<PAGE>
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
UBS
HIGH YIELD
BOND
FUND
-----------
UBS
PRIVATE INVESTOR
FUNDS, INC.
SEMI-ANNUAL REPORT
JUNE 30, 1998
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
UBS Private Investor Funds, Inc.
Chairman's Letter
- --------------------------------------------------------------------------------
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 semi-annual report for the six
months ended June 30, 1998. This report contains a letter from the portfolio
manager discussing the performance of the Fund for the six months ended June 30,
1998, including a market overview. In addition, it includes a complete set of
financial statements as well as a schedule of investments.
The UBS Private Investor Funds are an integral part of the asset allocation
service provided by The Private Bank* of Union Bank of Switzerland, the largest
bank in Switzerland. The Funds provide investment opportunities in U.S. and
international securities markets to enhance investment performance, diversify
risk and preserve capital within your investment objectives.
The UBS Private Investor Funds bring you:
The expertise of The Private Bank's professional money managers
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. The
merger was completed on Monday June 29, 1998, creating UBS A.G.
UBS A.G. is a top-tier global financial services company which concentrates on
clearly defined core businesses. As private banking and asset management are
core businesses of the bank, 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 confidence in the UBS Private Investor Funds.
Sincerely,
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.
The semi-annual report must be accompanied or preceded by the Fund's prospectus.
<PAGE>
<PAGE>
UBS Private Investor Funds, Inc.
Fund Commentary
- --------------------------------------------------------------------------------
FUND PERFORMANCE
For the period January 1 through June 30, 1998 the UBS High Yield Fund (the
'Fund') returned 5.70% versus 4.51% for the Merrill Lynch High Yield Master
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 dividends and
capital gains distributions) of a hypothetical $10,000 investment made on
September 30, 1997* and held through June 30, 1998.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
UBS
High Yield Merrill Lynch All
Bond Fund High Yield Bond Index
--------- ---------------------
<S> <C> <C>
$10,000 $10,000
9,954 10,066
10,055 10,162
10,234 10,258
10,473 10,411
10,542 10,454
10,668 10,544
10,684 10,594
10,709 10,668
10,818 10,721
</TABLE>
Average Annual Total Return:
<TABLE>
<CAPTION>
UBS MERRILL LYNCH
HIGH YIELD ALL HIGH YIELD
BOND FUND BOND INDEX
---------- --------------
<S> <C> <C>
Six months ended June 30, 1998.................................. 5.70% 4.51%
Since inception* through June 30, 1998.......................... 8.18% 7.21%
</TABLE>
- ------------
* Commencement of operations -- September 30, 1997.
2
<PAGE>
<PAGE>
UBS Private Investor Funds, Inc.
Fund Commentary
- --------------------------------------------------------------------------------
ECONOMIC OVERVIEW:
Despite continued volatility and growing concern about the economic outlook in
Japan, we expect the U.S. economy to grow at a 2.5-3.0% pace over the next few
quarters, driven by strength in consumer spending and housing, which represents
over two-thirds of the economy. These sectors are expected to grow at a 3.5-4.5%
pace over the balance of 1998, supported by the continued strong growth of real
earnings, as wage gains continue to outpace inflation as well as by low
long-term interest rates and the rising value of household financial assets in
the last few years. We expect slower export growth due to decreased demand from
Asia and a downward adjustment in inventory investments to pull growth back into
the high 2% range. Inflation should remain low through the remainder of the year
owing to a strong trade-weighted dollar and continued solid productivity growth.
We expect the core CPI inflation rate to end 1998 at around 2.0-2.5%. The
Federal Reserve Bank's most likely response to our economic scenario is to leave
the funds rate unchanged through the remainder of the year.
MARKET OVERVIEW:
The spreads offered in the high yield bond market widened sharply during the
first half of 1998, increasing from +330bp to +350bp. During the second quarter
in particular, high yield spreads widened in response to a surge in primary
market issuance and an increase in the default rate versus prior periods. In
particular, telecommunications-related issuers and cyclical issuers fared poorly
in the first half, while broadcasters enjoyed strong relative performance.
