<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
UBS
SMALL CAP
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 Small Cap 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
The UBS Small Cap Fund commenced operations with a 5.62% loss for the period
September 30, 1997 (commencement of operations) through December 31, 1997, which
compares unfavorably with a 3.35% loss for its benchmark, the Russell 2000 Total
Return Index (the 'Russell 2000').
This chart provides a comparison of the Fund's performance to that of the
Russell 2000. 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 SMALL RUSSELL 2000 TOTAL
DATE CAP FUND RETURN INDEX
---- --------- ------------------
9/30/97 10,000 10,000
10/31/97 9,536 9,561
11/30/97 9,366 9,498.85
12/31/97 9,438 9,665.08
PORTFOLIO ACTIVITY
Small cap growth stocks were hammered in the fourth quarter of 1997, in large
part because of a flight to quality by nervous investors. As investors grew
concerned about the growing turmoil in Asia, they instinctively fled to the
safety of U.S. bonds and high-quality, large cap U.S. stocks. Although most
American small cap companies will be largely untouched by the Asian crisis, it
typically takes a while for market perceptions to catch up with economic
realities in tumultuous times.
In the fourth quarter, the UBS Small Cap Fund suffered from weak performances in
its oil services and technology stocks. Many of the technology names were hurt
during the quarter by issues relating to the problems in Asia. In fact, the
technology segment of the Russell 2000 dropped a remarkable 17.4% in the fourth
quarter. In addition, several of the Fund's oil services stocks retreated from
very strong price performances that they had chalked up earlier in the year. The
Fund, because of its growth orientation, also was substantially underrepresented
in the utilities sector, which enjoyed a 16.5% return for the quarter. On the
positive side, the Fund benefited from excellent stock selection in financial
and transportation stocks in the fourth quarter.
The Fund's strategy is to identify companies with strong competitive franchises
that will enable them to generate robust earnings growth and thereby produce
above-average stock price gains in the future.
2
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UBS Private Investor Funds, Inc.
Fund Commentary
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Instead of making 'top-down' calls on the economy and individual economic
sectors, the Fund uses a 'bottom-up' approach to identify promising stocks that
are likely to grow at an above-average pace. Note, however, that we are
attentive to the overall risk of the Fund and make every effort to diversify the
portfolio across a broad range of sectors. Even so, we will overweight sectors
where we find large numbers of attractive companies, while we will underweight
sectors that lack favorable growth characteristics.
At present, the Fund is modestly overweighted relative to the Russell 2000 in
retail, energy, and transportation names, and it has a substantial overweight in
the consumer staples environment, because many of the stocks in this sector have
been chalking up excellent profit gains of late. The Fund also is moderately
underweighted in the financial, health care, technology, and utility sectors.
Cash at quarter-end was in the 3% range, which is in line with our objective of
remaining fully invested at all times.
SMALL CAP MARKET OUTLOOK
Small cap stocks underperformed large cap stocks for the fourth consecutive
year, and we calculate that the Russell 2000 has lagged the S&P 500 by a
cumulative 52 percentage points since small cap stocks lost their leadership in
March 1994. If we limit our perspective to the past three years, small cap
stocks have chalked up one of their worst three-year performances versus the S&P
500 in the past two decades. At year-end, the Russell 2000 had sunk to levels
versus the S&P 500 not seen since their lows in the early 1990s, which was
immediately prior to the beginning of the last substantial small cap rally.
On the earnings front, most market observers are questioning whether current
profit forecasts are too optimistic, especially for large cap stocks with
substantial business in Asia. The 'Asian flu' has proven to be a nasty bug and
we are seeing evidence that it will have an impact on large-cap, multi-national
earnings in general, and technology stock profits in particular. In this
environment of cutting estimates, we expect more domestically oriented small
companies to hold up relatively well, which should provide a helpful catalyst to
small cap stock performance in the months ahead. Even before adjusting for the
Asian turmoil, IBES forecasters had been projecting small cap earnings to grow
faster than large cap earnings. At the end of 1997, for instance, the IBES
consensus had forecasted a 21.5% rise in share earnings for the small cap
Russell 2000 in the year ahead, versus a 14.1% increase for the S&P 500. Over
time, we expect these superior bottom-line growth prospects to be reflected in
strong relative stock price action.
