bears all costs of its operations other than expenses
specifically assumed by UBS, FFDI and IBT. Expenses incurred by the Company on
behalf of any two or more funds are allocated in proportion to the net assets of
each fund, except when allocations of direct expenses to each fund can otherwise
be made fairly. Expenses directly attributable to the Fund are charged directly
to the Fund.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. ADMINISTRATION AGREEMENT -- Under the terms of an Administration Agreement
with the Company effective March 13, 1997, IBT provides overall administrative
services and general office facilities. As compensation for such services, the
Company has agreed to pay IBT a fee, accrued daily and payable monthly, at an
annual rate of 0.065% of the Fund's first $100 million average daily net assets
and 0.025% of the next $100 million average daily net assets. IBT does not
receive a fee on average daily net assets in excess of $200 million. Prior to
March 13, 1997, Signature Broker-Dealer Services, Inc. ('Signature') provided
overall administrative services and general office facilities. As compensation
for such services, the Company had agreed to pay Signature a fee, accrued daily
and paid monthly, at an annual rate of 0.05% of the Fund's first $100 million
average daily net assets and 0.025% of the next $100 million average daily net
assets. Signature did not receive a fee on average daily net assets in excess of
$200 million. For the six months ended June 30, 1997, the administrative
services fee amounted to $4,219.
B. DISTRIBUTION AGREEMENT -- Under the terms of a Distribution Agreement
effective March 13, 1997, FFDI serves as the distributor of Fund shares. FFDI
does not receive any fees from the Fund for services provided pursuant to this
agreement. Prior to March 13, 1997, Signature served as the distributor of Fund
shares. Signature did not receive any additional fees for services provided as
the distributor.
C. SHAREHOLDER SERVICING AGREEMENT -- The Fund has entered into a Shareholder
Servicing Agreement with UBS pursuant to which UBS provides certain services to
shareholders of the Fund. The Fund has agreed to pay UBS a fee for these
services, accrued daily and payable monthly, at an annual rate of 0.25% of the
average daily net assets of the Fund. For the six months ended June 30, 1997,
the shareholder service fee amounted to $17,879, all of which was waived.
D. FUNDS SERVICES AGREEMENT -- Under the terms of a Funds Services Agreement
with the Company, UBS has agreed to provide certain administrative services to
the Fund. UBS is not entitled to any additional compensation pursuant to this
agreement.
E. EXPENSE REIMBURSEMENTS -- UBS has voluntarily agreed to limit the total
operating expenses of the Fund, including its share of the Portfolio's expenses
and excluding extraordinary expenses. For the period January 1, 1997 through
June 5, 1997, the Fund's total operating expenses were limited to an annual rate
of 0.90% of the Fund's average daily net assets. Effective June 6, 1997, this
expense limitation was increased to 1.00% of the Fund's average daily net
assets. For the six months ended June 30, 1997, UBS reimbursed the Fund for
expenses totaling $19,339 in connection with this voluntary limitation. UBS may
modify or discontinue this voluntary expense limitation at any time with 30
days' advance notice to the Fund.
SAI-105
<PAGE>
<PAGE>
UBS U.S. Equity Fund
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS
At June 30, 1997 there were 500 million shares of the Company's common stock
authorized, of which 10 million shares were classified as common stock of the
Fund. Transactions in shares of the Fund were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD FROM APRIL 2, 1996
JUNE 30, 1997 (COMMENCEMENT OF OPERATIONS)
(UNAUDITED) THROUGH DECEMBER 31, 1996
------------- ----------------------------
<S> <C> <C>
Shares subscribed.................................... 91,364 137,339
Shares issued to shareholders in reinvestment of
dividends and distributions........................ 136 1,465
Shares redeemed...................................... (20,404) (50,342)
------------- ----------
Net increase in shares outstanding................... 71,096 88,462
------------- ----------
------------- ----------
</TABLE>
SAI-106
<PAGE>
<PAGE>
UBS U.S. Equity Portfolio
Schedule of Investments
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ------------------------------------------------------------------------------------------ -----------
<C> <S> <C>
COMMON STOCK -- 98.8%
BANKING & FINANCIAL INSTITUTIONS -- 15.6%
5,600 BankAmerica Corp. ........................................................................ $ 361,550
15,800 Corestates Financial Corp. ............................................................... 849,250
14,350 J. P. Morgan & Co. Inc. .................................................................. 1,497,781
43,600 Mellon Bank Corp. ........................................................................ 1,967,450
17,700 U.S. Bancorp.............................................................................. 1,135,013
5,900 Wachovia Corp. ........................................................................... 344,044
-----------
6,155,088
-----------
CHEMICALS -- 3.8%
8,090 Dow Chemical Company...................................................................... 704,841
20,800 Witco Corp. .............................................................................. 789,100
-----------
1,493,941
-----------
CONSUMER FOODS -- 8.1%
23,070 General Mills Co. ........................................................................ 1,502,434
36,775 H. J. Heinz Co. .......................................................................... 1,696,247
-----------
3,198,681
-----------
COSMETICS -- 2.2%
17,410 International Flavors & Fragrances........................................................ 879,205
-----------
DIVERSIFIED -- 1.2%
13,000 Fortune Brands Inc. ...................................................................... 485,063
-----------
DRUGS & PHARMACEUTICALS -- 15.4%
26,860 American Home Products Corp. ............................................................. 2,054,790
14,700 Baxter International...................................................................... 768,075
27,900 Bristol-Myers Squibb Co. ................................................................. 2,259,900
28,477 Pharmacia & Upjohn Inc. .................................................................. 989,576
-----------
6,072,341
-----------
INSURANCE -- 4.0%
17,100 American General Corp. ................................................................... 816,525
10,900 Marsh & McLennan Cos. Inc. ............................................................... 777,988
-----------
1,594,513
-----------
LUMBER, PAPER & BUILDING SUPPLIES -- 6.3%
14,500 Union Camp Corp. ......................................................................... 725,000
34,100 Weyerhaeuser Co. ......................................................................... 1,773,198
-----------
2,498,198
-----------
MANUFACTURING -- 7.3%
20,000 Cooper Industries Inc. ................................................................... 995,000
18,510 Minnesota Mining & Manufacturing.......................................................... 1,888,020
-----------
2,883,020
-----------
OFFICE EQUIPMENT AND SUPPLIES -- 2.9%
16,350 Pitney Bowes, Inc......................................................................... 1,136,325
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-107
<PAGE>
<PAGE>
UBS U.S. Equity Portfolio
Schedule of Investments
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ------------------------------------------------------------------------------------------ -----------
<C> <S> <C>
PETROLEUM PRODUCTION & SALES -- 8.6%
9,100 Amoco Corporation......................................................................... $ 791,131
15,500 Atlantic Richfield Co. ................................................................... 1,092,750
12,700 Chevron Corporation....................................................................... 939,006
5,120 Texaco Inc. .............................................................................. 556,800
-----------
3,379,687
-----------
RETAIL -- 3.5%
18,620 J. C. Penney Company, Inc. ............................................................... 971,731
8,600 May Department Stores..................................................................... 406,350
-----------
1,378,081
-----------
TELECOMMUNICATIONS -- 13.7%
9,800 Ameritech Corp. .......................................................................... 665,788
23,400 Bell Atlantic Corp. ...................................................................... 1,775,475
30,650 GTE Corporation........................................................................... 1,344,769
13,400 SBC Communications........................................................................ 829,125
20,600 US West Inc. ............................................................................. 776,363
-----------
5,391,520
-----------
TOBACCO -- 5.1%
45,350 Philip Morris Companies, Inc. ............................................................ 2,012,406
-----------
UTILITIES -- 1.1%
3,400 American Electric Power Inc. ............................................................. 142,800
10,750 Baltimore Gas And Electric................................................................ 286,891
-----------
429,691
-----------
TOTAL INVESTMENTS AT MARKET VALUE -- 98.8%
(COST $32,800,276).............................................................................. 38,987,760
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.2%....................................................... 477,017
-----------
NET ASSETS -- 100.0%................................................................................ $39,464,777
-----------
-----------
</TABLE>
- ------------------------
Note: Based upon the cost of investments of $32,800,276 for Federal Income Tax
purposes at June 30, 1997, the aggregate gross unrealized appreciation and
depreciation was $7,575,019 and $1,387,535, respectively, resulting in net
unrealized appreciation of $6,187,484.
See notes to financial statements.
SAI-108
<PAGE>
<PAGE>
UBS U.S. Equity Portfolio
Statement of Assets and Liabilities
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $32,800,276)............................................ $38,987,760
Cash................................................................................ 408,995
Dividends and interest receivable................................................... 110,206
Deferred organization expenses and other assets..................................... 21,548
-----------
Total Assets.............................................................. 39,528,509
-----------
LIABILITIES:
Administrative services fees payable................................................ 6,701
Investment advisory fees payable.................................................... 4,151
Other accrued expenses.............................................................. 52,880
-----------
Total Liabilities......................................................... 63,732
-----------
NET ASSETS.......................................................................... $39,464,777
-----------
-----------
NET ASSETS CONSIST OF:
Paid-in capital for beneficial interests.......................................... $39,464,777
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-109
<PAGE>
<PAGE>
UBS U.S. Equity Portfolio
Statement of Operations
For the Six Months Ended June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends.............................................................. $540,414
Interest............................................................... 22,454
--------
Investment income................................................. $ 562,868
EXPENSES
Investment advisory fees............................................... 97,665
Administrative services fees........................................... 9,936
Audit fees............................................................. 19,701
Fund accounting fees................................................... 12,989
Custodian fees and expenses............................................ 10,087
Legal fees............................................................. 5,513
Amortization of organization expenses.................................. 4,478
Trustees' fees......................................................... 3,968
Insurance expense...................................................... 1,291
Miscellaneous expenses................................................. 1,321
--------
Total expenses.................................................... 166,949
Less: Fee waiver.................................................. (93,514)
--------
Net expenses...................................................... 73,435
----------
Net investment income.................................................. 489,433
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on securities transactions........................... 170,619
Net change in unrealized appreciation of investments................... 4,513,149
----------
Net realized and unrealized gain on investments........................ 4,683,768
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $5,173,201
----------
----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-110
<PAGE>
<PAGE>
UBS U.S. Equity Portfolio
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 2, 1996*
JUNE 30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income............................................ $ 489,433 $ 432,121
Net realized gain on securities transactions..................... 170,619 1,679
Net change in unrealized appreciation of investments............. 4,513,149 1,674,335
------------- -----------------
Net increase in net assets resulting from operations............. 5,173,201 2,108,135
------------- -----------------
CAPITAL TRANSACTIONS:
Proceeds from contributions...................................... 13,588,532 30,786,561
Value of withdrawals............................................. (4,722,689) (7,468,963)
------------- -----------------
Net increase in net assets from capital transactions............. 8,865,843 23,317,598
------------- -----------------
NET INCREASE IN NET ASSETS....................................... 14,039,044 25,425,733
NET ASSETS:
Beginning of period.............................................. 25,425,733 --
------------- -----------------
End of period.................................................... $ 39,464,777 $25,425,733
------------- -----------------
------------- -----------------
</TABLE>
- ------------------------
* Commencement of operations.
See notes to financial statements.
SAI-111
<PAGE>
<PAGE>
UBS U.S. Equity Portfolio
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 2, 1996*
JUNE 30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)................. $39,465 $25,426
Average commission rate per share........................ $ 0.06 $ 0.06
Ratio of expenses to average net assets(1)............... 0.45%(2) 0.91%(2)
Ratio of net investment income to
average net assets(1).................................. 3.01%(2) 3.07%(2)
Portfolio turnover....................................... 17% 19%
</TABLE>
- ------------------------
* Commencement of operations.
(1) Net of fee waivers. Such fee waivers had the effect of reducing the ratio of
expenses to average net assets and increasing the ratio of net investment
income to average net assets by 0.57% (annualized) and 0.60% (annualized)
for the respective periods.
(2) Annualized.
See notes to financial statements.
SAI-112
<PAGE>
<PAGE>
UBS U.S. Equity Portfolio
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
1. GENERAL
UBS U.S. Equity Portfolio (the 'Portfolio'), a separate series of UBS Investor
Portfolios Trust (the 'Trust'), is registered under the Investment Company Act
of 1940, as a diversified, open-end management investment company. The Trust is
organized as a trust under the laws of the State of New York.
The investment adviser of the Portfolio is Union Bank of Switzerland, New York
Branch ('UBS'). Investors Fund Services (Ireland) Limited ('IBT Ireland') acts
as the Portfolio's administrator.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements:
A. INVESTMENT VALUATION -- Equity securities in the portfolio are valued at
their last sale price on the exchange on which they are primarily traded, or in
the absence of recorded sales, at the average of readily available closing bid
and asked prices, or at the quoted bid price. Unlisted securities are valued at
the average of the quoted bid and asked prices in the over-the-counter market.
Options on stock indices traded on national securities exchanges are valued at
their last sale price as of the close of options trading on such exchanges.