Through the first half of 1998, approximately $100 billion in new issuance
entered the high yield market, increasing the overall high yield market to more
than $500 billion in outstandings.
STRATEGY:
We continue to believe that the high yield bond market offers attractive total
return opportunities, particularly for actively managed portfolios. During the
first half, we reduced our holdings in petroleum production and service
companies based on our concerns about near-term financial performance given weak
oil prices. This strategy, combined with an underweight position in steel and
paper companies and an overweight position in broadcasting companies served the
Fund well during the first half and should continue to generate superior
returns.
In addition, we continue to believe that attractive refinancing candidates exist
in the market. During the first half of 1998, the Fund benefited from several
tender offers for, among others, Petersen Publishing, Ryder TRS and Showboat
Inc. We continue to maintain investments in certain high yield issues which we
believe may benefit from tender offers in the second half of 1998.
Kevin J. McCormick
Portfolio Manager
Kurtis W. Krestinski
Portfolio Manager
3
<PAGE>
<PAGE>
UBS Private Investor Funds, Inc.
Fund Commentary
- --------------------------------------------------------------------------------
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. 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.
4
<PAGE>
<PAGE>
UBS High Yield Bond Fund
Statement of Assets and Liabilities
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in UBS Investor Portfolios Trust -- UBS High Yield Bond
Portfolio, at value............................................................... $16,195,953
Receivable from funds services agent................................................ 4,107
Receivable from sale of capital stock............................................... 500,000
Deferred organization expenses and other assets..................................... 11,806
-----------
Total Assets.............................................................. 16,711,866
-----------
LIABILITIES:
Administrative services fees payable................................................ 845
Dividends payable................................................................... 967
Payable from purchase of capital stock.............................................. 223,740
Other accrued expenses.............................................................. 22,907
-----------
Total Liabilities......................................................... 248,459
-----------
NET ASSETS.......................................................................... $16,463,407
-----------
-----------
SHARES OUTSTANDING ($0.001 par value, 10 million shares authorized)................. 160,991
-----------
-----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE...................... $ 102.26
-----------
-----------
COMPOSITION OF NET ASSETS:
Shares of common stock, at par...................................................... $ 161
Additional paid-in capital.......................................................... 16,256,834
Net unrealized depreciation of investments.......................................... (4,312)
Accumulated undistributed net investment income..................................... 11,388
Accumulated undistributed net realized gains on securities.......................... 199,336
-----------
Net Assets................................................................ $16,463,407
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
5
<PAGE>
<PAGE>
UBS High Yield Bond Fund
Statement of Operations
For the Six Months Ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Investment Income and Expenses allocated from UBS Investor
Portfolios Trust -- UBS High Yield Bond Portfolio
Interest....................................................... $ 476,948
Dividends...................................................... 349
----------
Investment income......................................... 477,297
Total expenses................................................. $ 60,185
Less: Fee waiver and expense reimbursements.................... (24,173)
----------
Net expenses................................................... 36,012
----------
Net Investment Income from UBS Investor Portfolios Trust -- UBS High
Yield Bond Portfolio.............................................. 441,285
EXPENSES:
Shareholder service fees............................................ 13,356
Administrative services fees........................................ 3,472
Registration fees................................................... 15,883
Reports to shareholders expense..................................... 11,021
Transfer agent fees................................................. 7,357
Legal fees.......................................................... 5,411
Audit fees.......................................................... 5,112
Fund accounting fees................................................ 4,463
Directors' fees..................................................... 1,700
Miscellaneous expenses.............................................. 4,258
----------
Total expenses................................................. 72,033
Less: Fee waiver and expense reimbursements.................... (59,965)
----------
Net expenses................................................... 12,068
----------
Net investment income............................................... 429,217
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM UBS
INVESTOR PORTFOLIOS TRUST -- UBS HIGH YIELD BOND PORTFOLIO
Net realized gains on securities transactions....................... 181,956
Net change in unrealized depreciation of investments................ (36,190)
----------
Net realized and unrealized gain on investments from UBS Investor
Portfolios Trust -- UBS High Yield Bond Portfolio................. 145,766
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................ $ 574,983
----------
----------
</TABLE>
- ------------------------
See notes to financial statements.