One other factor that favors a small cap rally is the recent passage of capital
gains tax reduction legislation, which will significantly improve the after-tax
returns of small cap stocks versus other financial instruments that are not as
capital gains oriented. On the two previous occasions when the U.S. pared
capital gains rates, small cap stocks substantially outperformed large cap
stocks in the two years following the reduction. Combine this favorable
legislation with excellent small cap earnings growth prospects and depressed
relative valuations, and we think all the ingredients are in place for a strong
small cap recovery over the next several years. When small cap stocks do take
the lead, they historically have outperformed their large cap counterparts for
periods of five to seven years, so the upside potential remains significant.
One question on many investors' minds is whether the stock market will have to
experience a meaningful break before small cap stocks return to the leadership
circle. Although bear markets are always a risk and small caps typically have
not held up well in declining markets, we note that smaller
3
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<PAGE>
UBS Private Investor Funds, Inc.
Fund Commentary
- --------------------------------------------------------------------------------
companies have had much less of a price runup in recent years than their large
cap brothers. Due to their recent laggard status, we think the downside risk to
small caps in a bear market is below average in the current cycle.
We appreciate your support and look forward to serving you in 1998.
Paul A. Graham, Jr. CFA
Portfolio Manager
David N. Wabnik
Portfolio Manager
- ------------------------
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
Small Cap 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. 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 Russell 2000 Total Return Index is an unmanaged index that includes 2,000
U.S. small capitalization stocks and is a common measure of the performance of
the small capitalization segment of the U.S. stock market.
4
<PAGE>
<PAGE>
UBS Small Cap Fund
Statement of Assets and Liabilities
December 31, 1997
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<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in UBS Investor Portfolios Trust -- UBS Small Cap Portfolio, at value.... $11,944,837
Receivable from sale of capital stock............................................... 25,000
Deferred organization expenses and other assets..................................... 38,289
-----------
Total Assets.............................................................. 12,008,126
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LIABILITIES:
Due to funds services agent......................................................... 5,192
Administrative services fees payable................................................ 1,160
Organizational expenses payable..................................................... 20,000
Other accrued expenses.............................................................. 27,776
-----------
Total Liabilities......................................................... 54,128
-----------
NET ASSETS.......................................................................... $11,953,998
-----------
-----------
SHARES OUTSTANDING ($0.001 par value, 10 million shares authorized)................. 126,657
-----------
-----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE...................... $94.38
-----------
-----------
COMPOSITION OF NET ASSETS:
Shares of common stock, at par...................................................... $ 127
Additional paid-in capital.......................................................... 12,476,380
Net unrealized depreciation of investments.......................................... (526,758)
Accumulated undistributed net realized gain......................................... 4,249
-----------
Net Assets................................................................ $11,953,998
-----------
-----------
</TABLE>
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See notes to financial statements.
5
<PAGE>
<PAGE>
UBS Small Cap Fund
Statement of Operations
For the Period September 30, 1997 (Commencement of Operations) through December
31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Investment Income and Expenses from UBS Investor Portfolios Trust -- UBS
Small Cap Portfolio
Interest............................................................ $ 19,156
Dividends........................................................... 7,705
---------
Investment income.............................................. 26,861
Total expenses...................................................... $ 29,904
Less: Fee waiver.................................................... (1,873)
--------
Net expenses........................................................ 28,031
---------
Net Investment Loss from UBS Investor Portfolios Trust -- UBS Small Cap
Portfolio.............................................................. (1,170)
EXPENSES:
Shareholder service fees................................................. 6,078
Administrative services fees............................................. 1,580
Reports to shareholders expense.......................................... 15,380
Audit fees............................................................... 11,300
Registration fees........................................................ 11,151
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................................................... 1,252
--------
Total expenses...................................................... 58,356
Less: Fee waiver and expense reimbursements......................... (57,213)
--------
Net expenses........................................................ 1,143
---------
Net investment loss...................................................... (2,313)
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM UBS INVESTOR
PORTFOLIOS TRUST -- UBS SMALL CAP PORTFOLIO
Net realized gain on securities transactions............................. 6,540
Net change in unrealized depreciation of investments..................... (526,758)
---------
Net realized and unrealized loss on investments from UBS Investor
Portfolios Trust -- UBS Small Cap Portfolio............................ (520,218)
---------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... ($522,531)
---------
---------
</TABLE>
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See notes to financial statements.
