<PAGE>
PB SERIES TRUST
ANNUAL
REPORT
DECEMBER 31, 1998
<PAGE>
PB Series Trust
Annual Report
For the Period Ending December 31, 1998
Table of Contents
<TABLE>
<S> <C>
Contract Owners Letter.................................. 1
Management's Discussion and Analysis.................... 2
PB Series Trust Financial Statements
Report of Independent Auditors.................... 17
Schedule of Investments........................... 18
Statements of Assets and Liabilities.............. 28
Statements of Operations.......................... 30
Statements of Changes in Net Assets............... 32
Financial Highlights.............................. 36
Notes to Financial Statements..................... 41
Trustees and Executive Officers................... Inside
Back
Cover
</TABLE>
<PAGE>
CONTRACT OWNERS LETTER
Dear Contract Owners:
As President of the PB Series Trust, I am pleased to bring you performance,
market and portfolio activity information on the portfolios of the PB Series
Trust ("Portfolios") for the fiscal year ended December 31, 1998.
The Peoples Benefit Variable Annuity represents a variety of Investment Managers
and a diverse choice of investment disciplines with distinctly different
management styles. Under the direction of the PB Series Trust Board of Trustees
and the Investment Managers, the Portfolios continue to deliver competitive
returns while providing its shareholders with a quality portfolio of
investments.
On the following pages are the schedule of investments, financial statements and
footnotes for the PB Series Trust as of December 31, 1998.
My sincere thanks for your continued support of the Peoples Benefit Variable
Annuity and the PB Series Trust. If you should have any comments, please do not
hesitate to contact us.
Sincerely,
[LOGO]
Thomas J. Hartlage
President
January 21, 1999
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MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 1998
PB SERIES TRUST INVESTMENT PORTFOLIOS
PORTFOLIOS MANAGED BY ATLANTA CAPITAL MANAGEMENT COMPANY, L.L.C.
The PB Series Trust Lifestyle Portfolios began operation on May 9, 1997. These
portfolios are designed for long-term investors who seek a diversified portfolio
of high-quality securities with a targeted level of risk.
Five separate Lifestyle Portfolios make up the series. Each Lifestyle Portfolio
invests in two or more of the following investment classes: US money market
securities, US bonds, US common stocks, and international stocks. A Portfolio's
exposure to each investment class is carefully set to reflect the risk
characteristics appropriate for that particular portfolio.
Risk is defined as the possibility of loss. In general the lower the risk of an
investment, the lower the potential return. The higher the risk of an
investment, the higher the potential return. Money-market investments are
usually considered lower risk, lower-return investments, while common stocks are
considered higher risk, higher-return investments.
Atlanta Capital Management Company, L.L.C. manages investment portfolios of US
bonds and US stocks for the Lifestyle Portfolios. US bonds are managed in the PB
Series Trust Fixed Income Fund, an intermediate-maturity bond fund of investment
grade issues. US stocks are managed in the PB Series Trust High Quality Stock
Fund, a widely diversified portfolio of high-quality US stocks in all
capitalization ranges.
Blairlogie Capital Management of Scotland manages the international-stock
portfolio for the Lifestyle Portfolios with the PB Series Trust International
Active Fund. Federated Investment Counseling of Pittsburgh, Pennsylvania manages
the money-market portfolio for the Lifestyle Portfolios with the PB Series Trust
Money Market Fund.
The Capital Preservation Lifestyle Portfolio is the most conservative and least
risky of the five Lifestyle Portfolios. Its investment allocation is 50%
money-market securities and 50% US bonds. This portfolio generated a total
return (income plus price change) of 5.17% during 1998. This compares with
returns of 5.38% for US Treasury bills over the same period. For the three
months ending 12/31/98, the portfolio returned -.52%, compared with 1.15% for
Treasury bills. Since inception, this portfolio has increased 10.34% as compared
to 9.09% for Treasury bills.
The Income Oriented Lifestyle Portfolio is a moderate-risk portfolio designed to
produce an attractive level of current income with moderate prospects for
growth. Its investment allocation is 28% US common stocks, 7% international
stocks, 50% US bonds, and 15% money-market securities. In 1998, the portfolio
returned 7.73% compared with 24.14% for US stocks as measured by the Russell
3000 stock index, and 7.85% for US bonds as measured by the Lehman Intermediate
Aggregate Bond index. For the three months ending 12/31/98, the portfolio
returned 3.92%, compared with 21.43% for the Russell 3000 and .49% for the
Lehman Intermediate Aggregate. International stocks as measured by the MSCI
Europe, Australasia and Far East (EAFE) stock index increased over 20% during
this reporting period and modestly added to the performance of the portfolio.
From inception, the portfolio has increased 17.25%. The Russell 3000 has
increased 49.44% and the Lehman Intermediate Index increased 15.05%.
The Growth & Income Lifestyle Portfolio is a moderate-risk portfolio designed to
provide a balance between current income and growth. Its investment mix is 40%
US stocks, 10% international stocks, 40% US bonds, and 10% money-market
securities. In 1998, the portfolio returned 9.33%. For the three months ending
12/31/98, the portfolio returned 6.84%. Since inception, the portfolio has
returned 20.54%.
The Capital Growth Lifestyle Portfolio is a more aggressive, less conservative
portfolio with an emphasis on growth of capital. Its investment mix is 60% US
stocks, 15% International stocks, and 25% US bonds. In 1998, the portfolio
returned 10.65%. For the three months ending 12/31/98, the portfolio returned
10.39%. Since inception, the portfolio has returned 24.67%.
2
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The Maximum Appreciation Portfolio is the most aggressive, least conservative
portfolio in the PB Series of Lifestyle Portfolios. Its investment mix is 80% US
stocks and 20% international stocks. In 1998, the portfolio returned 12.28%. For
the three months ending 12/31/98, the portfolio returned 10.39%. Since
inception, the Maximum Appreciation Portfolio is up 28.92%.
PERFORMANCE ATTRIBUTION
The year 1998 was characterized by strong economic growth and low inflation, a
near perfect environment for investors, and a repeat of 1997. US stocks turned
in their fourth consecutive "20% plus" year of returns, an unprecedented string
of strong performances. US bond prices rose sharply in the second half of the
year as inflation remained benign and a currency crisis erupted in Russia. The
Russian financial crisis and ensuing worldwide credit panic led the Federal
Reserve to lower short-term interest rates three times in the fall. The crises
and record-high valuations combined to create a significant "correction" in the
stock market lasting six weeks and measuring almost 20%. There was an associated
flight to U.S. Treasury securities and away from all other less credit-worthy
securities. However, quick reassurance from the Federal Reserve reversed the
declines, and the last four months in the stock market were extraordinarily
strong. Broad-market averages increased almost 30% from the bottom and hit new
highs.
OUTLOOK
As we said last year, we doubt that investors will enjoy the same level of
return in 1999 as they did in 1998. The favorable fundamentals of good growth
and low inflation seem likely to remain in place although earnings growth is
questionable. The key will be whether the Federal Reserve maintains its
favorable monetary stance. With valuations back in record-high ranges, we remain
cautious on the equity markets, but recognize the favorable financial
environment may continue and generate another year of positive returns from both
the equity and fixed income markets. International stocks, as measured by the
EAFE Stock Index, rebounded sharply in the fourth quarter, but have
underperformed for seven years. We are optimistic that foreign markets will
improve over the next several years.
HIGH QUALITY STOCK FUND
FUND MANAGED BY ATLANTA CAPITAL MANAGEMENT COMPANY, L.L.C.
In an abrupt and extraordinary reversal, the U.S. stock market indices surged to
new highs in the fourth quarter of 1998, easily erasing the 10% decline of the
third quarter. The large capitalization dominated indices increased over 20%
during the quarter, in one of the strongest periods in recent history. The
market ignored the international weakness and political turmoil at home and
focused on the continuation of strong economic growth, low inflation, and the
full flow of liquidity made available by the Federal Reserve.
The market averages, however, did not reflect what happened to most investors
during the fourth quarter or in all of 1998. Dramatic differences in stock
prices occurred during 1998: very few large-capitalization issues ($50 billion
market value and higher) propelled the averages to new highs, but the majority
of individual stocks actually declined in price. In fact, just 15 of these
mega-capitalization issues accounted for over one-half of the S&P 500's 1998
return.
For 1998, mega-large was excellent, large was good, and all the rest were
mediocre or negative. This can be seen in the following chart showing
equal-weighted data.
<TABLE>
<CAPTION>
AVG. MKT. % WT. '98 PRICE % OF ISSUES
EQUAL-WEIGHTED DATA CAP INDEX CHANGE DECLINING
- -------------------------------------------------- ----------- ----- ------------- ---------------
<S> <C> <C> <C> <C>
Largest 50 stocks $ 106b 55% 44% 10%
Next 150 largest $ 20b 31% 29% 24%
Smallest 300 $ 5b 14% (1)% 55 %
All 500 stocks $ 20b 100 % 13% 41 %
</TABLE>
The average stock in the S&P 500, as represented by the equal-weighted data on
the 500 stocks, rose 13.8% with 41% declining compared to the 27% price increase
of the weighted average.
3
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The High Quality Stock Fund posted a total return of 16.3% gross of fees,
equivalent to a return of 16.2% in net asset value. This compares with an
increase of 21.4% in the Russell 3000 index. Relative to other mutual funds, the
fund ranked somewhat below average at the 66th percentile of the Lipper Growth
and Income Funds database. The median mutual fund increased 18.0%
Since inception, the High Quality Stock Fund has achieved a competitive
performance record despite its overweighting in medium- and small-capitalization
stocks. The fund has increased 30.0% since June 30, 1997, gross before
management fees and operating expenses. While this is behind the long-term
benchmark return of the 38.9% for the Russell 3000 index, it is about average in
a universe of funds which had a median return of 29.3% for the eighteen months.
PERFORMANCE ATTRIBUTION
With a weighting of 25% in small-capitalization stocks versus the benchmark's
11% weight, and with 16% invested in medium-cap companies versus an 11%
benchmark weighting, the portfolio was positioned to underperform the benchmark
by 1.2% in the quarter, assuming index returns. With the market very narrowly
based, our high quality and equal-weighted strategies, which equal weight
smaller companies with larger companies within each subportfolio, caused all
three subportfolios, large, medium, and small, to increase less than their
individual benchmarks in the quarter.
The attribution analysis reveals the same pattern since inception. The heavier
allocation to medium and smaller stocks, in an effort to capture the
historically superior returns, has been a detriment to performance of 6.3% since
inception. However, the stock selection has added 2.4% over and above index
returns, significantly more than we expected. Our large-cap stocks have trailed
the S&P 500 by 4.8% cumulatively, due to our equal weighting strategy. However,
the medium-cap portfolio only slightly trailed the Wilshire 750 by .5%
cumulatively. The small-cap portfolio has increased 26.9% as compared to an
increase of only 8.2% in the Russell 2000, or an advantage of 1873 basis points
in less than 20 months, and gave the combined portfolios a positive stock
selection score.
We continue to maintain an overweighting, 43% to 22%, in medium and smaller
companies, relative to the Russell 3000. Their significant underperformance has
led to an even stronger fundamental advantage in terms of valuation as compared
to large-cap stocks. We fully expect that valuation gap to be closed, and with
the easing of interest rates, we are beginning to see signs of that occurring.