6
<PAGE>
<PAGE>
UBS High Yield Bond Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED SEPTEMBER 30, 1997*
JUNE 30, 1998 THROUGH
(UNAUDITED) DECEMBER 31, 1997
------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income......................................... $ 429,217 $ 131,850
Net realized gain on securities transactions.................. 181,956 17,380
Net change in unrealized (depreciation) appreciation of
investments................................................. (36,190) 31,878
------------- -------------
Net increase in net assets resulting from operations.......... 574,983 181,108
------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income......................................... (420,106) (129,573)
TRANSACTIONS IN SHARES OF COMMON STOCK:
Net proceeds from sale of shares.............................. 9,377,090 7,756,774
Net asset value of shares issued to shareholders from
reinvestment of dividends and distributions................. 414,926 129,246
Cost of shares redeemed....................................... (1,344,747) (76,294)
------------- -------------
Net increase in net assets from transactions in shares of
common stock................................................ 8,447,269 7,809,726
------------- -------------
NET INCREASE IN NET ASSETS.................................... 8,602,146 7,861,261
NET ASSETS:
Beginning of period........................................... 7,861,261 --
------------- -------------
End of period (including undistributed net investment income
of $11,388 and $2,277, respectively)........................ $ 16,463,407 $ 7,861,261
------------- -------------
------------- -------------
</TABLE>
- ------------------------
* Commencement of operations.
See notes to financial statements.
7
<PAGE>
<PAGE>
UBS High Yield Bond Fund
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED SEPTEMBER 30, 1997*
JUNE 30, 1998 THROUGH
(UNAUDITED) DECEMBER 31, 1997
------------- -------------------
<S> <C> <C>
FOR A SHARE OUTSTANDING FOR THE PERIOD
Net asset value, beginning of period.......................... $100.55 $100.00
------- -------
Income from investment operations:
Net investment income.................................... 4.00 1.80
Net realized and unrealized gain on investments.......... 1.67 0.52
------- -------
Total income from investment operations.................. 5.67 2.32
------- -------
Less dividends to shareholders from net investment income..... (3.96) (1.77)
------- -------
Net asset value, end of period................................ $102.26 $100.55
------- -------
------- -------
Total return.................................................. 5.70%(1) 2.34%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)................. $16,463 $ 7,861
Ratio of expenses to average net assets(2)............... 0.90%(4) 0.90%(3)(4)
Ratio of net investment income to average net
assets(2).............................................. 8.03%(4) 7.23%(3)(4)
</TABLE>
- ------------------------
* Commencement of operations.
(1) Not annualized.
(2) Includes the Fund's share of UBS Investor Portfolio 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 1.57% (annualized) and 4.08%
(annualized) for the respective periods.
(3) The annualization of these ratios is affected by the fact that the
Investment Advisory Agreement and Investment Sub-Advisory Agreement were not
ratified by shareholders until December 22, 1997. Prior to this date,
investment advisory services were being provided without compensation.
(4) Annualized.
See notes to financial statements.
8
<PAGE>
<PAGE>
UBS High Yield Bond Fund
Notes to Financial Statements
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
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
June 30, 1998, 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 June 30,
1998, certain shares of the Fund were held by UBS or its affiliates on behalf of
its clients.
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
(70.84% at June 30, 1998). 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 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.
9
<PAGE>
<PAGE>
UBS High Yield Bond Fund
Notes to Financial Statements
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
E. 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 six months ended June 30,
1998, the administrative services fee amounted to $3,472.
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 six months ended June 30, 1998,
the shareholder service fee amounted to $13,356, 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 six months ended June 30, 1998, UBS reimbursed
the Fund for expenses totaling $46,609 in connection with this voluntary
limitation. UBS may modify or discontinue this voluntary expense limitation at
any time with 30 days' advance notice to the Fund.
