<PAGE>
<PAGE>
UBS
VALUE EQUITY
FUND
-------
UBS
Private Investor
Funds, Inc.
Annual Report
December 31, 1997
<PAGE>
<PAGE>
UBS Private Investor Funds, Inc.
Chairman's Letter
- --------------------------------------------------------------------------------
Dear Shareholder,
Thank you for your investment in the UBS Value Equity Fund, which is part of the
UBS Private Investor Funds.
We are pleased to provide you with the Fund's annual report for the year ended
December 31, 1997. This report contains a letter from the portfolio manager
discussing the performance of the Fund for the year ended 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/ 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
- --------------------------------------------------------------------------------
FUND PERFORMANCE
The UBS Value Equity Fund (the 'Fund') generated a total return of 29.57% for
the year ended December 31, 1997, compared with increases of 33.38% for the S&P
500 and 29.98% for the S&P/Barra Value Index. For the fourth quarter of 1997,
the Fund returned 4.26% versus 2.87% for the S&P 500 and 2.22% for the Barra
Value Index.
This chart provides a comparison of the Fund's performance to that of the S&P
500 Index. This chart compares total returns (which includes changes in share
price and reinvestment of all income dividends and capital gains distributions)
of a hypothetical $10,000 investment made on April 2, 1996 (commencement of
operations) and held through December 31, 1997.
[PERFORMANCE GRAPH]
UBS VALUE
DATE EQUITY FUND S&P 500 INDEX
----- ----------- -------------
4/02/96 10000 10000
4/30/96 9813 10023.5
5/31/96 9957 10281.1
6/30/96 9971 10320.2
7/31/96 9609 9864.07
8/31/96 9651 10072.2
9/30/96 10084 10639.3
10/31/96 10273 10932.9
11/30/96 10962 11759.4
12/31/96 10873 11526.6
01/31/97 11177.3 12246.8
02/28/97 11571.7 12342.8
03/31/97 11053.2 11835.6
04/30/97 11497 12542.2
05/31/97 12194.8 13306
06/30/97 12604.9 13902.1
07/31/97 13390.5 15008.8
08/31/97 12815.1 14168.3
09/30/97 13512.9 14944.7
10/31/97 13171.2 14445.5
11/30/97 14013.9 15114.4
12/31/97 14089.1 15374.3
Average Annual Total Return
<TABLE>
<CAPTION>
UBS VALUE
EQUITY FUND S&P 500 INDEX
----------- -------------
<S> <C> <C>
For the year ended December 31, 1997..................................... 29.57% 33.38%
For the period April 2, 1996 (commencement of operations) through
December 31, 1997...................................................... 21.63% 27.85%
</TABLE>
Your Fund benefited during the most recent quarter from significant commitments
to three market sectors: telecommunications, consumer staples, and financials.
Each of our five telecommunications stocks was up more than 10% as the group
found favor with investors due to solid fundamentals, merger speculation, and
high dividend yields (defensive in nature). Likewise, each of the Fund's
consumer staples issues beat the market, with Albertson's (a recent purchase)
increasing by more than 23%. Among our banks, Corestates Financial performed
well after agreeing to be acquired by First Union.
The petroleum production and sales, basic materials, and capital goods sectors
hurt the Fund's performance in the last three months of the year. The threat of
an economic slowdown penalized all three groups. Currency devaluations in Asia
particularly impacted commodity businesses like papers and chemicals as they
made the products of U.S. manufacturers less competitive on world markets.
2
<PAGE>
<PAGE>
UBS Private Investor Funds, Inc.
Fund Commentary
- --------------------------------------------------------------------------------
Energy prices (and stocks) faded considerably late in the year due to the fears
of slower demand, but also due to OPEC's decision to raise its production
ceiling, and to the possibility of larger sales from Iraq. Taking advantage of
the price weakness, we have recently added to our position in the group.