OUTLOOK
For the past three years, economic forecasters--ourselves included--have been
anxiously anticipating a slower, more sustainable 2.0%-2.5% growth rate in
economic activity. But the strength in capital spending and consumer spending
kept fooling us and aggregate economic growth surprised on the upside. In 1998,
real gross domestic product (GDP) grew about 3.5%, down a bit from 1997 but very
solid by historic standards. In 1999, with much of Asia and Latin America mired
in recession, we forsee US growth on the order of 2.0%. The bond market, but not
the stock market, will welcome slower growth.
A surprising aspect of the 1998 economy is that, despite its strength, it
produced no growth in corporate profits. When all the numbers are in, profits as
reported in the GDP accounts and by the S&P 500 should show a decline of 1%-2%
for the fourth quarter of 1998 versus the prior year. We are expecting very
little corporate profit growth in 1999 as tight labor markets here in the US
pressure costs and worldwide over-capacity in a variety of industries pressures
product prices. Weak profits imply weak capital spending, a key driver of
economic activity over the past five years.
With US growth slowing and much of the developing world in recession, the
Federal Reserve should maintain a neutral to accommodative monetary policy. And
given the record high levels of equity valuations, a friendly Fed is crucial to
the sustainability of equity prices. Sharply divergent equity markets like we
saw in 1998 are not healthy and do not bode well for future price appreciation.
Normally these divergences "get corrected" by the leaders falling to meet the
laggards, not the laggards rising to meet the leaders. We remain cautious on the
4
<PAGE>
prospects for stocks, but can't become too negative given the favorable monetary
environment and the prospects for continued low inflation.
FIXED INCOME FUND
FUND MANAGED BY ATLANTA CAPITAL MANAGEMENT COMPANY, L.L.C.
For the quarter ended 12-31-98, the fund returned 0.58% on a gross-of-fees basis
versus 0.49% for the Lehman Intermediate Aggregate Index. For the year 1998, the
fund returned 8.69% gross-of-fees while the Lehman Intermediate Aggregate Index
returned 7.85%.
PERFORMANCE ATTRIBUTION
During the fourth quarter, a rebound in the equity markets and improved outlook
for the U.S. economy, spurred on by two Fed rate cuts (September 29th and
October 15th), moved Treasury yields higher beginning in the second half of
October. Treasuries underperformed all non-Treasury issues as the
"flight-to-quality" reversed itself. Nevertheless, for 1998, Treasuries
outperformed all other sectors followed by agencies, asset-backed securities
(ABS), mortgage-backed securities (MBS), and corporates, on a duration-adjusted
basis. The fund benefited greatly in 1998 by being overweighted in Treasuries
and very liquid agency issues. In November, we added a corporate issue to take
advantage of the higher corporate yields relative to similar-duration
Treasuries.
OUTLOOK
Going forward, we believe Asian and Latin American economies will continue to
act as a speed break for the U.S. economy and to lower inflation. Though yields
have backed up since their lows in the third quarter, we will continue to manage
the duration in a 100 to 110 percent range of the benchmark duration.
INTERNATIONAL ACTIVE FUND
FUND MANAGED BY BLAIRLOGIE CAPITAL MANAGEMENT
A mainstream equity investor who disappeared into the Himalayas in January 1998
and returned to what we call civilization around Christmas should have been
pretty pleased with the performance of his portfolio. In 1998 the World index
was up 24.8%, EAFE 20.3% and Europe 28.9%. Our investor might be astonished that
market pundits and senior Washington officials had described the world as
"facing the most dangerous economic threat since the 1930's" during a market
panic in late summer. But then he might reflect that the people who said this
were either in finance themselves, or government types whose job is to ease the
pain of financiers. By year-end most indexes had made up lost ground. Taken from
point to point, 1998 was an excellent year in the major markets.
Emerging markets were a different story. The overall index fell 25.3% as Asian
problems rumbled on, Russia collapsed and money poured out of Latin America.
Most of Emerging Asia remained in a deflationary state, although Korea, Thailand
and the Philippines had good markets. Malaysia ceased to be the WUNDERKIND of
the East, with its leader lashing around for scapegoats as its economy imploded.
Malaysia got itself expelled from the EAFE and Emerging Market indices as a
result of its market-unfriendly policies. The Russian debt default was one of
the triggers of the summer global financial panic. The market fell 83% in 1998,
although rose strongly in the last quarter as a semblance of political stability
returned. Latin America suffered more from financial contagion hitting its
markets than from real economic downturn, and the regional index fell 35.1%.
PERFORMANCE ATTRIBUTION
Our overweighing of Continental Europe at the expense of Asia and the UK
benefited performance. Strong market gains occurred in countries such as Spain
(50.6%), Italy (53.2%), France (42.1%) and Portugal (27.9%) all of which we are
heavily weighted relative to EAFE. Also strong stock performances in France,
Italy and Finland helped to contribute to the overperformance against the index.
5
<PAGE>
OUTLOOK
Looking at the patterns we see in our top down data. We believe that global
economic growth will remain subdued in 1999. G7 growth in 1998 was just under 2%
and the consensus is looking for 1.5% this year. This is significantly below the
long term trend of 2-2.5% from the world's leading economies. As a result above-
average profits growth should continue to command a premium. Of the 48 markets
monitored by us 46 saw their mean estimates fall during the past two months
while 42 saw more downgrades than upgrades to 12 month eps estimates. We believe
that further disappointments to brokers' forecasts will be seen in the US and
Europe where bottom up numbers look unrealistic but as stated above, Europe's
growth should still be respectable. In Asia we expect stability during the first
half with true recovery creeping through only later in the year.
How much of a safety net is provided by present valuations? In developed markets
we see mixed signals. Cheapness is only apparent when measured historically
against cash and bond yields. Otherwise market multiples vary widely. The only
distinct message (and one which concerns us) is that the US market as defined by
MSCI looks overvalued by 49% against book value, by 47% against cash flow and by
41% against earnings. Moreover, it is one of the few markets which seems
stretched when placed against long bonds and cash rates. It is only fair to
point out that these are statistical averages based upon a large cap index and
that many US sub-sectors have experienced much less gains in stock prices. In
emerging markets there is a clear pattern of cheapness at least outside of Asia.
Prospective p/e are as low as 4x in places like Turkey and Venezuela while an
average price/book multiple of 0.5x is available in Brazil. Discounts to normal
multiples range typically from 35-60%. The main obstacle to a sudden upward
reversion in smaller markets would be the apparent need for correction or
consolidation in psychologically important developed markets such as the US. It
is difficult to imagine emerging markets booming if large markets fall and in
any event it would be reckless to assume that the global investor's aversion to
emerging market risk has evaporated.
The brightest aspect in our view is the likelihood of easy money policies
continuing. Globally we are aware of an absence of inflation and in certain
Asian countries we have witnessed successive months of outright deflation. We
expect more rate cuts from G7 banks and this extra liquidity could at least help
cushion the sluggishness in the real economy which we highlighted above.
MONEY MARKET FUND
FUND MANAGED BY FEDERATED INVESTMENT COUNSELING
PB Series Trust Money Market Fund (the "Fund") invests exclusively in short-term
debt instruments. The average maturity of these securities, computed on a dollar
weighted basis, is restricted to 90 days or less. Portfolio securities must be
rated in one of the two highest short-term rating categories by one or more of
the nationally recognized statistical rating organizations or be of comparable
quality to securities having such ratings. Typical security types include, but
are not limited to, commercial paper, certificates of deposit, time deposits,
variable rate instruments and repurchase agreements.
Economic growth during the second half of 1998 resumed its above-average pace,
after a brief slowdown in the second quarter. Specifically, third quarter GDP
registered 3.9% while fourth quarter is estimated to be in the 4% range. Despite
the high growth, though, inflation remained subdued by all measures. The
consumer price index rose just 1.6% for the 12 months ending December 31, 1998.
For the same time period, the producer price index actually declined 0.2%, due
mostly to a decline in food and energy prices, while the employment cost index
grew 3.8% on an annualized basis through the end of the third quarter.
Thirty day commercial paper started the period at 5.77% on January 1, 1998,
hovered in the 5.5% range area until September 23 when expectations began to
surface about the Fed lowering rates, and then dropped as low as 4.90% on
November 20, 1998 before rising to end the period at 4.98%.
The money market yield curve looked lower but similarly shaped from 12/31/97 to
12/31/98. One month commercial paper rates declined 79 basis points while six
month rates declined 76 basis points reflecting the concern in the market about
the lack of liquidity in the U.S. credit markets. The Fed responded to this by
lowering the Fed Funds target rate three times during the period--25 basis
points on September 29, 25 basis
6
<PAGE>
points on October 15 and 25 basis points on November 17 to end the period with a
4.75% target rate. The Fed also lowered the discount rate twice by 25 basis
points to 4.75% on October 15 and by 25 basis points on November 17 to 4.50%.
During the 12 months ended December 31, 1998, the net assets of the Money Market
Fund increased from $2,361,341 to $2,227,268 while the 7-day net yield decreased
from 5.59% to 5.18%. The effective average maturity of the Fund on December 31,
was 6 days.
PERFORMANCE GRAPHS
The following graphs illustrate the change of a $10,000 investment in each of
the Portfolios and Funds in comparison to its respective market indices. The
chart assumes that an investor starts with $10,000 and shows the changes in that
investment from May 9, 1997 (commencement of operations) to December 31, 1998.
7
<PAGE>
COMPARISON OF $10,000
CAPITAL PRESERVATION PORTFOLIO VS. COMPOSITE INDEX+
FOR THE PERIOD MAY 9, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CAPITAL PRESERVATION COMPOSITE INDEX
<S> <C> <C>
5/9/97 $10,000.00 $10,000.00
5/31/97 $10,020.00 $10,046.00
6/30/97 $10,105.00 $10,116.00
7/31/97 $10,239.00 $10,240.00
8/31/97 $10,234.00 $10,241.00
9/30/97 $10,307.00 $10,330.00
10/31/97 $10,386.00 $10,408.00
11/30/97 $10,420.00 $10,441.00
12/31/97 $10,492.00 $10,509.00
1/31/98 $10,579.00 $10,596.04
2/28/98 $10,589.00 $10,618.82
3/31/98 $10,629.00 $10,662.68
4/30/98 $10,671.00 $10,716.21
5/31/98 $10,733.00 $10,776.97
6/30/98 $10,784.00 $10,832.58
7/31/98 $10,825.00 $10,878.72
8/31/98 $10,949.00 $10,975.44
9/30/98 $11,092.00 $11,112.74
10/31/98 $11,102.00 $11,127.41
11/30/98 $11,122.00 $11,156.56
12/31/98 $11,034.00 $11,204.20
</TABLE>
<TABLE>
<CAPTION>
SINCE
TOTAL RETURN* INCEPTION 1998
- -------------------------- ----------- ---------
<S> <C> <C>
Capital Preservation
Portfolio 10.34% 5.17%
Composite Index 12.04% 6.62%
</TABLE>
+50% Lehman Brothers Intermediate Aggregate Index, 50% of U.S. Treasury Bill
Index.
