UBS INVESTOR PORTFOLIOS TR, N-30D, 1997-03-07

UBS INVESTOR PORTFOLIOS TR
N-30D, 1997-03-07

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<PAGE>

UBS Bond Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FACE COUPON MATURITY
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- ---------- ------------------------------------------------------------------ ------ -------- -----------
<C> <S> <C> <C> <C>
U.S. TREASURY & U.S. GOVERNMENT AGENCY OBLIGATIONS -- 60.7%
U.S. TREASURY OBLIGATIONS -- 56.3%
$ 150,000 U.S. Treasury Note................................................ 6.25 % 1/31/97 $ 150,070
25,000 U.S. Treasury Note................................................ 6.125 % 5/31/97 25,070
50,000 U.S. Treasury Note................................................ 6.375 % 6/30/97 50,258
1,000,000 U.S. Treasury Note................................................ 6.00 % 8/31/97 1,002,810
1,170,000 U.S. Treasury Note................................................ 5.125 % 6/30/98 1,159,400
1,290,000 U.S. Treasury Note................................................ 5.25 % 7/31/98 1,279,319
100,000 U.S. Treasury Note................................................ 7.00 % 4/15/99 102,234
150,000 U.S. Treasury Note................................................ 6.75 % 5/31/99 152,555
5,200,000 U.S. Treasury Note................................................ 6.375 % 7/15/99 5,247,112
155,000 U.S. Treasury Note................................................ 6.875 % 8/31/99 158,246
145,000 U.S. Treasury Note................................................ 7.125 % 9/30/99 149,010
1,500,000 U.S. Treasury Bond................................................ 5.875 % 11/15/99 1,494,135
1,203,000 U.S. Treasury Bond................................................ 7.75 % 1/31/00 1,258,831
2,600,000 U.S. Treasury Note................................................ 7.125 % 2/29/00 2,676,778
505,000 U.S. Treasury Note................................................ 6.75 % 4/30/00 514,550
1,344,000 U.S. Treasury Note................................................ 6.25 % 5/31/00 1,349,457
1,700,000 U.S. Treasury Note................................................ 6.125 % 7/31/00 1,700,000
650,000 U.S. Treasury Note................................................ 6.125 % 9/30/00 649,590
2,250,000 U.S. Treasury Note................................................ 5.75 % 10/31/00 2,220,120
1,000,000 U.S. Treasury Note................................................ 5.50 % 12/31/00 976,870
775,000 U.S. Treasury Bond................................................ 6.25 % 4/30/01 776,697
1,500,000 U.S. Treasury Note................................................ 6.625 % 7/31/01 1,523,910
1,200,000 U.S. Treasury Note................................................ 6.25 % 10/31/01 1,201,128
500,000 U.S. Treasury Note................................................ 7.50 % 11/15/01 526,330
170,000 U.S. Treasury Note................................................ 7.50 % 5/15/02 179,748
800,000 U.S. Treasury Note................................................ 6.375 % 8/15/02 805,248
70,000 U.S. Treasury Note................................................ 6.25 % 2/15/03 69,913
450,000 U.S. Treasury Note................................................ 5.75 % 8/15/03 436,500
419,000 U.S. Treasury Note................................................ 7.25 % 5/15/04 440,868
100,000 U.S. Treasury Note................................................ 7.25 % 8/15/04 105,250
1,450,000 U.S. Treasury Note................................................ 6.50 % 10/15/06 1,457,932
-----------
29,839,939
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 4.4%
1,400,000 Federal Home Loan Mortgage Corp................................... 5.96 % 10/20/00 1,385,342
995,400 Federal National Mortgage Assc., Pool #250576..................... 7.00 % 6/01/26 973,680
-----------
2,359,022
-----------
TOTAL U.S. TREASURY & U.S. GOVERNMENT AGENCY
OBLIGATIONS (COST $32,115,403).................................. 32,198,961
-----------
CORPORATE OBLIGATIONS -- 27.5%

CORPORATE OBLIGATIONS -- DOMESTIC -- 24.5%
AEROSPACE/DEFENSE -- 1.0%
500,000 Lockheed Martin................................................... 6.55 % 5/15/99 502,226
-----------
BANKING -- 3.9%
500,000 BanPonce Corp..................................................... 6.75 % 4/26/00 502,195
500,000 Capital One Bank.................................................. 6.87 % 8/16/99 502,605
250,000 Capital One Bank.................................................. 6.95 % 6/14/00 251,078
720,000 J.P. Morgan & Co.................................................. 8.50 % 8/15/03 785,124
-----------
2,041,002
-----------
</TABLE>

- ------------------------
See notes to financial statements.

<PAGE>
UBS Bond Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FACE COUPON MATURITY
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- ---------- ------------------------------------------------------------------ ------ -------- -----------
<C> <S> <C> <C> <C>
BROKERAGE -- 3.2%
$ 500,000 Goldman Sachs..................................................... 6.25 % 2/01/03 $ 486,795
600,000 Lehman Brothers Inc............................................... 7.14 % 9/24/99 606,666
200,000 Lehman Brothers Inc............................................... 7.25 % 4/15/03 201,266
400,000 Salomon Inc....................................................... 7.25 % 5/01/01 403,549
-----------
1,698,276
-----------
CHEMICALS -- 0.5%
250,000 Praxair........................................................... 6.70 % 4/15/01 250,785
-----------
ENERGY -- 0.8%
400,000 Oryx Energy Co.................................................... 10.00 % 4/01/01 439,076
-----------
FINANCING & LEASING -- 4.8%
950,000 Associates Corp N.A............................................... 8.50 % 1/10/00 1,005,347
500,000 CIT Group Holdings................................................ 6.50 % 7/13/98 504,220
750,000 Countrywide Home Loan............................................. 7.45 % 9/16/03 764,663
265,000 General Electric Capital Corp..................................... 6.875 % 4/15/00 270,239
-----------
2,544,469
-----------
INDUSTRIAL -- CAPTIVE FINANCE -- 3.2%
600,000 Caterpillar Financial............................................. 6.77 % 12/29/00 605,274
500,000 Pitney Bowes Credit............................................... 6.54 % 7/15/99 503,590
600,000 Sears Roebuck Acceptance Corp..................................... 5.59 % 2/16/01 578,790
-----------
1,687,654
-----------
MEDIA/CABLE -- 2.8%
600,000 News America Holdings............................................. 7.50 % 3/01/00 613,716
200,000 Paramount Communications.......................................... 7.50 % 1/15/02 199,834
650,000 Tele-Communications Inc........................................... 7.375 % 2/15/00 646,503
-----------
1,460,053
-----------
NATURAL GAS -- 1.1%
600,000 Kern River Funding (a)............................................ 6.72 % 9/30/01 599,172
-----------
REAL ESTATE -- 1.4%
650,000 Franchise Finance................................................. 7.02 % 2/20/03 638,950
125,000 Susa Partnership LP............................................... 7.125 % 11/01/03 123,581
-----------
762,531
-----------
TECHNOLOGY -- 0.9%
500,000 CSC Enterprises (a)............................................... 6.50 % 11/15/01 496,355
-----------
UTILITIES -- 0.9%
464,000 BVPS II Funding Corp.............................................. 7.38 % 12/01/99 466,320
-----------
TOTAL CORPORATE OBLIGATIONS -- DOMESTIC (COST $12,864,655)........ 12,947,919
-----------
CORPORATE OBLIGATIONS -- FOREIGN -- 2.7%
BANKING -- 1.7%
500,000 Banco Central Hispano............................................. 7.50 % 6/15/05 509,585
400,000 Spintab (a)....................................................... 7.50 % 8/14/49 403,120
-----------
912,705
-----------
PAPER & FOREST PRODUCTS -- 1.0%
500,000 Canadian Pacific Forest........................................... 10.25 % 1/15/03 528,550
-----------
TOTAL CORPORATE OBLIGATIONS -- FOREIGN (COST $1,473,146).......... 1,441,255
-----------
CORPORATE OBLIGATIONS -- EURODOLLAR -- 0.3%
ENERGY -- 0.1%
50,000 BP America Inc.................................................... 9.75 % 3/01/99 53,531
-----------
</TABLE>

- ------------------------
See notes to financial statements.