MARKET OVERVIEW
1997 marked the third consecutive year in which the Dow Jones Industrial Average
returned more than 20%; this had never happened before in the 101 year history
of the index. Other major indexes, particularly the S&P 500, performed as well,
or better. The theme of moderate economic growth, together with low interest
rates and inflation, has been long lasting and has carried stocks to levels
unexpected by most investors. As we look ahead to 1998, and beyond, we must
examine the remaining strength of this theme, and the extent to which the recent
'Asian crisis' will impact the U.S economy and markets. The problems faced by
South Korea, Indonesia and others in Asia are serious, and may result in a
region-wide recession. This is significant because, for years, Asia was the
fastest growing part of the world. While the International Monetary Fund and a
group of large banks have provided temporary financing to these troubled
nations, it is difficult to ascertain how long the economic slowdown in Asia
will last, and how it will affect the rest of the world.
Considering the current uncertainty in Asia, historically high market valuations
in the U.S., and the extraordinary returns generated by equities in recent
years, it is reasonable to be concerned about the outlook for 1998. Our view is
that the rates of return generated by stocks during this decade are not
sustainable, and that increases are likely to be much closer to the long-term
average of 10% over the next few years. While inflation and interest rates
should remain low, corporate earnings growth will almost certainly slow from the
double digit pace witnessed since 1995. There are even those who believe that
declining unit volume, and a total absence of pricing power will lead to
recession in the not too distant future. For most of the last two decades, lower
interest rates have been positive for the stock market. In 1998, it is possible
that lower rates will signal a deflationary environment, and a reduction in
corporate earnings.
Having pointed out the potential negatives, we must also note that many of the
positive drivers of the bull market are still in place. Low inflation and
interest rates have been mentioned. Mergers, acquisitions, and restructurings
have become the norm in our economy. Continuous change has transformed many
American companies into some of the most efficient in the world, and should keep
them at the forefront of global competition. Structural changes in the U.S.
economy have played a major role as well. Investment spending is now driven more
by the private sector, where it has enhanced productivity, than by the
Government. Also significant is the projection that the Federal Government will
report a budget surplus by 1999 or 2000.
Finally, the demand for equities has surged in recent years for many
reasons -- market returns have been very high, consumer confidence has been
strong, and the baby boomer generation believes that it must save/invest for
retirement because the Government can no longer be relied upon for this purpose.
Of course, this demand factor can be very fragile. It remains to be seen how
investors will react to the next bear market.
Considering both the positive and negative factors in the current environment,
we conclude that while the ride may be bumpy, the U.S. stock market still offers
reasonable upside in 1998. We expect to see continued volatility, within a
fairly wide trading range, and we believe that individual stock picking will be
more important than it has been in many years. We are hopeful that the Asian
concerns will recede as the year progresses and that no lasting impact will be
felt in the United States. Investing in a market with many countervailing
forces, and being in the late stages of an economic cycle, we want to own
3
<PAGE>
<PAGE>
UBS Private Investor Funds, Inc.
Fund Commentary
- --------------------------------------------------------------------------------
large, quality companies that can work through a potentially difficult economic
period, but also take advantage of opportunities to grow even stronger.
Neil S. Kenagy
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
Value Equity 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 a portion 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 S&P 500 Index is an unmanaged index broadly representative of the U.S. stock
market.