* Total Return is net of fees and is calculated including reinvestment of all
income dividends and capital gain distributions for the period May 9, 1997
(commencement of operations) to December 31, 1998. Results represent past
performance and do not indicate future results. The value of an investment in
the Portfolio and the return on the investment will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
8
<PAGE>
COMPARISON OF $10,000
INCOME ORIENTED PORTFOLIO VS. COMPOSITE INDEX+
FOR THE PERIOD MAY 9, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INCOME ORIENTED COMPOSITE INDEX
<S> <C> <C>
5/9/97 $10,000.00 $10,000.00
5/31/97 $10,060.00 $10,124.00
6/30/97 $10,230.00 $10,337.00
7/31/97 $10,540.00 $10,686.00
8/31/97 $10,388.00 $10,494.00
9/30/97 $10,663.00 $10,773.00
10/31/97 $10,618.00 $10,680.00
11/30/97 $10,720.00 $10,808.00
12/31/97 $10,884.00 $10,928.00
1/31/98 $10,966.00 $11,051.55
2/28/98 $11,252.00 $11,331.15
3/31/98 $11,467.00 $11,541.35
4/30/98 $11,509.00 $11,618.33
5/31/98 $11,458.00 $11,582.78
6/30/98 $11,560.00 $11,739.95
7/31/98 $11,467.00 $11,720.82
8/31/98 $11,027.00 $11,201.59
9/30/98 $11,283.00 $11,511.76
10/31/98 $11,559.00 $11,840.53
11/30/98 $11,764.00 $12,103.63
12/31/98 $11,725.00 $12,385.52
</TABLE>
<TABLE>
<CAPTION>
SINCE
TOTAL RETURN* INCEPTION 1998
- ----------------------- ----------- ---------
<S> <C> <C>
Income Oriented
Portfolio 17.25% 7.73%
Composite Index 23.86% 13.34%
</TABLE>
+50% Lehman Brothers Intermediate Aggregate Index, 15% of U.S. Treasury Bill
Index, 7% MSCI EAFE Index, 28% Russell 3000 Index.
* Total Return is net of fees and is calculated including reinvestment of all
income dividends and capital gain distributions for the period May 9, 1998
(commencement of operations) to December 31, 1998. Results represent past
performance and do not indicate future results. The value of an investment in
the Portfolio and the return on the investment will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
9
<PAGE>
COMPARISON OF $10,000
GROWTH & INCOME PORTFOLIO VS. COMPOSITE INDEX+
FOR THE PERIOD MAY 9, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH & INCOME COMPOSITE INDEX
<S> <C> <C>
5/9/97 $10,000.00 $10,000.00
5/31/97 $10,075.00 $10,156.00
6/30/97 $10,267.00 $10,426.00
7/31/97 $10,648.00 $10,857.00
8/31/97 $10,446.00 $10,588.00
9/30/97 $10,803.00 $10,944.00
10/31/97 $10,687.00 $10,766.00
11/30/97 $10,823.00 $10,935.00
12/31/97 $11,025.00 $11,074.00
1/31/98 $11,098.00 $11,206.06
2/28/98 $11,498.00 $11,604.89
3/31/98 $11,807.00 $11,893.04
4/30/98 $11,838.00 $11,980.21
5/31/98 $11,735.00 $11,895.39
6/30/98 $11,858.00 $12,098.33
7/31/98 $11,704.00 $12,048.36
8/31/98 $10,995.00 $11,229.80
9/30/98 $11,283.00 $11,597.24
10/31/98 $11,673.00 $12,069.59
11/30/98 $11,962.00 $12,440.61
12/31/98 $12,054.00 $12,832.12
</TABLE>
<TABLE>
<CAPTION>
SINCE
TOTAL RETURN* INCEPTION 1998
- ------------------------ ----------- ---------
<S> <C> <C>
Growth & Income
Portfolio 20.54% 9.33%
Composite Index 28.32% 15.87%
</TABLE>
+40% Lehman Brothers Intermediate Aggregate Index, 10% U.S. Treasury Bill Index,
10% MSCI EAFE Index, 40% Russell 3000 Index.
* Total Return is net of fees and is calculated including reinvestment of all
income dividends and capital gain distributions for the period May 9, 1997
(commencement of operations) to December 31, 1998. Results represent past
performance and do not indicate future results. The value of an investment in
the Portfolio and the return on the investment will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
10
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COMPARISON OF $10,000
CAPITAL GROWTH PORTFOLIO VS. COMPOSITE INDEX+
FOR THE PERIOD MAY 9, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CAPITAL GROWTH COMPOSITE INDEX
<S> <C> <C>
5/9/97 $10,000.00 $10,000.00
5/31/97 $10,094.00 $10,209.00
6/30/97 $10,346.00 $10,575.00
7/30/97 $10,833.00 $11,151.00
8/31/97 $10,553.00 $10,744.00
9/30/97 $11,039.00 $11,232.00
10/31/97 $10,812.00 $10,908.00
11/30/97 $11,001.00 $11,149.00
12/31/97 $11,267.00 $11,321.00
1/30/98 $11,314.00 $11,468.53
2/28/98 $11,926.00 $12,072.57
3/31/98 $12,386.00 $12,498.61
4/30/98 $12,405.00 $12,603.98
5/31/98 $12,222.00 $12,430.92
6/30/98 $12,375.00 $12,715.47
7/31/98 $12,120.00 $12,609.93
8/31/98 $10,956.00 $11,258.27
9/30/98 $11,293.00 $11,723.69
10/31/98 $11,884.00 $12,438.01
11/30/98 $12,333.00 $12,996.73
12/31/98 $12,467.00 $13,583.01
</TABLE>
<TABLE>
<CAPTION>
SINCE
TOTAL RETURN* INCEPTION 1998
- ---------------------- ----------- ---------
<S> <C> <C>
Capital Growth
Portfolio 24.67% 10.65%
Composite Index 35.83% 19.98%
</TABLE>
+25% Lehman Brothers Intermediate Aggregate Index, 15% MSCI EAFE Index, 60%
Russell 3000 Index.
* Total Return is net of fees and is calculated including reinvestment of all
income dividends and capital gain distributions for the period May 9, 1997
(commencement of operations) to December 31, 1998. Results represent past
performance and do not indicate future results. The value of an investment in
the Portfolio and the return on the investment will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
11
<PAGE>
COMPARISON OF $10,000
MAXIMUM APPRECIATION PORTFOLIO VS. COMPOSITE INDEX+
FOR THE PERIOD MAY 9, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MAXIMUM APPRECIATION COMPOSITE INDEX
<S> <C> <C>
5/9/97 $10,000.00 $10,000.00
5/31/97 $10,113.00 $10,263.00
6/30/97 $10,423.00 $10,718.00
7/31/97 $10,999.00 $11,426.00
8/31/97 $10,650.00 $10,885.00
9/30/97 $11,263.00 $11,501.00
10/31/97 $10,910.00 $11,015.00
11/30/97 $11,155.00 $11,331.00
12/31/97 $11,482.00 $11,532.00
1/31/98 $11,504.00 $11,686.27
2/28/98 $12,338.00 $12,505.60
3/31/98 $12,937.00 $13,078.98
4/30/98 $12,969.00 $13,202.97
5/31/98 $12,684.00 $12,930.19
6/30/98 $12,866.00 $13,300.13
7/31/98 $12,500.00 $13,134.54
8/31/98 $10,842.00 $11,199.95
9/30/98 $11,219.00 $11,743.04
10/31/98 $12,022.00 $12,701.62
11/30/98 $12,622.00 $13,453.81
12/31/98 $12,892.00 $14,244.76
</TABLE>
<TABLE>
<CAPTION>
SINCE
TOTAL RETURN* INCEPTION 1998
- ----------------------------- ----------- ---------
<S> <C> <C>
Maximum Appreciation
Portfolio 28.92% 12.28%
Composite Index 42.45% 23.52
</TABLE>
+20% MSCI EAFE Index, 80% Russell 3000 Index.
* Total Return is net of fees and is calculated including reinvestment of all
income dividends and capital gain distributions for the period May 9, 1997
(commencement of operations) to December 31, 1998. Results represent past
performance and do not indicated future results. The value of an investment in
the Portfolio and the return on the investment will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
12
<PAGE>
COMPARISON OF $10,000
HIGH QUALITY STOCK FUND VS. RUSSELL 3000 INDEX
FOR THE PERIOD MAY 9, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HIGH QUALITY STOCK RUSSELL 3000
<S> <C> <C>
5/9/97 $10,000.00 $10,000.00
5/31/97 $10,153.00 $10,329.00
6/30/97 $10,426.00 $10,758.00
7/31/97 $11,106.00 $11,602.00
8/31/97 $10,904.00 $11,131.00
9/30/97 $11,532.00 $11,762.00
10/31/97 $11,266.00 $11,367.00
11/30/97 $11,598.00 $11,802.00
12/31/97 $11,972.00 $12,038.00
1/31/98 $11,886.00 $12,100.34
2/28/98 $12,772.00 $12,965.99
3/31/98 $13,344.00 $13,608.59
4/30/98 $13,333.00 $13,742.36
5/31/98 $12,895.00 $13,403.20
6/30/98 $13,110.00 $13,856.36
7/31/98 $12,559.00 $13,604.73
8/31/98 $10,908.00 $11,520.62
9/30/98 $11,520.00 $12,306.44
10/31/98 $12,304.00 $13,240.63
11/30/98 $12,906.00 $14,050.42
12/31/98 $13,382.00 $14,943.47
</TABLE>
<TABLE>
<CAPTION>
SINCE
TOTAL RETURN* INCEPTION 1998
- ---------------------- ----------- ---------
<S> <C> <C>
High Quality Stock
Fund 33.82% 11.78%
Russell 3000 Index 49.44% 24.14%
</TABLE>
* Total Return is net of fees and is calculated including reinvestment of all
income dividends and capital gain distributions for the period May 9, 1997
(commencement of operations) to December 31, 1998. Results represent past
performance and do not indicated future results. The value of an investment in
the Portfolio and the return on the investment will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
13
<PAGE>
COMPARISON OF $10,000
FIXED INCOME FUND VS. LEHMAN BROTHERS INDEX
FOR THE PERIOD MAY 9, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FIXED INCOME LEHMAN BROTHERS
<S> <C> <C>
5/9/97 $10,000.00 $10,000.00
5/31/97 $10,038.00 $10,050.00
6/30/97 $10,118.00 $10,151.00
7/31/97 $10,345.00 $10,352.00
8/31/97 $10,260.00 $10,311.00
9/30/97 $10,385.00 $10,435.00
10/31/97 $10,509.00 $10,550.00
11/30/97 $10,537.00 $10,578.00
12/31/97 $10,630.00 $10,667.00
1/31/98 $10,775.00 $10,793.77
2/28/98 $10,755.00 $10,797.44
3/31/98 $10,775.00 $10,836.42
4/30/98 $10,816.00 $10,893.53
5/31/98 $10,889.00 $10,970.54
6/30/98 $10,962.00 $11,033.63
7/31/98 $11,003.00 $11,079.19
8/31/98 $11,189.00 $11,244.33
9/30/98 $11,428.00 $11,447.81
10/31/98 $11,417.00 $11,434.53
11/30/98 $11,428.00 $11,457.51
12/31/98 $11,461.00 $11,504.37
</TABLE>
<TABLE>
<CAPTION>
SINCE
TOTAL RETURN* INCEPTION 1998
- ------------------------------------------ ----------- ---------
<S> <C> <C>
Fixed Income Fund 14.61% 7.82%
Lehman Brothers Intermediate Aggregate
Index 15.04% 7.85%
</TABLE>
* Total Return is net of fees and is calculated including reinvestment of all
income dividends and capital gain distributions for the period May 9, 1997
(commencement of operations) to December 31, 1998. Results represent past
performance and do not indicate future results. The value of an investment in
the Fund and the return on the investment will fluctuate and redemption proceeds
may be higher or lower than an investor's original cost.
