<PAGE>
<PAGE>
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UBS
HIGH YIELD
BOND
FUND
-----------
UBS
PRIVATE INVESTOR
FUNDS, INC.
ANNUAL REPORT
DECEMBER 31, 1997
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<PAGE>
<PAGE>
UBS Private Investor Funds, Inc.
Chairman's Letter
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Dear Shareholder,
Thank you for your investment in the UBS High Yield Bond Fund, which is part of
the UBS Private Investor Funds.
We are pleased to provide you with the Fund's annual report for the period ended
December 31, 1997. This report contains a letter from the portfolio manager
discussing the performance of the Fund during the period September 30, 1997
(commencement of operations) through December 31, 1997 including a market
overview. In addition, it includes a complete set of audited financial
statements as well as a schedule of investments.
The UBS Private Investor Funds are an integral part of the asset allocation
service provided by The Private Bank* of Union Bank of Switzerland, the largest
bank in Switzerland. The Funds provide investment opportunities in U.S. and
international securities markets to enhance investment performance, diversify
risk and preserve capital within your investment objectives.
The UBS Private Investor Funds bring you:
The expertise of The Private Bank's professional money managers
Global investment perspective and knowledge
A high priority on financial stability and preservation of wealth
As you are aware, in December, 1997, Union Bank of Switzerland and Swiss Bank
Corporation ('SBC') announced their intention to merge. Early in February, 1998,
the shareholders of UBS and SBC overwhelmingly approved the proposed merger.
Completion of the merger is still subject to regulatory approvals which are
expected to be received soon.
This merger will create a top-tier global financial services group which will
concentrate on clearly defined core businesses. As private banking and asset
management are core businesses of the banks, shareholders of the UBS Private
Investor Funds will continue to see a commitment to growing and building the
mutual fund business.
We will continue to keep you informed of any new developments as they occur.
To learn more about the other UBS Private Investor Funds, please call (888)
UBS-FUND. You will be provided with a copy of the prospectus which contains more
complete information including charges and expenses. Please read it carefully
before investing.
We appreciate your continued confidence in the UBS Private Investor Funds.
Sincerely,
/s/ Dr. HansPeter Lochmeier
Dr. HansPeter Lochmeier
Chairman of the Board
UBS Private Investor Funds, Inc.
- ------------
* 'The Private Bank', as used in this document, refers to Union Bank of
Switzerland, New York Branch.
This annual report must be accompanied or preceded by the Fund's prospectus.
<PAGE>
<PAGE>
UBS Private Investor Funds, Inc.
Fund Commentary
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FUND PERFORMANCE
For the period from inception (September 30, 1997) through December 31, 1997,
the UBS High Yield Bond Fund (the 'Fund') returned 2.34% versus 2.58% for the
Merrill Lynch All High Yield Bond Index (the 'Index').
This chart provides a comparison of the Fund's performance to that of the
Merrill Lynch All High Yield Bond Index. This chart compares total returns
(which includes changes in share price and reinvestment of all income dividends
and capital gains distributions) of a hypothetical $10,000 investment made on
September 30, 1997 (commencement of operations) and held through December 31,
1997.
[PERFORMANCE GRAPH]
UBS HIGH YIELD MERRILL LYNCH ALL
DATE BOND FUND HIGH YIELD BOND INDEX
---- -------------- ---------------------
9/30/97 10,000 10,000
10/31/97 9,954.05 10,066.4
11/30/97 10,055.3 10,161.7
12/31/97 10,234.3 10,258.2
ECONOMIC FORECAST
We expect the economy to grow at a 2.3% rate in the first half of 1998, after
growing at a 3.5% rate in the second half of 1997. Although domestic demand has
considerable momentum right now, the devaluations in Asia are expected to cause
a substantial widening in our trade deficit, which should lower growth by
approximately 0.6% this year. Additionally, manufacturers appear to have built
up inventories too rapidly in the second half of 1997. A downward inventory
adjustment should lower Gross Domestic Product growth by an additional 0.3%.
Finally, increasing volatility in the stock market should modestly lower the
pace of consumer spending growth in the first half. Core inflation, which ended
1997 at 2.2%, should trend lower to approximately 1.8% by year-end 1998 as the
Asian devaluations cause deflation in tradable goods prices. The combination of
slower growth and lower inflation should keep the Fed on hold through the next
six months. If events in Asia cause a greater slowdown than we have forecast,
one Fed easing is possible in the spring.