<PAGE>
UBS Bond Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FACE COUPON MATURITY
VALUE SECURITY DESCRIPTION RATE DATE VALUE
- ---------- ------------------------------------------------------------------ ------ -------- -----------
<C> <S> <C> <C> <C>
INDUSTRIAL -- CAPTIVE FINANCE -- 0.2%
$ 40,000 Ford Capital BV................................................... 9.75 % 6/05/97 $ 40,625
80,000 Unilever Capital.................................................. 9.25 % 3/29/00 87,000
-----------
127,625
-----------
TOTAL CORPORATE OBLIGATIONS -- EURODOLLAR (COST $180,661)......... 181,156
-----------
TOTAL CORPORATE OBLIGATIONS (COST $14,518,462).................... 14,570,330
-----------
FOREIGN GOVERNMENT OBLIGATIONS -- 5.5%
CANADA -- 4.2%
1,750,000* Canada Government................................................. 7.50 % 9/01/00 1,376,538
1,000,000* Canada Government................................................. 7.00 % 9/01/01 775,493
50,000 Province of Ontario............................................... 7.375 % 1/27/03 52,107
50,000 Province of Quebec................................................ 9.125 % 8/22/01 54,875
-----------
2,259,013
-----------
ITALY -- 0.1%
20,000 Italy (Euro Bond)................................................. 9.375 % 4/03/97 20,200
-----------
JAPAN -- 1.2%
355,000 Japan Finance Corp................................................ 9.125 % 10/11/00 382,587
250,000 Japan Finance Corp. for Municipal Enterprises..................... 6.85 % 4/15/06 252,145
-----------
634,732
-----------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS (COST $2,922,758)............ 2,913,945
-----------
ASSET BACKED SECURITIES -- 1.8%
CREDIT CARD RECEIVABLES -- 1.8%
440,000 First Omni Bank Credit Card Trust, Series 96-A.................... 6.65 % 9/15/03 443,709
500,000 Sears Credit Account Master Trust Series 96-3..................... 7.00 % 7/16/08 510,000
-----------
TOTAL ASSET BACKED SECURITIES (COST $937,838)..................... 953,709
-----------
TOTAL INVESTMENTS AT MARKET VALUE -- 95.5%
(COST $50,494,461)........................................................... 50,636,945
OTHER ASSETS IN EXCESS OF LIABILITIES -- 4.5%.................................. 2,363,907
-----------
NET ASSETS -- 100.0%........................................................... $53,000,852
-----------
-----------
</TABLE>

- ------------------------

* Securities denominated in Canadian dollars.

(a) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
1996, the total value of such securities amounted to $1,498,647 or 2.8% of
net assets.

SUMMARY OF OPEN FORWARD FOREIGN CURRENCY CONTRACTS

<TABLE>
<CAPTION>
U.S. DOLLAR
FOREIGN U.S. DOLLAR NET UNREALIZED
CURRENCY UNITS U.S. DOLLAR VALUE AT APPRECIATION/
CURRENCY AND SETTLEMENT DATE PURCHASED/SOLD COST/PROCEEDS DECEMBER 31, 1996 (DEPRECIATION)
- --------------------------------------------------- -------------- ------------- ------------------ --------------
<S> <C> <C> <C> <C>
PURCHASE CONTRACT
German Deutsche Mark, 1/14/97...................... 1,342,000 $ 863,578 $ 873,102 $ 9,524
SALE CONTRACTS
Canadian Dollar, 1/13/97........................... 2,145,000 1,617,464 1,567,696 49,768
Canadian Dollar, 1/13/97........................... 874,767 646,539 639,333 7,206
German Deutsche Mark, 1/14/97...................... 1,342,000 892,198 873,102 19,096
-------
$ 85,594
-------
-------
</TABLE>

Note: Based on the cost of investments of $50,516,946 for Federal Income Tax
purposes at December 31, 1996, the aggregate gross unrealized appreciation
and depreciation was $246,232 and $126,233, respectively, resulting in net
unrealized appreciation of $119,999.

See notes to financial statements.

<PAGE>
UBS Bond Portfolio
Statement of Assets and Liabilities
December 31, 1996
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investment, at value (cost $50,494,461).......................................... $50,636,945
Cash............................................................................. 1,443,320
Interest receivable.............................................................. 905,546
Unrealized appreciation on open forward foreign currency contracts............... 85,594
Deferred organization expenses and other assets.................................. 44,038
-----------
Total Assets................................................................ 53,115,443
-----------
LIABILITIES:
Administrative services fees payable............................................. 2,061
Trustees' fees payable........................................................... 877
Organization expenses payable.................................................... 42,733
Other accrued expenses........................................................... 68,920
-----------
Total Liabilities........................................................... 114,591
-----------

NET ASSETS....................................................................... $53,000,852
-----------
-----------

COMPOSITION OF NET ASSETS:
Paid-in capital for beneficial interests......................................... $53,000,852
-----------
-----------
</TABLE>

- ------------------------
See notes to financial statements.

<PAGE>
UBS Bond Portfolio
Statement of Operations
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................................ $ 1,848,040

EXPENSES:
Investment advisory fees............................................ $ 131,348
Administrative services fees........................................ 14,594
Audit fees.......................................................... 39,357
Custodian fees and expenses......................................... 27,616
Fund accounting fees................................................ 19,348
Legal fees.......................................................... 18,766
Amortization of organization expenses............................... 7,508
Trustees' fees...................................................... 7,508
Insurance expense................................................... 4,151
Miscellaneous expenses.............................................. 6,110
---------
Total expenses................................................. 276,306
Less: Fee waiver............................................... (131,348)
---------
Net expenses................................................... 144,958
-----------
Net investment income............................................... 1,703,082
-----------

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities transactions........................ 113,360
Net realized loss on foreign currency transactions.................. (68,736)
Net change in unrealized appreciation of investments................ 142,484
Net change in unrealized appreciation of foreign currency contracts
and translations.................................................. 84,921
-----------
Net realized and unrealized gain on investments..................... 272,029
-----------

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................ $ 1,975,111
-----------
-----------
</TABLE>

- ------------------------
See notes to financial statements.