14
<PAGE>
COMPARISON OF $10,000
INTERNATIONAL ACTIVE FUND VS. MSCI EAFE INDEX
FOR THE PERIOD MAY 12, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNATIONAL ACTIVE MSCI EAFE
<S> <C> <C>
5/12/97 $10,000.00 $10,000.00
5/31/97 $9,960.00 $9,998.00
6/30/97 $10,415.00 $10,551.00
7/31/97 $10,579.00 $10,724.00
8/31/97 $9,658.00 $9,926.00
9/30/97 $10,210.00 $10,484.00
10/31/97 $9,537.00 $9,680.00
11/30/97 $9,462.00 $9,584.00
12/31/97 $9,620.00 $9,670.00
1/31/98 $10,008.84 $10,114.50
2/28/98 $10,669.42 $10,765.87
3/31/98 $11,350.13 $11,099.60
4/30/98 $11,498.81 $11,189.52
5/31/98 $11,719.59 $11,138.05
6/30/98 $11,829.76 $11,224.92
7/31/98 $12,080.55 $11,341.66
8/31/98 $10,418.26 $9,938.70
9/30/98 $9,987.99 $9,636.56
10/31/98 $10,849.95 $10,643.78
11/30/98 $11,441.27 $11,191.72
12/31/98 $11,811.97 $11,636.03
</TABLE>
<TABLE>
<CAPTION>
SINCE
TOTAL RETURN* INCEPTION 1998
- ---------------------------------------- ----------- ---------
<S> <C> <C>
International Active Fund 18.12% 22.78%
Morgan Stanley Capital International
Europe, Australasia and Far East Index 16.36% 20.34%
</TABLE>
* Total Return is net of fees and is calculated including reinvestment of all
income dividends and capital gain distributions for the period May 12, 1997
(commencement of operations) to December 31, 1998. Results represent past
performance and do not indicate future results. The value of an investment in
the Fund and the return on the investment will fluctuate and redemption proceeds
may be higher or lower than an investor's original cost.
15
<PAGE>
COMPARISON OF $10,000
MONEY MARKET FUND VS. US TREASURY BILL INDEX
FOR THE PERIOD MAY 9, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MONEY MARKET US TREASURY BILL
<S> <C> <C>
5/9/97 $10,000.00 $10,000.00
5/31/97 $10,031.00 $10,043.00
6/30/97 $10,072.00 $10,080.00
7/31/97 $10,114.00 $10,127.00
8/31/97 $10,157.00 $10,171.00
9/30/97 $10,199.00 $10,225.00
10/30/97 $10,243.00 $10,266.00
11/30/97 $10,286.00 $10,306.00
12/31/97 $10,331.00 $10,352.00
1/31/98 $10,376.00 $10,401.07
2/28/98 $10,415.00 $10,442.15
3/31/98 $10,460.00 $10,490.71
4/30/98 $10,503.00 $10,540.75
5/31/98 $10,548.00 $10,585.76
6/30/98 $10,591.00 $10,634.03
7/31/98 $10,637.00 $10,680.61
8/31/98 $10,682.00 $10,730.48
9/30/98 $10,727.00 $10,785.21
10/31/98 $10,769.00 $10,826.09
11/30/98 $10,809.00 $10,860.95
12/31/98 $10,850.00 $10,909.17
</TABLE>
<TABLE>
<CAPTION>
SINCE
TOTAL RETURN* INCEPTION 1998
- --------------------- ----------- ---------
<S> <C> <C>
Money Market Fund 8.49% 5.02%
US Treasury Bill
Index 9.09% 5.38%
</TABLE>
* Total Return is net of fees and is calculated including reinvestment of all
income dividends and capital gain distributions for the period May 9, 1997
(commencement of operations) to December 31, 1998. Results represent past
performance and do not indicate future results. The value of an investment in
the Fund and the return on the investment will fluctuate and redemption proceeds
may be higher or lower than an investor's original cost.
16
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Contractholders and Board of Trustees
PB Series Trust
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments of PB Series Trust (comprised of the Capital
Preservation Portfolio, Income Oriented Portfolio, Growth and Income Portfolio,
Capital Growth Portfolio, Maximum Appreciation Portfolio, High Quality Stock
Fund, Fixed Income Fund, International Active Fund and Money Market Fund) (the
Trust) as of December 31, 1998, and the related statements of operations,
changes in net assets and the financial highlights for the periods indicated
therein. These financial statements and the financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We have conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
investments owned as of December 31, 1998, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the portfolios and funds within the Trust at December 31, 1998, and the
results of their operations, changes in their net assets and the financial
highlights for the periods indicated therein in conformity with generally
accepted accounting principles.
[LOGO]
Kansas City, Missouri
January 22, 1999, except for Note 7,
as to which the date is February 2, 1999
17
<PAGE>
PB SERIES TRUST
CAPITAL PRESERVATION PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------------- --------- ----------
<S> <C> <C>
INVESTMENT COMPANIES - 100.0%
PB Series Trust
Money Market Fund........................ 361,533 $ 361,533
PB Series Trust
Fixed Income Fund........................ 35,718 366,740
----------
TOTAL INVESTMENT COMPANIES
- (Cost $734,874) 728,273
----------
TOTAL INVESTMENTS - (Cost $734,874) - 100.0% 728,273
OTHER ASSETS LESS LIABILITIES - 0.0% (86)
----------
NET ASSETS - 100.0% $ 728,187
----------
----------
</TABLE>
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Portfolio.
PB SERIES TRUST
INCOME ORIENTED PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------------- --------- ----------
<S> <C> <C>
INVESTMENT COMPANIES - 100.0%
PB Series Trust
Money Market Fund........................ 4,996 $ 4,996
PB Series Trust
High Quality Stock Fund.................. 824 9,969
PB Series Trust
Fixed Income Fund........................ 1,640 16,841
PB Series Trust
International Active Fund................ 214 2,530
----------
TOTAL INVESTMENT COMPANIES
- (Cost $34,342) 34,336
----------
TOTAL INVESTMENTS - (Cost $34,342) - 100.0% 34,336
OTHER ASSETS LESS LIABILITIES - 0.0% (1)
----------
NET ASSETS - 100.0% $ 34,335
----------
----------
</TABLE>
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Portfolio.
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
18
<PAGE>
PB SERIES TRUST
GROWTH & INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------------- --------- ----------
<S> <C> <C>
INVESTMENT COMPANIES - 100.0%
PB Series Trust
Money Market Fund........................ 58,279 $ 58,279
PB Series Trust
High Quality Stock Fund.................. 20,627 249,404
PB Series Trust
Fixed Income Fund........................ 23,080 236,973
PB Series Trust
International Active Fund................ 5,346 63,054
----------
TOTAL INVESTMENT COMPANIES
- (Cost $602,639) 607,710
----------
TOTAL INVESTMENTS - (Cost $602,639) - 100.0% 607,710
OTHER ASSETS LESS LIABILITIES - 0.0% (14)
----------
NET ASSETS - 100.0% $ 607,696
----------
----------
</TABLE>
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Portfolio.
PB SERIES TRUST
CAPITAL GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------------- --------- ----------
<S> <C> <C>
INVESTMENT COMPANIES - 100.0%
PB Series Trust
High Quality Stock Fund.................. 70,752 $ 855,459
PB Series Trust
Fixed Income Fund........................ 33,480 343,755
PB Series Trust
International Active Fund................ 18,292 215,741
----------
TOTAL INVESTMENT COMPANIES
- (Cost $1,401,418) 1,414,955
----------
TOTAL INVESTMENTS - (Cost $1,401,418) - 100.0% 1,414,955
OTHER ASSETS LESS LIABILITIES - 0.0% --
----------
NET ASSETS - 100.0% $1,414,955
----------
----------
</TABLE>
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Portfolio.
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
19
<PAGE>
PB SERIES TRUST
MAXIMUM APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------------- --------- ----------
<S> <C> <C>
INVESTMENT COMPANIES - 100.0%
PB Series Trust
High Quality Stock Fund.................. 59,361 $ 717,737
PB Series Trust
International Active Fund................ 15,375 181,332
----------
TOTAL INVESTMENT COMPANIES
- (Cost $882,104) 899,069
----------
TOTAL INVESTMENTS - (Cost $882,104) - 100.0% 899,069
OTHER ASSETS LESS LIABILITIES - 0.0% --
----------
NET ASSETS - 100.0% $ 899,069
----------
----------
</TABLE>
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Portfolio.