Stock index futures and related options traded on commodities exchanges are
valued at their last sales price as of the close of such exchanges.
Securities or other assets for which market quotations are not readily available
are valued at fair value in accordance with procedures established by and under
the general supervision of the Portfolio's Board of Trustees (the 'Trustees').
Debt securities that mature in 60 days or less are valued at amortized cost,
which approximates market value. The amortized cost method involves valuing a
security at its cost on the date of purchase or, in the case of securities
purchased with more than 60 days until maturity, at their market value each day
until the 61st day prior to maturity, and thereafter assuming a constant
amortization to maturity of the difference between the principal amount due at
maturity and such valuation.
B. ACCOUNTING FOR INVESTMENTS -- Securities transactions are accounted for on
trade date. Realized gains and losses on security transactions are determined on
the identified cost basis. Dividend income and other distributions from
portfolio securities are recorded on the ex-dividend date. Interest income,
adjusted for amortization of premiums and accretion of discounts on investments,
is accrued daily.
C. U. S. FEDERAL INCOME TAXES -- The Portfolio is considered a partnership under
the U.S. Internal Revenue Code (the 'Code'). As such, each investor in the
Portfolio will be taxed on its share of the Portfolio's ordinary income and
capital gains. Accordingly, no provision for federal income taxes is necessary.
It is intended that the Portfolio will be managed in such a way that an investor
will be able to satisfy the requirements of the Code applicable to regulated
investment companies.
D. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Portfolio in
connection with its organization in the amount of approximately $30,000 have
been deferred and are being amortized on a straight line basis over five years
from the Portfolio's commencement of operations (April 2, 1996).
E. OTHER -- The Portfolio bears all costs of its operations other than expenses
specifically assumed by UBS and IBT Ireland. Expenses incurred by the Trust on
behalf of any two or more portfolios are allocated in proportion to the net
assets of each portfolio, except when allocations of direct expenses to
SAI-113
<PAGE>
<PAGE>
UBS U.S. Equity Portfolio
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
each portfolio can otherwise be made fairly. Expenses directly attributable to
the Portfolio are charged directly to the Portfolio.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. INVESTMENT ADVISORY AGREEMENT -- The Portfolio has retained the services of
UBS as investment adviser. UBS makes the Portfolio's day-to-day investment
decisions, arranges for the execution of portfolio transactions and generally
manages the Portfolio's investments and operations. As compensation for overall
investment management services, the Trust has agreed to pay UBS an investment
advisory fee, accrued daily and payable monthly, at an annual rate of 0.60% of
the Portfolio's average daily net assets. For the six months ended June 30,
1997, UBS voluntarily agreed to waive a portion of its investment advisory fee.
Such waiver amounted to $93,514.
B. ADMINISTRATION AGREEMENT -- Under the terms of an Administration Agreement
with the Trust effective March 13, 1997, IBT Ireland provides overall
administrative services and general office facilities to the Portfolio and the
Trust. As compensation for such services, the Portfolio has agreed to pay IBT
Ireland an administrative services fee, accrued daily and payable monthly, at an
annual rate of 0.07% of the Portfolio's first $100 million average daily net
assets and 0.05% of the Portfolio's average daily net assets in excess of $100
million. Prior to March 13, 1997, Signature Financial Group (Grand Cayman), Ltd.
('SFG') provided overall administrative services and general office facilities
to the Portfolio and the Trust. As compensation for such services, the Portfolio
had agreed to pay SFG an administrative services fee, accrued daily and paid
monthly, at an annual rate of 0.05% of the Portfolio's average daily net assets.
For the six months ended June 30, 1997, the administrative services fee amounted
to $9,936.
4. PURCHASES AND SALES OF INVESTMENTS
For the six months ended June 30, 1997, purchases and sales of investment
securities, excluding short-term investments, aggregated $15,039,035 and
$5,553,662, respectively.
SAI-114
<PAGE>
<PAGE>
UBS International Equity Fund
Statement of Assets and Liabilities
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investment in UBS Investor Portfolios Trust -- UBS International Equity Portfolio,
at value.......................................................................... $24,462,116
Tax reclaims receivable............................................................. 70,410
Receivable from sale of capital stock............................................... 70,000
Receivable from funds services agent................................................ 3,748
Deferred organization expenses and other assets..................................... 106,973
-----------
Total Assets.............................................................. 24,713,247
-----------
LIABILITIES:
Administrative services fees payable................................................ 2,437
Other accrued expenses.............................................................. 9,275
-----------
Total Liabilities......................................................... 11,712
-----------
NET ASSETS.......................................................................... $24,701,535
-----------
-----------
SHARES OUTSTANDING ($0.001 par value, 10 million shares authorized)................. 215,021
-----------
-----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE...................... $114.88
-----------
-----------
COMPOSITION OF NET ASSETS:
Shares of common stock, at par...................................................... $ 215
Additional paid-in capital.......................................................... 22,168,521
Net unrealized appreciation of investments, foreign currency contracts and foreign
currency translations............................................................. 2,021,604
Accumulated undistributed net investment income..................................... 233,263
Accumulated undistributed net realized gains on securities and foreign currency
transactions...................................................................... 277,932
-----------
Net Assets................................................................ $24,701,535
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-115
<PAGE>
<PAGE>
UBS International Equity Fund
Statement of Operations
For the Six Months Ended June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Investment Income and Expenses allocated from UBS Investor Portfolios
Trust -- UBS International Equity Portfolio
Dividends (net of foreign withholding tax of $25,583)............. $328,486
Interest.......................................................... 83,073
--------
Investment income................................................. $ 411,559
Total expenses.................................................... 176,996
Less: Fee waiver.................................................. (43,604)
--------
Net expenses...................................................... 133,392
----------
Net Investment Income from UBS Investor Portfolios Trust -- UBS
International Equity Portfolio....................................... 278,167
EXPENSES
Shareholder service fees.......................................... 31,308
Administrative services fees...................................... 7,109
Reports to shareholders expense................................... 12,085
Amortization of organization expenses............................. 9,718
Registration fees................................................. 6,128
Audit fees........................................................ 5,505
Transfer agent fees............................................... 5,200
Legal fees........................................................ 5,029
Fund accounting fees.............................................. 3,841
Directors' fees................................................... 2,976
Miscellaneous expenses............................................ 2,425
--------
Total expenses............................................... 91,324
Less: Fee waiver and expense reimbursements.................. (85,531)
--------
Net expenses................................................. 5,793
----------
Net investment income.................................................. 272,374
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM UBS
INVESTOR PORTFOLIOS TRUST -- UBS INTERNATIONAL EQUITY PORTFOLIO
Net realized gain on securities transactions........................... 296,349
Net realized loss on foreign currency transactions..................... (18,532)
Net change in unrealized appreciation of investments................... 1,676,113
Net change in unrealized depreciation of foreign currency contracts and
translations......................................................... 4,883
----------
Net realized and unrealized gain on investments from UBS Investor
Portfolios Trust -- UBS International Equity Portfolio............... 1,958,813
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $2,231,187
----------
----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-116
<PAGE>
<PAGE>
UBS International Equity Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE APRIL 2, 1996*
30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income.......................................................... $ 272,374 $ 146,877
Net realized gain on securities and foreign currency transactions.............. 277,817 135,557
Net change in unrealized appreciation of investments, foreign currency
contracts and foreign currency translations.................................. 1,680,996 340,608
------------- -----------------
Net increase in net assets resulting from operations........................... 2,231,187 623,042
------------- -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.......................................................... (57,133) (136,578)
Net realized gains............................................................. (37,703) (94,755)
------------- -----------------
Total dividends and distributions to shareholders.............................. (94,836) (231,333)
------------- -----------------
TRANSACTIONS IN SHARES OF COMMON STOCK:
Net proceeds from sale of shares............................................... 10,318,687 30,851,057
Net asset value of shares issued to shareholders in reinvestment of dividends
and distributions............................................................ 51,504 229,580
Cost of shares redeemed........................................................ (14,428,736) (4,873,617)
------------- -----------------
Net (decrease) increase in net assets from transactions in shares of common
stock........................................................................ (4,058,545) 26,207,020
------------- -----------------
NET (DECREASE) INCREASE IN NET ASSETS.......................................... (1,922,194) 26,598,729
NET ASSETS:
Beginning of period............................................................ 26,623,729 25,000
------------- -----------------
End of period (including undistributed net investment income of $233,263 and
$18,022, respectively)....................................................... $ 24,701,535 $26,623,729
------------- -----------------
------------- -----------------
</TABLE>
- ------------------------
* Commencement of operations.
See notes to financial statements.
SAI-117
<PAGE>
<PAGE>
UBS International Equity Fund
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE APRIL 2, 1996*
30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
FOR A SHARE OUTSTANDING FOR THE PERIOD
Net asset value, beginning of period........................................... $102.84 $100.00
------------- -----------------
Income from investment operations:
Net investment income..................................................... 1.21 1.08
Net realized and unrealized gain on investments, foreign currency
contracts and foreign currency translations............................. 11.16 3.54
------------- -----------------
Total income from investment operations................................... 12.37 4.62
------------- -----------------
Less dividends and distributions to shareholders:
Dividends from net investment income...................................... (0.20) (1.05)
Distributions from net realized gains..................................... (0.13) (0.73)
------------- -----------------
Total dividends and distributions......................................... (0.33) (1.78)
------------- -----------------
Net asset value, end of period................................................. $114.88 $102.84
------------- -----------------
------------- -----------------
Total return................................................................... 12.05%(1) 4.65%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted).................................. $24,702 $26,624
Ratio of expenses to average net assets(2)................................ 1.11%(3) 1.39%(3)
Ratio of net investment income to average net assets(2)................... 2.18%(3) 1.78%(3)
</TABLE>
- ------------------------
* Commencement of operations.
(1) Not annualized.
(2) Includes the Fund's share of UBS Investor Portfolios Trust -- UBS
International Equity Portfolio expenses and net of fee waivers and expense
reimbursements. Such fee waivers and expense reimbursements had the effect
of reducing the ratio of expenses to average net assets and increasing the
ratio of net investment income to average net assets by 1.03% (annualized)
and 1.66% (annualized) for the respective periods.
(3) Annualized.
See notes to financial statements.
SAI-118
<PAGE>
<PAGE>
UBS International Equity Fund
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
1. GENERAL
UBS International Equity Fund (the 'Fund') is a diversified, no-load mutual fund
registered under the Investment Company Act of 1940. The Fund is a series of UBS
Private Investor Funds, Inc. (the 'Company'), an open-end management investment
company organized as a corporation under Maryland law. At June 30, 1997, the
Company included three other funds, UBS Bond Fund, UBS U.S. Equity Fund and UBS
Institutional International Equity Fund. These financial statements relate only
to the Fund.
The Fund seeks to achieve its investment objective by investing substantially
all of its investable assets in the UBS International Equity Portfolio of UBS
Investor Portfolios Trust (the 'Portfolio'), an open-end management investment
company that has the same investment objective as that of the Fund.
Investors Bank & Trust Company ('IBT') serves as the Fund's administrator and
First Fund Distributors, Inc. ('FFDI') serves as the Fund's distributor. Union
Bank of Switzerland, New York Branch ('UBS') serves as the funds services agent
to the Fund.
The financial statements of the Portfolio, including its Schedule of
Investments, are included elsewhere within this report and should be read in
conjunction with the Fund's financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. Significant accounting policies
followed by the Fund are as follows:
A. INVESTMENT VALUATION -- The value of the Fund's investment in the Portfolio
included in the accompanying Statement of Assets and Liabilities reflects the
Fund's proportionate beneficial interest in the net assets of the Portfolio
(46.2% at June 30, 1997). Valuation of securities by the Portfolio is discussed
in Note 2A of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report.
B. INVESTMENT INCOME, EXPENSES AND REALIZED AND UNREALIZED GAINS AND
LOSSES -- The Fund records its share of the investment income, expenses and
realized and unrealized gains and losses recorded by the Portfolio on a daily
basis. The investment income, expenses and realized and unrealized gains and
losses are allocated daily to investors of the Portfolio based upon the amount
of their investment in the Portfolio. The amount of foreign withholding taxes
deducted from the dividend income allocated to the Fund from the Portfolio is
net of amounts the Fund expects to recover from foreign tax authorities.
C. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies, including
the requirement to distribute substantially all of its taxable income, including
any net realized capital gains on investment transactions, to its shareholders.
Accordingly, no provision for federal income or excise taxes is necessary.
D. DIVIDENDS AND DISTRIBUTIONS -- The Fund declares dividends from net
investment income to shareholders of record on the day of declaration. Such
dividends are declared and paid annually. Net realized gains, if any, will be
distributed at least annually. However, to the extent that net realized gains of
the Fund can be reduced by capital loss carryovers, such gains will not be
distributed. Dividends and distributions are recorded on the ex-dividend date.