<PAGE>
UBS Bond Portfolio
Statement of Changes in Net Assets
For the period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income............................................................... $ 1,703,082
Net realized gain on securities and foreign currency transactions................... 44,624
Net change in unrealized appreciation of investments, foreign currency contracts and
foreign currency translations..................................................... 227,405
-----------
Net increase in net assets resulting from operations................................ 1,975,111
-----------

CAPITAL TRANSACTIONS:
Proceeds from contributions......................................................... 59,142,218
Value of withdrawals................................................................ (8,116,477)
-----------
Net increase in net assets from capital transactions................................ 51,025,741
-----------

NET INCREASE IN NET ASSETS.......................................................... 53,000,852

NET ASSETS:
Beginning of period................................................................. --
-----------
End of period....................................................................... $53,000,852
-----------
-----------
</TABLE>

- ------------------------
See notes to financial statements.

<PAGE>
UBS Bond Portfolio
Financial Highlights
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)...................................... $53,001
Ratio of expenses to average net assets(1)..................................... 0.50%(2)
Ratio of net investment income to average net assets(1)........................ 5.83%(2)
Portfolio turnover............................................................. 100%
</TABLE>

- ------------------------
(1) Net of fee waivers. Such fee waivers had the effect of reducing the ratio of
expenses to average net assets and increasing the ratio of net investment
income to average net assets by 0.45% (annualized).
(2) Annualized.

See notes to financial statements.

<PAGE>
UBS Bond Portfolio
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------

1. GENERAL
UBS Bond Portfolio (the 'Portfolio'), a separate series of UBS Investor
Portfolios Trust (the 'Trust'), is registered under the Investment Company Act
of 1940, as a diversified, open-end management investment company. The Trust is
organized as a trust under the laws of the State of New York.

The investment adviser of the Portfolio is Union Bank of Switzerland, New York
Branch ('UBS'). Signature Financial Group (Grand Cayman), Ltd. ('SFG'), a
wholly-owned subsidiary of Signature Financial Group, Inc., acts as the
Portfolio's administrator and placement agent.

2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements:

A. INVESTMENT VALUATION -- Debt securities with a remaining maturity of more
than 60 days are normally valued by a pricing service approved by the Board of
Trustees (the 'Trustees'). Such pricing service will consider various factors
when arriving at a valuation for a security. Such factors include yields and
prices of comparable securities, indications as to values from dealers in such
securities and general market conditions. In the event a pricing service is
unable to price a security, the security will be valued by taking the average of
the bid and ask prices as provided by a dealer in such security.

Debt securities that mature in 60 days or less are valued at amortized cost,
which approximates market value. The amortized cost method involves valuing a
security at its cost on the date of purchase or, in the case of securities
purchased with more than 60 days until maturity, at their market value each day
until the 61st day prior to maturity, and thereafter assuming a constant
amortization to maturity of the difference between the principal amount due at
maturity and such valuation.

Securities or other assets for which market quotations are not readily available
are valued at fair value in accordance with procedures established by and under
the general supervision of the Trustees.

B. FOREIGN CURRENCY TRANSLATION -- The accounting records of the Portfolio are
maintained in U.S. dollars. Assets, including investment securities, and
liabilities denominated in foreign currency are translated into U.S. dollars at
the prevailing rate of exchange at year end. Purchases and sales of securities,
income and expenses are translated at the prevailing rate of exchange on the
respective dates of such transactions. Gain/loss on translation of foreign
currency includes net exchange gains and losses, gains and losses on disposition
of foreign currency and adjustments to the amount of foreign taxes withheld.

The assets and liabilities are presented at the exchange rates and market values
at the close of the year. The changes in net assets arising from changes in
exchange rates and the changes in net assets resulting from changes in market
prices of securities held at year-end are not separately presented. However,
gains and losses from certain foreign currency transactions are treated as
ordinary income for U.S. Federal income tax purposes.

C. FORWARD FOREIGN CURRENCY CONTRACTS -- The Portfolio may enter into forward
foreign currency contracts in connection with planned purchases or sales of
securities or to hedge the U.S. dollar value of portfolio securities denominated
in a particular currency. The Portfolio could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their contracts
and from unanticipated movements in the value of a foreign currency relative to
the U.S. dollar. The forward foreign currency contracts are marked-to-market
daily using the daily exchange rate of the underlying currency and any

<PAGE>
UBS Bond Portfolio
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------
resulting gains or losses are recorded for financial statement purposes as
unrealized gains or losses until the contract settlement date.

The Portfolio's use of forward contracts involves, to varying degrees, elements
of market risk in excess of the amount recognized in the statement of assets and
liabilities. The contract or notional amounts reflect the extent of the
Portfolio's involvement in these financial instruments. Risks arise from the
possible movements in the foreign exchange rates underlying these instruments.
The unrealized appreciation/depreciation on forward contracts reflects the
Portfolio's exposure at year end to credit loss in the event of a counterparty's
failure to perform its obligations.

E. U.S. FEDERAL INCOME TAXES -- The Portfolio is considered a partnership under
the U. S. Internal Revenue Code (the 'Code'). As such, each investor in the
Portfolio will be taxed on its share of the Portfolio's ordinary income and
capital gains. Accordingly, no provision for federal income taxes is necessary.
It is intended that the Portfolio will be managed in such a way that an investor
will be able to satisfy the requirements of the Code applicable to regulated
investment companies.

F. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Portfolio in
connection with its organization in the amount of $50,000 have been deferred and
are being amortized on a straight line basis over five years from the
Portfolio's commencement of operations (April 2, 1996).

G. OTHER -- The Portfolio bears all costs of its operations other than expenses
specifically assumed by UBS and SFG. Expenses incurred by the Trust on behalf of
any two or more portfolios are allocated in proportion to the net assets of each
portfolio, except when allocations of direct expenses to each portfolio can
otherwise be made fairly. Expenses directly attributable to the Portfolio are
charged directly to the Portfolio.

3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. INVESTMENT ADVISORY AGREEMENT -- The Portfolio has retained the services of
UBS as investment adviser. UBS makes the Portfolio's day-to-day investment
decisions, arranges for the execution of portfolio transactions and generally
manages the Portfolio's investments and operations. As compensation for overall
investment management services the Trust has agreed to pay UBS an investment
advisory fee, accrued daily and payable monthly, at an annual rate of 0.45% of
the Portfolio's average daily net assets. For the period April 2, 1996
(commencement of operations) through December 31, 1996, UBS voluntarily agreed
to waive the entire investment advisory fee. Such waiver amounted to $131,348.

B. ADMINISTRATIVE SERVICES AGREEMENT -- Under the terms of an Administrative
Services Agreement with the Trust, SFG provides overall administrative services
and general office facilities to the Portfolio and the Trust. As compensation
for such services, the Portfolio has agreed to pay SFG an administrative
services fee, accrued daily and payable monthly, at an annual rate of 0.05% of
the Portfolio's average daily net assets. For the period from April 2, 1996
(commencement of operations) through December 31, 1996, the administrative
services fee amounted to $14,594.

C. EXCLUSIVE PLACEMENT AGENT AGREEMENT -- Under the terms of an Exclusive
Placement Agent Agreement with the Trust, SFG has agreed to act as the Trust's
placement agent. SFG does not receive any additional fees for services provided
pursuant to this agreement.