6
<PAGE>
<PAGE>
UBS Small Cap 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 loss............................................................ $ (2,313)
Net realized gain on securities transactions................................... 6,540
Net change in unrealized depreciation of investments........................... (526,758)
-----------------
Net decrease in net assets resulting from operations........................... (522,531)
-----------------
TRANSACTIONS IN SHARES OF COMMON STOCK:
Net proceeds from sale of shares............................................... 12,731,529
Cost of shares redeemed........................................................ (255,000)
-----------------
Net increase in net assets from transactions in shares of common stock......... 12,476,529
-----------------
NET INCREASE IN NET ASSETS..................................................... 11,953,998
NET ASSETS:
Beginning of period............................................................ --
-----------------
End of period.................................................................. $11,953,998
-----------------
-----------------
</TABLE>
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See notes to financial statements.
7
<PAGE>
<PAGE>
UBS Small Cap Fund
Financial Highlights
For the Period September 30, 1997 (Commencement of Operations) through December
31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
FOR A SHARE OUTSTANDING FOR THE PERIOD
Net asset value, beginning of period...................................................... $ 100.00
-----------------
Loss from investment operations:
Net realized and unrealized loss on investments...................................... (5.62)
-----------------
Net asset value, end of period............................................................ $ 94.38
-----------------
-----------------
Total return.............................................................................. (5.62%)(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)............................................. $ 11,954
Ratio of expenses to average net assets(2)........................................... 1.20%(3)
Ratio of net investment income to average net assets(2).............................. (0.10%)(3)
</TABLE>
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(1) Not annualized.
(2) Includes the Fund's share of UBS Investor Portfolios Trust -- UBS Small Cap
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 2.43% (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.
8
<PAGE>
<PAGE>
UBS Small Cap Fund
Notes to Financial Statements
December 31, 1997
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1. GENERAL
UBS Small Cap 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 High Yield Bond Fund, UBS
International Equity 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 Small Cap 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. One shareholder owned 19.7% of the shares of the Fund 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 include 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
(44.2% 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 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
9
<PAGE>
<PAGE>
UBS Small Cap Fund
Notes to Financial Statements
December 31, 1997
- --------------------------------------------------------------------------------
require reclassification. For the period ended December 31, 1997, the Fund
increased accumulated undistributed net investment income by $2,313, decreased
accumulated undistributed net realized gains by $2,291 and decreased
paid-in-capital by $22. 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 $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
by 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) through December 31, 1997, the administrative
services fee amounted to $1,580.