MARKET OVERVIEW
Spreads of high yield bond yields over Treasury bond yields ground steadily
tighter from early 1997 through mid-October, reaching their tightest levels of
+265 basis points (2.65%) in the third week of October. This tightening was
driven by strong credit performances, increased cash inflows into the high yield
mutual fund universe and an increase in the high yield allocation of insurance
companies and other typically high-grade investors.
When the emerging markets sold off in late October, the high yield bond market
sold off in sympathy, albeit to a much lesser extent. While emerging market
spreads over Treasury bonds widened
2
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<PAGE>
UBS Private Investor Funds, Inc.
Fund Commentary
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approximately 350 b.p. during this period, high yield spreads over Treasury
bonds widened by only 100 b.p. Over the remainder of the fourth quarter, high
yield spreads over Treasury bonds tightened back, ending the year at +330 b.p.
STRATEGY
We continue to believe that the high yield bond market offers attractive total
return opportunities for investment, despite an expected economic slowdown
driven by Asian turmoil. However, we have underweighted cyclical industries in
the Fund and overweighted industries that we feel will outperform in the
expected economy of 1998. Most notably, we continue to maintain overweight
positions in the broadcasting, cable tv, telecommunications and petroleum
production and sales industries. We believe broadcasting and cable tv are
relatively non-cyclical industries and maintain investments in bonds issued by
such companies as Argyle Television and Century Communications. In the
telecommunications industry, we have benefited from consolidation activity which
continues to drive spreads to increasingly tight levels. Our investment in the
bonds of Teleport Communications, which recently agreed to be acquired by AT&T,
has appreciated significantly since purchase. Lastly, we continue to favor the
petroleum production and sales industry, which continues to generate impressive
quarterly and annual earnings and cash flow gains despite lower commodity
prices. We expect our investments in Parker Drilling, Pride International and
Newpark Resources to continue to generate strong total returns.
Kevin J. McCormick
Portfolio Manager
Kurtis W. Krestinski
Portfolio Manager
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The Fund is not insured by the FDIC and is not a deposit with, an obligation of,
or guaranteed by Union Bank of Switzerland. The Fund is subject to investment
risks, including possible loss of principal amount invested.
Shares of the Fund are distributed by First Fund Distributors, Inc. which is not
affiliated with Union Bank of Switzerland.
Unlike other mutual funds, the Fund seeks to achieve its investment objective by
investing all of its investable assets in UBS Investor Portfolios Trust -- UBS
High Yield Bond Portfolio (the 'Portfolio') which is a separate fund with an
identical investment objective.
Union Bank of Switzerland is voluntarily waiving all shareholder servicing fees
for the Fund and reimbursing a portion of the Fund's expenses. Union Bank of
Switzerland is also waiving all of its advisory fees for the Portfolio and
reimbursing a portion of the Portfolio's expenses. If Union Bank of Switzerland
had not waived fees and reimbursed expenses, total return would have been lower.
Past performance is not a guarantee of future results. Investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
The Merrill Lynch All High Yield Bond Index is an unmanaged composite consisting
of publicly-issued, fixed-rate, non-convertible, domestic bonds that are rated
below investment grade.
3
<PAGE>
<PAGE>
UBS High Yield Bond Fund
Statement of Assets and Liabilities
December 31, 1997
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<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investment in UBS Investor Portfolios Trust --
UBS High Yield Bond Portfolio, at value............................................ $7,882,781
Receivable from sale of capital stock................................................ 8,000
Deferred organization expenses and other assets...................................... 30,855
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Total Assets............................................................... 7,921,636
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LIABILITIES:
Due to funds services agent.......................................................... 13,318
Administrative services fees payable................................................. 829
Organization costs payable........................................................... 20,000
Other accrued expenses............................................................... 26,228
----------
Total Liabilities.......................................................... 60,375
----------
NET ASSETS........................................................................... $7,861,261
----------
----------
SHARES OUTSTANDING ($0.001 par value, 10 million shares authorized).................. 78,181
----------
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NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE....................... $100.55
----------
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COMPOSITION OF NET ASSETS:
Shares of common stock, at par....................................................... $ 78
Additional paid-in capital........................................................... 7,809,648
Net unrealized appreciation of investments........................................... 31,878
Accumulated undistributed net investment income...................................... 2,277
Accumulated undistributed net realized gains on securities........................... 17,380
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Net Assets................................................................. $7,861,261
----------
----------
</TABLE>
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See notes to financial statements.