The amounts of dividends from net investment income and distributions from net
realized gains are determined in accordance with federal income tax regulations
which may differ from generally accepted accounting principles. These 'book/tax'
differences are either considered temporary or permanent in
SAI-119
<PAGE>
<PAGE>
UBS International Equity Fund
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the composition of net assets based upon their federal
tax-basis treatment; temporary differences do not require reclassification. For
the fiscal year ended December 31, 1996, the Fund increased accumulated
undistributed net investment income by $7,723, decreased accumulated
undistributed net realized gains by $2,984 and decreased paid-in capital by
$4,739. Net investment income, net realized gains and net assets were not
affected by this change.
E. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Fund in connection
with its organization in the amount of approximately $107,500 have been deferred
and are being amortized on a straight line basis over five years from the Fund's
commencement of operations (April 2, 1996).
F. OTHER -- The Fund bears all costs of its operations other than expenses
specifically assumed by IBT, FFDI and UBS. Expenses incurred by the Company on
behalf of any two or more funds are allocated in proportion to the net assets of
each fund, except when allocations of direct expenses to each fund can otherwise
be made fairly. Expenses directly attributable to the Fund are charged directly
to the Fund.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. ADMINISTRATION AGREEMENT -- Under the terms of an Administration Agreement
with the Company effective March 13, 1997, IBT provides overall administrative
services and general office facilities. As compensation for such services, the
Company has agreed to pay IBT a fee, accrued daily and payable monthly, at an
annual rate of 0.065% of the Fund's first $100 million average daily net assets
and 0.025% of the next $100 million average daily net assets. IBT does not
receive a fee on average daily net assets in excess of $200 million. Prior to
March 13, 1997, Signature Broker-Dealer Services, Inc. ('Signature') provided
overall administrative services and general office facilities. As compensation
for such services, the Company had agreed to pay Signature a fee, accrued daily
and paid monthly, at an annual rate of 0.05% of the Fund's first $100 million
average daily net assets and 0.025% of the next $100 million average daily net
assets. Signature did not receive a fee on average daily net assets in excess of
$200 million. For the six months ended June 30, 1997, the administrative
services fee amounted to $7,109.
B. DISTRIBUTION AGREEMENT -- Under the terms of a Distribution Agreement
effective March 13, 1997, FFDI serves as the distributor of Fund shares. FFDI
does not receive any fees from the Fund for services provided pursuant to this
agreement. Prior to March 13, 1997, Signature served as the distributor of Fund
shares. Signature did not receive any additional fees for services provided as
the distributor.
C. SHAREHOLDER SERVICING AGREEMENT -- The Fund has entered into a Shareholder
Servicing Agreement with UBS pursuant to which UBS provides certain services to
shareholders of the Fund. The Fund has agreed to pay UBS a fee for these
services, accrued daily and payable monthly, at an annual rate of 0.25% of the
average daily net assets of the Fund. For the six months ended June 30, 1997,
the shareholder service fee amounted to $31,308, all of which was waived.
D. FUNDS SERVICES AGREEMENT -- Under the terms of a Funds Services Agreement
with the Company, UBS has agreed to provide certain administrative services to
the Fund. UBS is not entitled to any additional compensation pursuant to this
agreement.
E. EXPENSE REIMBURSEMENTS -- UBS has voluntarily agreed to limit the total
operating expenses of the Fund, including its share of the Portfolio's expenses
and excluding extraordinary expenses. For the period from January 1, 1997
through April 14, 1997, the Fund's total operating expenses were limited to an
annual rate of 0.95% of the Fund's average daily net assets. For the period from
April 15, 1997 through June 30, 1997, the Fund's total operating expenses were
limited to an annual rate of 1.40% of
SAI-120
<PAGE>
<PAGE>
UBS International Equity Fund
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
the Fund's average daily net assets. For the six months ended June 30, 1997, UBS
reimbursed the Fund for expenses totaling $54,223 in connection with this
voluntary limitation. UBS may modify or discontinue this voluntary expense
limitation at any time with 30 days' advance notice to the Fund.
4. CAPITAL SHARE TRANSACTIONS
At June 30, 1997 there were 500 million shares of the Company's common stock
authorized, of which 10 million shares were classified as common stock of the
Fund. Transactions in shares of the Fund were as follows:
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 2, 1996
SIX MONTHS (COMMENCEMENT
ENDED OF OPERATIONS)
JUNE 30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
Shares subscribed............................................... 98,361 304,954
Shares issued to shareholders in reinvestment
of dividends and distributions................................ 495 2,281
Shares redeemed................................................. (142,712) (48,608)
------------- -----------------
Net (decrease) increase in shares outstanding................... (43,856) 258,627
------------- -----------------
------------- -----------------
</TABLE>
SAI-121
<PAGE>
<PAGE>
UBS International Equity Portfolio
Schedule of Investments
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ----------- -------------------------------------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCK -- 86.0%
AUSTRALIA -- 5.3%
32,000 Australia & New Zealand Bank Group (Banking & Finance)................................ $ 239,976
15,800 Australian National Industries (Metals & Mining)...................................... 19,389
254,362 Burns Philp & Co. (Food).............................................................. 473,991
62,500 Coles Myer Ltd. (Retail).............................................................. 326,198
138,400 Fosters Brewing Group (Beverages)..................................................... 257,901
189,100 Goodman Fielder Limited (Food)........................................................ 279,324
570,029 MIM Holdings (Metals & Mining)........................................................ 846,322
89,000 Pacific Dunlop Ltd. (Diversified)..................................................... 264,277
50,000 Pasminco Limited (Metals & Mining).................................................... 101,884
-----------
2,809,262
-----------
DENMARK -- 1.3%
2,700 BG Bank A/S (Banking & Finance)....................................................... 149,378
10,500 Tele Danmark -- B Shares (Telecommunications)......................................... 546,092
-----------
695,470
-----------
FRANCE -- 15.2%
3,060 AXA Company (Banking & Finance)....................................................... 190,420
8,800 Alcatel Alsthom SA (Electrical & Electronics)......................................... 1,102,718
15,900 Banque Nationale de Paris (Banking & Finance)......................................... 655,653
4,500 Casino-Guichard-PE (Etabl Econ) (Food)................................................ 222,874
3,100 Compagnie de Saint Gobain (Building Materials)........................................ 452,320
84,000 Compagnie Financiere de Suez (Banking & Finance)...................................... 206,657
9,620 Groupe Danone (Food).................................................................. 1,590,367
27,120 Moulinex (Household Appliances)*...................................................... 743,393
7,800 Pechiney SA -- A Shares (Metals & Mining)............................................. 307,432
2,050 Peugeot SA (Automotive)............................................................... 198,246
1,460 Sefimeg (Societe Francaise d'Investissements Immobiliers et de Gestion)
(Real Estate)....................................................................... 93,215
10,100 Societe Nationale Elf-Aquitaine (Energy Sources)...................................... 1,090,219
18,300 Thomson CSF (Defense Electronics)..................................................... 471,715
6,970 Total Cie Francaise des Petroles -- B Shares (Energy Sources)......................... 704,891
-----------
8,030,120
-----------
GERMANY -- 6.9%
34,300 Bayer AG (Chemicals).................................................................. 1,319,057
1,500 MAN AG (Automotive & Heavy Machinery)................................................. 462,201
3,000 Schering AG (Pharmaceuticals)......................................................... 320,786
2,000 Volkswagen AG (Automotive)............................................................ 1,534,357
-----------
3,636,401
-----------
GREAT BRITAIN -- 13.5%
135,420 Allied Domecq PLC (Food & Beverages).................................................. 972,951
81,900 B.A.T. Industries (Tobacco)........................................................... 732,976
247,200 BG PLC (Natural Gas).................................................................. 909,637
330,000 BTR Limited (Diversified)............................................................. 1,129,154
15,840 Bass PLC (Beverages).................................................................. 193,324
247,200 Centrica (Energy Sources)............................................................. 301,497
113,000 Coats Viyella (Apparel & Textiles).................................................... 239,892
53,000 MEPC British Registered (Real Estate)................................................. 435,061
178,000 Marley PLC (Building Materials)....................................................... 370,474
123,550 Northern Foods PLC (Food)............................................................. 409,377
43,950 Peninsular & Orient Steam (Transportation)............................................ 439,074
17,700 South West Water PLC (Utilities)...................................................... 207,773
209,750 Tarmac PLC (Building Materials)....................................................... 436,555
30,040 Thames Water PLC (Utilities).......................................................... 346,876
-----------
7,124,621
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-122
<PAGE>
<PAGE>
UBS International Equity Portfolio
Schedule of Investments
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ----------- -------------------------------------------------------------------------------------- -----------
<C> <S> <C>
HONG KONG -- 0.2%
548,000 Yizheng Chemical Fibre Co. (Chemicals)................................................ $ 97,613
-----------
ITALY -- 1.3%
89,800 Eni S.p.A. (Energy Sources)........................................................... 507,626
31,500 La Rinascente S.p.A. (Food)........................................................... 174,766
-----------
682,392
-----------
JAPAN -- 21.5%
11,000 Dai Nippon Printing Co. (Printing).................................................... 248,832
11,000 Fuji Photo Film Co. (Photographic Equipment & Supplies)............................... 442,901
80,000 Hitachi Ltd. (Hit. Seisakusho) (Electrical & Electronics)............................. 894,362
96,000 Ishikawajima Harima Heavy Industries (Machinery)...................................... 377,309
28,000 JGC Engineering & Constructuction Corp. (Engineering)................................. 193,196
68 Japan Tobacco Inc. (Tobacco).......................................................... 537,491
49,000 Japan Wool Textile Co. (Apparel & Textiles)........................................... 345,797
45,000 Kajima Corp. (Building & Construction)................................................ 263,723
49,000 Kansai Paint Co. (Chemicals).......................................................... 202,856
14,000 Kao Corp. (Household Products)........................................................ 194,419
33,000 Koito Manufacturing Co., Ltd. (Automotive -- Parts & Equipment)....................... 252,483
36,000 Marudai Food Co., Ltd. (Food)......................................................... 158,470
33,000 Matsushita Electric Industries (Electrical & Electronics)............................. 665,793
150,000 Mitsubishi Chemical Corp. (Chemicals)................................................. 489,978
47,000 Mitsubishi Estate Co. (Real Estate)................................................... 681,427
27,000 Mitsubishi Heavy Industries (Aerospace/Defense Equipment)............................. 207,284
45,000 Nihon Cement Co. (Building Materials)................................................. 215,381
34,000 Nikko Securities Co. (Investment Banking)............................................. 209,354
111,000 Nippon Yusen Kabushiki Kaish (Shipping)............................................... 431,416
47,250 Nissan Fire & Marine Insurance (Insurance)............................................ 259,990
58,000 Nisshinbo Industries Inc. (Apparel & Textiles)........................................ 526,835
16,000 Sanwa Bank Ltd. (Banking & Finance)................................................... 237,565
3,900 Sony Corp. (Electrical & Electronics)................................................. 340,286
53,000 Sumitomo Marine & Fire (Insurance).................................................... 435,128
77,000 Tokyo Gas (Energy Sources)............................................................ 213,861
69,000 Toray Industries Inc. (Chemicals)..................................................... 492,362
9,000 Tostem Corporation (Building & Construction).......................................... 249,181
10,000 Uny Co. (Retail)...................................................................... 195,642
115 West Japan Railway (Transportation)................................................... 450,980
35,000 Yamaha Motor Co. (Automotive)......................................................... 348,487
23,000 Yamanouchi Pharmaceutical (Pharmaceuticals)........................................... 618,717
-----------
11,381,506
-----------
NETHERLANDS -- 4.7%
6,800 Akzo Nobel (Chemicals)................................................................ 932,552
12,587 Internationale Nederlanden Groep NV (Banking & Finance)............................... 580,741
18,700 Koninklijke Papierfabrieken BT NV (Paper & Forest Products)........................... 426,148
4,800 Philips Electronics NV (Electronics).................................................. 344,063
5,040 Royal PTT Nederland (Telecommunications).............................................. 197,849
-----------
2,481,353
-----------
NEW ZEALAND -- 0.7%
10,300 Ceramco Corp. Ltd. (Diversified)...................................................... 10,216
43,840 Fletcher Challenge Forestry Shares (Forest Products).................................. 63,735
116,000 Fletcher Challenge Paper Shares (Paper & Forest Products)............................. 281,332
-----------
355,283
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-123
<PAGE>
<PAGE>
UBS International Equity Portfolio
Schedule of Investments
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ----------- -------------------------------------------------------------------------------------- -----------
<C> <S> <C>
NORWAY -- 0.1%
3,600 Bergesen D.Y. ASA (Transportation).................................................... $ 85,521
-----------
SINGAPORE -- 2.1%
280,579 Dairy Farm International Holdings (Food).............................................. 210,434
125,696 Hong Kong Land Holdings (Real Estate)................................................. 334,351
29,765 Jardine Matheson Holdings (Diversified)............................................... 211,332
46,000 Keppel Corp. Ltd. (Diversified)....................................................... 204,309
7,250 Keppel Corp. Ltd. -- A Shares (Diversified)........................................... 31,440
110,000 United Overseas Land Ltd. (Real Estate)............................................... 149,262
-----------
1,141,128
-----------
SOUTH KOREA -- 1.8%
22,000 Hyundai Motor Co. GDR (Automotive).................................................... 226,050
1,870 Hyundai Motor Co., Ltd. (Automotive).................................................. 56,016
1,360 Korea Housing Bank (Banking & Finance)................................................ 25,897
220 Korea Mobile Telecom Corp. (Telecommunications)....................................... 166,434
8,720 Korean Air (Airlines)*................................................................ 178,750
11,310 Shinhan Bank (Banking & Finance)...................................................... 166,020
5,600 Yukong Ltd. (Energy Sources).......................................................... 135,586
-----------
954,753
-----------
SPAIN -- 1.0%
46,530 Uralita (Building Materials).......................................................... 519,668
-----------
SWEDEN -- 3.1%
13,050 Electrolux (Household Appliances)..................................................... 941,958
10,000 Granges AB (Metals & Mining).......................................................... 132,590
6,000 Sparbanken Sverige (Banking & Finance)................................................ 133,495
26,000 Stora Kopparbergs -- A Shares (Paper & Forest Products)............................... 420,407
-----------
1,628,450
-----------
SWITZERLAND -- 6.1%
41 Bobst AG (Machinery).................................................................. 69,677
600 Forbo Holding (Building Materials).................................................... 259,028
1,330 Nestle SA (Food & Beverages).......................................................... 1,755,348
555 Novartis (Pharmaceuticals)............................................................ 887,665
210 Schindler Holding AG (Machinery)...................................................... 262,626
-----------
3,234,344
-----------
THAILAND -- 1.2%
14,000 Bangkok Bank Public Company, Ltd. (Banking & Finance)................................. 100,080
15,000 Italian-Thai Development PLC (Building & Construction)................................ 35,241
45,000 Shinawatra Computer Company (Technology).............................................. 323,494
23,000 Thai Farmers Bank Public Co. Ltd. (Banking & Finance)................................. 101,606
58,000 Thai Military Bank, Ltd. (Banking & Finance).......................................... 67,550
-----------
627,971
-----------
TOTAL COMMON STOCK (COST $40,708,713)................................................. 45,485,856
-----------
CONVERTIBLE PREFERRED STOCK -- 0.7%
JAPAN -- 0.7%
42,000,000 Sakura Finance, Series II, 0.75%, due 10/01/01** (Banking & Finance)
(Cost $376,462)..................................................................... 371,414
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-124
<PAGE>
<PAGE>
UBS International Equity Portfolio
Schedule of Investments
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ----------- -------------------------------------------------------------------------------------- -----------
<C> <S> <C>
CONTINGENT VALUE RIGHTS -- 0.0%
FRANCE -- 0.0%
3,060 AXA Company (Banking & Finance) (Cost $0)............................................. $ 11,878
-----------
COMMON STOCK RIGHTS -- 0.0%
ITALY -- 0.0%
31,500 La Rinascente S.p.A. (Food) (Cost $0)................................................. 5,133
-----------
TOTAL INVESTMENTS AT MARKET VALUE -- 86.7%
(COST $41,085,175)............................................................................... 45,874,281
OTHER ASSETS IN EXCESS OF LIABILITIES -- 13.3%..................................................... 7,032,073
-----------
NET ASSETS -- 100.0%............................................................................... $52,906,354
-----------
-----------
</TABLE>
- ------------------------
GDR -- Global Depository Receipts.