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) through December 31, 1997, the shareholder service
fee amounted to $6,078, 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 REIMBURSEMENT -- 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 1.20% of the Fund's
average daily net assets. For the period September 30, 1997 (commencement of
operations) through December 31, 1997, UBS reimbursed the Fund for expenses
totaling $51,135 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 during the period September 30, 1997
(commencement of operations) through December 31, 1997 were as follows:
<TABLE>
<S> <C>
Shares subscribed............................................. 129,190
Shares redeemed............................................... (2,533)
----------
Net increase in shares outstanding............................ 126,657
----------
----------
</TABLE>
10
<PAGE>
<PAGE>
UBS Small Cap 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 Small Cap 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 Small Cap Portfolio
Schedule of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------ -------------------------------------------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCK -- 96.7%
ADVERTISING -- 2.3%
23,700 HA-LO Industries, Inc....................................................................... $ 616,200
-----------
AIRLINES -- 1.6%
16,400 Mesaba Holdings, Inc.*...................................................................... 426,400
-----------
BANKING & FINANCIAL INSTITUTIONS -- 12.5%
17,100 Commercial Federal Corporation.............................................................. 608,119
9,100 Imperial Bancorp............................................................................ 448,744
8,000 Investors Financial Services Corporation.................................................... 368,000
20,500 North Fork Bancorporation, Inc.............................................................. 688,031
14,900 Peoples Heritage Financial Group, Inc....................................................... 685,400
9,200 U.S. Trust Corporation...................................................................... 576,150
-----------
3,374,444
-----------
BIO-TECHNOLOGY -- 2.1%
25,500 COR Therapeutics, Inc.*..................................................................... 573,750
-----------
BUILDING MATERIALS -- 2.1%
12,900 Texas Industries, Inc....................................................................... 580,500
-----------
COMMERCIAL SERVICES -- 1.3%
17,400 Norrell Corporation......................................................................... 345,825
-----------
CONSUMER FOODS -- 6.3%
14,000 American Italian Pasta Company, Class A*.................................................... 350,000
19,500 JP Foodservice, Inc.*....................................................................... 720,278
22,000 Richfood Holdings, Inc...................................................................... 621,500
-----------
1,691,778
-----------
CONSUMER GOODS & SERVICES -- 3.4%
21,500 Central Garden & Pet Company*............................................................... 564,375
11,600 Samsonite Corporation*...................................................................... 366,850
-----------
931,225
-----------
ELECTRONICS -- 4.5%
18,886 Computer Products Inc.*..................................................................... 427,296
9,000 Sanmina Corporation......................................................................... 609,750
6,800 SpeedFam International, Inc.*............................................................... 180,200
-----------
1,217,246
-----------
ENVIRONMENTAL SERVICES -- 2.1%
28,050 Tetra Tech, Inc............................................................................. 561,000
-----------
HEALTH CARE PROVIDERS -- 4.1%
14,200 FPA Medical Management, Inc.*............................................................... 264,475
11,700 Genesis Health Ventures, Inc................................................................ 308,588
12,700 Pediatrix Medical Group Inc.*............................................................... 542,925
-----------
1,115,988
-----------
HOME BUILDING -- 2.4%
19,700 Oakwood Homes Corp.......................................................................... 653,794
-----------
</TABLE>
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See notes to financial statements.
12
<PAGE>
<PAGE>
UBS Small Cap Portfolio
Schedule of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------ -------------------------------------------------------------------------------------------- -----------
<C> <S> <C>
INSURANCE -- 7.0%
21,800 Horace Mann Educators Corporation........................................................... $ 619,938
10,700 Protective Life Corporation................................................................. 639,325
10,400 Vesta Insurance Group, Inc.................................................................. 617,500
-----------
1,876,763
-----------
LODGING -- 3.9%
13,900 Interstate Hotels Company*.................................................................. 487,369
13,600 Promus Hotel Corporation*................................................................... 571,200
-----------
1,058,569
-----------
MANUFACTURING -- 2.5%
17,100 Kuhlman Corporation......................................................................... 669,038
-----------
MEDICAL SUPPLIES -- 3.0%
15,300 Patterson Dental Company*................................................................... 692,325
2,100 Safeskin Corporation........................................................................ 119,175
-----------
811,500
-----------
OIL SERVICES -- 6.2%
20,700 Pride International, Inc.*.................................................................. 522,675
13,800 R&B Falcon Corp.*........................................................................... 577,875
23,800 Tuboscope Inc.*............................................................................. 572,688
-----------
1,673,238
-----------
PACKAGING -- 0.1%
800 Ivex Packaging Corporation*................................................................. 19,200
-----------
REAL ESTATE -- 0.6%
6,800 Prime Group Realty Trust REIT(a)............................................................ 137,700
500 Trammell Crow Company*...................................................................... 12,875
-----------
150,575
-----------
RETAIL -- 9.0%
15,700 Ethan Allen Interiors Inc................................................................... 605,431
37,600 Foodmaker, Inc.*............................................................................ 566,350
22,000 Landry's Seafood Restaurants, Inc.*......................................................... 528,000
5,700 Paul Harris Stores, Inc.*................................................................... 57,356
30,000 Pier 1 Imports, Inc......................................................................... 678,750
-----------
2,435,887
-----------
SCIENTIFIC INSTRUMENTS -- 2.0%
14,300 Waters Corporation*......................................................................... 538,038
-----------
TECHNOLOGY -- 8.9%
2,700 Coherent, Inc.*............................................................................. 94,838
4,500 Concord Communications, Inc.*............................................................... 93,375
14,000 Dallas Semiconductor Corporation............................................................ 570,500
12,200 Methode Electronics, Inc., Class A.......................................................... 198,250
37,200 Paxar Corporation........................................................................... 551,025
9,400 Perceptron, Inc.*........................................................................... 203,275
10,300 SPSS, Inc.*................................................................................. 198,275
19,000 Technology Solutions Company................................................................ 501,125
-----------
2,410,663
-----------
</TABLE>
- ------------------------
See notes to financial statements.