4
<PAGE>
<PAGE>
UBS Value Equity Fund
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investment in UBS Investor Portfolios Trust -- UBS Value
Equity Portfolio, at value........................................................ $26,454,709
Receivable from funds services agent................................................ 9,021
Deferred organization expenses and other assets..................................... 91,315
-----------
Total Assets.............................................................. 26,555,045
-----------
LIABILITIES:
Administrative services fees payable................................................ 2,607
Other accrued expenses.............................................................. 28,488
-----------
Total Liabilities......................................................... 31,095
-----------
NET ASSETS.......................................................................... $26,523,950
-----------
-----------
SHARES OUTSTANDING ($0.001 par value, 10 million shares authorized)................. 205,343
-----------
-----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE...................... $ 129.17
-----------
-----------
COMPOSITION OF NET ASSETS:
Shares of common stock, at par...................................................... $ 205
Additional paid-in capital.......................................................... 22,506,410
Net unrealized appreciation of investments.......................................... 3,802,538
Accumulated undistributed net investment income..................................... 11,388
Accumulated undistributed net realized gains........................................ 203,409
-----------
Net Assets................................................................ $26,523,950
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
5
<PAGE>
<PAGE>
UBS Value Equity Fund
Statement of Operations
For the Year Ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Investment Income and Expenses from UBS Investor Portfolios
Trust -- UBS Value Equity Portfolio
Dividends........................................................ $ 584,504
Interest......................................................... 41,559
----------
Investment income........................................... 626,063
Total expenses................................................... $ 183,777
Less: Fee waiver................................................. (75,604)
---------
Net expenses..................................................... 108,173
----------
Net Investment Income from UBS Investor Portfolios Trust -- UBS Value
Equity Portfolio.................................................... 517,890
EXPENSES:
Shareholder service fees.............................................. 49,844
Administrative services fees.......................................... 12,531
Reports to shareholders expense....................................... 23,601
Registration fees..................................................... 22,739
Amortization of organization expenses................................. 21,364
Legal fees............................................................ 16,968
Transfer agent fees................................................... 10,487
Audit fees............................................................ 9,741
Fund accounting fees.................................................. 7,744
Directors' fees....................................................... 5,357
Miscellaneous expenses................................................ 7,241
---------
Total expenses................................................... 187,617
Less: Fee waiver and expense reimbursements...................... (102,221)
---------
Net expenses..................................................... 85,396
----------
Net investment income................................................. 432,494
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS FROM UBS INVESTOR
PORTFOLIOS TRUST -- UBS VALUE EQUITY PORTFOLIO:
Net realized gain on securities transactions.......................... 1,477,194
Net change in unrealized appreciation of investments.................. 3,117,642
----------
Net realized and unrealized gain on investments from UBS Investor
Portfolios Trust -- UBS Value Equity Portfolio...................... 4,594,836
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. $5,027,330
----------
----------
</TABLE>
- ------------------------
See notes to financial statements.
6
<PAGE>
<PAGE>
UBS Value Equity Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE APRIL 2, 1996*
YEAR ENDED THROUGH
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income..................................................... $ 432,494 $ 157,796
Net realized gain on securities transactions.............................. 1,477,194 13,685
Net change in unrealized appreciation of investments...................... 3,117,642 684,896
----------------- -----------------
Net increase in net assets resulting from operations...................... 5,027,330 856,377
----------------- -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income..................................................... (435,505) (156,639)
Net realized gains........................................................ (1,287,470) --
----------------- -----------------
Total dividends and distributions to shareholders......................... (1,722,975) (156,639)
----------------- -----------------
TRANSACTIONS IN SHARES OF COMMON STOCK:
Net proceeds from sale of shares.......................................... 20,401,903 13,752,890
Net asset value of shares issued to shareholders in reinvestment of
dividends and distributions............................................. 1,713,022 156,639
Cost of shares redeemed................................................... (8,361,026) (5,168,571)
----------------- -----------------
Net increase in net assets from transactions in shares of common stock.... 13,753,899 8,740,958
----------------- -----------------
NET INCREASE IN NET ASSETS................................................ 17,058,254 9,440,696
NET ASSETS:
Beginning of period....................................................... 9,465,696 25,000
----------------- -----------------
End of period (including undistributed net investment income of $11,388
and $1,157, respectively)............................................... $26,523,950 $ 9,465,696
----------------- -----------------
----------------- -----------------
</TABLE>
- ------------------------
* Commencement of operations.
See notes to financial statements.