4
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<PAGE>
UBS High Yield Bond Fund
Statement of Operations
For the Period September 30, 1997 (Commencement of Operations) through December
31, 1997
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<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Investment Income and Expenses allocated from UBS Investor Portfolios
Trust -- UBS High Yield Bond Portfolio
Interest............................................................ $146,094
Dividends........................................................... 2,165
--------
Investment income.............................................. 148,259
Total expenses...................................................... $ 36,201
Less: Fee waiver and expense reimbursements......................... (19,792)
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Net expenses........................................................ 16,409
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Net Investment Income from UBS Investor Portfolios Trust --
UBS High Yield Bond Portfolio.......................................... 131,850
EXPENSES:
Shareholder service fees................................................. 4,558
Administrative services fees............................................. 1,185
Reports to shareholders expense.......................................... 15,550
Audit fees............................................................... 11,300
Registration fees........................................................ 9,188
Transfer agent fees...................................................... 3,750
Legal fees............................................................... 3,750
Fund accounting fees..................................................... 2,250
Amortization of organization expenses.................................... 1,008
Directors' fees.......................................................... 857
Miscellaneous expenses................................................... 1,250
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Total expenses...................................................... 54,646
Less: Fee waiver and expense reimbursements......................... (54,646)
--------
Net expenses........................................................ --
--------
Net investment income.................................................... 131,850
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NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS FROM UBS INVESTOR
PORTFOLIOS TRUST -- UBS HIGH YIELD BOND PORTFOLIO
Net realized gains on securities transactions............................ 17,380
Net change in unrealized appreciation of investments..................... 31,878
--------
Net realized and unrealized gain on investments from UBS Investor
Portfolios Trust -- UBS High Yield Bond Portfolio...................... 49,258
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $181,108
--------
--------
</TABLE>
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See notes to financial statements.
5
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<PAGE>
UBS High Yield Bond Fund
Statement of Changes in Net Assets
For the Period September 30, 1997 (Commencement of Operations) through December
31, 1997
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<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income......................................................................... $ 131,850
Net realized gain on securities transactions.................................................. 17,380
Net change in unrealized appreciation of investments.......................................... 31,878
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Net increase in net assets resulting from operations.......................................... 181,108
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DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income......................................................................... (129,573)
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TRANSACTIONS IN SHARES OF COMMON STOCK:
Net proceeds from sale of shares.............................................................. 7,756,774
Net asset value of shares issued to shareholders in reinvestment of dividends................. 129,246
Cost of shares redeemed....................................................................... (76,294)
-----------------
Net increase in net assets from transactions in shares of common stock........................ 7,809,726
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NET INCREASE IN NET ASSETS.................................................................... 7,861,261
NET ASSETS:
Beginning of period........................................................................... --
-----------------
End of period (including undistributed net investment income of $2,277)....................... $ 7,861,261
-----------------
-----------------
</TABLE>
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See notes to financial statements.
6
<PAGE>
<PAGE>
UBS High Yield Bond Fund
Financial Highlights
For the Period September 30, 1997 (Commencement of Operations) through December
31, 1997
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<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.................................................................... 1.80
Net realized and unrealized gain on investments.......................................... 0.52
-----------------
Total income from investment operations.................................................. 2.32
-----------------
Less dividends to shareholders from net investment income..................................... (1.77)
-----------------
Net asset value, end of period................................................................ $100.55
-----------------
-----------------
Total return.................................................................................. 2.34%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)................................................. $ 7,861
Ratio of expenses to average net assets(2)............................................... 0.90%(3)
Ratio of net investment income to average net assets(2).................................. 7.23%(3)
</TABLE>
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(1) Not annualized.