* Non-income producing security.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At June 30, 1997, the value of
this security amounted to $371,414 or 0.7% of net assets.
Note: Based upon the cost of investments of $41,085,175 for Federal Income Tax
purposes at June 30, 1997, the aggregate gross unrealized appreciation and
depreciation was $6,178,399 and $1,389,293, respectively, resulting in net
unrealized appreciation of $4,789,106.
SUMMARY OF OPEN FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
FOREIGN U.S. DOLLAR U.S. DOLLAR
CURRENCY U.S. DOLLAR VALUE AT NET UNREALIZED
CURRENCY AND SETTLEMENT DATE UNITS SOLD PROCEEDS JUNE 30, 1997 APPRECIATION
- -------------------------------------------------- -------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
SALE CONTRACTS
German Deutsche Mark, 7/01/97 404,586 $ 234,339 $ 232,172 $2,167
Norwegian Krone, 7/02/97 500,195 68,239 66,679 1,560
-------
$3,727
-------
-------
</TABLE>
See notes to financial statements.
SAI-125
<PAGE>
<PAGE>
UBS International Equity Portfolio
Schedule of Investments
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
SUMMARY OF INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY DIVERSIFICATION NET ASSETS
- ------------------------------------------------------------------------------------------------------ ----------
<S> <C>
Chemicals............................................................................................. 6.7%
Food.................................................................................................. 6.7%
Banking & Finance..................................................................................... 6.1%
Electrical & Electronics.............................................................................. 5.7%
Food & Beverages...................................................................................... 5.2%
Energy Sources........................................................................................ 4.9%
Building Materials.................................................................................... 4.3%
Automotive............................................................................................ 3.6%
Pharmaceuticals....................................................................................... 3.5%
Real Estate........................................................................................... 3.2%
Household Appliances.................................................................................. 3.2%
Metals & Mining....................................................................................... 3.1%
Diversified........................................................................................... 3.0%
Tobacco............................................................................................... 2.4%
Transportation........................................................................................ 2.2%
Natural Gas........................................................................................... 2.1%
Apparel & Textiles.................................................................................... 2.1%
Paper & Forest Products............................................................................... 2.1%
Telecommunications.................................................................................... 1.7%
Machinery............................................................................................. 1.3%
Insurance............................................................................................. 1.3%
Utilities............................................................................................. 1.0%
Retail................................................................................................ 1.0%
Automotive & Heavy Machinery.......................................................................... 0.9%
Beverages............................................................................................. 0.9%
Defense Electronics................................................................................... 0.9%
Heavy Machinery....................................................................................... 0.9%
Shipping.............................................................................................. 0.8%
Photographic Equipment & Supplies..................................................................... 0.8%
Electronics........................................................................................... 0.7%
Building & Construction............................................................................... 0.6%
Technology............................................................................................ 0.6%
Automotive -- Parts & Equipment....................................................................... 0.5%
Printing.............................................................................................. 0.5%
Household Products.................................................................................... 0.4%
Aerospace/Defense Equipment........................................................................... 0.4%
Investment Banking.................................................................................... 0.4%
Airlines.............................................................................................. 0.3%
Engineering........................................................................................... 0.3%
Oil Refining.......................................................................................... 0.2%
Forest Products....................................................................................... 0.1%
Industrial-Diversified................................................................................ 0.1%
----------
Total Portfolio Holdings.............................................................................. 86.7%
Other assets in excess of liabilities................................................................. 13.3%
----------
Total Net Assets...................................................................................... 100.0%
----------
----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-126
<PAGE>
<PAGE>
UBS International Equity Portfolio
Statement of Assets and Liabilities
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $41,085,175).......................................... $45,874,281
Cash.............................................................................. 7,253,197
Foreign currency (cost $916,413).................................................. 901,456
Receivable for investment securities sold......................................... 735,605
Dividends receivable.............................................................. 207,688
Interest receivable............................................................... 33,445
Unrealized appreciation on open forward foreign currency contracts................ 3,727
Deferred organization expenses and other assets................................... 30,728
-----------
Total Assets................................................................. 55,040,127
-----------
LIABILITIES:
Investment advisory fees payable.................................................. 20,832
Administrative services fees payable.............................................. 8,912
Payable for investment securities purchased....................................... 2,030,600
Other accrued expenses............................................................ 73,429
-----------
Total Liabilities............................................................ 2,133,773
-----------
NET ASSETS........................................................................ $52,906,354
-----------
-----------
COMPOSITION OF NET ASSETS:
Paid-in capital for beneficial interests.......................................... $52,906,354
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-127
<PAGE>
<PAGE>
UBS International Equity Portfolio
Statement of Operations
For the Six Months Ended June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign withholding tax of $146,199).................... $505,077
Interest.................................................................. 145,800
--------
Investment income.................................................... $ 650,877
EXPENSES
Investment advisory fees.................................................. 180,965
Administrative services fees.............................................. 12,963
Custodian fees and expenses............................................... 46,550
Fund accounting fees...................................................... 22,165
Audit fees................................................................ 19,701
Amortization of organization expenses..................................... 4,889
Legal fees................................................................ 4,010
Trustees' fees............................................................ 3,968
Insurance expense......................................................... 3,186
Miscellaneous expenses.................................................... 1,230
--------
Total expenses....................................................... 299,627
Less: Fee waiver..................................................... (74,515)
--------
Net expenses......................................................... 225,112
----------
Net investment income..................................................... 425,765
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities transactions.............................. 474,001
Net realized loss on foreign currency transactions........................ (29,098)
Net change in unrealized appreciation of investments...................... 4,415,204
Net change in unrealized depreciation of foreign currency contracts and
translations............................................................ 13,061
----------
Net realized and unrealized gain on investments........................... 4,873,168
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................... $5,298,933
----------
----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-128
<PAGE>
<PAGE>
UBS International Equity Portfolio
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 2, 1996*
JUNE 30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income........................................... $ 425,765 $ 483,834
Net realized gain on securities and foreign currency
transactions.................................................. 444,903 372,215
Net change in unrealized appreciation of investments, foreign
currency contracts and foreign currency translations.......... 4,428,265 367,572
------------- -----------------
Net increase in net assets resulting from operations............ 5,298,933 1,223,621
------------- -----------------
CAPITAL TRANSACTIONS:
Proceeds from contributions..................................... 25,766,560 60,373,286
Value of withdrawals............................................ (19,705,718) (20,050,328)
------------- -----------------
Net increase in net assets from capital transactions............ 6,060,842 40,322,958
------------- -----------------
NET INCREASE IN NET ASSETS...................................... 11,359,775 41,546,579
NET ASSETS:
Beginning of period............................................. 41,546,579 --
------------- -----------------
End of period................................................... $ 52,906,354 $ 41,546,579
------------- -----------------
------------- -----------------
</TABLE>
- ------------------------
* Commencement of operations.
See notes to financial statements.
SAI-129
<PAGE>
<PAGE>
UBS International Equity Portfolio
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 2, 1996*
JUNE 30, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)................... $52,906 $41,547
Average commission rate per share(1)........................ $ 0.03 $ 0.02
Ratio of expenses to average net assets(2).................. 1.06%(3) 0.88%(3)
Ratio of net investment income to
average net assets(2)..................................... 2.00%(3) 2.07%(3)
Portfolio turnover.......................................... 15% 42%
</TABLE>
- ------------------------
* Commencement of operations.
(1) Most foreign securities markets do not charge commissions based on a rate
per share but as a percentage of the principal value of the transaction. As
a result, the above rate is not indicative of the commission arrangements
currently in effect.
(2) Net of fee waivers. Such fee waivers had the effect of reducing the ratio of
expenses to average net assets and increasing the ratio of net investment
income to average net assets by 0.35% (annualized) and 0.79% (annualized)
for the respective periods.
(3) Annualized.
See notes to financial statements.
SAI-130
<PAGE>
<PAGE>
UBS International Equity Portfolio
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
1. GENERAL
UBS International Equity Portfolio (the 'Portfolio'), a separate series of UBS
Investor Portfolios Trust (the 'Trust'), is registered under the Investment
Company Act of 1940, as a diversified, open-end management investment company.
The Trust is organized as a trust under the laws of the State of New York.
The investment adviser of the Portfolio is Union Bank of Switzerland, New York
Branch ('UBS'); UBS International Investment London Limited ('UBSII') is the
sub-adviser of the Portfolio. Investors Fund Services (Ireland) Limited ('IBT
Ireland') acts as the Portfolio's administrator.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements:
A. INVESTMENT VALUATION -- Equity securities are valued at the last sale price
on the exchange on which they are primarily traded, or in the absence of
recorded sales, at the average of readily available closing bid and asked
prices, or at the quoted bid price. Unlisted securities are valued at the
average of the quoted bid and asked prices in the over-the-counter market.
Options on stock indices traded on national securities exchanges are valued at
their last sale price as of the close of options trading on such exchanges.
Stock index futures and related options traded on commodities exchanges are
valued at their last sales price as of the close of trading on such exchanges.
Securities or other assets for which market quotations are not readily available
are valued at fair value in accordance with procedures established by and under
the general supervision of the Portfolio's Board of Trustees (the 'Trustees').
Debt securities that mature in 60 days or less are valued at amortized cost,
which approximates market value. The amortized cost method involves valuing a
security at its cost on the date of purchase or, in the case of securities
purchased with more than 60 days until maturity, at their market value each day
until the 61st day prior to maturity, and thereafter assuming a constant
amortization to maturity of the difference between the principal amount due at
maturity and such valuation.
Trading in securities on most foreign exchanges and over-the-counter markets is
normally completed before the close of the New York Stock Exchange and may also
take place on days on which the New York Stock Exchange is closed. If events
materially affecting the value of foreign securities occur between the time when
the exchange on which they are traded closes and the pricing of the Portfolio,
such securities will be valued at fair value in accordance with procedures
established by and under the general supervision of the Trustees.