<PAGE>
UBS Bond Portfolio
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------

4. PURCHASES AND SALES OF INVESTMENTS
For the period April 2, 1996 (commencement of operations) through December 31,
1996, purchases and sales of investment securities, excluding short-term
investments, were as follows:

<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------

<S> <C> <C>
U.S. Government Securities............................................... $60,905,077 $30,940,595
Corporate obligations.................................................... 28,583,638 7,953,111
----------- -----------
Total.......................................................... $89,488,715 $38,893,706
----------- -----------
----------- -----------
</TABLE>

<PAGE>
UBS Bond Portfolio
Report of Independent Accountants
- --------------------------------------------------------------------------------

To the Board of Trustees and
Investors of UBS Investor Portfolios Trust

In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the UBS Bond Portfolio (the
'Portfolio') (one of the portfolios constituting the UBS Investor Portfolios
Trust) at December 31, 1996, and the results of its operations, the changes in
its net assets and the financial highlights for the period April 2, 1996
(commencement of operations) through December 31, 1996, in conformity with
generally accepted accounting principles in the United States. These financial
statements and financial highlights (hereafter referred to as 'financial
statements') are the responsibility of the Portfolio's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards in the United States which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit, which included confirmation
of securities at December 31, 1996 by correspondence with the custodian,
provides a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE
Chartered Accountants

Toronto, Ontario
February 21, 1997

<PAGE>
UBS International Equity Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ----------- -------------------------------------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCK -- 83.1%
AUSTRALIA -- 6.2%
32,000 Australia & New Zealand Bank Group (Banking & Finance)................................ $ 201,701
15,800 Australian National Industries (Metals & Mining)...................................... 15,698
249,171 Burns Philp & Co. (Food).............................................................. 443,640
62,500 Coles Myer Ltd. (Retail).............................................................. 257,333
159,400 Fosters Brewing Group (Beverages)..................................................... 323,083
189,100 Goodman Fielder Limited (Food)........................................................ 234,478
565,638 MIM Holdings (Metals & Mining)........................................................ 791,291
89,000 Pacific Dunlop Ltd. (Diversified)..................................................... 226,373
50,000 Pasminco Limited (Metals & Mining).................................................... 78,690
-----------
2,572,287
-----------
DENMARK -- 1.7%
2,700 BG Bank A/S (Banking & Finance)....................................................... 126,541
10,500 Tele Danmark -- B shares (Telecommunications)......................................... 579,470
-----------
706,011
-----------
FRANCE -- 14.2%
8,800 Alcatel Alsthom SA (Electrical & Electronics)......................................... 708,009
3,060 AXA Company (Banking & Finance)....................................................... 194,923
5,358 Banque Nationale de Paris (Banking & Finance)......................................... 207,680
4,500 Casino-Guichard-PE (Etabl Econ) (Food)................................................ 209,864
4,200 Compagnie Financiere de Suez (Banking & Finance)...................................... 178,848
6,130 Groupe Danone (Food).................................................................. 855,514
22,600 Moulinex (Household Appliances)*...................................................... 521,320
5,100 Pechiney SA -- A Shares (Metals & Mining)............................................. 214,022
4,300 Pernod-Ricard SA (Beverages).......................................................... 238,220
2,050 Peugeot SA (Automotive)............................................................... 231,097
1,460 Sefimeg (Societe Francaise d'Investissements Immobiliers et de Gestion) (Real
Estate)............................................................................. 105,967
10,000 Societe Nationale Elf-Aquitaine (Energy Sources)...................................... 911,688
18,300 Thomson CSF (Defense Electronics)..................................................... 594,516
9,070 Total Cie Francaise des Petroles -- B shares (Energy Sources)......................... 738,836
-----------
5,910,504
-----------
GERMANY -- 8.1%
26,000 Bayer AG (Chemicals).................................................................. 1,061,294
13,500 Deutsche Bank AG (Banking & Finance).................................................. 630,907
770 Schmalbach-Lubeca AG (Packaging)*..................................................... 189,184
11,500 Veba AG (Diversified)................................................................. 665,258
2,000 Volkswagen AG (Automotive)............................................................ 831,979
-----------
3,378,622
-----------
GREAT BRITAIN -- 13.9%
86,320 Allied Domecq PLC (Food & Beverages).................................................. 675,630
81,900 B.A.T. Industries (Tobacco)........................................................... 680,310
115,700 BTR Limited (Diversified)............................................................. 562,773
15,840 Bass PLC (Beverages).................................................................. 222,731
247,200 British Gas Corp. (Energy Sources).................................................... 952,604
16,800 British Petroleum Co. PLC (Energy Sources)............................................ 201,557
53,000 MEPC British Registered (Real Estate)................................................. 393,955
178,000 Marley PLC (Building Materials)....................................................... 385,649
123,550 Northern Foods PLC (Food)............................................................. 427,440
43,950 Peninsular & Orient Steam (Transportation)............................................ 444,112
17,700 South West Water PLC (Utilities)...................................................... 182,798
209,750 Tarmac PLC (Building Materials)....................................................... 352,054
30,040 Thames Water PLC (Utilities).......................................................... 316,415
-----------
5,798,028
-----------
</TABLE>

- ------------------------
See notes to financial statements.

<PAGE>
UBS International Equity Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ----------- -------------------------------------------------------------------------------------- -----------
<C> <S> <C>
HONG KONG -- 0.3%
548,000 Yizheng Chemical Fibre Co. (Chemicals)................................................ $ 133,201
-----------
INDONESIA -- 0.3%
47,000 PT Astra International (Automotive)................................................... 129,340
-----------
JAPAN -- 21.1%
11,000 Dai Nippon Printing Co. (Printing).................................................... 192,816
13,000 Fuji Photo Film Co. (Photographic Equipment & Supplies)............................... 428,806
80,000 Hitachi Ltd. (Hit. Seisakusho) (Electrical & Electronics)............................. 746,050
96,000 Ishikawajima Harima Heavy Industries (Machinery)...................................... 426,906
20,000 JGC Engineering & Construction Corp. (Engineering).................................... 150,073
68 Japan Tobacco Inc. (Tobacco).......................................................... 460,927
41,000 Japan Wool Textile Co. (Apparel & Textiles)........................................... 338,451
49,000 Kansai Paint Co. (Chemicals).......................................................... 220,016
14,000 Kao Corp. (Household Products)........................................................ 163,198
33,000 Koito Manufacturing Co., Ltd. (Automotive -- Parts & Equipment)....................... 220,836
36,000 Marudai Food Co., Ltd. (Food)......................................................... 192,419
22,000 Matsushita Electric Industries (Electrical & Electronics)............................. 359,036
105,000 Mitsubishi Chemical Corp. (Chemicals)*................................................ 339,997
38,000 Mitsubishi Estate Co. (Real Estate)................................................... 390,467
27,000 Mitsubishi Heavy Industries (Aerospace/Defense Equipment)............................. 214,489
38,000 Nihon Cement Co. (Building Materials)................................................. 193,921
77,000 Nippon Yusen Kabushiki Kaish (Shipping)............................................... 348,398
36,000 Nissan Fire & Marine Insurance (Insurance)............................................ 198,947
47,000 Nisshinbo Industries Inc. (Apparel & Textiles)........................................ 366,065
3,900 Sony Corp. (Electrical & Electronics)................................................. 255,600
53,000 Sumitomo Marine & Fire (Insurance).................................................... 329,505
1,000 Takashimaya Co. (Retail).............................................................. 12,002
69,000 Toray Industries Inc. (Chemicals)..................................................... 425,999
13,000 Uny Co. (Retail)...................................................................... 237,976
115 West Japan Railway (Transportation)................................................... 372,377
35,000 Yamaha Motor Co. (Automotive)......................................................... 314,308
42,000 Yamanouchi Pharmaceutical (Pharmaceuticals)........................................... 863,138
-----------
8,762,723
-----------
NETHERLANDS -- 2.3%
12,400 Internationale Nederlanden Groep NV (Banking & Finance)............................... 446,730
14,500 Koninklijke Papierfabrieken BT NV (Paper & Forest Product)............................ 316,623
5,040 Royal PTT Nederland (Telecommunications).............................................. 192,375
-----------
955,728
-----------
NEW ZEALAND -- 0.8%
10,300 Ceramco Corp. Ltd. (Diversified)...................................................... 9,830
116,000 Fletcher Challenge Paper Shares (Paper & Forest Products)............................. 238,638
39,200 Fletcher Challenge Forestry Shares (Forest Products).................................. 65,679
-----------
314,147
-----------
NORWAY -- 0.5%
8,100 Bergesen D.Y. ASA (Transportation).................................................... 196,117
-----------
SINGAPORE -- 1.9%
280,579 Dairy Farm International Holdings (Food).............................................. 225,866
121,898 Hong Kong Land Holdings (Real Estate)................................................. 338,876
34,965 Jardine Matheson Holdings (Diversified)............................................... 230,769
-----------
795,511
-----------
</TABLE>