PB SERIES TRUST
HIGH QUALITY STOCK FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------------- --------- ----------
<S> <C> <C>
COMMON STOCK - 95.3%
AEROSPACE - 2.0%
Allied Signal Incorporated............... 3,300 $ 146,231
Southwest Airlines....................... 6,800 152,575
----------
298,806
----------
APPAREL & TEXTILES - 1.1%
Guilford Mills Incorporated (a).......... 2,600 43,387
Liz Clairborne Incorporated (a).......... 1,200 37,875
Paxar Corporation (a).................... 4,800 42,900
Unifi Incorporated....................... 1,900 37,168
----------
161,330
----------
AUTO PARTS - 1.4%
Eaton Corporation........................ 2,200 155,513
Modine Manufacturing Company............. 1,100 39,875
----------
195,388
----------
BANKS - 7.9%
Advanta Corporation...................... 4,300 56,975
Amcore Financial Incorporated............ 2,100 48,070
Banc One Corporation..................... 3,020 154,209
BancorpSouth Incorporated................ 2,200 39,738
Carolina First Corporation............... 1,800 45,563
Centura Banks Incorporated............... 500 37,188
Citizens Banking Corporation............. 1,350 45,563
Colonial Bancgroup Incorporated.......... 3,000 36,000
First Source Corporation................. 1,400 46,900
First Union Corporation.................. 2,916 177,329
First Virginia Banks Incorporated........ 800 37,600
F & M National Corporation............... 1,300 38,919
Provident Bankshares Corporation......... 1,700 42,287
Union Planters Corporation............... 2,800 126,875
Wachovia Corporation..................... 1,800 157,388
Wilmington Trust Corporation............. 600 36,975
----------
1,127,579
----------
BROADCASTING - 0.5%
TCA Cable TV Incorporated (a)............ 1,900 67,806
----------
BUILDING CONSTRUCTION - 1.5%
Harsco Corporation....................... 1,200 36,525
Halliburton Company...................... 4,500 133,312
Lawson Products Incorporated............. 1,700 39,100
----------
208,937
----------
BUSINESS SERVICES - 2.5%
ABM Industries Incorporated.............. 1,600 55,400
American Management Systems Incorporated
(a).................................... 1,200 48,000
Automatic Data Processing Incorporated... 2,100 168,394
G & K Services Incorporated.............. 1,100 58,575
Olsten Corporation....................... 3,900 28,763
----------
359,132
----------
CHEMICALS - 3.1%
Avery Dennison Corporation............... 2,500 112,656
Brady W. H. Company...................... 2,200 59,263
Fuller H.B. Company...................... 800 38,500
</TABLE>
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
20
<PAGE>
PB SERIES TRUST
HIGH QUALITY STOCK FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------------- --------- ----------
COMMON STOCK (CONTINUED)
<S> <C> <C>
CHEMICALS - (CONTINUED)
MacDermid Incorporated................... 1,400 $ 54,775
Nalco Chemical Company................... 1,100 34,100
Sigma-Aldrich Corporation................ 5,000 146,875
----------
446,169
----------
COMPUTERS & BUSINESS EQUIPMENT - 6.4%
Cisco Systems Incorporated (a)........... 2,100 194,906
Electronic Data Systems Corporation...... 3,500 175,875
General Binding Corporation.............. 1,100 40,975
Hewlett-Packard Company.................. 2,200 150,288
Sci Systems Incorporated (a)............. 1,000 57,750
Sun Microsystems, Incorporated (a)....... 2,900 248,312
SunGard Data Systems Incorporated (a).... 1,100 43,656
----------
911,762
----------
CONGLOMERATES - 1.5%
Aaron Rents Incorporated................. 2,300 34,788
Textron Incorporated..................... 2,000 151,875
Varian Associates Incorporated (a)....... 900 34,088
----------
220,751
----------
CONSTRUCTION MATERIALS - 0.6%
Valspar Corporation...................... 1,200 44,775
Vulcan Materials Company................. 300 39,469
----------
84,244
----------
CONTAINERS & GLASS - 0.2%
Bemis Company Incorporated............... 1,000 37,938
----------
DRUGS & HEALTH CARE - 8.5%
Abbott Laboratories...................... 3,400 166,600
Bard C.R. Incorporated................... 800 39,600
Biomet Incorporated...................... 1,100 44,275
Dentsply International Incorporated...... 1,400 36,050
Diagnostic Products Corporation.......... 1,300 40,463
Invacare Corporation..................... 1,600 38,400
Johnson & Johnson........................ 1,800 150,975
Longs Drug Stores Corporation............ 1,100 41,250
Owens & Minor, Inc. Holdings Company..... 3,100 48,825
Mylan Laboratories Incorporated.......... 1,100 34,650
Patterson Dental Company (a)............. 1,300 56,550
Pfizer Incorporated...................... 1,300 163,068
Schering Plough Corporation.............. 3,000 165,750
Thermedics Incorporated (a).............. 4,200 45,412
Warner-Lambert Company................... 2,000 150,375
----------
1,222,243
----------
ELECTRIC UTILITIES - 2.3%
Duke Energy Corporation (a).............. 2,600 166,563
Southern Company......................... 5,400 156,937
----------
323,500
----------
ELECTRICAL EQUIPMENT - 2.7%
Baldor Electric Company.................. 1,866 37,787
Federal Signal Corporation............... 1,500 41,063
General Electric Company................. 1,700 173,506
Hubbell Incorporated..................... 900 34,200
</TABLE>
PB SERIES TRUST
HIGH QUALITY STOCK FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------------- --------- ----------
COMMON STOCK (CONTINUED)
<S> <C> <C>
ELECTRICAL EQUIPMENT - (CONTINUED)
Technitrol Incorporated.................. 2,000 $ 63,750
Thomas & Betts Corporation............... 800 34,650
----------
384,956
----------
ELECTRONICS - 4.9%
Avnet Incorporated....................... 700 42,350
Benchmark Electronics Incorporated (a)... 1,700 62,263
Cohu Incorporated........................ 2,200 48,400
Dionex Corporation (a)................... 1,600 58,600
Harris Corporation....................... 1,000 36,625
Intel Corporation........................ 1,600 189,700
Kronos Incorporated (a).................. 1,300 57,606
Methode Electronics...................... 3,200 50,000
MTS Systems Corporation.................. 2,900 39,150
Nichols Research Corporation............. 1,900 39,663
Pittston Brink's Group................... 1,300 41,437
X-Rite Incorporated...................... 4,400 34,100
----------
699,894
----------
FINANCIAL SERVICES - 1.6%
A.G. Edwards Incorporated................ 950 35,388
Enhance Financial Services Group......... 1,800 54,000
Morgan Keegan Incorporated............... 2,000 37,625
Merrill Lynch & Company.................. 1,600 106,800
----------
233,813
----------
FOOD & BEVERAGES - 2.9%
Bestfoods................................ 2,400 127,800
Dean Foods Company....................... 900 36,731
Flowers Industries Incorporated.......... 1,600 38,300
Richfood Holdings Incorporated........... 2,000 41,500
PepsiCo Incorporated..................... 4,000 163,750
----------
408,081
----------
FOOD SERVICE - 1.2%
Sysco Corporation........................ 6,200 170,112
----------
FUNERAL SERVICES - 1.2%
Services Corporation International....... 3,700 140,831
Stewart Enterprises Incorporated......... 1,600 35,600
----------
176,431
----------
GAS DISTRIBUTION - 2.7%
Energen Corporation...................... 2,500 48,750
K N Energy Incorporated.................. 900 32,737
Northwest Natural Gas Company............ 1,600 41,400
Oneok Incorporated....................... 1,200 43,350
Piedmont Natural Gas Company
Incorporated........................... 1,300 46,962
Utilicorp United Incorporated............ 1,100 40,356
Williams Companies Incorporated.......... 4,300 134,106
----------
387,661
----------
GAS EXPLORATION - 2.3%
Apache Corporation....................... 1,300 32,906
Equitable Resources Incorporated......... 1,300 37,863
National Fuel Gas Company................ 800 36,150
Questar Corporation...................... 1,800 34,875
</TABLE>
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
21
<PAGE>
PB SERIES TRUST
HIGH QUALITY STOCK FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------------- --------- ----------
COMMON STOCK (CONTINUED)
<S> <C> <C>
GAS EXPLORATION - (CONTINUED)
Southwestern Energy Company.............. 5,200 $ 39,000
Sonat Incorporated....................... 1,300 35,181
Unocal Corporation....................... 3,900 113,831
----------
329,806
----------
HOME BUILDERS - 0.6%
Lennar Corporation....................... 1,600 40,400
Thor Industries Incorporated............. 1,650 42,075
----------
82,475
----------
HOUSEHOLD APPLIANCES - 0.5%
Interface Incorporated................... 3,000 27,844
La-Z-Boy Incorporated.................... 2,100 37,406
----------
65,250
----------
HOUSEHOLD PRODUCTS - 3.4%
Alberto Culver Company................... 1,400 37,363
Colgate-Palmolive Company................ 1,800 167,175
Proctor & Gamble Company................. 1,800 164,362
Newell Company........................... 2,900 119,625
----------
488,525
----------
HOTELS & RESTAURANTS - 1.0%
Cracker Barrel Old Country Store
Incorporated........................... 1,600 37,300
Bob Evans Farms Incorporated............. 2,000 52,125
Marcus Corporation....................... 3,200 52,000
----------
141,425
----------
INDUSTRIAL MACHINERY - 2.9%
Applied Power Incorporated............... 1,200 45,300
Clacor Incorporated...................... 2,250 45,000
Crane Company............................ 1,200 36,225
Cordant Technologies Incorporated........ 1,100 41,250
Deere & Company.......................... 3,700 122,563
Graco Incorporated (a)................... 1,500 44,250
Pentair Incorporated..................... 1,000 39,813
Tennant Company.......................... 1,000 40,125
----------
414,526
----------
INSURANCE - 5.4%
American Heritage Life Investment
Corporation............................ 2,000 48,875
American International Group
Incorporated........................... 1,475 142,522
Berkley (WR) Corporation................. 1,050 35,766
Chubb Corporation........................ 1,800 116,775
Fidelity National Financial
Incorporated........................... 1,650 50,325
Fremont General Corporation.............. 1,400 34,650
Hooper Holmes Incorporated (a)........... 2,000 58,000
Lincoln National Corporation............. 1,500 122,719
NAC Re Corporation (a)................... 900 42,243
Orion Capital Corporation................ 900 35,831
Protective Life Corporation.............. 1,000 39,812
Presidential Life Insurance Company...... 2,100 41,737
----------
769,255
----------
INTERNATIONAL OIL - 1.2%
Mobil Corporation........................ 2,000 174,250
----------
</TABLE>
PB SERIES TRUST
HIGH QUALITY STOCK FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------------- --------- ----------
COMMON STOCK (CONTINUED)
<S> <C> <C>
INVESTMENT ADVISORY FIRMS - 1.2%
Eaton Vance Corporation.................. 1,800 $ 37,575
SEI Investment Company................... 600 59,625
T. Rowe Price Associates Incorporated.... 1,000 34,250
United Asset Management Corporation...... 1,400 36,400
----------
167,850
----------
NEWSPAPERS - 1.3%
Lee Enterprises Incorporated............. 1,300 40,950
Tribune Company.......................... 2,100 138,600
----------
179,550
----------
PAPER - 1.6%
Lydall Incorporated (a).................. 3,200 38,000
Sonoco Products Company.................. 4,840 143,385
Wausau - Mosinee Paper Corporation....... 2,900 51,293
----------
232,678
----------
PETROLEUM SERVICES - 0.5%
Input Output Incorporated (a)............ 4,700 34,368
World Fuel Services Corporation.......... 3,500 37,625
----------
71,993
----------
PUBLISHING - 1.0%
Banta Corporation........................ 1,500 41,063
Bowne & Company Incorporated............. 2,200 39,325
Houghton Mifflin Company................. 1,400 66,150
----------
146,538
----------
RAILROADS & EQUIPMENT - 0.3%
GATX Corporation......................... 1,000 37,875
----------
RETAIL GROCERY - 0.3%
Casey's General Stores Incorporated...... 3,100 40,397
----------
RETAIL TRADE - 4.3%
Claire's Stores Incorporated............. 2,300 47,150
Home Depot Incorporated.................. 3,300 201,918
Office Depot Incorporated (a)............ 1,400 51,713
Ross Stores Incorporated................. 1,000 39,375
Ruddick Corporation...................... 2,400 55,200
Stride Rite Corporation.................. 5,200 45,500
Wal-Mart Stores Incorporated............. 2,200 179,163
----------
620,019
----------
SOFTWARE - 2.1%
Adobe Systems Incorporated............... 900 42,075
Analysts International Corporation....... 2,300 44,275
Autodesk Incorporated.................... 900 38,419
Computer Associates International
Incorporated (a)....................... 4,100 174,763
----------
299,532
----------
STEEL - 1.5%
Carpenter Technology Corporation......... 1,200 40,725
Nucor Corporation........................ 3,300 142,725
Worthington Industries Incorporated...... 2,900 36,250
----------
219,700
----------
</TABLE>
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
22
<PAGE>
PB SERIES TRUST
HIGH QUALITY STOCK FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------------- --------- ----------
COMMON STOCK (CONTINUED)
<S> <C> <C>
TELEPHONE - 4.8%
Aliant Communications Incorporated....... 1,800 $ 73,575
Alltel Corporation....................... 3,100 185,419
Bell Atlantic Corporation................ 3,200 181,800
Century Telephone Enterprises
Incorporated (a)....................... 650 43,875
SBC Communications Incorporated.......... 3,800 203,775
----------
688,444
----------
TIRES & RUBBER - 0.4%
Carlisle Companies Incorporated........ . 1,200 61,950
----------
TOBACCO - 1.3%
Philip Morris Companies Incorporated
(a).................................... 3,400 181,900
----------
TRUCKING & FREIGHT FORWARDING - 0.7%
Air Express International Corporation
(a).................................... 2,300 50,025
Rollins Truck Leasing Corporation........ 3,450 50,887
----------
100,912
----------
TOTAL COMMON STOCK (Cost $11,492,633) 13,641,383
----------
SHORT-TERM INVESTMENTS - 4.7%
INVESTMENT COMPANY - 3.1%
SSgA U.S. Government Money Market Fund... 450,000 450,000
----------
<CAPTION>
PRINCIPAL
AMOUNT
---------
<S> <C> <C>
REPURCHASE AGREEMENT - 1.6%
Agreement with State Street Bank and
Trust Company, dated 12/31/1998,
3.500%, to be repurchased at $223,555
on 01/04/1999 (collateralized by
$205,000 par value U.S. Treasury Note,
7.250 %, due 05/15/2004, with a value
of $231,745)........................... $ 223,468 223,468
----------
TOTAL SHORT-TERM INVESTMENTS (Cost $673,468) 673,468
----------
TOTAL INVESTMENTS - (Cost $12,166,101) - 100.0% 14,314,851
OTHER ASSETS LESS LIABILITIES - (0.0%) (6,504)
----------
NET ASSETS - 100.0% $14,308,347
----------
----------
</TABLE>
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
(a) Non-income producing securities.