4. CAPITAL SHARE TRANSACTIONS
At June 30, 1998 there were 500 million shares of the Company's common stock
authorized, of which 10 million shares were classified as common stock of the
Fund. Transactions in shares of the Fund were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD FROM SEPTEMBER 30, 1997
JUNE 30, 1998 (COMMENCEMENT OF OPERATIONS)
(UNAUDITED) THROUGH DECEMBER 31, 1997
------------- ------------------------------
<S> <C> <C>
Shares subscribed.................................. 91,877 77,644
Shares issued to shareholders from dividends and
distributions.................................... 4,056 1,296
Shares redeemed.................................... (13,123) (759)
---------- -------
Net increase in shares outstanding................. 82,810 78,181
---------- -------
---------- -------
</TABLE>
10
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Schedule of Investments
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE COUPON MATURITY MARKET
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- -------- ------------------------------------------------------------------- ------ -------- -----------
<C> <S> <C> <C> <C>
CORPORATE OBLIGATIONS -- DOMESTIC -- 91.2%
ADVERTISING -- 4.5%
$500,000 Lamar Advertising Company.......................................... 8.625% 9/15/07 $ 514,375
500,000 Outdoor Communications, Inc........................................ 9.250% 8/15/07 515,000
-----------
1,029,375
-----------
APPAREL & TEXTILES -- 2.7%
300,000 Dan River Inc...................................................... 10.125% 12/15/03 319,500
300,000 Galey & Lord, Inc.................................................. 9.125% 3/01/08 291,000
-----------
610,500
-----------
AUTOMOTIVE -- 5.5%
440,000 Collins & Aikman Corporation....................................... 11.500% 4/15/06 488,400
500,000 Diamond Triumph Autoglass, Inc. (a)................................ 9.250% 4/01/08 511,250
250,000 Federal-Mogul Corporation.......................................... 7.875% 7/01/10 252,302
-----------
1,251,952
-----------
BROADCASTING -- 7.5%
500,000 Allbritton Communications Company.................................. 8.875% 2/01/08 539,999
400,000 Cumulus Media Inc.................................................. 10.375% 7/01/08 408,000
200,000 Interep National Radio Sales (a)................................... 10.000% 7/01/08 201,500
150,000 Sinclair Broadcast Group, Inc...................................... 10.000% 9/30/05 161,625
375,000 Young Broadcasting Inc............................................. 8.750% 6/15/07 391,875
-----------
1,702,999
-----------
BUILDING MATERIALS -- 7.6%
225,000 Building Materials Holding Corporation (0.00% until 7/01/99, 11.75%
thereafter)**.................................................... 0.000% 7/01/04 222,750
500,000 International Comfort Products Corporation (a)..................... 8.625% 5/15/08 493,750
500,000 Nortek, Inc........................................................ 9.125% 9/01/07 513,750
500,000 Wesco Distribution, Inc. (a)....................................... 9.125% 6/01/08 497,500
-----------
1,727,750
-----------
CABLE TV -- 7.4%
500,000 Adelphia Communications Corporation................................ 9.250% 10/01/02 521,250
135,000 CSC Holdings, Inc.................................................. 9.250% 11/01/05 144,450
300,000 Echostar Satellite Broadcast Corp. (0.00% until 3/15/00, 13.125%
thereafter)**.................................................... 0.000% 3/15/04 275,625
500,000 Mediacom, L.L.C. (a)............................................... 8.500% 4/15/08 498,125
250,000 Pegasus Communications Corporation................................. 9.625% 10/15/05 255,625
-----------
1,695,075
-----------
CHEMICALS -- 1.1%
450,000 Trans-Resources, Inc. (0.00% until 3/15/03, 12.00% thereafter)**... 0.000% 3/15/08 263,250
-----------
CONSUMER GOODS & SERVICES -- 8.2%
300,000 Alliance Laundry Systems L.L.C. (a)................................ 9.625% 5/01/08 302,250
350,000 Bally Total Fitness Holding Corporation............................ 9.875% 10/15/07 362,250
350,000 Iron Mountain, Inc................................................. 10.125% 10/01/06 379,750
150,000 Rayovac Corporation................................................ 10.250% 11/01/06 164,250
350,000 Ryder TRS, Inc..................................................... 10.000% 12/01/06 406,000
250,000 Simmons Company.................................................... 10.750% 4/15/06 268,750
-----------
1,883,250
-----------
COSMETICS -- 1.1%
250,000 Revlon, Inc........................................................ 8.625% 2/01/08 250,000
-----------
DRUGS & PHARMACEUTICALS -- 1.0%
225,000 NBTY, Inc.......................................................... 8.625% 9/15/07 229,500
-----------
</TABLE>
- ------------------------
See notes to financial statements.