7
<PAGE>
<PAGE>
UBS Value Equity Fund
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE APRIL 2, 1996*
YEAR ENDED THROUGH
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------- -----------------
<S> <C> <C>
FOR A SHARE OUTSTANDING FOR THE PERIOD
Net asset value, beginning of period....................................... $106.70 $100.00
-------- --------
Income from investment operations:
Net investment income................................................. 2.32 2.05
Net realized and unrealized gain on investments....................... 29.17 6.69
-------- --------
Total income from investment operations............................... 31.49 8.74
-------- --------
Less dividends and distributions to shareholders:
Dividends from net investment income.................................. (2.27) (2.04)
Distributions from net realized gains................................. (6.75) --
-------- --------
Total dividends and distributions..................................... (9.02) (2.04)
-------- --------
Net asset value, end of period............................................. $129.17 $106.70
-------- --------
-------- --------
Total return............................................................... 29.57% 8.74%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted).............................. $26,524 $ 9,466
Ratio of expenses to average net assets (2)........................... 0.97% 0.90%(3)
Ratio of net investment income to average net assets (2).............. 2.17% 3.04%(3)
</TABLE>
- ------------------------
* Commencement of operations.
(1) Not annualized.
(2) Includes the Fund's share of UBS Investor Portfolios Trust -- UBS Value
Equity Portfolio expenses and net of fee waivers and expense reimbursements.
Such fee waivers and expense reimbursements had the effect of reducing the
ratio of expenses to average net assets and increasing the ratio of net
investment income to average net assets by 0.89% and 2.65% (annualized) for
the respective periods.
(3) Annualized.
See notes to financial statements.
8
<PAGE>
<PAGE>
UBS Value Equity Fund
Notes to Financial Statements
December 31, 1997
- --------------------------------------------------------------------------------
1. GENERAL
UBS Value Equity Fund (the 'Fund'), formerly known as the UBS U.S. Equity 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 International Equity Fund, UBS Institutional
International Equity Fund, UBS High Yield Bond 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 Value Equity Portfolio of UBS Investor
Portfolios Trust (the 'Portfolio'), an open-end management investment company
that has the same investment objective as that of the Fund. At December 31,
1997, 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
(48.2% 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
9
<PAGE>
<PAGE>
UBS Value Equity Fund
Notes to Financial Statements
December 31, 1997
- --------------------------------------------------------------------------------
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the composition of net assets based upon their federal
tax-basis treatment; temporary differences do not require reclassification. For
the year ended December 31, 1997, the Fund increased accumulated undistributed
net investment income by $13,242 and decreased paid-in-capital by $13,242. Net
investment income, net realized gains and net assets were not affected by this
change.
E. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Fund in connection
with its organization in the amount of approximately $107,500 have been deferred
and are being amortized on a straight line basis over five years from the Fund's
commencement of operations (April 2, 1996).
F. OTHER -- The Fund bears all costs of its operations other than expenses
specifically assumed by IBT, FFDI and UBS. Expenses incurred by the Company on
behalf of any two or more funds are allocated in proportion to the net assets of
each fund, except when allocations of direct expenses to each fund can otherwise
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, effective March 13, 1997, IBT provides overall administrative
services and general office facilities. As compensation for such services, the
Company has agreed to pay IBT a fee, accrued daily and payable monthly, at an
annual rate of 0.065% of the Fund's first $100 million average daily net assets
and 0.025% of the next $100 million average daily net assets. IBT does not
receive a fee on average daily net assets in excess of $200 million. Prior to
March 13, 1997, Signature Broker-Dealer Services, Inc. ('Signature') provided
overall administrative services and general office facilities. As compensation
for such services, the Company had agreed to pay Signature a fee, accrued daily
and paid monthly, at an annual rate of 0.05% of the Fund's first $100 million
average daily net assets and 0.025% of the next $100 million average daily net
assets. Signature did not receive a fee on average daily net assets in excess of
$200 million. For the year ended December 31, 1997, the administrative services
fee amounted to $12,531.
B. DISTRIBUTION AGREEMENT -- Under the terms of a Distribution Agreement,
effective March 13, 1997, FFDI serves as the distributor of Fund shares. FFDI
does not receive any fees from the Fund for services provided pursuant to this
agreement. Prior to March 13, 1997, Signature served as the distributor of Fund
shares. Signature did not receive any additional fees for services provided as
the distributor.