- ------------------------
See notes to financial statements.

TOTAL COMMON STOCK (COST $34,119,162)................................................. 34,507,979
-----------

CONVERTIBLE PREFERRED STOCK -- 0.6%
JAPAN -- 0.6%
30,000,000 Sakura Finance, Series II, 0.75%, due 10/01/01** (Banking & Finance)
(Cost $282,056)..................................................................... 267,140
-----------

CONTINGENT VALUE RIGHTS -- 0.0%
FRANCE -- 0.0%
3,060 AXA Company (Banking & Finance) (Cost $0)***.......................................... 0
-----------
TOTAL INVESTMENTS AT MARKET VALUE -- 83.7%
(COST $34,401,218)............................................................................... 34,775,119
OTHER ASSETS IN EXCESS OF LIABILITIES -- 16.3%..................................................... 6,771,460
-----------
NET ASSETS -- 100.0%............................................................................... $41,546,579
-----------
-----------
</TABLE>

- ------------------------

GDR -- Global Depository Receipts.
* Non-income producing security.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At December 31, 1996, the value
of this security amounted to $267,140 or 0.6% of net assets.
*** This security did not commence trading until January 14, 1997. At December
31, 1996 there was no market for this security.
Note: Based on the cost of investments of $34,401,218 for Federal Income Tax
purposes at December 31, 1996, the aggregate gross unrealized appreciation
and depreciation was $1,866,903 and $1,493,002, respectively, resulting in
net unrealized appreciation of $373,901.

See notes to financial statements.

<PAGE>
UBS International Equity Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------

SUMMARY OF INDUSTRY DIVERSIFICATION

<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY DIVERSIFICATION (UNAUDITED) NET ASSETS
- ----------------------------------------------------------------------------------------------------- -----------

<S> <C>
Energy Sources....................................................................................... 6.8%
Food................................................................................................. 6.2%
Banking & Finance.................................................................................... 5.4%
Chemicals............................................................................................ 5.2%
Electrical & Electronics............................................................................. 5.0%
Food & Beverages..................................................................................... 4.5%
Pharmaceuticals...................................................................................... 4.1%
Diversified.......................................................................................... 4.1%
Automotive........................................................................................... 4.0%
Building Materials................................................................................... 3.7%
Real Estate.......................................................................................... 3.0%
Paper & Forest Products.............................................................................. 2.9%
Household Appliances................................................................................. 2.8%
Tobacco.............................................................................................. 2.7%
Metals & Mining...................................................................................... 2.6%
Transportation....................................................................................... 2.4%
Insurance............................................................................................ 2.1%
Beverages............................................................................................ 1.9%
Telecommunications................................................................................... 1.9%
Apparel & Textiles................................................................................... 1.7%
Defense Electronics.................................................................................. 1.4%
Retail............................................................................................... 1.2%
Utilities............................................................................................ 1.2%
Photographic Equipment & Supplies.................................................................... 1.0%
Machinery............................................................................................ 1.0%
Shipping............................................................................................. 0.8%
Manufacturing........................................................................................ 0.7%
Automotive -- Parts & Equipment...................................................................... 0.5%
Aerospace / Defense Equipment........................................................................ 0.5%
Packaging............................................................................................ 0.5%
Printing............................................................................................. 0.5%
Household Products................................................................................... 0.4%
Engineering.......................................................................................... 0.4%
Technology........................................................................................... 0.4%
Forest Products...................................................................................... 0.2%
-----------
Total Portfolio Holdings............................................................................. 83.7%
Other assets in excess of liabilities................................................................ 16.3%
-----------
Total Net Assets..................................................................................... 100.0%
-----------
-----------
</TABLE>

- ------------------------
See notes to financial statements.

<PAGE>
UBS International Equity Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------

SUMMARY OF OPEN FORWARD FOREIGN CURRENCY CONTRACTS

<S> <C> <C> <C> <C>
PURCHASE CONTRACTS
Australian Dollar, 1/07/97......................... 562,647 $ 448,711 $ 447,175 ($ 1,536)
Australian Dollar, 1/08/97......................... 111,016 88,480 88,231 (249)
Swiss Franc, 1/06/97............................... 1,219,183 903,098 911,436 8,338
German Deutsche Mark, 1/06/97...................... 1,692,482 1,088,973 1,100,531 11,558
Danish Krone, 1/06/97.............................. 1,399,769 235,810 237,770 1,960
Spanish Peseta, 1/09/97............................ 15,642,120 119,615 120,457 842
French Franc, 1/31/97.............................. 9,045,738 1,728,711 1,749,415 20,704
British Pound, 1/07/97............................. 866,020 1,468,935 1,483,015 14,080
Hong Kong Dollar, 1/03/97.......................... 275,087 35,564 35,567 3
Japanese Yen, 1/08/97.............................. 362,927,155 3,129,155 3,137,482 8,327
Dutch Guilder, 1/06/97............................. 534,289 306,587 309,590 3,003
Norwegian Krone, 1/06/97........................... 419,630 65,252 65,148 (104)
New Zealand Dollar, 1/08/97........................ 89,738 63,534 63,407 (127)
Swedish Krona, 1/07/97............................. 3,675,096 534,249 539,855 5,606
Thai Baht, 1/06/97................................. 938,788 36,628 36,606 (22)

SALE CONTRACTS
Japanese Yen, 1/07/97.............................. 60,000 517 519 (2)
--------------
$ 72,381
--------------
--------------
</TABLE>

- ------------------------
See notes to financial statements.

<PAGE>
UBS International Equity Portfolio
Statement of Assets and Liabilities
December 31, 1996
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $34,401,218).......................................... $34,775,119
Cash.............................................................................. 17,165,268
Foreign currency (cost $1,237).................................................... 1,247
Dividends receivable.............................................................. 73,763
Interest receivable............................................................... 25,636
Unrealized appreciation on open forward foreign currency contracts................ 72,381
Deferred organization expenses and other assets................................... 44,063
-----------
Total Assets................................................................. 52,157,477
-----------

LIABILITIES:
Advisory fees payable............................................................. 13,839
Administrative services fees payable.............................................. 1,151
Trustees' fees payable............................................................ 582
Payable for investment securities purchased....................................... 10,476,488
Organization expenses payable..................................................... 32,933
Other accrued expenses............................................................ 85,905
-----------
Total Liabilities............................................................ 10,610,898
-----------

NET ASSETS........................................................................ $41,546,579
-----------
-----------

COMPOSITION OF NET ASSETS:
Paid-in capital for beneficial interests.......................................... $41,546,579
-----------
-----------
</TABLE>

- ------------------------
See notes to financial statements.