11
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Schedule of Investments
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE COUPON MATURITY MARKET
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- -------- ------------------------------------------------------------------- ------ -------- -----------
<C> <S> <C> <C> <C>
ENTERTAINMENT -- 8.2%
$125,000 Grand Casinos, Inc................................................. 10.125% 12/01/03 $ 136,250
200,000 Harvey Casino Resorts.............................................. 10.625% 6/01/06 222,500
360,000 Horseshoe Gaming, L.L.C............................................ 9.375% 6/15/07 381,150
500,000 SFX Entertainment Inc. (a)......................................... 9.125% 2/01/08 492,500
275,000 Speedway Motorsports, Inc.......................................... 8.500% 8/15/07 286,000
100,000 Trump Atlantic City Association.................................... 11.250% 5/01/06 97,250
250,000 United Artists Theatre Circuit Inc.* (a)........................... 10.063% 10/15/07 250,000
-----------
1,865,650
-----------
FOOD -- 4.2%
400,000 Eagle Family Foods (a)............................................. 8.750% 1/15/08 392,000
250,000 Fresh Foods Inc. (a)............................................... 10.750% 6/01/06 251,250
300,000 Pilgrim's Pride Corporation........................................ 10.875% 8/01/03 313,500
-----------
956,750
-----------
HEALTH CARE PROVIDERS -- 1.1%
250,000 Insight Health Services Corp. (a).................................. 9.625% 6/15/08 249,375
-----------
HOUSEHOLD APPLIANCES -- 1.0%
225,000 Fedders North America.............................................. 9.375% 8/15/07 223,875
-----------
METALS & MINING -- 3.3%
500,000 Bayou Steel Corporation (a)........................................ 9.500% 5/15/08 498,125
250,000 WCI Steel, Inc..................................................... 10.000% 12/01/04 256,875
-----------
755,000
-----------
OIL SERVICES -- 5.0%
250,000 Bayard Drilling Technologies, Inc. (a)............................. 11.000% 6/30/05 252,500
350,000 Newpark Resources, Inc............................................. 8.625% 12/15/07 350,000
250,000 Parker Drilling Corp............................................... 9.750% 11/15/06 256,250
300,000 Trico Marine Services, Inc......................................... 8.500% 8/01/05 291,000
-----------
1,149,750
-----------
PACKAGING -- 1.7%
400,000 Indesco International, Inc. (a).................................... 9.750% 4/15/08 398,000
-----------
PAPER & FOREST PRODUCTS -- 1.0%
220,000 Stone Container Corporation........................................ 11.875% 12/01/98 224,400
-----------
PETROLEUM PRODUCTION & SALES -- 0.6%
150,000 Forcenergy Inc..................................................... 8.500% 2/15/07 142,875
-----------
PRINTING & PUBLISHING -- 5.0%
500,000 Hollinger International Inc........................................ 9.250% 3/15/07 527,500
400,000 Liberty Group Operating............................................ 9.375% 2/01/08 410,000
200,000 R.H. Donnelly, Inc. (a)............................................ 9.125% 6/01/08 204,500
-----------
1,142,000
-----------
REAL ESTATE -- 2.2%
500,000 CB Richard Ellis Services, Inc..................................... 8.875% 6/01/06 496,250
-----------
RETAIL -- 1.5%
350,000 MTS, Inc. (a)...................................................... 9.375% 5/01/05 347,375
-----------
TECHNOLOGY -- 2.1%
300,000 ICG Services, Inc. (0.00% until 2/15/03, 10.00% thereafter)**(a)... 0.000% 2/15/08 179,250
300,000 PSINet Inc......................................................... 10.000% 2/15/05 307,500
-----------
486,750
-----------
</TABLE>
- ------------------------
See notes to financial statements.