C. SHAREHOLDER SERVICING AGREEMENT -- The Fund has entered into a Shareholder
Servicing Agreement with UBS pursuant to which UBS provides certain services to
shareholders of the Fund. The Fund has agreed to pay UBS a fee for these
services, accrued daily and payable monthly, at an annual rate of 0.25% of the
average daily net assets of the Fund. For the year ended December 31, 1997, the
shareholder service fee amounted to $49,844, all of which was waived.
D. FUNDS SERVICES AGREEMENT -- Under the terms of a Funds Services Agreement
with the Company, UBS has agreed to provide certain administrative services to
the Fund. UBS is not entitled to any additional compensation pursuant to this
agreement.
E. EXPENSE REIMBURSEMENTS -- UBS has voluntarily agreed to limit the total
operating expenses of the Fund, including its share of the Portfolio's expenses
and excluding extraordinary expenses. For the period from January 1, 1997
through June 5, 1997, the Fund's total operating expenses were limited to an
annual rate of 0.90% of the Fund's average daily net assets. Effective June 6,
1997, this expense limitation was increased to 1.00% of the Fund's average daily
net assets. For the year ended
10
<PAGE>
<PAGE>
UBS Value Equity Fund
Notes to Financial Statements
December 31, 1997
- --------------------------------------------------------------------------------
December 31, 1997, UBS reimbursed the Fund for expenses totaling $52,377 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 were as follows:
<TABLE>
<CAPTION>
PERIOD FROM APRIL 2, 1996
YEAR ENDED (COMMENCEMENT OF OPERATIONS)
DECEMBER 31, 1997 THROUGH DECEMBER 31, 1996
----------------- ----------------------------
<S> <C> <C>
Shares subscribed............................... 169,168 137,339
Shares issued to shareholders in reinvestment of
dividends and distribution.................... 13,323 1,465
Shares redeemed................................. (65,860) (50,342)
----------------- ----------
Net increase in shares outstanding.............. 116,631 88,462
----------------- ----------
----------------- ----------
</TABLE>
11
<PAGE>
<PAGE>
UBS Value Equity Fund
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors
and Shareholders of
UBS Private Investor Funds, Inc.
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the UBS Value Equity Fund (the 'Fund') (one of the funds constituting UBS
Private Investor Funds, Inc.) at December 31, 1997, the results of its
operations for the year then ended and the changes in its net assets and the
financial highlights for the year then ended and for the period April 2, 1996
(commencement of operations) through December 31, 1996, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as 'financial statements') are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits 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
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of Americas
New York, New York
February 17, 1998
12
<PAGE>
<PAGE>
UBS Value Equity Portfolio
Schedule of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ------------------------------------------------------------------------------------------- -----------
<S> <C> <C>
COMMON STOCK -- 94.5%
BANKING & FINANCIAL INSTITUTIONS -- 17.2%
6,400 BankAmerica Corp........................................................................... $ 467,200
20,500 Corestates Financial Corp.................................................................. 1,641,281
19,000 J.P. Morgan & Co........................................................................... 2,144,625
40,100 Mellon Bank Corp........................................................................... 2,431,063
18,400 U.S. Bancorp............................................................................... 2,059,650
8,300 Wachovia Corp.............................................................................. 673,338
-----------
9,417,157
-----------
CHEMICALS -- 2.8%
10,250 Dow Chemical Company....................................................................... 1,040,375
12,200 Witco Corp................................................................................. 497,913
-----------
1,538,288
-----------
CONSUMER FOODS -- 7.6%
29,300 General Mills, Inc......................................................................... 2,098,613
40,900 H.J. Heinz Co.............................................................................. 2,078,231
-----------
4,176,844
-----------
COSMETICS -- 2.1%
22,600 International Flavors & Fragrances......................................................... 1,163,900
-----------
DIVERSIFIED -- 0.9%
13,700 Fortune Brands Inc......................................................................... 507,756
-----------