(2) Includes the Fund's share of UBS Investor Portfolios Trust -- UBS High Yield
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 4.08% (annualized).The
annualization of these ratios is affected by the fact that the Investment
Advisory Agreement and Investment Sub-Advisory Agreement was not ratified
until December 22, 1997. Prior to this date, investment advisory services
were being provided without compensation.
(3) Annualized.
See notes to financial statements.
7
<PAGE>
<PAGE>
UBS High Yield Bond Fund
Notes to Financial Statements
December 31, 1997
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1. GENERAL
UBS High Yield Bond Fund (the 'Fund') is a diversified, no-load mutual fund
registered under the Investment Company Act of 1940. The Fund is one of several
series of UBS Private Investor Funds, Inc. (the 'Company'), an open-end
management investment company organized as a corporation under Maryland law. At
December 31, 1997, the Company included six other funds, UBS Bond Fund, UBS
Value Equity Fund, UBS Institutional International Equity Fund, UBS
International Equity Fund, UBS Small Cap Fund and UBS Large Cap Growth 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 High Yield 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. At December
31, 1997, certain shares of the Fund were held by UBS or its affiliates on
behalf of its clients. Three shareholders, individually owning greater than 10%
of the shares of the Fund, collectively held 52.1% at December 31, 1997.
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
(60.0% at December 31, 1997). Valuation of securities by the Portfolio is
discussed in Note 2A of the Portfolio's Notes to Financial Statements.
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
8
<PAGE>
<PAGE>
UBS High Yield Bond Fund
Notes to Financial Statements
December 31, 1997
- --------------------------------------------------------------------------------
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 period ended December 31, 1997, there were no
permanent 'book/tax' differences.
E. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Fund in connection
with its organization in the amount of approximately $20,000 have been deferred
and are being amortized on a straight line basis over five years from the Fund's
commencement of operations (September 30, 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, 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 September 30, 1997
(commencement of operations) to December 31, 1997, the administrative services
fee amounted to $1,185.
B. DISTRIBUTION AGREEMENT -- Under the terms of a Distribution Agreement, 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. 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 period September 30, 1997
(commencement of operations) to December 31, 1997, the shareholder service fee
amounted to $4,558, 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 0.90% of the Fund's
average daily net assets. For the period September 30, 1997 (commencement of
operations) to December 31, 1997, UBS reimbursed the Fund for expenses totaling
$50,088 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, 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
9
<PAGE>
<PAGE>
UBS High Yield Bond Fund
Notes to Financial Statements
December 31, 1997
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during the period September 30, 1997 (commencement of operations) through
December 31, 1997 were as follows:
<TABLE>
<S> <C>
Shares subscribed................................................... 77,644
Shares issued in reinvestment of dividends.......................... 1,296
Shares redeemed..................................................... (759)
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Net increase in shares outstanding.................................. 78,181
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-------
</TABLE>
10
<PAGE>
<PAGE>
UBS High Yield Bond Fund
Report of Independent Accountants
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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 High Yield Bond Fund (the 'Fund') (one of the funds constituting UBS
Private Investor Funds, Inc.) at December 31, 1997, and the results of its
operations, the changes in its net assets and the financial highlights for the
period September 30, 1997 (commencement of operations) through December 31,
1997, 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 Americas
New York, New York
February 17, 1998
11
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Schedule of Investments
December 31, 1997
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<TABLE>
<CAPTION>
FACE COUPON MATURITY MARKET