B. FOREIGN CURRENCY TRANSLATION -- The accounting records of the Portfolio are
maintained in U.S. dollars. Assets, including investment securities, and
liabilities denominated in foreign currency are translated into U.S. dollars at
the prevailing rate of exchange at period-end. Purchases and sales of
securities, income and expenses are translated at the prevailing rate of
exchange on the respective dates of such transactions. Gain/loss on translation
of foreign currency includes net exchange gains and losses, gains and losses on
disposition of foreign currency and adjustments to the amount of foreign taxes
withheld.
The assets and liabilities are presented at the exchange rates and market values
at the close of the period. The changes in net assets arising from changes in
exchange rates and the changes in net assets resulting from changes in market
prices of securities at period-end are not separately presented.
SAI-131
<PAGE>
<PAGE>
UBS International Equity Portfolio
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
However, gains and losses from certain foreign currency transactions are treated
as ordinary income for U.S. Federal income tax purposes.
C. FORWARD FOREIGN CURRENCY CONTRACTS -- The Portfolio may enter into forward
foreign currency contracts in connection with planned purchases or sales of
securities or to hedge the U.S. dollar value of portfolio securities denominated
in a particular currency. The Portfolio could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts
and from unanticipated movements in the value of a foreign currency relative to
the U.S. dollar. The forward foreign currency contracts are marked-to-market
daily using the daily exchange rate of the underlying currency and any resulting
gains or losses are recorded for financial statement purposes as unrealized
gains or losses until the contract settlement date.
The Portfolio's use of forward contracts involves, to varying degrees, elements
of market risk in excess of the amount recognized in the statement of assets and
liabilities. The contract or notional amounts reflect the extent of the
Portfolio's involvement in these financial instruments. Risks arise from the
possible movements in the foreign exchange rates underlying these instruments.
The unrealized appreciation/depreciation on forward contracts reflects the
Portfolio's exposure at period-end to credit loss in the event of a
counterparty's failure to perform its obligations.
D. ACCOUNTING FOR INVESTMENTS -- Securities transactions are accounted for on
trade date. Realized gains and losses on security transactions are determined on
the identified cost basis. Dividend income and other distributions from
portfolio securities are recorded on the ex-dividend date, except, if the ex-
dividend date has passed, certain dividends from foreign securities are recorded
as soon as the Portfolio is informed of the ex-dividend date. Dividend income is
recorded net of foreign taxes withheld where recovery of such taxes is not
assured. Withholding taxes on foreign dividends have been provided for in
accordance with the Portfolio's understanding of the applicable countries' tax
rules and rates. Recoveries of foreign taxes withheld from the Portfolio's
income are generally recorded, where applicable, by the funds investing in the
Portfolio. Interest income, adjusted for amortization of premiums and accretion
of discounts on investments, is accrued daily.
E. U.S. FEDERAL INCOME TAXES -- The Portfolio is considered a partnership under
the U.S. Internal Revenue Code (the 'Code'). As such, each investor in the
Portfolio will be taxed on its share of the Portfolio's ordinary income and
capital gains. Accordingly, no provision for federal income taxes is necessary.
It is intended that the Portfolio will be managed in such a way that an investor
will be able to satisfy the requirements of the Code applicable to regulated
investment companies.
F. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Portfolio in
connection with its organization in the amount of approximately $40,000 have
been deferred and are being amortized on a straight line basis over five years
from the Portfolio's commencement of operations (April 2, 1996).
G. OTHER -- The Portfolio bears all costs of its operations other than expenses
specifically assumed by UBS, UBSII and IBT Ireland. Expenses incurred by the
Trust on behalf of any two or more portfolios are allocated in proportion to net
assets of each portfolio, except when allocations of direct expenses to each
portfolio can otherwise be made fairly. Expenses directly attributable to the
Portfolio are charged directly to the Portfolio.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. INVESTMENT ADVISORY AGREEMENT -- The Portfolio has retained the services of
UBS as investment adviser and UBSII as investment sub-adviser. UBSII 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 subject to the supervision of UBS and the Trustees. As compensation
for overall investment management services, the Trust has agreed to pay UBS an
investment advisory fee, accrued daily and payable monthly, at an annual rate of
0.85% of the Portfolio's average daily net
SAI-132
<PAGE>
<PAGE>
UBS International Equity Portfolio
Notes to Financial Statements
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
assets. UBS, in turn, has agreed to pay UBSII a fee, accrued daily and payable
monthly, at an annual rate of 0.75% of the Portfolio's first $20 million average
daily net assets, 0.50% of the next $30 million average daily net assets and
0.40% of the Portfolio's average daily net assets in excess of $50 million. For
the six months ended June 30, 1997, the investment advisory fee amounted to
$180,965. UBS voluntarily agreed to waive $74,515 of this amount.
B. ADMINISTRATION AGREEMENT -- Under the terms of an Administration Agreement
with the Trust, effective March 13, 1997, IBT Ireland provides overall
administrative services and general office facilities to the Portfolio and the
Trust. As compensation for such services, the Portfolio has agreed to pay IBT
Ireland an administrative services fee, accrued daily and payable monthly, at an
annual rate of 0.07% of the Portfolio's first $100 million average daily net
assets and 0.05% of the Portfolio's average daily net assets in excess of $100
million. Prior to March 13, 1997, Signature Financial Group (Grand Cayman), Ltd.
('SFG') provided overall administrative services and general office facilities
to the Portfolio and the Trust. As compensation for such services, the Portfolio
had agreed to pay SFG an administrative services fee, accrued daily and paid
monthly, at an annual rate of 0.05% of the Portfolio's average daily net assets.
For the six months ended June 30, 1997, the administrative services fee amounted
to $12,963.
4. PURCHASES AND SALES OF INVESTMENTS
For the six months ended June 30, 1997, purchases and sales of investment
securities, excluding short-term investments, aggregated $11,178,601 and
$5,662,629, respectively.
SAI-133
<PAGE>
<PAGE>
UBS Institutional International Equity Fund
Statement of Assets and Liabilities
August 29, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investment in UBS Investor Portfolios Trust -- UBS International Equity Portfolio,
at value.......................................................................... $13,622,640
Tax reclaims receivable............................................................. 27,390
Receivable from funds services agent................................................ 8,879
Deferred organization expenses and other assets..................................... 26,053
-----------
Total Assets.............................................................. 13,684,962
-----------
LIABILITIES:
Administrative services fees payable................................................ 1,998
Organization expenses payable....................................................... 19,478
Other accrued expenses.............................................................. 24,839
-----------
Total Liabilities......................................................... 46,315
-----------
NET ASSETS.......................................................................... $13,638,647
-----------
-----------
SHARES OUTSTANDING ($0.001 par value, 10 million shares authorized)................. 126,547
-----------
-----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE...................... $107.78
-----------
-----------
COMPOSITION OF NET ASSETS:
Shares of common stock, at par...................................................... $ 127
Additional paid-in capital.......................................................... 12,654,565
Net unrealized appreciation of investments, foreign currency contracts and foreign
currency translations............................................................. 702,941
Accumulated undistributed net investment income..................................... 121,631
Accumulated undistributed net realized gains on securities and foreign currency
transactions...................................................................... 159,383
-----------
Net Assets................................................................ $13,638,647
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-134
<PAGE>
<PAGE>
UBS Institutional International Equity Fund
Statement of Operations
For the Period April 14, 1997 (Commencement of Operations) through August 29,
1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Investment Income and Expenses allocated from UBS Investor Portfolios
Trust -- UBS International Equity Portfolio
Dividends (net of foreign withholding tax of $2,431).................. $134,356
Interest.............................................................. 38,085
--------
Investment income..................................................... $172,441
Total expenses........................................................ 68,066
Less: Fee waiver...................................................... (18,653)
--------
Net expenses.......................................................... 49,413
--------
Net Investment Income from UBS Investor Portfolios Trust --
UBS International Equity Portfolio....................................... 123,028
EXPENSES
Administrative services fees............................................... 3,477
Reports to shareholders expense............................................ 13,411
Audit fees................................................................. 6,062
Transfer agent fees........................................................ 5,754
Registration fees.......................................................... 4,470
Fund accounting fees....................................................... 3,451
Legal fees................................................................. 2,877
Amortization of organization expenses...................................... 2,071
Directors' fees............................................................ 1,207
Miscellaneous expenses..................................................... 1,918
--------
Total expenses........................................................ 44,698
Less: Expense reimbursements.......................................... (43,301)
--------
Net expenses.......................................................... 1,397
--------
Net investment income...................................................... 121,631
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM UBS INVESTOR
PORTFOLIOS TRUST -- UBS INTERNATIONAL EQUITY PORTFOLIO
Net realized gain on securities transactions............................... 161,952
Net realized loss on foreign currency transactions......................... (2,568)
Net change in unrealized appreciation of investments....................... 703,395
Net change in unrealized appreciation of foreign currency contracts and
translations............................................................. (454)
--------
Net realized and unrealized gain on investments from UBS Investor
Portfolios Trust -- UBS International Equity Portfolio.................. 862,325
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $983,956
--------
--------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-135
<PAGE>
<PAGE>
UBS Institutional International Equity Fund
Statement of Changes in Net Assets
For the Period April 14, 1997 (Commencement of Operations) through August 29,
1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income................................................................ $ 121,631
Net realized gain on securities and foreign currency transactions.................... 159,384
Net change in unrealized appreciation of investments, foreign currency contracts and
foreign currency translations...................................................... 702,941
-----------
Net increase in net assets resulting from operations................................. 983,956
-----------
TRANSACTIONS IN SHARES OF COMMON STOCK:
Net proceeds from sale of shares..................................................... 12,654,691
-----------
NET INCREASE IN NET ASSETS........................................................... 13,638,647
NET ASSETS:
Beginning of period.................................................................. --
-----------
End of period (including undistributed net investment income of $121,631)............ $13,638,647
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-136
<PAGE>
<PAGE>
UBS Institutional International Equity Fund
Financial Highlights
For the Period April 14, 1997 (Commencement of Operations) through August 29,
1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
FOR A SHARE OUTSTANDING FOR THE PERIOD
Net asset value, beginning of period........................................... $100.00
-------
Income from investment operations:
Net investment income..................................................... 0.96
Net realized and unrealized gain on investments, foreign currency
contracts and foreign currency translations............................. 6.82
-------
Total income from investment operations................................... 7.78
-------
Net asset value, end of period................................................. $107.78
-------
-------
Total return................................................................... 7.78%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted).................................. $13,639
Ratio of expenses to average net assets(2)................................ 0.95%(3)
Ratio of net investment income to average net assets(2)................... 2.31%(3)
</TABLE>
- ------------------------
(1) Not annualized.
(2) Includes the Fund's share of UBS Investor Portfolios Trust -- UBS
International Equity Portfolio expenses and net of fee waiver and expense
reimbursements. Such fee waiver and expense reimbursements had the effect of
reducing the ratio of expenses to average net assets and increasing the
ratio of net investment income to average net assets by 1.18% (annualized).
(3) Annualized.
See notes to financial statements.
SAI-137
<PAGE>
<PAGE>
UBS Institutional International Equity Fund
Notes to Financial Statements
August 29, 1997 (Unaudited)
- --------------------------------------------------------------------------------
1. GENERAL
UBS Institutional International Equity Fund (the 'Fund') is a diversified,
no-load mutual fund registered under the Investment Company Act of 1940. The
Fund is a series of UBS Private Investor Funds, Inc. (the 'Company'), an
open-end management investment company organized as a corporation under Maryland
law. At August 29, 1997, the Company included three other funds, UBS Bond Fund,
UBS U.S. Equity Fund and UBS International Equity Fund. These financial
statements relate only to the Fund.
The Fund seeks to achieve its investment objective by investing substantially
all of its investable assets in the UBS International Equity Portfolio of UBS
Investor Portfolios Trust (the 'Portfolio'), an open-end management investment
company that has the same investment objective as that of the Fund.
Investors Bank & Trust Company ('IBT') serves as the Fund's administrator and
First Fund Distributors, Inc. ('FFDI') serves as the Fund's distributor. Union
Bank of Switzerland, New York Branch ('UBS') serves as the funds services agent
to the Fund.
The financial statements of the Portfolio, including its Schedule of
Investments, are included elsewhere within this report and should be read in
conjunction with the Fund's financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. Significant accounting policies
followed by the Fund are as follows:
A. INVESTMENT VALUATION -- The value of the Fund's investment in the Portfolio
included in the accompanying Statement of Assets and Liabilities reflects the
Fund's proportionate beneficial interest in the net assets of the Portfolio
(27.2% at August 29, 1997). Valuation of securities by the Portfolio is
discussed in Note 2A of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B. INVESTMENT INCOME, EXPENSES AND REALIZED AND UNREALIZED GAINS AND
LOSSES -- The Fund records its share of the investment income, expenses and
realized and unrealized gains and losses recorded by the Portfolio on a daily
basis. The investment income, expenses and realized and unrealized gains and
losses are allocated daily to investors of the Portfolio based upon the amount
of their investment in the Portfolio. The amount of foreign withholding taxes
deducted from the dividend income allocated to the Fund from the Portfolio is
net of amounts the Fund expects to recover from foreign tax authorities.
C. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies, including
the requirement to distribute substantially all of its taxable income, including
any net realized capital gains on investment transactions, to its shareholders.
Accordingly, no provision for federal income or excise taxes is necessary.
D. DIVIDENDS AND DISTRIBUTIONS -- The Fund declares dividends from net
investment income to shareholders of record on the day of declaration. Such
dividends are declared and paid annually. Net realized gains, if any, will be
distributed at least annually. However, to the extent that net realized gains of
the Fund can be reduced by capital loss carryovers, such gains will not be
distributed. Dividends and distributions are recorded on the ex-dividend date.
The amounts of dividends from net investment income and distributions from net
realized gains are determined in accordance with federal income tax regulations
which may differ from generally accepted accounting principles. These 'book/tax'
differences are either considered temporary or permanent in
SAI-138
<PAGE>
<PAGE>
UBS Institutional International Equity Fund
Notes to Financial Statements
August 29, 1997 (Unaudited)
- --------------------------------------------------------------------------------
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the composition of net assets based upon their federal
tax-basis treatment; temporary differences do not require reclassification.
E. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Fund in connection
with its organization in the amount of approximately $27,000 have been deferred
and are being amortized on a straight line basis over five years from the Fund's
commencement of operations (April 14, 1997).
F. OTHER -- The Fund bears all costs of its operations other than expenses
specifically assumed by IBT, FFDI and UBS. Expenses incurred by the Company on
behalf of any two or more funds are allocated in proportion to the net assets of
each fund, except when allocations of direct expenses to each fund can otherwise
be made fairly. Expenses directly attributable to the Fund are charged directly
to the Fund.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. ADMINISTRATION AGREEMENT -- Under the terms of an Administration Agreement
with the Company effective March 13, 1997, IBT provides overall administrative
services and general office facilities. As compensation for such services, the
Company has agreed to pay IBT a fee, accrued daily and payable monthly, at an
annual rate of 0.065% of the Fund's first $100 million average daily net assets
and 0.025% of the next $100 million average daily net assets. IBT does not
receive a fee on average daily net assets in excess of $200 million. For the
period April 14, 1997 (commencement of operations) through August 29, 1997, the
administrative services fee amounted to $3,477.
B. DISTRIBUTION AGREEMENT -- Under the terms of a Distribution Agreement with
the Company, FFDI serves as the distributor of Fund shares. FFDI does not
receive any fees from the Fund for services provided pursuant to this agreement.
C. FUNDS SERVICES AGREEMENT -- Under the terms of a Funds Services Agreement
with the Company, UBS has agreed to provide certain administrative services to
the Fund. UBS is not entitled to any compensation pursuant to this agreement.
D. EXPENSE REIMBURSEMENTS -- UBS has voluntarily agreed to limit the total
operating expenses of the Fund, including its share of the Portfolio's expenses
and excluding extraordinary expenses. For the period April 14, 1997
(commencement of operations) through August 29, 1997, the Fund's total operating
expenses were limited to an annual rate of 0.95% of the Fund's average daily net
assets. During this period, UBS reimbursed the Fund for expenses totaling
$43,301 in connection with this voluntary limitation. UBS may modify or
discontinue this voluntary expense limitation at any time with 30 days' advance
notice to the Fund.
4. CAPITAL SHARE TRANSACTIONS
At August 29, 1997 there were 500 million shares of the Company's common stock
authorized, of which 10 million shares were classified as common stock of the
Fund. For the period April 14, 1997 (commencement of operations) through August
29, 1997 there were 126,547 shares subscribed.
SAI-139
<PAGE>
<PAGE>
UBS International Equity Portfolio
Schedule of Investments
August 29, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ----------- -------------------------------------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCK -- 83.1%
AUSTRALIA -- 4.8%
32,000 Australia & New Zealand Bank Group (Banking & Finance)................................ $ 230,041
15,800 Australian National Industries (Metals & Mining)...................................... 18,118
254,362 Burns Philp & Co. (Food).............................................................. 446,855
62,500 Coles Myer Ltd. (Retail).............................................................. 291,218
138,400 Fosters Brewing Group (Beverages)..................................................... 261,448
160,100 Goodman Fielder Limited (Food)........................................................ 229,479
715,029 MIM Holdings (Metals & Mining)........................................................ 856,699
89,000 Pacific Dunlop Ltd. (Diversified)..................................................... 228,968
50,000 Pasminco Limited (Metals & Mining).................................................... 90,521
-----------
2,653,347
-----------
DENMARK -- 1.4%
4,440 BG Bank A/S (Banking & Finance)....................................................... 237,557
10,500 Tele Danmark -- B shares (Telecommunications)......................................... 549,578
-----------
787,135
-----------
FRANCE -- 12.9%
3,060 AXA Company (Banking & Finance)....................................................... 194,863
8,800 Alcatel Alsthom SA (Electrical & Electronics)......................................... 1,077,338
18,768 Banque Nationale de Paris (Banking & Finance)......................................... 799,860
4,330 Compagnie de Saint Gobain (Building Materials)........................................ 594,224
10,950 Groupe Danone (Food).................................................................. 1,628,842
27,120 Moulinex (Household Appliances)*...................................................... 655,999
4,941 Pechiney SA -- A shares (Metals & Mining)............................................. 213,341
1,460 Sefimeg (Societe Francaise d'Investissements Immobiliers et de Gestion) (Real
Estate)............................................................................. 96,577
11,000 Societe Nationale Elf-Aquitaine (Energy Sources)...................................... 1,221,780
2,048 Suez Lyonnaise des Eaux (Building & Construction)..................................... 205,905
5,070 Total Cie Francaise des Petroles -- B shares (Energy Sources)......................... 474,697
-----------
7,163,426
-----------
GERMANY -- 6.7%
34,300 Bayer AG (Chemicals).................................................................. 1,261,275
2,050 MAN AG (Automotive & Heavy Machinery)................................................. 561,877
4,500 Schering AG (Pharmaceuticals)......................................................... 437,791
2,000 Volkswagen AG (Automotive)............................................................ 1,434,109
-----------
3,695,052
-----------
GREAT BRITAIN -- 15.0%
79,760 Safeway PLC (Food).................................................................... 484,991
150,420 Allied Domecq PLC (Food & Beverages).................................................. 1,137,822
247,200 BG PLC (Natural Gas).................................................................. 1,082,254
330,000 BTR Limited (Diversified)............................................................. 1,166,507
81,900 B.A.T. Industries (Tobacco)........................................................... 685,916
38,540 Bass PLC (Beverages).................................................................. 516,814
247,200 Centrica (Energy Sources)............................................................. 355,741
113,000 Coats Viyella (Apparel & Textiles).................................................... 217,127
178,000 Marley PLC (Building Materials)....................................................... 317,490
53,000 MEPC British Registered (Real Estate)................................................. 402,627
123,550 Northern Foods PLC (Food)............................................................. 439,738
45,650 Peninsular & Orient Steam (Transportation)............................................ 481,140
17,700 South West Water PLC (Utilities)...................................................... 232,905
209,750 Tarmac PLC (Building Materials)....................................................... 403,030
30,040 Thames Water PLC (Utilities).......................................................... 386,026
-----------
8,310,128
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-140
<PAGE>
<PAGE>
UBS International Equity Portfolio
Schedule of Investments
August 29, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ----------- -------------------------------------------------------------------------------------- -----------
<C> <S> <C>
INDONESIA -- 0.1%
246,000 PT Bank Internasional Indonesia -- Foreign Shares (Banking & Finance)................. $ 68,449
-----------
ITALY -- 1.3%
89,800 Eni S.p.A. (Energy Sources)........................................................... 496,795
37,800 La Rinascente S.p.A. (Food)........................................................... 231,041
-----------
727,836
-----------
JAPAN -- 21.3%
11,000 Dai Nippon Printing Co. (Printing).................................................... 229,233
11,000 Fuji Photo Film Co. (Photographic Equipment & Supplies)............................... 422,080
80,000 Hitachi Ltd. (Hit. Seisakusho) (Electrical & Electronics)............................. 734,339
128,000 Ishikawajima Harima Heavy Industries (Machinery)...................................... 389,531
68 Japan Tobacco Inc. (Tobacco).......................................................... 544,900
69,000 Japan Wool Textile Co. (Apparel & Textiles)........................................... 410,833
28,000 JGC Engineering & Constructuction Corp. (Engineering)................................. 118,090
51,000 Kajima Corp. (Building & Construction)................................................ 267,389
72,000 Kansai Paint Co. (Chemicals).......................................................... 232,805
14,000 Kao Corp. (Household Products)........................................................ 206,078
66,000 Koito Manufacturing Co., Ltd. (Automotive -- Parts & Equipment)....................... 480,298
36,000 Marudai Food Co., Ltd. (Food)......................................................... 121,761
33,000 Matsushita Electric Industries (Electrical & Electronics)............................. 605,830
150,000 Mitsubishi Chemical Corp. (Chemicals)................................................. 390,738
47,000 Mitsubishi Estate Co. (Real Estate)................................................... 656,853
27,000 Mitsubishi Heavy Industries (Aerospace/Defense Equipment)............................. 178,400
79,000 Nihon Cement Co. (Building Materials)................................................. 233,881
80,000 Nikko Securities Co. (Banking & Finance).............................................. 376,432
149,000 Nippon Yusen Kabushiki Kaish (Shipping)............................................... 535,993
47,250 Nissan Fire & Marine Insurance (Insurance)............................................ 207,091
58,000 Nisshinbo Industries Inc. (Apparel & Textiles)........................................ 374,116
16,000 Sanwa Bank Ltd. (Banking & Finance)................................................... 198,470
3,900 Sony Corp. (Electrical & Electronics)................................................. 338,640
53,000 Sumitomo Marine & Fire (Insurance).................................................... 354,137
213,000 Tokyo Gas (Natural Gas)............................................................... 510,812
26,000 Tokyo Steel Manufacturing (Metals & Mining)........................................... 510,924
69,000 Toray Industries Inc. (Chemicals)..................................................... 456,481
25,000 Tostem Corporation (Metals & Mining).................................................. 518,917
10,000 Uny Co. (Retail)...................................................................... 182,758
139 West Japan Railway (Transportation)................................................... 477,031
35,000 Yamaha Motor Co. (Automotive)......................................................... 315,485
23,000 Yamanouchi Pharmaceutical (Pharmaceuticals)........................................... 547,778
-----------
11,828,104
-----------
NETHERLANDS -- 4.6%
7,800 Akzo Nobel (Chemicals)................................................................ 1,208,732
9,387 Internationale Nederlanden Groep NV (Banking & Finance)............................... 408,431
18,700 Koninklijke Papierfabrieken BT NV (Paper & Forest Products)........................... 401,765
4,800 Philips Electronics NV (Electronics).................................................. 341,475
5,040 Royal PTT Nederland (Telecommunications).............................................. 178,655
-----------
2,539,058
-----------
NEW ZEALAND -- 0.5%
10,300 Ceramco Corp. Ltd. (Diversified)...................................................... 10,528
43,840 Fletcher Challenge Forestry Shares (Forest Products).................................. 51,533
116,000 Fletcher Challenge Paper Shares (Paper & Forest Products)............................. 234,177
-----------
296,238
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-141
<PAGE>
<PAGE>
UBS International Equity Portfolio
Schedule of Investments
August 29, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ----------- -------------------------------------------------------------------------------------- -----------
<C> <S> <C>
SINGAPORE -- 2.5%
280,579 Dairy Farm International Holdings (Food).............................................. $ 235,686
79,696 Hong Kong Land Holdings (Real Estate)................................................. 230,321
29,765 Jardine Matheson Holdings (Diversified)............................................... 208,355
141,250 Keppel Corp., Ltd. (Transportation)................................................... 504,631
180,000 United Overseas Land Ltd. (Real Estate)............................................... 208,406
-----------
1,387,399
-----------
SOUTH KOREA -- 1.5%
25,000 Hyundai Motor Co. GDR (Automotive).................................................... 190,625
1,870 Hyundai Motor Co., Ltd. (Automotive).................................................. 56,359
1,360 Korea Housing Bank (Banking & Finance)................................................ 28,791
220 Korea Mobile Telecom Corp. (Telecommunications)....................................... 166,625
8,720 Korean Air (Airlines)*................................................................ 132,061
11,310 Shinhan Bank (Banking & Finance)...................................................... 115,817
5,600 Yukong Ltd. (Oil Refining)............................................................ 128,443
-----------
818,721
-----------
SPAIN -- 0.8%
41,692 Uralita (Building Materials).......................................................... 416,565
-----------
SWEDEN -- 2.7%
13,050 Electrolux (Household Appliances)..................................................... 927,199
8,000 Sparbanken Sverige (Banking & Finance)................................................ 173,564
26,000 Stora Kopparbergs -- A shares (Paper & Forest Products)............................... 412,342
-----------
1,513,105
-----------
SWITZERLAND -- 5.5%
41 Bobst AG (Machinery).................................................................. 63,066
600 Forbo Holding (Building Materials).................................................... 248,665
1,450 Nestle SA (Food & Beverages).......................................................... 1,684,971
555 Novartis (Pharmaceuticals)............................................................ 785,854
210 Schindler Holding AG (Machinery)...................................................... 265,189
-----------
3,047,745
-----------
THAILAND -- 1.5%
39,000 Bangkok Bank Public Company, Ltd. (Banking & Finance)................................. 193,284
15,000 Italian-Thai Development PLC (Building & Construction)................................ 26,833
58,000 Shinawatra Computer Company -- Foreign Shares (Technology)............................ 289,150
5,000 Shinawatra Computer Company -- Local Shares (Technology).............................. 22,287
45,350 TelecomAsia Corp. -- Foreign Shares (Telecommunications).............................. 39,897
44,650 TelecomAsia Corp. -- Local Shares (Telecommunications)................................ 36,335
60,000 Thai Farmers Bank Public Co., Ltd. (Banking & Finance)................................ 172,434
58,000 Thai Military Bank, Ltd. (Banking & Finance).......................................... 40,821
-----------
821,041
-----------
TOTAL COMMON STOCK (COST $44,868,312)................................................. 46,073,349
-----------
CONVERTIBLE PREFERRED STOCK -- 1.7%
JAPAN -- 1.7%
114,000,000 Sakura Finance, Series II, 0.75%, due 10/01/01** (Banking & Finance)
(Cost $988, 849).................................................................... 942,733
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-142
<PAGE>
<PAGE>
UBS International Equity Portfolio
Schedule of Investments
August 29, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
VALUE SECURITY DESCRIPTION COUPON MATURITY VALUE
- ---------- ---------------------------------------------------------------- ------ -------- -----------
<C> <S> <C> <C> <C>
TIME DEPOSIT -- 4.9%
UNITED STATES -- 4.9%
Investors Bank and Trust Co. (Banking & Finance)
$2,700,000 (Cost $2,700,000)............................................... 5.20 % 9/2/97 $ 2,700,000
-----------
TOTAL INVESTMENTS AT MARKET VALUE -- 89.7%
(COST $48,557,161)................................................................................ 49,716,082
OTHER ASSETS IN EXCESS OF LIABILITIES -- 10.3%...................................................... 5,717,936
-----------
NET ASSETS -- 100.0%................................................................................ $55,434,018
-----------
-----------
</TABLE>
- ------------------------
GDR -- Global Depository Receipts.