13
<PAGE>
<PAGE>
UBS Small Cap Portfolio
Schedule of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------ -------------------------------------------------------------------------------------------- -----------
<C> <S> <C>
TRANSPORTATION -- 6.3%
7,600 Airborne Freight Corporation................................................................ $ 472,150
20,900 Coach USA, Inc.*............................................................................ 700,150
7,000 Expeditors International of Washington, Inc................................................. 269,500
8,000 Swift Transportation Co., Inc.*............................................................. 259,000
-----------
1,700,800
-----------
WATER TREATMENT SYSTEMS -- 2.5%
13,600 Culligan Water Technologies, Inc.*.......................................................... 683,400
-----------
TOTAL INVESTMENTS AT MARKET VALUE -- 96.7%
(COST $27,126,057)...................................................................... 26,115,821
OTHER ASSETS IN EXCESS OF LIABILITIES -- 3.3%............................................... 879,967
-----------
NET ASSETS -- 100.0%........................................................................ $26,995,788
-----------
-----------
</TABLE>
- ------------------------
(a) REIT -- Real Estate Investment Trust.
* Non-income producing security.
Note: Based upon the cost of investments of $27,126,057 for Federal Income Tax
purposes at December 31, 1997, the aggregate gross unrealized appreciation
and depreciation was $1,229,092 and $2,239,328, respectively, resulting in
net unrealized depreciation of $1,010,236.
See notes to financial statements.
14
<PAGE>
<PAGE>
UBS Small Cap Portfolio
Statement of Assets and Liabilities
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $27,126,057)......................................... $26,115,821
Cash............................................................................. 1,006,534
Receivable for investment securities sold........................................ 500,000
Dividends and interest receivable................................................ 12,942
Deferred organization expenses and other assets.................................. 4,549
-----------
Total Assets................................................................ 27,639,846
-----------
LIABILITIES:
Administrative services fees payable............................................. 2,643
Payable for investment securities purchased...................................... 604,904
Organization expenses payable.................................................... 5,000
Other accrued expenses........................................................... 31,511
-----------
Total Liabilities........................................................... 644,058
-----------
NET ASSETS....................................................................... $26,995,788
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
15
<PAGE>
<PAGE>
UBS Small Cap Portfolio
Statement of Operations
For the Period September 30, 1997 (Commencement of Operations) through December
31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest.............................................................. $34,600
Dividends............................................................. 14,908
-------
Investment income................................................ $ 49,508
EXPENSES:
Investment advisory fees.............................................. 4,233
Administrative services fees.......................................... 3,362
Audit fees............................................................ 24,500
Fund accounting fees.................................................. 8,750
Custodian fees and expenses........................................... 8,000
Legal fees............................................................ 3,750
Trustees' fees........................................................ 1,000
Insurance expense..................................................... 375
Amortization of organization expenses................................. 252
Miscellaneous expenses................................................ 1,000
-------
Total expenses................................................... 55,222
Less: Fee waiver................................................. (4,233)
-------
Net expenses..................................................... 50,989
-----------
Net investment loss................................................... (1,481)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities transactions.......................... 14,491
Net change in unrealized depreciation of investments.................. (1,010,236)
-----------
Net realized and unrealized loss on investments....................... (995,745)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. $ (997,226)
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
16
<PAGE>
<PAGE>
UBS Small Cap Portfolio
Statement of Changes in Net Assets
For the Period September 30, 1997 (Commencement of Operations) through December