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- -------- ------------------------------------------------------------------- ------ -------- -----------
<C> <S> <C> <C> <C>
CORPORATE OBLIGATIONS -- 91.0%
CORPORATE OBLIGATIONS -- DOMESTIC -- 88.1%
ADVERTISING -- 4.5%
$200,000 Lamar Advertising Company.......................................... 8.63% 9/15/07 $ 206,500
250,000 Outdoor Communications, Inc........................................ 9.25% 8/15/07 256,250
125,000 Outdoor Systems, Inc............................................... 8.88% 6/15/07 130,625
-----------
593,375
-----------
BROADCASTING -- 8.8%
105,000 Argyle Television, Inc............................................. 9.75% 11/01/05 117,600
300,000 Chancellor Media Corporation....................................... 8.75% 6/15/07 306,748
250,000 Jacor Communications Co.**......................................... 8.75% 6/15/07 256,250
225,000 Sinclair Broadcast Group, Inc.**................................... 9.00% 7/15/07 230,625
250,000 Young Broadcasting Inc............................................. 8.75% 6/15/07 246,250
-----------
1,157,473
-----------
BUILDING MATERIALS -- 7.2%
278,000 American Standard, Inc. (0.00% until 6/01/98, 10.50%
thereafter)(a)................................................... 0.00% 6/01/05 280,085
125,000 Building Materials Holding Corporation (0.00% until 7/01/99, 11.75%
thereafter)(a)................................................... 0.00% 7/01/04 118,125
300,000 Maxim Group, Inc.**................................................ 9.25% 10/15/07 297,000
250,000 Nortek, Inc.**..................................................... 9.13% 9/01/07 255,000
-----------
950,210
-----------
CABLE TV -- 14.7%
200,000 Adelphia Communications Corporation................................ 9.25% 10/01/02 205,000
135,000 Cablevision Systems Corporation.................................... 9.25% 11/01/05 143,100
200,000 Cablevision Systems Corporation**.................................. 7.88% 12/15/07 204,000
250,000 Century Communications Corp.**..................................... 8.75% 10/01/07 255,000
250,000 Comcast Corporation................................................ 9.13% 10/15/06 270,000
300,000 Echostar Satellite Broadcast Corp. (0.00% until 3/15/00, 13.125%
thereafter)(a)................................................... 0.00% 3/15/04 249,000
125,000 Marcus Cable Company, L.P (0.00% until 8/01/99, 13.50%
thereafter)(a)................................................... 0.00% 8/01/04 115,625
200,000 Pegasus Communications Corporation**............................... 9.63% 10/15/05 206,000
425,000 TCI Satellite Entertainment, Inc.** (0.00% until 2/15/02, 12.25%
thereafter)(a)................................................... 0.00% 2/15/07 280,500
-----------
1,928,225
-----------
CHEMICALS -- 1.7%
125,000 ISP Holdings, Inc.................................................. 9.00% 10/15/03 130,156
100,000 NL Industries, Inc. (0.00% until 10/15/98, 13.00% thereafter)(a)... 0.00% 10/15/05 99,500
-----------
229,656
-----------
CONSUMER GOODS & SERVICES -- 5.7%
250,000 Bally Total Fitness Holding Corporation**.......................... 9.88% 10/15/07 253,750
250,000 Iron Mountain, Inc.**.............................................. 8.75% 9/30/09 256,250
235,000 Ryder TRS, Inc..................................................... 10.00% 12/01/06 236,175
-----------
746,175
-----------
COSMETICS -- 2.0%
250,000 Revlon, Inc........................................................ 10.50% 2/15/03 266,250
-----------
DRUGS & PHARMACEUTICALS -- 1.7%
225,000 NBTY, Inc.**....................................................... 8.63% 9/15/07 226,125
-----------
</TABLE>
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See notes to financial statements.
12
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Schedule of Investments (continued)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE COUPON MATURITY MARKET
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- -------- ------------------------------------------------------------------- ------ -------- -----------
<C> <S> <C> <C> <C>
ENTERTAINMENT -- 9.0%
$150,000 Fox Kids Worldwide Inc.**.......................................... 9.25% 11/01/07 $ 145,500
225,000 Grand Casinos, Inc.**.............................................. 9.00% 10/15/04 226,125
250,000 Horseshoe Gaming, L.L.C............................................ 12.75% 9/30/00 277,500
275,000 Speedway Motorsports, Inc.......................................... 8.50% 8/15/07 281,875
125,000 Trump Atlantic City Association.................................... 11.25% 5/01/06 123,438