* Non-Income producing security.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At August 31, 1997, the value of
this security amounted to $942,733 or 1.7% of net assets.
Note: Based upon the cost of investments of $48,557,161 for Federal Income Tax
purposes at August 29, 1997, the aggregate gross unralized appreciation
and depreciation was $4,628,751 and $3,469,830, respectively, resulting in
net unrealized appreciation of $1,158,921.
SUMMARY OF OPEN FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
FOREIGN U.S. DOLLAR U.S. DOLLAR
CURRENCY U.S. DOLLAR VALUE AT NET UNREALIZED
CURRENCY AND SETTLEMENT DATE UNITS SOLD COST AUGUST 29, 1997 DEPRECIATION
- ------------------------------------------------------ ---------- ----------- --------------- --------------
<S> <C> <C> <C> <C>
PURCHASE CONTRACTS
Australian Dollar, 9/03/97 242,235 181,022 178,074 $ (2,948)
Singapore Dollar, 9/03/97 69,875 46,405 46,233 (172)
--------------
$ (3,120)
--------------
--------------
</TABLE>
See notes to financial statements.
SAI-143
<PAGE>
<PAGE>
UBS International Equity Portfolio
Statement of Assets and Liabilities
August 29, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $48,557,161).......................................... $49,716,082
Cash.............................................................................. 5,943,362
Foreign currency (cost $916,413).................................................. 135,731
Receivable for investment securities sold......................................... 187,613
Dividends receivable.............................................................. 53,472
Interest receivable............................................................... 25,395
Deferred organization expenses and other assets................................... 28,409
-----------
Total Assets................................................................. 56,090,064
-----------
LIABILITIES:
Investment advisory fees payable.................................................. 24,446
Administrative services fees payable.............................................. 9,988
Payable for investment securities purchased....................................... 547,626
Unrealized depreciation on open forward foreign currency contracts................ 3,120
Other accrued expenses............................................................ 70,866
-----------
Total Liabilities............................................................ 656,046
-----------
NET ASSETS........................................................................ $55,434,018
-----------
-----------
COMPOSITION OF NET ASSETS:
Paid-in capital for beneficial interests.......................................... $55,434,018
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-144
<PAGE>
<PAGE>
UBS International Equity Portfolio
Statement of Operations
For the period January 1, 1997 through August 29, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign withholding tax of $146,199).................... $559,972
Interest.................................................................. 211,471
--------
Investment income.................................................... $ 771,443
EXPENSES
Investment advisory fees.................................................. 261,642
Administrative services fees.............................................. 19,607
Custodian fees and expenses............................................... 54,763
Fund accounting fees...................................................... 31,499
Audit fees................................................................ 26,635
Amortization of organization expenses..................................... 6,149
Legal fees................................................................ 2,059
Trustees' fees............................................................ 5,348
Insurance expense......................................................... 4,294
Miscellaneous expenses.................................................... 1,407
--------
Total expenses....................................................... 413,403
Less: Fee waiver..................................................... (107,735)
--------
Net expenses......................................................... 305,668
----------
Net investment income..................................................... 465,775
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities transactions.............................. 918,083
Net realized loss on foreign currency transactions........................ (30,608)
Net change in unrealized appreciation of investments...................... 1,158,921
Net change in unrealized depreciation of foreign currency contracts and
translations............................................................ (365,800)
----------
Net realized and unrealized gain on investments........................... 1,680,596
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................... $2,146,371
----------
----------
</TABLE>
- ------------------------
See notes to financial statements.
SAI-145
<PAGE>
<PAGE>
UBS International Equity Portfolio
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EIGHT MONTHS
ENDED APRIL 2, 1996*
AUGUST 29, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
--------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income........................................................... $ 465,775 $ 483,834
Net realized gain on securities and foreign currency transactions............... 887,475 372,215
Net change in unrealized appreciation of investments, foreign currency contracts
and foreign currency translations............................................. 793,121 367,572
--------------- -----------------
Net increase in net assets resulting from operations............................ 2,146,371 1,223,621
--------------- -----------------
CAPITAL TRANSACTIONS:
Proceeds from contributions..................................................... 31,793,589 60,373,286
Value of withdrawals............................................................ (20,052,521) (20,050,328)
--------------- -----------------
Net increase in net assets from capital transactions............................ 11,741,068 40,322,958
--------------- -----------------
NET INCREASE IN NET ASSETS...................................................... 13,887,439 41,546,579
NET ASSETS:
Beginning of period............................................................. 41,546,579 --
--------------- -----------------
End of period................................................................... $ 55,434,018 $ 41,546,579
--------------- -----------------
--------------- -----------------
</TABLE>
- ------------------------
* Commencement of operations.
See notes to financial statements.
SAI-146
<PAGE>
<PAGE>
UBS International Equity Portfolio
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EIGHT MONTHS
ENDED APRIL 2, 1996*
AUGUST 29, 1997 THROUGH
(UNAUDITED) DECEMBER 31, 1996
--------------- -----------------
<S> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)................................ $55,434 $41,547
Average commission rate per share(1)..................................... $ 0.02 $ 0.02
Ratio of expenses to average net assets(2)............................... 1.01%(3) 0.88%(3)
Ratio of net investment income to average net assets(2).................. 1.54%(3) 2.07%(3)
Portfolio turnover....................................................... 20% 42%
</TABLE>
- ------------------------
(1) Most foreign securities markets do not charge commissions based on a rate
per share but as a percentage of the principal value of the transaction. As
a result, the above rate is not indicative of the commission arrangements
currently in effect.
(2) Net of fee waivers. Such fee waivers had the effect of reducing the ratio of
expenses to average net assets and increasing the ratio of net investment
income to average net assets by 0.47% (annualized) and 0.79% (annualized)
for the respective periods.
(3) Annualized.
* Commencement of operations.
See notes to financial statements.
SAI-147
<PAGE>
<PAGE>
UBS International Equity Portfolio
Notes to Financial Statements
August 29, 1997 (Unaudited)
- --------------------------------------------------------------------------------
1. GENERAL
UBS International Equity Portfolio (the 'Portfolio'), a separate series of UBS
Investor Portfolios Trust (the 'Trust'), is registered under the Investment
Company Act of 1940, as a diversified, open-end management investment company.
The Trust is organized as a trust under the laws of the State of New York.
The investment adviser of the Portfolio is Union Bank of Switzerland, New York
Branch ('UBS'); UBS International Investment London Limited ('UBSII') is the
sub-adviser of the Portfolio. Investors Fund Services (Ireland) Limited ('IBT
Ireland') acts as the Portfolio's administrator.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements:
A. INVESTMENT VALUATION -- Equity securities are valued at the last sale price
on the exchange on which they are primarily traded, or in the absence of
recorded sales, at the average of readily available closing bid and asked
prices, or at the quoted bid price. Unlisted securities are valued at the
average of the quoted bid and asked prices in the over-the-counter market.
Options on stock indices traded on national securities exchanges are valued at
their last sale price as of the close of options trading on such exchanges.
Stock index futures and related options traded on commodities exchanges are
valued at their last sales price as of the close of trading on such exchanges.
Securities or other assets for which market quotations are not readily available
are valued at fair value in accordance with procedures established by and under
the general supervision of the Portfolio's Board of Trustees (the 'Trustees').
Debt securities that mature in 60 days or less are valued at amortized cost,
which approximates market value. The amortized cost method involves valuing a
security at its cost on the date of purchase or, in the case of securities
purchased with more than 60 days until maturity, at their market value each day
until the 61st day prior to maturity, and thereafter assuming a constant
amortization to maturity of the difference between the principal amount due at
maturity and such valuation.
Trading in securities on most foreign exchanges and over-the-counter markets is
normally completed before the close of the New York Stock Exchange and may also
take place on days on which the New York Stock Exchange is closed. If events
materially affecting the value of foreign securities occur between the time when
the exchange on which they are traded closes and the pricing of the Portfolio,
such securities will be valued at fair value in accordance with procedures
established by and under the general supervision of the Trustees.
B. FOREIGN CURRENCY TRANSLATION -- The accounting records of the Portfolio are
maintained in U.S. dollars. Assets, including investment securities, and
liabilities denominated in foreign currency are translated into U.S. dollars at
the prevailing rate of exchange at period-end. Purchases and sales of
securities, income and expenses are translated at the prevailing rate of
exchange on the respective dates of such transactions. Gain/loss on translation
of foreign currency includes net exchange gains and losses, gains and losses on
disposition of foreign currency and adjustments to the amount of foreign taxes
withheld.
The assets and liabilities are presented at the exchange rates and market values
at the close of the period. The changes in net assets arising from changes in
exchange rates and the changes in net assets resulting from changes in market
prices of securities at period-end are not separately presented.
SAI-148
<PAGE>
<PAGE>
UBS International Equity Portfolio
Notes to Financial Statements
August 29, 1997 (Unaudited)
- --------------------------------------------------------------------------------
However, gains and losses from certain foreign currency transactions are treated
as ordinary income for U.S. Federal income tax purposes.
C. FORWARD FOREIGN CURRENCY CONTRACTS -- The Portfolio may enter into forward
foreign currency contracts in connection with planned purchases or sales of
securities or to hedge the U.S. dollar value of portfolio securities denominated
in a particular currency. The Portfolio could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts
and from unanticipated movements in the value of a foreign currency relative to
the U.S. dollar. The forward foreign currency contracts are marked-to-market
daily using the daily exchange rate of the underlying currency and any resulting
gains or losses are recorded for financial statement purposes as unrealized
gains or losses until the contract settlement date.
The Portfolio's use of forward contracts involves, to varying degrees, elements
of market risk in excess of the amount recognized in the statement of assets and
liabilities. The contract or notional amounts reflect the extent of the
Portfolio's involvement in these financial instruments. Risks arise from the
possible movements in the foreign exchange rates underlying these instruments.
The unrealized appreciation/depreciation on forward contracts reflects the
Portfolio's exposure at period-end to credit loss in the event of a
counterparty's failure to perform its obligations.