<PAGE>
UBS International Equity Portfolio
Statement of Operations
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $141,935).................... $500,868
Interest.................................................................. 189,623
--------
Investment income.................................................... $ 690,491

EXPENSES:
Investment advisory fees.................................................. 199,112
Administrative services fees.............................................. 11,712
Custodian fees and expenses............................................... 60,563
Audit fees................................................................ 39,357
Fund accounting fees...................................................... 35,843
Legal fees................................................................ 18,766
Amortization of organization expenses..................................... 7,508
Trustees' fees............................................................ 7,508
Insurance expense......................................................... 4,053
Miscellaneous expenses.................................................... 7,508
--------
Total expenses....................................................... 391,930
Less: Fee waiver..................................................... (185,273)
--------
Net expenses......................................................... 206,657
----------
Net investment income..................................................... 483,834
----------

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on securities transactions.............................. 361,151
Net realized gain on foreign currency transactions........................ 11,064
Net change in unrealized appreciation of investments...................... 373,901
Net change in unrealized depreciation of foreign currency contracts and
translations............................................................ (6,329)
----------
Net realized and unrealized gain on investments........................... 739,787
----------

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................... $1,223,621
----------
----------
</TABLE>

- ------------------------
See notes to financial statements.

<PAGE>
UBS International Equity Portfolio
Statement of Changes in Net Assets
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income................................................................ $ 483,834
Net realized gain on securities and foreign currency transactions.................... 372,215
Net change in unrealized appreciation of investments, foreign currency contracts and
foreign currency translations...................................................... 367,572
-----------
Net increase in net assets resulting from operations................................. 1,223,621
-----------

CAPITAL TRANSACTIONS:
Proceeds from contributions.......................................................... 60,373,286
Value of withdrawals................................................................. (20,050,328)
-----------
Net increase in net assets from capital transactions................................. 40,322,958
-----------

NET INCREASE IN NET ASSETS........................................................... 41,546,579

NET ASSETS:
Beginning of period.................................................................. --
-----------
End of period........................................................................ $41,546,579
-----------
-----------
</TABLE>

- ------------------------
See notes to financial statements.

<PAGE>
UBS International Equity Portfolio
Financial Highlights
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's omitted)...................................... $41,547
Average commission rate per share(1)........................................... $ 0.02
Ratio of expenses to average net assets(2)..................................... 0.88%(3)
Ratio of net investment income to average net assets(2)........................ 2.07%(3)
Portfolio turnover............................................................. 42%
</TABLE>

- ------------------------
(1) Most foreign securities markets do not charge commissions based on a rate
per share but as a percentage of the principal value of the transaction. As
a result, the above rate is not indicative of the commission arrangements
currently in effect.
(2) Net of fee waivers. Such fee waivers had the effect of reducing the ratio of
expenses to average net assets and increasing the ratio of net investment
income to average net assets by 0.79% (annualized).
(3) Annualized.

See notes to financial statements.

<PAGE>
UBS International Equity Portfolio
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------

1. GENERAL
UBS International Equity Portfolio (the 'Portfolio'), a separate series of UBS
Investor Portfolios Trust (the 'Trust'), is registered under the Investment
Company Act of 1940, as a diversified, open-end management investment company.
The Trust is organized as a trust under the laws of the State of New York.

The investment adviser of the Portfolio is Union Bank of Switzerland, New York
Branch ('UBS'); UBS International Investment London Limited ('UBSII') is the
sub-adviser of the Portfolio. Signature Financial Group (Grand Cayman), Ltd.
('SFG'), a wholly-owned subsidiary of Signature Financial Group, Inc., acts as
the Portfolio's administrator and placement agent.

A. INVESTMENT VALUATION -- Equity securities in the portfolio are valued at the
last sale price on the exchange on which they are primarily traded, or in the
absence of recorded sales, at the average of readily available closing bid and
asked prices, or at the quoted bid price. Unlisted securities are valued at the
average of the quoted bid and asked prices in the over-the-counter market.

Options on stock indices traded on national securities exchanges are valued at
their last sale price as of the close of options trading on such exchanges.
Stock index futures and related options traded on commodities exchanges are
valued at their last sales price as of the close of trading on such exchanges.

Trading in securities on most foreign exchanges and over-the-counter markets is
normally completed before the close of the New York Stock Exchange and may also
take place on days on which the New York Stock Exchange is closed. If events
materially affecting the value of foreign securities occur between the time when
the exchange on which they are traded closes and the pricing of the Portfolio,
such securities will be valued at fair value in accordance with procedures
established by and under the general supervision of the Trustees.

The assets and liabilities are presented at the exchange rates and market values
at the close of the year. The changes in net assets arising from changes in
exchange rates and the changes in net assets resulting from changes in market
prices of securities at year end are not separately presented. However, gains
and losses from certain foreign currency transactions are treated as ordinary
income for U.S. Federal income tax purposes.

<PAGE>
UBS International Equity Portfolio
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------

D. ACCOUNTING FOR INVESTMENTS -- Securities transactions are accounted for on
trade date. Realized gains and losses on security transactions are determined on
the identified cost basis. Dividend income and other distributions from
portfolio securities are recorded on the ex-dividend date, except, if the ex-
dividend date has passed, certain dividends from foreign securities are recorded
as soon as the Portfolio is informed of the ex-dividend date. Dividend income is
recorded net of foreign taxes withheld where recovery of such taxes is not
assured. Withholding taxes on foreign dividends have been provided for in
accordance with the Portfolio's understanding of the applicable countries' tax
rules and rates. Recoveries of foreign taxes withheld from the Portfolio's
income are generally recorded, where applicable, by the funds investing in the
Portfolio. Interest income, adjusted for amortization of premiums and accretion
of discounts on investments, is accrued daily.

E. U. S. FEDERAL INCOME TAXES -- The Portfolio is considered a partnership under
the U.S. Internal Revenue Code (the 'Code'). As such, each investor in the
Portfolio will be taxed on its share of the Portfolio's ordinary income and
capital gains. Accordingly, no provision for federal income taxes is necessary.
It is intended that the Portfolio will be managed in such a way that an investor
will be able to satisfy the requirements of the Code applicable to regulated
investment companies.

G. OTHER -- The Portfolio bears all costs of its operations other than expenses
specifically assumed by UBS and SFG. Expenses incurred by the Trust on behalf of
any two or more portfolios are allocated in proportion to net assets of each
portfolio, except when allocations of direct expenses to each portfolio can
otherwise be made fairly. Expenses directly attributable to the Portfolio are
charged directly to the Portfolio.