125,000 United Artists Entertainment Company............................... 11.50% 5/01/02 130,313
-----------
1,184,751
-----------
FOOD -- 1.2%
150,000 AmeriServ Food Company**........................................... 8.875 % 10/15/06 151,500
-----------
HEALTH CARE PROVIDERS -- 1.0%
125,000 Tenet Healthcare Corporation....................................... 10.13% 3/01/05 136,563
-----------
HOUSEHOLD APPLIANCES -- 1.8%
225,000 Fedders North America**............................................ 9.38% 8/15/07 230,625
-----------
MANUFACTURING -- 3.8%
250,000 RBX Corp.**........................................................ 12.00% 1/15/03 255,625
250,000 Unicco Service Co.................................................. 9.88% 10/15/07 250,313
-----------
505,938
-----------
METALS & MINING -- 1.9%
250,000 WCI Steel, Inc..................................................... 10.00% 12/01/04 255,625
-----------
OIL SERVICES -- 0.8%
100,000 Trico Marine Services.............................................. 8.50% 8/01/05 100,500
-----------
PAPER & FOREST PRODUCTS -- 2.9%
150,000 Gaylord Container Corporation**.................................... 9.75% 6/15/07 146,250
220,000 Stone Container Corporation........................................ 11.88% 12/01/98 228,800
-----------
375,050
-----------
PETROLEUM PRODUCTION & SALES -- 10.9%
250,000 Belko Oil & Gas Corporation**...................................... 8.88% 9/15/07 255,625
125,000 Chesapeake Energy Corporation...................................... 10.50% 6/01/02 134,375
150,000 Forcenergy Inc..................................................... 8.50% 2/15/07 151,500
100,000 Gothic Energy Corporation**........................................ 12.25% 9/01/04 104,250
250,000 Newpark Resources, Inc.**.......................................... 8.63% 12/15/07 253,750
250,000 Parker Drilling Corp............................................... 9.75% 11/15/06 268,125
250,000 Pride Petroleum Services, Inc...................................... 9.38% 5/01/07 268,750
-----------
1,436,375
-----------
PRINTING & PUBLISHING -- 1.6%
200,000 Transwestern Publishing Co.**...................................... 9.63% 11/15/07 209,000
-----------
TECHNOLOGY -- 1.6%
200,000 Details Inc.**..................................................... 10.00% 11/15/05 205,500
-----------
TELECOMMUNICATIONS -- 5.3%
300,000 McLeod USA Inc. (0.00% until 3/01/02, 10.50% thereafter)(a)........ 0.00% 3/01/07 218,250
200,000 Nextel Communications, Inc.** (0.00% until 9/15/02, 10.65%
thereafter)(a)................................................... 0.00% 9/15/07 126,500
125,000 Rogers Communications, Inc.**...................................... 8.88% 7/15/07 125,000
275,000 Teleport Communications Group Inc. (0.00% until 7/01/01, 11.125%
thereafter)(a)................................................... 0.00% 7/01/07 224,125
-----------
693,875
-----------
TOTAL CORPORATE OBLIGATIONS -- DOMESTIC (COST $11,531,859)......... 11,582,791
-----------
</TABLE>
- ------------------------
See notes to financial statements.
13
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Schedule of Investments (continued)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE COUPON MATURITY MARKET
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- -------- ------------------------------------------------------------------- ------ -------- -----------
<C> <S> <C> <C> <C>
CORPORATE OBLIGATIONS -- FOREIGN -- 2.9%
ENTERTAINMENT -- 0.9%
$125,000 Livent, Inc.**..................................................... 9.38% 10/15/04 $ 125,625
-----------
FOOD -- 2.0%
250,000 Cott Corporation................................................... 9.38% 7/01/05 260,625
-----------
TOTAL CORPORATE OBLIGATIONS -- FOREIGN (COST $386,328)............. 386,250
-----------
TOTAL CORPORATE OBLIGATIONS (COST $11,918,187)..................... 11,969,041
-----------
SHARES
- --------
PREFERRED STOCK -- 1.0%
TELECOMMUNICATIONS -- 1.0%
125 Hyperion Telecommunications, Inc. (Cost $125,000)**................ 126,250
-----------
WARRANTS -- 0.0%
PETROLEUM PRODUCTION & SALES -- 0.0%
1,400 Gothic Energy Corporation Warrant (Cost $2,019).................... 2,800
-----------
TOTAL INVESTMENTS AT MARKET VALUE -- 92.0%
(COST $12,045,206)................................................. 12,098,091
OTHER ASSETS IN EXCESS OF LIABILITIES -- 8.0%...................... 1,045,200
-----------
NET ASSETS -- 100.0%............................................... $13,143,291
-----------
-----------
</TABLE>
- ------------------------
** 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,
1997, the value of these securities amounted to $5,407,625 or 41.14% of net
assets.