PB SERIES TRUST
FIXED INCOME FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
- --------------------------------------------- --------- ----------
<S> <C> <C>
MORTGAGE BACKED SECURITIES - 2.7%
GE Capital Mortgage 6.500%, 01/25/18..... $ 61,451 $ 61,316
American International 6.500%,
10/15/01............................... 100,000 102,309
----------
TOTAL MORTGAGE BACKED SECURITIES
- (Cost $163,179) 163,625
----------
U.S. GOVERNMENT AND AGENCY SECURITIES - 62.7%
GOVERNMENT AGENCY - 28.9%
Federal Home Loan Mortgage Corporation
5.950%, 01/19/06....................... 750,000 779,648
Federal National Mortgage Association
6.375%, 01/16/02....................... 500,000 518,515
5.875%, 02/02/06....................... 275,000 285,357
5.750%, 06/25/10....................... 100,000 99,781
5.500%, 02/25/17....................... 95,485 95,127
----------
1,778,428
----------
U.S. GOVERNMENT - 33.8%
U.S. Treasury Notes
5.875%, 08/31/99....................... 750,000 755,858
6.125%, 12/31/01....................... 250,000 260,155
5.250%, 08/15/03....................... 500,000 512,735
6.250%, 08/15/23....................... 500,000 558,830
----------
2,087,578
----------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
- (Cost $3,740,638) 3,866,006
----------
<CAPTION>
SHARES
---------
<S> <C> <C>
SHORT TERM INVESTMENTS - 33.6%
INVESTMENT COMPANY - 3.7%
SSgA U.S. Government Money Market Fund... 225,000 225,000
----------
<CAPTION>
PRINCIPAL
AMOUNT
---------
<S> <C> <C>
REPURCHASE AGREEMENT - 1.7%
Agreement with State Street Bank and
Trust Company, dated 12/31/1998,
3.500%, to be repurchased at $105,104
on 01/04/1999 (collateralized by
$85,000 par value U.S. Treasury Bond,
11.125 %, due 08/15/2003, with a value
of $110,845)........................... $ 105,063 105,063
----------
GOVERNMENT AGENCY - 16.2%
Federal Farm Credit Bank Discount Note
5.310%, 02/08/99....................... 500,000 497,197
Federal Home Loan Bank Discount Note
5.360%, 01/13/99....................... 500,000 499,107
----------
996,304
----------
U.S. GOVERNMENT - 12.0%
U.S. Treasury Bill
4.510%, 04/01/99....................... 750,000 742,095
----------
TOTAL SHORT TERM INVESTMENTS
- (Cost $2,068,080) 2,068,462
----------
TOTAL INVESTMENTS - (Cost $5,971,897) - 99.0% 6,098,093
OTHER ASSETS LESS LIABILITIES - 1.0% 61,572
----------
NET ASSETS - 100.0% $6,159,665
----------
----------
</TABLE>
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
23
<PAGE>
PB SERIES TRUST
INTERNATIONAL ACTIVE FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------------- --------- ----------
<S> <C> <C>
COMMON STOCK AND OTHER
EQUITY INTERESTS - 96.3%
ARGENTINA - 2.6%
Amcor Limited............................ 4,711 $ 20,088
Broken Hill Proprietary Company
Limited................................ 4,536 33,338
Comalco Limited.......................... 1,946 7,437
Leighton Holdings Limited................ 3,790 16,223
Lend Lease Corporation................... 2,368 31,857
News Corporation Limited................. 4,768 31,431
National Australia Bank.................. 3,600 54,154
Pasminco Limited......................... 5,883 4,461
Southcorp Limited........................ 6,900 21,962
TABCORP Holdings Limited................. 2,607 15,942
Telstra Corporation...................... 6,900 32,193
Westpac Banking Corporation Limited...... 6,549 43,731
----------
312,817
----------
FINLAND - 4.9%
Fortum Oy (a)............................ 6,908 41,998
Hartwall Ab Oy........................... 995 16,099
Metsa Serla Oy........................... 2,131 17,344
Nokia Ab Oy.............................. 3,170 385,452
Okobank Osuuspankk....................... 637 11,618
Rautaruukki Oy........................... 2,273 14,666
Sonera Group............................. 1,000 17,651
UPM Kymmene Corporation Oy............... 996 27,737
Viking Line AB........................... 200 9,610
WSOY "B"................................. 682 43,336
YIT-Yhtymaoy Oy.......................... 1,399 12,072
----------
597,583
----------
FRANCE - 14.7%
Alcatel Alsthom.......................... 632 77,336
Banque Nationale de Paris................ 1,880 154,779
Carrefour Supermarche.................... 210 158,503
Castorma Dubois Investisse............... 300 68,429
Compagnie De St. Gobain.................. 340 47,991
Elf Aquitaine SA......................... 1,166 134,753
France Telecom........................... 2,466 195,877
Groupe Danone............................ 411 117,643
Group GTM................................ 800 83,009
L'Oreal.................................. 130 93,958
Lafarge SA............................... 420 39,898
LVMH Moet Hennessy....................... 240 47,487
Peugeot.................................. 360 55,709
Pinault-Printemps........................ 390 74,514
Schneider SA............................. 4 243
Suez Lyonnaise des Eaux.................. 750 154,032
Total "B"................................ 1,330 134,672
Valeo.................................... 685 53,969
Vivendi.................................. 361 93,645
----------
1,786,447
----------
GERMANY - 10.5%
Allianz AG............................... 326 121,397
BASF AG.................................. 1,300 49,620
Bayer AG................................. 2,223 93,396
Bayerische Vereinsba..................... 730 57,788
DaimlerChrylser AG....................... 1,510 150,098
</TABLE>
PB SERIES TRUST
INTERNATIONAL ACTIVE FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------------- --------- ----------
COMMON STOCK AND OTHER
EQUITY INTERESTS (CONTINUED)
<S> <C> <C>
GERMANY - (CONTINUED)
Deutsche Bank............................ 950 $ 56,077
Dresdner Bank AG......................... 661 27,711
Mannesmann AG............................ 850 98,403
Metro AG................................. 850 66,879
Muenchener Rueckver...................... 215 105,243
RWE AG................................... 720 39,785
SAP AG-Vorzug............................ 230 110,445
Siemens AG............................... 985 64,781
VEBA AG.................................. 1,900 112,634
Viag AG.................................. 85 50,287
Volkswagon AG............................ 790 63,961
----------
1,268,505
----------
IRELAND - 2.7%
Allied Irish Bank........................ 8,100 145,044
CRH PLC.................................. 5,420 93,585
Irish Life PLC........................... 4,070 38,288
Kerry Group PLC-ADR...................... 2,220 30,236
Smurfit (Jefferson) Group................ 12,600 22,694
----------
329,847
----------
ISRAEL - 1.2%
Bank Hapoalim Limited.................... 11,400 20,644
Bank Leumi Le-Israel..................... 6,000 8,484
Bezeq Israeli Telecommunication
Corporation Limited.................... 4,500 14,058
Blue Square-Israel Limited (a)........... 700 8,400
ECI Telecommunications................... 580 20,663
Elite Industries Limited (a)............. 300 9,163
Formula Systems Limited.................. 410 10,156
Israel Chemicals Limited................. 7,800 7,710
Koor Industries Limited.................. 160 13,968
Super-Sol Limited........................ 4,100 10,185
Teva Pharmaceutical Industries Limited... 480 19,624
----------
143,055
----------
ITALY - 8.6%
Alleanza Assicurazioni................... 3,873 54,753
Assic Generali........................... 2,780 116,136
Banca Commerciale Italiana............... 8,767 60,510
Benetton Group........................... 32,800 66,128
Danieli & Company........................ 5,001 36,334
Edison SpA............................... 8,000 94,279
Eni SpA.................................. 28,403 185,721
Fiat SpA................................. 15,301 53,175
Instituto Nazionale delle Assicurazioni
Istituto............................... 13,846 36,592
Istituto Babcario San Paolo di Torino.... 4,198 74,216
Telecom Italia SpA....................... 14,080 120,197
Telecom Italia Mobile SpA................ 18,000 132,955
Unione Immobiliare SpA (a)............... 13,846 7,226
----------
1,038,222
----------
JAPAN - 13.5 %
Aoyama Trading Company Limited........... 3,300 91,897
Bridgestone Company...................... 2,000 45,208
Canon Incorporated....................... 2,000 42,564
</TABLE>
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
24
<PAGE>
PB SERIES TRUST
INTERNATIONAL ACTIVE FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------------- --------- ----------
COMMON STOCK AND OTHER
EQUITY INTERESTS (CONTINUED)
<S> <C> <C>
JAPAN - (CONTINUED)
Fanuc.................................... 3,200 $ 109,134
Fuji Photo Film Company.................. 2,000 74,025
Fujisawa Pharmaceutical Company.......... 6,000 84,600
Hitachi Limited.......................... 6,000 37,013
Ito-Yokado............................... 1,000 69,619
Kirin Brewery Company.................... 7,000 88,830
Matsushita Electric Works................ 3,000 52,849
Mitsubishi Heavy Industries.............. 11,000 42,653
Mitsui O.S.K. Lines Limited.............. 31,000 49,720
Murata Manufacturing Company Limited..... 2,000 82,661
NEC Corporation.......................... 11,000 100,815
Nippon Telephone & Telegraph
Corporation............................ 32 122,952
Sekisui Chemical Company Limited......... 8,000 53,580
Tokio Marine & Fire Insurance............ 5,000 59,484
Tokyo Electric........................... 2,100 51,633
Toyota Motor............................. 2,000 54,109
Webs Japan Index Series.................. 32,000 328,000
----------
1,641,346
----------
NETHERLANDS - 5.0%
ABN AMRO Holdings NV..................... 1,532 32,192
Akzo Nobel............................... 462 21,013
Elsevier................................. 1,500 20,986
Fortis Amev NV........................... 600 49,665
Heineken NV.............................. 330 19,837
ING Groep NV............................. 1,269 77,296
Koninklijke Ahold NV..................... 500 18,459
Koninklijke Philips Electronics N.V...... 479 32,107
Koninklijke PTT Nederland NV............. 755 37,754
Royal Dutch Petroleum Company............ 3,348 166,527
TNT Post Group NV........................ 755 24,299
Unilever NV PLC.......................... 936 79,917
VNU-Verenigde Nederlandse
Uitgeversbedrijven Verenigd Bezit...... 840 31,638