12
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Schedule of Investments
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE COUPON MATURITY MARKET
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- -------- ------------------------------------------------------------------- ------ -------- -----------
<C> <S> <C> <C> <C>
TELECOMMUNICATIONS -- 7.7%
$375,000 Intermedia Communications Inc. (0.00% until 7/15/02, 11.25%
thereafter)**.................................................... 0.000% 7/15/07 $ 273,750
250,000 Level 3 Communications, Inc. (a)................................... 9.125% 5/01/08 243,125
335,000 McLeod USA Inc. (0.00% until 3/01/02, 10.50% thereafter)**......... 0.000% 3/01/07 248,738
200,000 Nextel Communications, Inc. (0.00% until 9/15/02, 10.65%
thereafter)**.................................................... 0.000% 9/15/07 135,500
400,000 Nextel Communications, Inc. (0.00% until 10/31/02, 9.75%
thereafter)**.................................................... 0.000% 10/31/07 262,000
200,000 RCN Corporation (0.00% until 10/15/02, 11.125% thereafter)**....... 0.000% 10/15/07 128,500
400,000 Sprint Spectrum L.P................................................ 11.000% 8/15/06 463,000
-----------
1,754,613
-----------
TOTAL CORPORATE OBLIGATIONS -- DOMESTIC (COST $20,824,200)......... 20,836,314
-----------
CORPORATE OBLIGATIONS -- FOREIGN -- 4.6%
FOOD -- 1.5%
350,000 Cott Corporation................................................... 9.375% 7/01/05 353,500
-----------
TELECOMMUNICATIONS -- 3.1%
300,000 Clearnet Communications Inc. (0.00% until 12/15/00, 14.75%
thereafter)**.................................................... 0.000% 12/15/05 252,750
600,000 Microcell Telecommunications Inc. (0.00% until 12/01/01, 14.00%
thereafter)**.................................................... 0.000% 6/01/06 448,500
-----------
701,250
-----------
TOTAL CORPORATE OBLIGATIONS -- FOREIGN (COST $1,077,447)........... 1,054,750
-----------
<CAPTION>
SHARES
- --------
<C> <S> <C>
PREFERRED STOCK -- 1.5%
BROADCASTING -- 1.5%
350,000 Paxson Communications Corporations (Cost $350,000)*(a)............. 343,875
-----------
WARRANTS -- 0.0%
NATURAL GAS -- 0.0%
476 Gothic Energy Corporation Warrant*................................. 5
1,400 Gothic Energy Corporation Warrant*................................. 1,400
-----------
1,405
-----------
TOTAL WARRANTS (COST $2,028)....................................... 1,405
-----------
TOTAL INVESTMENTS AT MARKET VALUE -- 97.3%
(COST $22,253,675).......................................................... 22,236,344
OTHER ASSETS IN EXCESS OF LIABILITIES -- 2.7%................................. 626,109
-----------
NET ASSETS -- 100.0%.......................................................... $22,862,453
-----------
-----------
</TABLE>
- ------------------------
* Non-income producing security.
** Step coupon bond.
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30, 1998,
the value of these securities amounted to $6,606,250 or 28.90% of net
assets.
Note: Based upon the cost of investments of $22,253,675 for Federal Income Tax
purposes at June 30, 1998, the aggregate gross unrealized appreciation and
depreciation was $173,642 and $190,973, respectively, resulting in net
unrealized depreciation of $17,331.
See notes to financial statements.