D. ACCOUNTING FOR INVESTMENTS -- Securities transactions are accounted for on
trade date. Realized gains and losses on security transactions are determined on
the identified cost basis. Dividend income and other distributions from
portfolio securities are recorded on the ex-dividend date, except, if the ex-
dividend date has passed, certain dividends from foreign securities are recorded
as soon as the Portfolio is informed of the ex-dividend date. Dividend income is
recorded net of foreign taxes withheld where recovery of such taxes is not
assured. Withholding taxes on foreign dividends have been provided for in
accordance with the Portfolio's understanding of the applicable countries' tax
rules and rates. Recoveries of foreign taxes withheld from the Portfolio's
income are generally recorded, where applicable, by the funds investing in the
Portfolio. Interest income, adjusted for amortization of premiums and accretion
of discounts on investments, is accrued daily.
E. U.S. FEDERAL INCOME TAXES -- The Portfolio is considered a partnership under
the U.S. Internal Revenue Code (the 'Code'). As such, each investor in the
Portfolio will be taxed on its share of the Portfolio's ordinary income and
capital gains. Accordingly, no provision for federal income taxes is necessary.
It is intended that the Portfolio will be managed in such a way that an investor
will be able to satisfy the requirements of the Code applicable to regulated
investment companies.
F. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Portfolio in
connection with its organization in the amount of approximately $40,000 have
been deferred and are being amortized on a straight line basis over five years
from the Portfolio's commencement of operations (April 2, 1996).
G. OTHER -- The Portfolio bears all costs of its operations other than expenses
specifically assumed by UBS, UBSII and IBT Ireland. Expenses incurred by the
Trust on behalf of any two or more portfolios are allocated in proportion to net
assets of each portfolio, except when allocations of direct expenses to each
portfolio can otherwise be made fairly. Expenses directly attributable to the
Portfolio are charged directly to the Portfolio.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. INVESTMENT ADVISORY AGREEMENT -- The Portfolio has retained the services of
UBS as investment adviser and UBSII as investment sub-adviser. UBSII 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 subject to the supervision of UBS and the Trustees. As compensation
for overall investment management services, the Trust has agreed to pay UBS an
investment advisory fee, accrued daily and payable monthly, at an annual rate of
0.85% of the Portfolio's average daily net
SAI-149
<PAGE>
<PAGE>
UBS International Equity Portfolio
Notes to Financial Statements
August 29, 1997 (Unaudited)
- --------------------------------------------------------------------------------
assets. UBS, in turn, has agreed to pay UBSII a fee, accrued daily and payable
monthly, at an annual rate of 0.75% of the Portfolio's first $20 million average
daily net assets, 0.50% of the next $30 million average daily net assets and
0.40% of the Portfolio's average daily net assets in excess of $50 million. For
the eight months ended August 29, 1997, the investment advisory fee amounted to
$261,642. UBS voluntarily agreed to waive $107,735 of this amount.
B. ADMINISTRATION AGREEMENT -- Under the terms of an Administration Agreement
with the Trust, effective March 13, 1997, IBT Ireland provides overall
administrative services and general office facilities to the Portfolio and the
Trust. As compensation for such services, the Portfolio has agreed to pay IBT
Ireland an administrative services fee, accrued daily and payable monthly, at an
annual rate of 0.07% of the Portfolio's first $100 million average daily net
assets and 0.05% of the Portfolio's average daily net assets in excess of $100
million. Prior to March 13, 1997, Signature Financial Group (Grand Cayman), Ltd.
('SFG') provided overall administrative services and general office facilities
to the Portfolio and the Trust. As compensation for such services, the Portfolio
had agreed to pay SFG an administrative services fee, accrued daily and paid
monthly, at an annual rate of 0.05% of the Portfolio's average daily net assets.
For the eight months ended August 29, 1997, the administrative services fee
amounted to $19,607.
4. PURCHASES AND SALES OF INVESTMENTS
For the eight months ended August 29, 1997, purchases and sales of investment
securities, excluding short-term investments, aggregated $18,435,442 and
$8,069,929, respectively.
SAI-150
<PAGE>
<PAGE>
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements:
The following financial statements are included in Part A:
Financial Highlights for UBS Institutional International Equity Fund.
The following financial statements are included in Part B:
UBS Bond Fund
Statement of Assets and Liabilities, December 31, 1996
Statement of Operations for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Statement of Changes in Net Assets for the period April 2, 1996 (commencement
of operations) through December 31, 1996
Financial Highlights for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Notes to Financial Statements, December 31, 1996
Report of Independent Accountants
UBS Bond Portfolio
Schedule of Investments, December 31, 1996
Statement of Assets and Liabilities, December 31, 1996
Statement of Operations for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Statement of Changes in Net Assets for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Notes to Financial Statements, December 31, 1996
Financial Highlights for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Report of Independent Accountants
UBS U.S. Equity Fund
Statement of Assets and Liabilities, December 31, 1996
Statement of Operations for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Statement of Changes in Net Assets for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Financial Highlights for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Notes to Financial Statements, December 31, 1996
Report of Independent Accountants
UBS U.S. Equity Portfolio
Schedule of Investments, December 31, 1996
Statement of Assets and Liabilities, December 31, 1996
Statement of Operations for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Statement of Changes in Net Assets for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Notes to Financial Statements, December 31, 1996
Financial Highlights for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Report of Independent Accountants
UBS International Equity Fund
Statement of Assets and Liabilities, December 31, 1996
Statement of Operations for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Statement of Changes in Net Assets for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Financial Highlights for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Notes to Financial Statements, December 31, 1996
Report of Independent Accountants
UBS International Equity Portfolio
Schedule of Investments, December 31, 1996
Statement of Assets and Liabilities, December 31, 1996
Statement of Operations for the period April 2, 1996 (commencement of
<PAGE>
<PAGE>
operations) through December 31, 1996
Statement of Changes in Net Assets for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Financial Highlights for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Notes to Financial Statements, December 31, 1996
Report of Independent Accountants
UBS Bond Fund
Statement of Assets and Liabilities, June 30, 1997 (unaudited)
Statement of Operations for the six months ended June 30, 1997 (unaudited)
Statement of Changes in Net Assets for the six months ended
June 30, 1997 (unaudited)
Statement of Changes in Net Assets for the period April 2, 1996 (commencement
of operations) through December 31, 1996
Financial Highlights for the six months ended June 30, 1997 (unaudited)
Financial Highlights for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Notes to Financial Statements June 30, 1997 (unaudited)
UBS Bond Portfolio
Schedule of Investments, June 30, 1997 (unaudited)
Statement of Assets and Liabilities, June 30, 1997 (unaudited)
Statement of Operations for the six months ended June 30, 1997 (unaudited)
Statement of Changes in Net Assets for the six months ended
June 30, 1997 (unaudited)
Statement of Changes in Net Assets for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Financial Highlights for the six months ended June 30, 1997 (unaudited)
Financial Highlights for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Notes to Financial Statements, June 30, 1997 (unaudited)
UBS U.S. Equity Fund
Statement of Assets and Liabilities, June 30, 1997 (unaudited)
Statement of Operations for the six months ended June 30, 1997 (unaudited)
Statement of Changes in Net Assets for the six months ended June 30, 1997
(unaudited)
Statement of Changes in Net Assets for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Financial Highlights for the six months ended June 30, 1997 (unaudited)
Financial Highlights for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Notes to Financial Statements, June 30, 1997 (unaudited)
UBS U.S. Equity Portfolio
Schedule of Investments, June 30, 1997 (unaudited)
Statement of Assets and Liabilities, June 30, 1997 (unaudited)
Statement of Operations for the six months ended June 30, 1997 (unaudited)
Statement of Changes in Net Assets for the six months ended June 30, 1997
(unaudited)
Statement of Changes in Net Assets for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Financial Highlights for the six months ended June 30, 1997 (unaudited)
Financial Highlights for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Notes to Financial Statements, June 30, 1997 (unaudited)
UBS International Equity Fund
Statement of Assets and Liabilities, June 30, 1997 (unaudited)
Statement of Operations for the six months ended June 30, 1997 (unaudited)
Statement of Changes in Net Assets for the six months ended June 30, 1997
(unaudited)
Statement of Changes in Net Assets for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Financial Highlights for the six months ended June 30, 1997 (unaudited)
Financial Highlights for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Notes to Financial Statements, June 30, 1997 (unaudited)
UBS International Equity Portfolio
Schedule of Investments, June 30, 1997 (unaudited)
Statement of Assets and Liabilities, June 30, 1997 (unaudited)
Statement of Operations for the six months ended June 30, 1997 (unaudited)
<PAGE>
<PAGE>
Statement of Changes in Net Assets for the six months ended June 30, 1997
(unaudited)
Statement of Changes in Net Assets for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Financial Highlights for the six months ended June 30, 1997 (unaudited)
Financial Highlights for the period April 2, 1996 (commencement of
operations) through December 31, 1996
Notes to Financial Statements, June 30, 1997 (unaudited)
UBS Institutional International Equity Fund
Statement of Assets and Liabilities August 29, 1997 (unaudited)
Statement of Operations for the period April 14, 1997 (commencement of
operations) through August 29, 1997 (unaudited)
Statement of Changes in Net Assets for the period April 14, 1997
(commencement of operations) through August 29, 1997 (unaudited)
Financial Highlights for the period April 14, 1997
(commencement of operations) through August 29, 1997 (unaudited)
Notes to Financial Statements August 29, 1997 (unaudited)
UBS International Equity Portfolio
Schedule of Investments August 29, 1997 (unaudited)
Statements of Assets and Liabilities August 29, 1997 (unaudited)
Statement of Operations for the period January 1, 1997
through August 29, 1997 (unaudited)
Statement of Changes in Net Assets for the eight months ended
August 31, 1997 (unaudited)
Statement of Changes in Net Assets for period April 2, 1996
(commencement of operations) through December 31, 1996
Financial Highlights for the eight months ended August 29, 1997
Financial Highlights for the period April 2, 1996
(commencement of operations) through December 31, 1996
Notes to Financial Statements, August 29, 1997 (unaudited)
(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) Opinion and consent of independent accountants.4
(13) Subscription Agreement between the Company and Signature Broker-Dealer
Services, Inc. with respect to the Company's initial capitalization.2
(17) Financial Data Schedules
(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.
4. Filed herewith.
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 September 19, 1997
UBS Tax Exempt Bond Fund: 1
<PAGE>
<PAGE>
UBS Bond Fund: 51
UBS U.S. Equity Fund: 90
UBS International Equity Fund: 110
UBS Institutional International Equity Fund: 1
UBS Small Cap Fund: 0
UBS Large Cap Growth Fund: 0
UBS High Yield Bond Fund: 0
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
Lawrence E. Gore Managing Director
Peter E. Guernsey Managing Director
Alfredo F. Roth Managing Director
Steven A. Babus Vice President
</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 U.S. Equity Fund, UBS
International Equity Fund, UBS Institutional International Equity Fund, UBS
Small Cap Fund, UBS Large Cap Growth Fund and UBS High Yield Bond 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
Stephen 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 The Royal Trust Tower, Toronto
Dominion Center, Suite 3000, Toronto, Ontario, M5K1G8.
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 Small Cap Fund, UBS Large Cap Growth
Fund and UBS High Yield Bond Fund (the "New Funds") using financial information,
which need not be certified, within four to six months from the date the New
Funds commence 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") certifies that it meets all of the requirements for
effectiveness of this Post-Effective Amendment pursuant to Rule 485(b) under the
Securities Act of 1933, as amended, and 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 10th day of October, 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 10th day of October,
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 10th day of October, 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 10th day of October, 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
Exhibit No. Description of Exhibit
- ----------- ----------------------
EX-99.B11 Consent of Independent Accountants.
EX-27 Financial Data Schedules
dated June 30, 1997 for:
UBS Bond Fund
UBS U.S. Equity Fund,
UBS International Equity Fund
dated August 29, 1997 for:
UBS Institutional International Equity Fund
STATEMENT OF DIFFERENCES
------------------------
The registered trademark symbol shall be expressed as...................... 'r'
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 5 to the registration
statement on Form N-1A (the "Registration Statement") of our reports dated
February 21, 1997, relating to the financial statements and financial highlights
of UBS Bond Fund. UBS US, Equity Fund and UBS International Equity Fund, and to
the incorporation by reference of our reports into the Prospectuses which
are incorporated by reference into this Registration Statement. We also
consent to the references to us under the heading "Financial Highlights"
in the Prospectuses and under the heading "Independent Accountants," in the
Statement of Additional Information.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
New York, New York
October 10, 1997
<PAGE>
<PAGE>
October 7, 1997
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
consituting part of this Post-Effective Amendment No. 5 to the registration
statement on Form N-1A (the "Registration Statement") of our reports dated
February 21, 1997, relating to the financial statements and financial highlights
of UBS Bond Portfolio, UBS U.S. Equity Portfolio and UBS International Equity
Portfolio, and to the incorporation by reference of our reports into the
Prospectuses which are incorporated by reference into this Registration
Statement. We also consent to the references to us under the heading
"Financial Highlights" in the Prospectuses and under the heading "Independent
Accountants" in the Statement of Additional Information.
/s/ Price Waterhouse
PRICE WATERHOUSE
CHARTERED ACCOUNTANTS
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<NAME> UBS INTERNATIONAL EQUITY FUND
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<NAME> UBS INSTIT INTERNATIONAL EQUITY FUND
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