3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. INVESTMENT ADVISORY AGREEMENT -- The Portfolio has retained the services of
UBS as investment adviser and UBSII as investment sub-adviser. UBSII makes the
Portfolio's day-to-day investment decisions, arranges for the execution of
portfolio transactions and generally manages the Portfolio's investments and
operations subject to the supervision of UBS and the Trustees. As compensation
for overall investment management services the Trust has agreed to pay UBS an
investment advisory fee, accrued daily and payable monthly, at an annual rate of
0.85% of the Portfolio's average daily net assets. UBS, in turn, has agreed to
pay UBSII a fee, accrued daily and payable monthly, at an annual rate of 0.75%
of the Portfolio's first $20 million average daily net assets, 0.50% of the next
$30 million average daily net assets and 0.40% of the Portfolio's average daily
net assets in excess of $50 million. For the period April 2, 1996 (commencement
of operations) through December 31, 1996, the

<PAGE>
UBS International Equity Portfolio
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------
investment advisory fee amounted to $199,112. UBS voluntarily agreed to waive
$185,273 of this amount.

B. ADMINISTRATIVE SERVICES AGREEMENT -- Under the terms of an Administrative
Services Agreement with the Trust, SFG provides overall administrative services
and general office facilities to the Portfolio and the Trust. As compensation
for such services, the Portfolio has agreed to pay SFG an administrative
services fee, accrued daily and payable monthly, at an annual rate of 0.05% of
the Portfolio's average daily net assets. For the period April 2, 1996
(commencement of operations) through December 31, 1996, the administrative
services fee amounted to $11,712.

<PAGE>
UBS International Equity Portfolio
Report of Independent Accountants
- --------------------------------------------------------------------------------

To the Board of Trustees
and Investors of
UBS INVESTOR PORTFOLIOS TRUST

In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the UBS International Equity
Portfolio (the 'Portfolio') (one of the portfolios constituting the UBS Investor
Portfolios Trust) at December 31, 1996, and the results of its operations, the
changes in its net assets and the financial highlights for the period April 2,
1996 (commencement of operations) through December 31, 1996, in conformity with
generally accepted accounting principles in the United States. These financial
statements and financial highlights (hereafter referred to as 'financial
statements') are the responsibility of the Portfolio's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards in the United States which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit, which included confirmation
of securities at December 31, 1996 by correspondence with the custodian and
brokers, and the application of alternative auditing procedures where
confirmations from brokers were not received provides a reasonable basis for the
opinion expressed above.

PRICE WATERHOUSE
Chartered Accountants
Toronto, Ontario
February 21, 1997

<PAGE>
UBS U.S. Equity Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------ ------------------------------------------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCK -- 97.6%
BANKING & FINANCIAL INSTITUTIONS -- 14.4%
1,100 BankAmerica Corp........................................................................... $ 109,725
9,200 Corestates Financial Corp.................................................................. 477,250
13,100 Great Western Financial.................................................................... 379,900
10,050 J. P. Morgan & Co. Inc..................................................................... 981,131
14,000 Mellon Bank Corp........................................................................... 994,000
10,700 U.S. Bancorp............................................................................... 480,831
4,300 Wachovia Corp.............................................................................. 242,950
-----------
3,665,787
-----------
CHEMICALS -- 4.2%
5,690 Dow Chemical Company....................................................................... 445,954
20,800 Witco Corp................................................................................. 634,400
-----------
1,080,354
-----------
CONSUMER FOODS -- 7.4%
17,870 General Mills Co........................................................................... 1,132,511
21,075 H. J. Heinz Co............................................................................. 753,431
-----------
1,885,942
-----------
CONSUMER GOODS & SERVICES -- 4.8%
23,750 H&R Block Inc.............................................................................. 688,750
13,500 Readers Digest Association Inc............................................................. 543,375
-----------
1,232,125
-----------
COSMETICS -- 2.5%
14,010 International Flavors & Fragrances......................................................... 630,450
-----------
DRUGS & PHARMACEUTICALS -- 10.9%
12,960 American Home Products Corp................................................................ 759,780
8,500 Baxter International....................................................................... 348,500
8,300 Bristol-Myers Squibb Co.................................................................... 902,625
18,977 Pharmacia & Upjohn Inc..................................................................... 751,964
-----------
2,762,869
-----------
INSURANCE -- 5.4%
12,600 American General Corp...................................................................... 515,025
4,250 Marsh & McLennan Cos. Inc.................................................................. 442,000
10,700 Safeco Corp................................................................................ 421,981
-----------
1,379,006
-----------
LUMBER, PAPER & BUILDING SUPPLIES -- 7.6%
10,550 Potlatch Corp.............................................................................. 453,650
6,200 Union Camp Corp............................................................................ 296,050
24,800 Weyerhauser Co............................................................................. 1,174,900
-----------
1,924,600
-----------
MANUFACTURING -- 3.7%
11,510 Minnesota Mining & Manufacturing........................................................... 953,891
-----------
NATURAL GAS -- 0.8%
6,000 NICOR Inc.................................................................................. 214,500
-----------
</TABLE>

- ------------------------
See notes to financial statements.

<PAGE>
UBS U.S. Equity Portfolio
Schedule of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY DESCRIPTION VALUE
- ------ ------------------------------------------------------------------------------------------- -----------
<C> <S> <C>
OFFICE EQUIPMENT AND SUPPLIES -- 1.6%
7,250 Pitney Bowes, Inc.......................................................................... $ 395,125
-----------
PETROLEUM PRODUCTION & SALES -- 7.7%
4,700 Amoco Corporation.......................................................................... 378,350
5,650 Atlantic Richfield Co...................................................................... 748,625
7,800 Chevron Corporation........................................................................ 507,000
2,300 Exxon Corporation.......................................................................... 225,400
1,120 Texaco Inc................................................................................. 109,900
-----------
1,969,275
-----------
PRINTING & PUBLISHING -- 0.9%
9,200 Dun & Bradstreet Corporation............................................................... 218,500
-----------
RETAIL -- 4.1%
21,220 J. C. Penney Company, Inc.................................................................. 1,034,475
-----------
TELECOMMUNICATIONS -- 11.0%
15,200 Bell Atlantic Corp......................................................................... 984,200
22,350 GTE Corporation............................................................................ 1,016,925
4,700 SBC Communications......................................................................... 243,225
16,800 US West Inc................................................................................ 541,800
-----------
2,786,150
-----------
TOBACCO -- 8.0%
9,600 American Brands, Inc....................................................................... 476,400
10,150 Philip Morris Companies, Inc............................................................... 1,143,144
12,600 UST, Inc................................................................................... 407,925
-----------
2,027,469
-----------
UTILITIES -- 2.6%
10,750 Baltimore Gas and Electric................................................................. 287,563
5,860 Central & South West Corp.................................................................. 150,163
8,200 Wisconsin Energy Corp...................................................................... 220,375
-----------
658,101
-----------
TOTAL INVESTMENTS AT MARKET VALUE -- 97.6%
(COST $23,144,284)................................................................................ 24,818,619
OTHER ASSETS IN EXCESS OF LIABILITIES -- 2.4%....................................................... 607,114
-----------
NET ASSETS -- 100.0%................................................................................ $25,425,733
-----------
-----------
</TABLE>

- ------------------------

Note: Based upon the cost of investments of $23,146,237 for Federal Income Tax
purposes at December 31, 1996, the aggregate gross unrealized appreciation
and depreciation was $2,047,624 and $375,242, respectively, resulting in
net unrealized appreciation of $1,672,382.

See notes to financial statements.