31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment loss................................................................. $ (1,481)
Net realized gain on securities transactions........................................ 14,491
Net change in unrealized depreciation of investments................................ (1,010,236)
-----------
Net decrease in net assets resulting from operations................................ (997,226)
-----------
CAPITAL TRANSACTIONS:
Proceeds from contributions......................................................... 28,559,733
Value of withdrawals................................................................ (566,719)
-----------
Net increase in net assets from capital transactions................................ 27,993,014
-----------
NET INCREASE IN NET ASSETS.......................................................... 26,995,788
NET ASSETS:
Beginning of period................................................................. --
-----------
End of period....................................................................... $26,995,788
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
17
<PAGE>
<PAGE>
UBS Small Cap 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)............................. $26,996
Average commission rate per share.................................... $ 0.05
Ratio of expenses to average net assets(1)........................... 1.06% (2)
Ratio of net investment loss to average net assets(1)................ (0.03%)(2)
Portfolio turnover................................................... 3%
</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 0.09% (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 Small Cap Portfolio
Notes to Financial Statements
December 31, 1997
- --------------------------------------------------------------------------------
1. GENERAL
UBS Small Cap 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 the UBS
Small Cap Fund and UBS Small Cap 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 -- 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.
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').
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 $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 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-adviser. UBS and UBSAM were
19
<PAGE>
<PAGE>
UBS Small Cap Portfolio
Notes to Financial Statements
December 31, 1997
- --------------------------------------------------------------------------------
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 0.60% 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 0.40% of the Portfolio's first $25 million
average daily net assets, 0.325% of the Portfolio's next $25 million average
daily net assets and 0.25% 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 $4,233, 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 $3,362.
4. PURCHASE AND SALES OF INVESTMENTS
For the period from September 30, 1997 (commencement of operations) through
December 31, 1997, purchases and sales of investment securities, excluding
short-term investments, aggregated $27,779,049 and $667,483, respectively.
20
<PAGE>
<PAGE>
UBS Small Cap 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 Small Cap Portfolio (the
'Portfolio') (one of the portfolios constituting the 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 Small Cap Fund on Proposals 1 and 2 are listed below.
PROPOSAL 1
To approve a proposal to adopt an Investment Advisory Agreement between the
Trust and UBS, with respect to the assets of UBS Small Cap Portfolio.
<TABLE>
<CAPTION>
# OF SHARES VOTED % OF SHARES
----------------- -----------
<S> <C> <C>
Affirmative........................................ 75,692.244 74.35%
Against............................................ 1,631.646 1.60%
Abstain............................................ 0 0.00%
</TABLE>
PROPOSAL 2
To adopt an Investment Sub-Advisory Agreement between UBS and UBSAM, with
respect to the assets of UBS Small Cap Portfolio.
<TABLE>
<CAPTION>
# OF SHARES VOTED % OF SHARES
----------------- -----------
<S> <C> <C>
Affirmative........................................ 75,694.244 74.35%
Against............................................ 1,631.646 1.60%
Abstain............................................ 0 0.00%
</TABLE>
22
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<PAGE>
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<PAGE>
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<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
UBS SMALL CAP FUND
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116
INVESTMENT ADVISOR Union Bank of Switzerland,
New York Branch
1345 Avenue of the Americas
New York,NY 10105
ADMINISTRATOR Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
DISTRIBUTOR First Fund Distributors, Inc.
4455 East Camelback Road
Phoenix, AZ 85018
CUSTODIAN AND TRANSFER AGENT Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
- --------------------------------------------------------------------------------