DRUGS & PHARMACEUTICALS -- 12.2%
18,200 American Home Products Corp................................................................ 1,392,300
16,900 Baxter International Inc................................................................... 852,394
28,800 Bristol-Myers Squibb Co.................................................................... 2,725,195
46,400 Pharmacia & Upjohn Inc..................................................................... 1,699,400
-----------
6,669,289
-----------
FOOD -- RETAIL -- 2.5%
28,900 Albertson's, Inc........................................................................... 1,369,138
-----------
INSURANCE -- 4.4%
21,100 American General Corp...................................................................... 1,140,719
17,200 Marsh & McLennan Cos., Inc................................................................. 1,282,475
-----------
2,423,194
-----------
LUMBER, PAPER & BUILDING SUPPLIES -- 4.1%
21,400 Union Camp Corp............................................................................ 1,148,913
22,600 Weyerhaeuser Co............................................................................ 1,108,813
-----------
2,257,726
MANUFACTURING -- 5.6%
23,400 Cooper Industries Inc...................................................................... 1,146,600
23,200 Minnesota Mining & Manufacturing........................................................... 1,903,850
-----------
3,050,450
-----------
OFFICE EQUIPMENT AND SUPPLIES -- 3.2%
19,600 Pitney Bowes, Inc.......................................................................... 1,762,775
-----------
PETROLEUM PRODUCTION & SALES -- 8.3%
11,500 Amoco Corp................................................................................. 978,938
17,600 Atlantic Richfield Co...................................................................... 1,410,200
14,400 Chevron Corporation........................................................................ 1,108,800
18,900 Texaco Inc................................................................................. 1,027,688
-----------
4,525,626
-----------
</TABLE>
- ------------------------
See notes to financial statements.
13
<PAGE>
<PAGE>
UBS Value Equity Portfolio
Schedule of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------- ------------------------------------------------------------------------------------------- -----------
<S> <C> <C>
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 1.5%
13,500 Eastman Kodak Company...................................................................... $ 820,969
-----------
REAL ESTATE -- 2.9%
30,800 Security Capital Industrial Trust REIT(a).................................................. 766,150
25,400 Simon DeBartolo Group, Inc. REIT(a)........................................................ 830,263
-----------
1,596,413
-----------
RETAIL -- 3.7%
14,900 J.C. Penney Company, Inc................................................................... 898,656
10,300 May Department Stores...................................................................... 542,681
13,000 Sears, Roebuck and Co...................................................................... 588,250
-----------
2,029,587
-----------
TELECOMMUNICATIONS -- 11.4%
12,600 Ameritech Corp............................................................................. 1,014,300
22,400 Bell Atlantic Corp......................................................................... 2,038,400
23,800 GTE Corporation............................................................................ 1,243,550
13,500 SBC Communications Inc..................................................................... 988,875
22,100 US West Inc................................................................................ 997,263
-----------
6,282,388
-----------
TOBACCO -- 4.1%
50,000 Philip Morris Companies, Inc............................................................... 2,265,625
-----------
TOTAL INVESTMENTS AT MARKET VALUE -- 94.5%
(COST $43,748,965)..................................................................... 51,857,125
OTHER ASSETS IN EXCESS OF LIABILITIES -- 5.5%.............................................. 3,023,320
-----------
NET ASSETS -- 100.0%....................................................................... $54,880,445
-----------
-----------
</TABLE>
- ------------------------
(a) REIT -- Real Estate Investment Trust
Note: Based upon the cost of investments of $43,748,965 for Federal Income Tax
purposes at December 31, 1997, the aggregate gross unrealized appreciation
and depreciation was $8,214,965 and $106,805, respectively, resulting in
net unrealized appreciation of $8,108,160.
See notes to financial statements.