<PAGE>
UBS U.S. Equity Portfolio
Statement of Assets and Liabilities
December 31, 1996
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Investment, at value (cost $23,144,284)........................................... $24,818,619
Cash.............................................................................. 2,980,844
Dividends and interest receivable................................................. 81,913
Deferred organization expenses and other assets................................... 43,094
-----------
Total Assets................................................................. 27,924,470
-----------

LIABILITIES:
Administrative services fees payable.............................................. 964
Trustees' fees payable............................................................ 1,929
Payable for investment securities purchased....................................... 2,382,507
Organization expenses payable..................................................... 42,733
Other accrued expenses............................................................ 70,604
-----------
Total Liabilities............................................................ 2,498,737
-----------
NET ASSETS........................................................................ $25,425,733
-----------
-----------

NET ASSETS CONSIST OF:
Paid-in capital for beneficial interests.......................................... $25,425,733
-----------
-----------
</TABLE>

- ------------------------

See notes to financial statements.

<PAGE>
UBS U.S. Equity Portfolio
Statement of Operations
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends................................................................ $524,846
Interest................................................................. 35,449
--------
Investment income................................................... $ 560,295

EXPENSES
Investment advisory fees................................................. 84,435
Administrative services fees............................................. 7,036
Audit fees............................................................... 39,357
Custodian fees and expenses.............................................. 24,387
Fund accounting fees..................................................... 19,348
Legal fees............................................................... 15,273
Amortization of organization expenses.................................... 7,508
Trustees' fees........................................................... 7,508
Insurance expense........................................................ 1,647
Miscellaneous expenses................................................... 6,110
--------
Total expenses...................................................... 212,609
Less: Fee waiver.................................................... (84,435)
--------
Net expenses........................................................ 128,174
----------
Net investment income.................................................... 432,121
----------

NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on securities transactions............................. 1,679
Net change in unrealized appreciation of investments..................... 1,674,335
----------
Net realized and unrealized gain on investments.......................... 1,676,014
----------

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $2,108,135
----------
----------
</TABLE>

- ------------------------

See notes to financial statements.

<PAGE>
UBS U.S. Equity Portfolio
Statement of Changes in Net Assets
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income.................................................................. $ 432,121
Net realized gain on securities transactions........................................... 1,679
Net change in unrealized appreciation of investments................................... 1,674,335
-----------
Net increase in net assets resulting from operations................................... 2,108,135
-----------

CAPITAL TRANSACTIONS:
Proceeds from contributions............................................................ 30,786,561
Value of withdrawals................................................................... (7,468,963)
-----------
Net increase in net assets from capital transactions................................... 23,317,598
-----------

NET INCREASE IN NET ASSETS............................................................. 25,425,733

NET ASSETS:
Beginning of period.................................................................... --
-----------
End of period.......................................................................... $25,425,733
-----------
-----------
</TABLE>

- ------------------------

See notes to financial statements.

<PAGE>
UBS U.S. Equity Portfolio
Financial Highlights
For the Period April 2, 1996 (Commencement of Operations) through December 31,
1996
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's omitted)...................................... $25,426
Average commission per share................................................... $ 0.06
Ratio of expenses to average net assets(1)..................................... 0.91%(2)
Ratio of net investment income to average net assets(1)........................ 3.07%(2)
Portfolio turnover............................................................. 19%
</TABLE>

- ------------------------

See notes to financial statements.

<PAGE>
UBS U.S. Equity Portfolio
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------

1. GENERAL
UBS U.S. Equity Portfolio (the 'Portfolio'), a separate series of UBS Investor
Portfolios Trust (the 'Trust'), is registered under the Investment Company Act
of 1940, as a diversified, open-end management investment company. The Trust is
organized as a trust under the laws of the State of New York.

A. INVESTMENT VALUATION -- Equity securities in the portfolio are valued at
their last sale price on the exchange on which they are primarily traded, or in
the absence of recorded sales, at the average of readily available closing bid
and asked prices, or at the quoted bid price. Unlisted securities are valued at
the average of the quoted bid and asked prices in the over-the-counter market.

B. ACCOUNTING FOR INVESTMENTS -- Securities transactions are accounted for on
trade date. Realized gains and losses on security transactions are determined on
the identified cost basis. Dividend income and other distributions from
portfolio securities are recorded on the ex-dividend date. Interest income,
adjusted for amortization of premiums and accretion of discounts on investments,
is accrued daily.

C. U. S. FEDERAL INCOME TAXES -- The Portfolio is considered a partnership under
the U. S. Internal Revenue Code (the 'Code'). As such, each investor in the
Portfolio will be taxed on its share of the Portfolio's ordinary income and
capital gains. Accordingly, no provision for federal income taxes is necessary.
It is intended that the Portfolio will be managed in such a way that an investor
will be able to satisfy the requirements of the Code applicable to regulated
investment companies.

D. DEFERRED ORGANIZATION EXPENSES -- Expenses incurred by the Portfolio in
connection with its organization in the amount of $50,000 have been deferred and
are being amortized on a straight line basis over five years from the
Portfolio's commencement of operations (April 2, 1996).

<PAGE>
UBS U.S. Equity Portfolio
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------------

E. OTHER -- The Portfolio bears all costs of its operations other than expenses
specifically assumed by UBS and SFG. Expenses incurred by the Trust on behalf of
any two or more portfolios are allocated in proportion to the net assets of each
portfolio, except when allocations of direct expenses to each portfolio can
otherwise be made fairly. Expenses directly attributable to the Portfolio are
charged directly to the Portfolio.

3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. INVESTMENT ADVISORY AGREEMENT -- The Portfolio has retained the services of
UBS as investment adviser. UBS makes the Portfolio's day-to-day investment
decisions, arranges for the execution of portfolio transactions and generally
manages the Portfolio's investments and operations. As compensation for overall
investment management services the Trust has agreed to pay UBS an investment
advisory fee, accrued daily and payable monthly, at an annual rate of 0.60% of
the Portfolio's average daily net assets. For the period April 2, 1996
(commencement of operations) through December 31, 1996, UBS voluntarily agreed
to waive the entire investment advisory fee. Such waiver amounted to $84,435.

B. ADMINISTRATIVE SERVICES AGREEMENT -- Under the terms of an Administrative
Services Agreement with the Trust, SFG provides overall administrative services
and general office facilities to the Portfolio and the Trust. As compensation
for such services, the Portfolio has agreed to pay SFG an administrative
services fee, accrued daily and payable monthly, at an annual rate of 0.05% of
the Portfolio's average daily net assets. For the period April 2, 1996
(commencement of operations) through December 31, 1996, the administrative
services fee amounted to $7,036.

<PAGE>
UBS U.S. Equity Portfolio
Report of Independent Accountants
- --------------------------------------------------------------------------------

To the Board of Trustees and
Investors of UBS Investor Portfolios Trust

In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position, of the UBS U.S. Equity Portfolio (the
'Portfolio') (one of the portfolios constituting the UBS Investor Portfolio
Trust) at December 31, 1996, and the results of its operations, the changes in
its net assets and the financial highlights for the period April 2, 1996
(commencement of operations) through December 31, 1996, in conformity with
generally accepted accounting principles in the United States. These financial
statements and financial highlights (hereafter referred to as 'financial
statements') are the responsibility of the Portfolio's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards in the United States which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit, which included confirmation
of securities at December 31, 1996 by correspondence with the custodian and
brokers, provides a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE
Chartered Accountants

Toronto, Ontario
February 21, 1997