(a) Step coupon bond.
Note: Based upon the cost of investments of $12,045,206 for Federal Income Tax
purposes at December 31, 1997, the aggregate gross unrealized appreciation
and depreciation was $102,956 and $50,071, respectively, resulting in net
unrealized appreciation of $52,885.
See notes to financial statements.
14
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Statement of Assets and Liabilities
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment, at value (cost $12,045,206).......................................... $12,098,091
Cash............................................................................. 837,762
Dividends and interest receivable................................................ 219,245
Receivable from Investment Advisor............................................... 21,780
Deferred organization expenses and other assets.................................. 4,550
-----------
Total Assets........................................................... 13,181,428
-----------
LIABILITIES:
Administrative services fees payable............................................. 1,391
Organization expenses payable.................................................... 5,000
Other accrued expenses........................................................... 31,746
-----------
Total Liabilities...................................................... 38,137
-----------
NET ASSETS....................................................................... $13,143,291
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
15
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Statement of Operations
For the Period September 30, 1997 (Commencement of Operations) through December
31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest................................................................ $215,326
Dividends............................................................... 3,613
--------
Total income....................................................... 218,939
EXPENSES
Investment advisory fees................................................ $ 1,611
Administrative services fees............................................ 1,870
Audit fees.............................................................. 24,500
Fund accounting fees.................................................... 8,750
Custodian fees and expenses............................................. 6,000
Legal fees.............................................................. 3,750
Trustees' fees.......................................................... 1,000
Insurance expense....................................................... 375
Amortization of organization expenses................................... 252
Miscellaneous expenses.................................................. 1,000
--------
Total expenses..................................................... 49,108
Less: Fee waiver and expense reimbursements........................ (23,391)
--------
Net expenses....................................................... 25,717
--------
Net investment income................................................... 193,222
--------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on securities transactions............................ 28,936
Net change in unrealized appreciation of investments.................... 52,885
--------
Net realized and unrealized gain on investments......................... 81,821
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................... $275,043
--------
--------
</TABLE>
- ------------------------
See notes to financial statements.
16
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Statement of Changes in Net Assets
For the Period September 30, 1997 (Commencement of Operations) through December
31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN NET ASSETS FROM:
<S> <C>
OPERATIONS:
Net investment income......................................................................... $ 193,222
Net realized gain on securities transactions.................................................. 28,936
Net change in unrealized appreciation of investments.......................................... 52,885
-----------------
Net increase in net assets resulting from operations.......................................... 275,043
-----------------
CAPITAL TRANSACTIONS:
Proceeds from contributions................................................................... 12,987,656
Value of withdrawals.......................................................................... (119,408)
-----------------
Net increase in net assets from capital transactions.......................................... 12,868,248
-----------------
NET INCREASE IN NET ASSETS.................................................................... 13,143,291
NET ASSETS:
Beginning of period........................................................................... --
-----------------
End of period................................................................................. $13,143,291
-----------------
-----------------
</TABLE>
- ------------------------
See notes to financial statements.
17
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Financial Highlights
For the Period September 30, 1997 (Commencement of Operations) through December
31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)................................................. $13,143
Ratio of expenses to average net assets(1)............................................... 0.96%(2)
Ratio of net investment income to average net assets(1).................................. 7.23%(2)
Portfolio turnover....................................................................... 80%
</TABLE>
- ------------------------
(1) 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 0.88% (annualized). The annualization of these ratios is affected
by the fact that the Investment Advisory Agreement and Investment
Sub-Advisory Agreement was not ratified until December 22, 1997. Prior to
this date, investment advisory services were being provided without
compensation.
(2) Annualized.
See notes to financial statements.
18
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Notes to Financial Statements
December 31, 1997
- --------------------------------------------------------------------------------
1. GENERAL
UBS High Yield 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. At
December 31, 1997, all of the beneficial interests in the Portfolio were held by
UBS High Yield Bond Fund and UBS High Yield Bond Fund, Ltd.
The investment adviser of the Portfolio is Union Bank of Switzerland, New York
Branch ('UBS'); UBS Asset Management (New York) Inc. ('UBSAM') is the
sub-advisor 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 -- Debt securities with remaining maturities of more
than 60 days are normally valued by a pricing service approved by the
Portfolio's 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. 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.