13
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Statement of Assets and Liabilities
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment, at value (cost $22,253,675).......................................... $22,236,344
Cash............................................................................. 153,718
Dividends and interest receivable................................................ 393,200
Receivable for investment securities sold........................................ 967,469
Deferred organization expenses and other assets.................................. 159
-----------
Total Assets................................................................ 23,750,890
-----------
LIABILITIES:
Administrative services fees payable............................................. 1,286
Payable for investment securities purchased...................................... 854,875
Other accrued expenses........................................................... 32,276
-----------
Total Liabilities........................................................... 888,437
-----------
NET ASSETS....................................................................... $22,862,453
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
14
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Statement of Operations
For the Six Months Ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest................................................................ $754,359
Dividends............................................................... 572
--------
Total income....................................................... 754,931
EXPENSES:
Investment advisory fees................................................ $ 38,222
Administrative services fees............................................ 5,946
Audit fees.............................................................. 18,661
Fund accounting fees.................................................... 17,356
Custodian fees and expenses............................................. 9,263
Legal fees.............................................................. 2,036
Trustees' fees.......................................................... 1,984
Insurance expense....................................................... 738
Miscellaneous expenses.................................................. 1,511
--------
Total expenses..................................................... 95,717
Less: Fee waiver and expense reimbursements........................ (38,222)
--------
Net expenses....................................................... 57,495
--------
Net investment income................................................... 697,436
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities transactions............................ 295,762
Net change in unrealized depreciation of investments.................... (70,216)
--------
Net realized and unrealized gain on investments......................... 225,546
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................... $922,982
--------
--------
</TABLE>
- ------------------------
See notes to financial statements.
15
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED SEPTEMBER 30, 1997*
JUNE 30, 1998 THROUGH
(UNAUDITED) DECEMBER 31, 1997
------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income......................................... $ 697,436 $ 193,222
Net realized gain on security transactions.................... 295,762 28,936
Net change in unrealized (depreciation) appreciation of
investments................................................. (70,216) 52,885
------------- ---------------
Net increase in net assets resulting from operations.......... 922,982 275,043
------------- ---------------
CAPITAL TRANSACTIONS:
Proceeds from contributions................................... 11,350,751 12,987,656
Value of withdrawals.......................................... (2,554,571) (119,408)
------------- ---------------
Net increase in net assets from capital transactions.......... 8,796,180 12,868,248
------------- ---------------
NET INCREASE IN NET ASSETS.................................... 9,719,162 13,143,291
NET ASSETS:
Beginning of period........................................... $ 13,143,291 $ --
------------- ---------------
End of period................................................. $ 22,862,453 $13,143,291
------------- ---------------
------------- ---------------
</TABLE>
- ------------------------
* Commencement of operations.
See notes to financial statements.
16
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED SEPTEMBER 30, 1997*
JUNE 30, 1998 THROUGH
(UNAUDITED) DECEMBER 31, 1997
------------- -------------------
<S> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted)................................ $22,862 $13,143
Ratio of expenses to average net assets(1).............................. 0.68%(2) 0.96%(2)(3)
Ratio of net investment income to average net assets(1)................. 8.21%(2) 7.23%(2)(3)
Portfolio turnover...................................................... 155% 80%
</TABLE>
- ------------------------
* Commencement of operations.
(1) Net of fee waivers. Such fee waivers had the effect of reducing the ratio of
expenses to average net assets and increasing the ratio of net investment
income to average net assets by 0.45% (annualized) and 0.88% (annualized)
for the respective periods.
(2) Annualized.
(3) The annualization of these ratios is affected by the fact that the
Investment Advisory Agreement and Investment Sub-Advisory Agreement were not
ratified by shareholders until December 22, 1997. Prior to this date,
investment advisory services were being provided without compensation.
See notes to financial statements.
17
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Notes to Financial Statements
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
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
June 30, 1998, 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. 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.
18
<PAGE>
<PAGE>
UBS High Yield Bond Portfolio
Notes to Financial Statements
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. INVESTMENT ADVISORY AGREEMENT -- The Portfolio has retained the services of
UBS as investment adviser and UBSAM as investment sub-advisor. 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 six
months ended June 30, 1998, the investment advisory fee amounted to $38,222, 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 six
months ended June 30, 1998, the administrative services fee amounted to $5,946.
4. PURCHASE AND SALES OF INVESTMENTS
For the six months ended June 30, 1998, purchases and sales of investment
securities, excluding short-term investments, aggregated to $35,151,250 and
$24,884,509, respectively.
19
<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
Administrator Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
Distributor First Fund Distributors, Inc.
4455 East Camelback Road
Phoenix, AZ 85018
Custodian and Transfer Agent Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
The accompanying financial statements dated as of June 30, 1998 were not audited
and, accordingly, no opinion is expressed on them.
- --------------------------------------------------------------------------------