----------
611,690
----------
NORWAY - 1.0%
Christiana Bank Og Kreditkasse........... 3,450 11,987
Den Norske Bank.......................... 1,740 6,023
Hafslund B ASA........................... 1,500 6,396
Merkantildata ASA........................ 620 6,120
Norsk Hydro ASA.......................... 970 32,808
Norske Skogindustrier ASA................ 340 8,546
Orkla ASA................................ 900 11,785
Petroleum Geo Services ASA............... 660 8,425
Storebrand ASA........................... 1,910 14,454
Tomra Systems ASA........................ 180 5,922
Unitor ASA............................... 640 6,233
----------
118,699
----------
PORTUGAL - 5.1%
Banco Comercia Portugues................. 2,515 77,191
Banco Espirito........................... 1,100 34,083
Banco Port De Inv BP..................... 800 27,103
Brisa.................................... 400 23,507
Cimpor Cimento........................... 1,360 43,340
Electricidade De Portugal SA............. 7,700 169,245
Jeronimo Martins......................... 1,250 68,267
</TABLE>
PB SERIES TRUST
INTERNATIONAL ACTIVE FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------------- --------- ----------
COMMON STOCK AND OTHER
EQUITY INTERESTS (CONTINUED)
<S> <C> <C>
PORTUGAL - (CONTINUED)
Mundial Confianca (a).................... 800 $ 25,401
Portugal Telecom SA...................... 2,500 114,431
Sonae Investimentos...................... 800 38,826
----------
621,394
----------
SPAIN - 5.8%
Argentaria Corporation SA................ 3,000 77,676
Autopistas Concesion..................... 2,730 45,394
Banco Bilbao Vizcaya..................... 6,000 94,057
Banco Central Hispanic................... 2,811 33,371
Banco Santande SA........................ 1,734 34,452
Endesa SA................................ 3,000 79,473
Gas Natural SDG.......................... 580 63,135
Gas Y Electricidads...................... 400 39,736
Iberdrola SA............................. 4,000 74,823
Repsol SA................................ 700 37,334
Telefonica De Espana..................... 3,000 133,371
----------
712,822
----------
SWITZERLAND - 7.6%
ABB AG................................... 30 35,152
Clariant AG.............................. 47 21,960
Credit Suisse Group...................... 368 57,583
Holderbank Financiere Glarus AG.......... 51 60,353
Nestle SA................................ 67 145,800
Novartis AG.............................. 106 208,296
Roche Holding AG......................... 16 195,167
Tag Heuer International SA............... 349 24,028
Union Bank of Switzerland................ 310 95,211
Zurich Allied (a)........................ 100 74,017
----------
917,567
----------
UNITED KINGDOM - 13.0%
Abbey National PLC....................... 4,375 93,370
Boots Company PLC........................ 4,826 81,748
British Petroleum Amoco.................. 6,370 94,752
British Telecommunications PLC........... 6,274 94,103
Cadbury Schwep PLC....................... 3,350 56,885
CGU PLC.................................. 4,267 66,477
Diageo PLC............................... 3,570 39,989
Glaxo Wellcome........................... 2,890 98,770
HSBC Holdings............................ 2,080 56,463
IMI PLC.................................. 5,477 21,570
Lasmo PLC................................ 6,800 11,163
Lloyds TSB Group PLC..................... 9,096 128,662
National Power PLC....................... 5,470 48,166
Prudential Corporation PLC............... 5,785 87,152
Scottish & Newcastle PLC................. 5,621 63,524
Scottish Power PLC....................... 6,434 65,669
Shell Transport & Trading Company PLC.... 5,327 32,507
Smithkline Beecham PLC................... 7,968 111,451
Tesco PLC................................ 21,500 61,500
TI Group PLC............................. 4,400 23,659
Unilever PLC............................. 8,652 96,915
Wolseley PLC............................. 5,909 37,186
Zeneca Group PLC......................... 2,376 103,425
----------
1,575,106
----------
</TABLE>
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
25
<PAGE>
PB SERIES TRUST
INTERNATIONAL ACTIVE FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- --------------------------------------------- --------- ----------
COMMON STOCK AND OTHER
EQUITY INTERESTS (CONTINUED)
<S> <C> <C>
VENEZUELA - 0.1%
Siderurgica Venez SIV ADR................ 775 $ 3,489
Sudamtex De Venezuela ADR................ 1,327 1,327
----------
4,816
----------
TOTAL COMMON STOCK AND OTHER EQUITY INTERESTS (Cost
$9,585,070) 11,679,916
----------
<CAPTION>
PRINCIPAL
AMOUNT
---------
<S> <C> <C>
SHORT TERM INVESTMENTS - 3.9%
TIME DEPOSIT - 3.9%
State Street Bank and Trust Company Time
Deposit, 1/04/99....................... $ 478,000 478,000
----------
TOTAL SHORT TERM INVESTMENTS
- (Cost $478,000) 478,000
----------
TOTAL INVESTMENTS - (Cost $10,063,070) - 100.2% 12,157,916
OTHER ASSETS LESS LIABILITIES - (0.2%) (24,848)
----------
NET ASSETS - 100.0% $12,133,068
----------
----------
</TABLE>
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
(a) Non-income producing securities.
ADR - American Depositary Receipts.
PB SERIES TRUST
INTERNATIONAL ACTIVE FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<S> <C>
INDUSTRY HOLDINGS AT DECEMBER 31, 1998
Banking......................................... 12.98 %
Telecommunications.............................. 11.97 %
Energy Sources.................................. 8.77 %
Insurance....................................... 6.80 %
Health & Personal Care.......................... 6.63 %
Utilities-Electrical & Gas...................... 5.75 %
Merchandising................................... 5.56 %
Food & Household Products....................... 4.75 %
Automobiles..................................... 3.09 %
Chemicals....................................... 2.95 %
Building Materials & Components................. 2.87 %
Investment Companies............................ 2.69 %
Business & Public Services...................... 2.65 %
Electrical and Electronics...................... 2.59 %
Beverages & Tobacco............................. 2.47 %
Electronic Components, Instruments.............. 2.16 %
Multi-Industry.................................. 1.63 %
Machinery and Engineering....................... 1.46 %
Financial Services.............................. 1.16 %
Recreation, Other Consumer Goods................ 1.16 %
Broadcasting and Publishing..................... 1.05 %
Construction & Housing.......................... 0.92 %
Forest Products & Paper......................... 0.79 %
Appliances & Household Durables................. 0.70 %
Textiles & Apparel.............................. 0.55 %
Transportation-Shipping......................... 0.49 %
Miscellaneous Materials......................... 0.39 %
Industrial Components........................... 0.37 %
Real Estate..................................... 0.32 %
Metals-Non Ferrous.............................. 0.28 %
Metals-Steel.................................... 0.15 %
Leisure & Tourism............................... 0.13 %
Miscellaneous................................... 0.05 %
----------
Total Investments by Industry................. 96.28 %
Time Deposit.................................... 3.92 %
----------
Total Investments............................. 100.20 %
Other Assets Less Liabilities................... (0.20) %
----------
Net Assets...................................... 100.00 %
----------
----------
</TABLE>
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
26
<PAGE>
PB SERIES TRUST
MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
- --------------------------------------------- --------- ----------
<S> <C> <C>
VARIABLE RATE NOTES - 22.9%
Edgefield County, SC County School
District, Series 1997 5.076%, 12/01/04
+...................................... $ 100,000 $ 100,000
Grand Aire Express, Inc., Series 1997
5.300%, 07/01/12 +..................... 100,000 100,000
JFK Family Borrowing, LLP, Series 1997
5.620%, 10/01/22 +..................... 50,000 50,000
La-Man Corporation
5.680%, 09/01/12 +..................... 100,000 100,000
Scranton Times, LP, Series 1997
5.601%, 05/31/07 +..................... 100,000 100,000
Westcourt
5.620%, 06/01/16 +..................... 60,000 60,000
----------
TOTAL VARIABLE RATE NOTES
- (Cost $510,000) 510,000
----------
SHORT TERM INVESTMENTS - 77.8%
JOINT REPURCHASE AGREEMENTS - 77.8%
Joint agreement with ABN AMRO
Incorporated, dated 12/31/1998, bearing
5.100%, to be repurchased at $550,312
on 01/04/1999 (collateral: Federal
National Mortgage Association, Federal
Home Loan Mortgage, 6.000% - 8.500%,
01/2028 - 12/2028, value equal to 102%
of the repurchase agreement)........... 550,000 550,000
Joint agreement with Bear Stearns &
Company, dated 12/31/1998, bearing
5.100%, to be repurchased at $110,062
on 01/04/1999 (collateral: Federal Home
Loan Bank, Federal National Mortgage
Association, Federal Home Loan
Mortgage, Federal Farm Credit Bank,
U.S. Treasury Tips, 3.625% - 8.500%,
02/1999 - 12/2028, value equal to 102%
of the repurchase agreement)........... 110,000 110,000
Joint agreement with Donaldson, Lufkin &
Jenrette Securities Corp., dated
12/31/1998, bearing 4.850%, to be
repurchased at $102,055 on 01/04/1999
(collateral: U.S. Treasury Bonds/Notes
4.000% - 11.250%, 05/1999 - 02/2026,
value equal to 102% of the repurchase
agreement)............................. 102,000 102,000
Joint agreement with Nationsbank
Montgomery Securities, dated
12/31/1998, bearing 5.100%, to be
repurchased at $550,312 on 01/04/1999
(collateral: Federal Home Loan
Mortgage, Federal National Mortgage
Association, Government National
Mortgage Association, 09/2011 -
01/2029, 5.500% - 9.500%, value equal
to 102% of the repurchase agreement)... 550,000 550,000
</TABLE>
PB SERIES TRUST
MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
- --------------------------------------------- --------- ----------
SHORT TERM INVESTMENTS (CONTINUED)
<S> <C> <C>
Joint agreement with Paribas Corporation,
dated 12/31/1998, bearing 5.100%, to be
repurchased at $105,060 on 01/04/1999
(collateral: Federal National Mortgage
Association, Federal Home Loan Bank,
Federal Home Loan Mortgage, U.S.