14
<PAGE>
<PAGE>
UBS Value Equity Portfolio
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investment, at value (cost $43,748,965).......................................... $51,857,125
Cash............................................................................. 3,120,961
Dividends and interest receivable................................................ 152,703
Deferred organization expenses and other assets.................................. 17,858
-----------
Total Assets................................................................ 55,148,647
-----------
LIABILITIES:
Investment advisory fees payable................................................. 23,050
Administrative services fees payable............................................. 8,576
Payable for investment securities purchased...................................... 201,097
Other accrued expenses........................................................... 35,479
-----------
Total Liabilities........................................................... 268,202
-----------
NET ASSETS....................................................................... $54,880,445
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
15
<PAGE>
<PAGE>
UBS Value Equity Portfolio
Statement of Operations
For the Year Ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends.......................................................... $1,221,696
Interest........................................................... 85,602
----------
Investment income............................................. $ 1,307,298
EXPENSES
Investment advisory fees........................................... 246,135
Administrative services fees....................................... 27,257
Audit fees......................................................... 36,000
Fund accounting fees............................................... 31,903
Custodian fees and expenses........................................ 22,155
Trustees' fees..................................................... 7,000
Amortization of organization expenses.............................. 6,896
Insurance expense.................................................. 2,602
Miscellaneous expenses............................................. 1,991
----------
Total expenses................................................ 381,939
Less: Fee waiver.............................................. (160,330)
----------
Net expenses.................................................. 221,609
-----------
Net investment income.............................................. 1,085,689
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on securities transactions....................... 3,252,224
Net change in unrealized appreciation of investments............... 6,433,825
-----------
Net realized and unrealized gain on investments.................... 9,686,049
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $10,771,738
-----------
-----------
</TABLE>
- ------------------------
See notes to financial statements.
16
<PAGE>
<PAGE>
UBS Value Equity Portfolio
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE APRIL 2, 1996*
YEAR ENDED THROUGH
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income..................................................... $ 1,085,689 $ 432,121
Net realized gain on securities transactions.............................. 3,252,224 1,679
Net change in unrealized appreciation of investments...................... 6,433,825 1,674,335
----------------- -----------------
Net increase in net assets resulting from operations...................... 10,771,738 2,108,135
----------------- -----------------
CAPITAL TRANSACTIONS:
Proceeds from contributions............................................... 38,796,136 30,786,561
Value of withdrawals...................................................... (20,113,162) (7,468,963)
----------------- -----------------
Net increase in net assets from capital transactions...................... 18,682,974 23,317,598
----------------- -----------------
NET INCREASE IN NET ASSETS................................................ 29,454,712 25,425,733
NET ASSETS:
Beginning of period....................................................... 25,425,733 --
----------------- -----------------
End of period............................................................. $ 54,880,445 $25,425,733
----------------- -----------------
----------------- -----------------
</TABLE>
- ------------------------
* Commencement of operations.
See notes to financial statements.
17
<PAGE>
<PAGE>
UBS Value Equity Portfolio
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE APRIL 2, 1996*
YEAR ENDED THROUGH
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------- -----------------
<S> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted).............................. $54,880 $25,426
Average commission rate per share..................................... $ 0.06 $ 0.06
Ratio of expenses to average net assets(1)............................ 0.54% 0.91%(2)
Ratio of net investment income to average net assets(1)............... 2.65% 3.07%(2)
Portfolio turnover.................................................... 47% 19%
</TABLE>
- ------------------------
* Commencement of operations.
(1) Net of fee waivers. Such fee waivers had the effect of reducing the ratio of
expenses to average net assets and increasing the ratio of net investment
income to average net assets by 0.39% and 0.60% (annualized) for the
respective periods.
(2) Annualized.
See notes to financial statements.
18
<PAGE>
<PAGE>
UBS Value Equity Portfolio
Notes to Financial Statements
December 31, 1997
- --------------------------------------------------------------------------------
1. GENERAL
UBS Value Equity Portfolio (the 'Portfolio'), formerly known as the UBS U.S.
Equity Portfolio, a separate series of UBS Investor Portfolios Trust (the
'Trust'), is registered under the Investment Company Act of 1940, as a
diversified, open-end management investment company. The Trust is organized as a
trust under the laws of the State of New York. At December 31, 1997, all of the
beneficial interests in the Portfolio were held by UBS Value Equity Fund and UBS
Value Equity Fund, Ltd.
The investment adviser of the Portfolio is Union Bank of Switzerland, New York
Branch ('UBS'). Investors Fund Services (Ireland) Limited ('IBT Ireland') acts
as the Portfolio's administrator.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements:
A. INVESTMENT VALUATION -- Equity securities in the portfolio are valued at 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.