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 $5,000 have been
deferred and are being amortized on a straight line basis over five years from
the Portfolio's commencement of operations (September 30, 1997).
E. OTHER -- The Portfolio bears all costs of its operations other than expenses
specifically assumed by UBS, UBSAM 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
19
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Notes to Financial Statements
December 31, 1997
- --------------------------------------------------------------------------------
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 -- Effective December 22, 1997, the Portfolio
has retained the services of UBS as investment adviser and UBSAM as investment
sub-advisor. UBS and UBSAM were not entitled to receive any investment advisory
fee prior to the approval of the Investment Advisory Agreement and Investment
Sub-Advisory Agreement by the Shareholders of the Fund. UBSAM 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
0.45% of the Portfolio's average daily net assets. UBS, in turn, has agreed to
pay UBSAM a fee, accrued daily and payable monthly, at an annual rate of 0.25%
of the Portfolio's first $25 million average daily net assets, 0.20% of the
Portfolio's next $25 million average daily net assets and 0.15% of the
Portfolio's average daily net assets in excess of $50 million. For the period
December 22, 1997 through December 31, 1997, the investment advisory fee
amounted to $1,611, all of which was waived.
B. ADMINISTRATION AGREEMENT -- Under the terms of an Administration Agreement
with the Trust, 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. For the period
September 30, 1997 (commencement of operations) through December 31, 1997, the
administrative services fee amounted to $1,870.
4. PURCHASES AND SALES OF INVESTMENTS
For the period September 30, 1997 (commencement of operations) through December
31, 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................................................. $ 2,019,063 $2,002,031
Corporate obligations...................................................... 18,325,115 6,351,871
----------- ----------
Total................................................................. $20,344,178 $8,353,902
----------- ----------
----------- ----------
</TABLE>
20
<PAGE>
<PAGE>
UBS High Yield 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 High Yield Bond Portfolio
(the 'Portfolio') (one of the portfolios constituting UBS Investor Portfolios
Trust) at December 31, 1997, and the results of its operations, the changes in
its net assets and the financial highlights for the period September 30, 1997
(commencement of operations) through December 31, 1997, in conformity with
accounting principles generally accepted 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 auditing standards generally accepted 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, 1997 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 17, 1998
21
<PAGE>
<PAGE>
Special Meeting of Shareholders (Unaudited)
- --------------------------------------------------------------------------------
A special meeting of the shareholders of UBS Private Investor Funds, Inc. with
respect to UBS Small Cap Fund, UBS Large Cap Growth Fund and UBS High Yield Bond
Fund was held Monday, December 22, 1997. The results of votes taken among
shareholders of UBS High Yield Bond Fund on Proposals 5 and 6 are listed below.
PROPOSAL 5
To approve a proposal to adopt an Investment Advisory Agreement between the
Trust and UBS, with respect to the assets of UBS High Yield Bond Portfolio.
<TABLE>
<CAPTION>
# OF SHARES VOTED % OF SHARES
----------------- -----------
<S> <C> <C>
Affirmative.............. 53,720.962 71.14%
Against.................. 1,089.691 1.44%
Abstain.................. 0 0.00%
</TABLE>
PROPOSAL 6
To adopt an Investment Sub-Advisory Agreement between UBS and UBSAM, with
respect to the assets of UBS High Yield Bond Portfolio.
<TABLE>
<CAPTION>
# OF SHARES VOTED % OF SHARES
----------------- -----------
<S> <C> <C>
Affirmative.............. 53,720.962 71.14%
Against.................. 1,089.691 1.44%
Abstain.................. 0 0.00%
</TABLE>
22
<PAGE>
<PAGE>
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<PAGE>
<PAGE>
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<PAGE>
<PAGE>
UBS HIGH YIELD BOND FUND
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116
INVESTMENT ADVISER Union Bank of Switzerland,
New York Branch
1345 Avenue of the Americas
New York, NY 10105
ADMINSTRATOR Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
DISTRIBUTOR First Fund Distributors, Inc.
4455 East Camelback Road
Phoenix, AZ 85018
CUSTODIAN AND TRANSFER AGENT Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