B. ACCOUNTING FOR INVESTMENTS -- Securities transactions are accounted for on
trade date. Realized gains and losses on security transactions are determined on
the identified cost basis. Dividend income and other distributions from
portfolio securities are recorded on the ex-dividend date. Interest income,
adjusted for amortization of premiums and accretion of discounts on investments,
is accrued daily.
C. U.S. FEDERAL INCOME TAXES -- The Portfolio is considered a partnership under
the U.S. Internal Revenue Code (the 'Code'). As such, each investor in the
Portfolio will be taxed on its share of the Portfolio's ordinary income and
capital gains. Accordingly, no provision for federal income taxes is necessary.
It is intended that the Portfolio will be managed in such a way that an investor
will be able to satisfy the requirements of the Code applicable to regulated
investment companies.
D. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Portfolio in
connection with its organization in the amount of approximately $30,000 have
been deferred and are being amortized on a straight line basis over five years
from the Portfolio's commencement of operations (April 2, 1996).
E. OTHER -- The Portfolio bears all costs of its operations other than expenses
specifically assumed by UBS and IBT Ireland. Expenses incurred by the Trust on
behalf of any two or more portfolios are allocated in proportion to the net
assets of each portfolio, except when allocations of direct expenses to each
portfolio can otherwise be made fairly. Expenses directly attributable to the
Portfolio are charged directly to the Portfolio.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. INVESTMENT ADVISORY AGREEMENT -- The Portfolio has retained the services of
UBS as investment adviser. UBS makes the Portfolio's day-to-day investment
decisions, arranges for the execution of
19
<PAGE>
<PAGE>
UBS Value Equity Portfolio
Notes to Financial Statements
December 31, 1997
- --------------------------------------------------------------------------------
portfolio transactions and generally manages the Portfolio's investments and
operations. As compensation for overall investment management services, the
Trust has agreed to pay UBS an investment advisory fee, accrued daily and
payable monthly, at an annual rate of 0.60% of the Portfolio's average daily net
assets. For the year ended December 31, 1997, UBS voluntarily agreed to waive a
portion of its advisory fee. Such waiver amounted to $160,330.
B. ADMINISTRATION AGREEMENT -- Under the terms of an Administration Agreement
with the Trust, effective March 13, 1997, IBT Ireland provides overall
administrative services and general office facilities to the Portfolio and the
Trust. As compensation for such services, the Portfolio has agreed to pay IBT
Ireland an administrative services fee, accrued daily and payable monthly, at an
annual rate of 0.07% of the Portfolio's first $100 million average daily net
assets and 0.05% of the Portfolio's average daily net assets in excess of $100
million. Prior to March 13, 1997, Signature Financial Group (Grand Cayman), Ltd.
('SFG') provided overall administrative services and general office facilities
to the Portfolio and the Trust. As compensation for such services, the Portfolio
had agreed to pay SFG an administrative services fee, accrued daily and paid
monthly, at an annual rate of 0.05% of the Portfolio's average daily net assets.
For the year ended December 31, 1997, the administrative services fee amounted
to $27,257.
4. PURCHASES AND SALES OF INVESTMENTS
For the year ended December 31, 1997, purchases and sales of investment
securities, excluding short-term investments, aggregated $35,758,058 and
$18,403,738, respectively.
20
<PAGE>
<PAGE>
UBS Value Equity Portfolio
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Trustees
and Investors of
UBS Investor Portfolios Trust
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the UBS Value Equity Portfolio (the
'Portfolio') (one of the portfolios constituting UBS Investor Portfolios Trust)
at December 31, 1997, the results of its operations for the year then ended and
the changes in its net assets and the financial highlights for the year ended
December 31, 1997 and for the period April 2, 1996 (commencement of operations)
through December 31, 1996, 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 audits. We conducted our
audits 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 audits, 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, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
Chartered Accountants
Toronto, Ontario
February 17, 1998
21
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UBS Value Equity 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, Masschusetts 02116