Treasury Bond, 4.750% - 8.875%, 01/1999
- 08/2017, value equal to 102% of the
repurchase agreement).................. $ 105,000 $ 105,000
Joint agreement with Prudential
Securities dated 12/31/1998, bearing
5.100%, to be repurchased at $105,060
on 01/04/1999 (collateral: Federal
National Mortgage Association, Federal
Home Loan Bank, Federal Home Loan
Mortgage, Federal Farm Credit Bank,
U.S. Treasury Note, Student Loan
Marketing Association, 5.000% - 9.200%,
01/1999 - 01/2029, value equal to 102%
of the repurchase agreement)........... 105,000 105,000
Joint agreement with Societe General
Securities, dated 12/31/1998, bearing
4.850%, to be repurchased at $105,057
on 01/04/1999 (collateral: U.S.
Treasury Bonds, 7.1250% - 10.6250%,
08/2015 - 02/2023, value equal to 102%
of the repurchase agreement)........... 105,000 105,000
Joint agreement with Toronto Dominion
Securities, dated 12/31/1998, bearing
4.970%, to be repurchased at $105,058
on 01/04/1999 (collateral: U.S.
Treasury Bonds/Bills/Notes 4.625% -
8.875%, 05/1999 - 08/2026, value equal
to 102% of the repurchase agreement)... 105,000 105,000
----------
TOTAL SHORT TERM INVESTMENTS
(Cost $1,732,000) 1,732,000
----------
TOTAL INVESTMENTS AT AMORTIZED COST AND VALUE -
100.7% $2,242,000
OTHER ASSETS LESS LIABILITIES - (0.7%) (14,732)
----------
NET ASSETS - 100.0% $2,227,268
----------
----------
</TABLE>
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
+ Variable rate demand notes are payable upon not more than one, seven, or
thirty day's notice. The interest rate shown reflects the rate currently in
effect.
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
27
<PAGE>
PB SERIES TRUST
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
CAPITAL INCOME GROWTH &
PRESERVATION ORIENTED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
------------ -------- ---------
<S> <C> <C> <C>
ASSETS
Investments in
securities, at value
(a).................. $728,273 $ 34,336 $607,710
Repurchase agreements,
at value (a)......... -- -- --
Cash, including foreign
currency, at value... 2,797 2,799 2,947
Interest receivable.... -- -- --
Dividends receivable... -- -- --
Receivable from
Investment Adviser
(Note 3)............. 4,717 4,799 4,814
Foreign income tax
reclaim receivable... -- -- --
------------ -------- ---------
TOTAL ASSETS......... 735,787 41,934 615,471
LIABILITIES
Payable for forward
currency contract
(Note 6)............. -- -- --
Payable to Custodian... -- -- --
Payable to Investment
Adviser.............. -- -- --
Accounts payable and
accrued expenses..... 7,600 7,599 7,775
------------ -------- ---------
TOTAL LIABILITIES.... 7,600 7,599 7,775
------------ -------- ---------
NET ASSETS........... $728,187 $ 34,335 $607,696
------------ -------- ---------
------------ -------- ---------
NET ASSETS CONSIST OF:
Paid-in capital........ $734,907 $ 34,341 $602,698
Undistributed net
investment income
(Note 2)............. -- -- --
Accumulated net
realized loss on
investments and
foreign currency
transactions......... (119) -- (73)
Net unrealized
appreciation
(depreciation) of:
Investments.......... (6,601) (6) 5,071
Translations of
assets and
liabilities in
foreign
currencies......... -- -- --
------------ -------- ---------
NET ASSETS........... $728,187 $ 34,335 $607,696
------------ -------- ---------
------------ -------- ---------
NET ASSET VALUE PER SHARE
Offering and redemption
price per share
(based on shares of
beneficial interest
outstanding)......... $ 10.15 $ 10.92 $ 11.09
Total shares
outstanding at end of
period............... 71,766 3,144 54,782
Capital shares
authorized........... Indefinite Indefinite Indefinite
(a) Investments in
securities and
repurchase
agreements, at
cost................. $734,874 $ 34,342 $602,639
</TABLE>
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
28
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MAXIMUM HIGH FIXED MONEY
GROWTH APPRECIATION QUALITY INCOME INTERNATIONAL MARKET
PORTFOLIO PORTFOLIO STOCK FUND FUND ACTIVE FUND FUND
--------- ------------ ----------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in
securities, at value
(a).................. $1,414,955 $899,069 $14,091,383 $5,993,030 $12,157,916 $ 510,000
Repurchase agreements,
at value (a)......... -- -- 223,468 105,063 -- 1,732,000
Cash, including foreign
currency, at value... 2,802 2,835 3,811 800 1,942 --
Interest receivable.... -- -- 80 80,772 53 2,592
Dividends receivable... -- -- 15,980 -- 5,470 --
Receivable from
Investment Adviser
(Note 3)............. 4,807 4,807 14,731 13,367 17,879 16,057
Foreign income tax
reclaim receivable... -- -- -- -- 14,687 --
--------- ------------ ----------- ---------- ------------- ---------
TOTAL ASSETS......... 1,422,564 906,711 14,349,453 6,193,032 12,197,947 2,260,649
LIABILITIES
Payable for forward
currency contract
(Note 6)............. -- -- -- -- 6,249 --
Payable to Custodian... -- -- -- -- -- 1,798
Payable to Investment
Adviser.............. -- -- 7,399 3,263 8,886 720
Accounts payable and
accrued expenses..... 7,609 7,642 33,707 30,104 49,744 30,863
--------- ------------ ----------- ---------- ------------- ---------
TOTAL LIABILITIES.... 7,609 7,642 41,106 33,367 64,879 33,381
--------- ------------ ----------- ---------- ------------- ---------
NET ASSETS........... $1,414,955 $899,069 $14,308,347 $6,159,665 $12,133,068 $2,227,268
--------- ------------ ----------- ---------- ------------- ---------
--------- ------------ ----------- ---------- ------------- ---------
NET ASSETS CONSIST OF:
Paid-in capital........ $1,403,202 $883,279 $12,171,803 $6,033,309 $10,274,362 $2,227,268
Undistributed net
investment income
(Note 2)............. -- -- 257 160 1,490 --
Accumulated net
realized loss on
investments and
foreign currency
transactions......... (1,784) (1,175) (12,463 ) -- (232,253) --
Net unrealized
appreciation
(depreciation) of:
Investments.......... 13,537 16,965 2,148,750 126,196 2,094,846 --
Translations of
assets and
liabilities in
foreign
currencies......... -- -- -- -- (5,377) --
--------- ------------ ----------- ---------- ------------- ---------
NET ASSETS........... $1,414,955 $899,069 $14,308,347 $6,159,665 $12,133,068 $2,227,268
--------- ------------ ----------- ---------- ------------- ---------
--------- ------------ ----------- ---------- ------------- ---------
NET ASSET VALUE PER SHARE
Offering and redemption
price per share
(based on shares of
beneficial interest
outstanding)......... $ 11.54 $ 11.90 $ 12.09 $ 10.27 $ 11.79 $ 1.00
Total shares
outstanding at end of
period............... 122,651 75,539 1,183,374 599,911 1,028,728 2,227,268
Capital shares
authorized........... Indefinite Indefinite Indefinite Indefinite Indefinite Indefinite
(a) Investments in
securities and
repurchase
agreements, at
cost................. $1,401,418 $882,104 $12,166,101 $5,971,897 $10,063,070 $2,242,000
</TABLE>
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
29
<PAGE>
PB SERIES TRUST
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
CAPITAL INCOME GROWTH &
PRESERVATION ORIENTED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
------------ --------- ---------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income........ $ 14,637 $ 107 $ 1,539
Dividend income........ 11,819 599 10,365
Less foreign taxes
withheld............ -- -- --
------------ --------- ---------
TOTAL INVESTMENT
INCOME............... 26,456 706 11,904
EXPENSES
Investment adviser fee
(Note 3)............. -- -- --
Administrative fee..... 9,055 9,055 9,055
Accounting fee......... 9,081 9,081 9,081
Audit fee.............. 1,993 1,993 1,993
Custodian fees and
expenses............. 25 25 25
Trustee's fees (Note
3)................... 2,340 2,340 2,340
Printing expense....... 5,012 5,012 5,012
Legal fee.............. 3,669 3,669 3,669
Insurance expense...... 1,571 1,571 1,571
Miscellaneous
expense.............. 19 19 19
------------ --------- ---------
Total operating
expenses before
reimbursement....... 32,765 32,765 32,765
Expenses reimbursed by
the Investment
Adviser (Note 3)..... (32,765) (32,765) (32,765)
------------ --------- ---------
NET EXPENSES......... -- -- --
------------ --------- ---------
NET INVESTMENT
INCOME.............. 26,456 706 11,904
NET REALIZED AND
UNREALIZED GAIN (LOSS)
FROM INVESTMENTS AND
FOREIGN CURRENCY
Net realized gain
(loss) from:
Investments.......... 8,175 91 1,295
Distribution of
realized gains from
underlying funds.... 6,219 792 19,129
Foreign currency
transactions........ -- -- --
------------ --------- ---------
14,394 883 20,424
Change in unrealized
appreciation
(depreciation) during
the period on:
Investments.......... (6,410) 69 4,159
Translations of
assets and
liabilities in
foreign
currencies.......... -- -- --
------------ --------- ---------
(6,410) 69 4,159
------------ --------- ---------
NET REALIZED AND
UNREALIZED GAIN...... 7,984 952 24,583
------------ --------- ---------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS............. $ 34,440 $ 1,658 $ 36,487
------------ --------- ---------
------------ --------- ---------
</TABLE>
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
30
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MAXIMUM HIGH FIXED MONEY
GROWTH APPRECIATION QUALITY INCOME INTERNATIONAL MARKET
PORTFOLIO PORTFOLIO STOCK FUND FUND ACTIVE FUND FUND
--------- ------------ ---------- -------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income........ $ -- $ -- $ 10,564 $327,438 $ 20,456 $117,068
Dividend income........ 16,694 3,973 202,753 -- 199,102 --
Less foreign taxes
withheld............ -- -- -- -- (23,021) --
--------- ------------ ---------- -------- ------------- --------
TOTAL INVESTMENT
INCOME............... 16,694 3,973 213,317 327,438 196,537 117,068
EXPENSES
Investment adviser fee
(Note 3)............. -- -- 82,964 36,509 100,592 8,430
Administrative fee..... 9,055 9,055 60,781 60,780 61,330 60,775
Accounting fee......... 9,081 9,081 43,786 43,302 64,939 44,508
Audit fee.............. 1,993 1,993 9,968 9,923 9,923 9,923
Custodian fees and
expenses............. 25 25 9,630 3,891 57,363 9,800
Trustee's fees (Note
3)................... 2,340 2,340 2,340 2,340 2,341 2,341
Printing expense....... 5,012 5,012 6,196 6,196 6,196 6,196
Legal fee.............. 3,669 3,669 8,237 4,136 8,241 2,109
Insurance expense...... 1,571 1,571 1,571 1,571 1,571 1,571
Miscellaneous
expense.............. 19 19 1,318 674 936 386
--------- ------------ ---------- -------- ------------- --------
Total operating
expenses before
reimbursement....... 32,765 32,765 226,791 169,322 313,432 146,039
Expenses reimbursed by
the Investment
Adviser (Note 3)..... (32,765) (32,765) (111,917 ) (118,771) (184,897) (132,341)
--------- ------------ ---------- -------- ------------- --------
NET EXPENSES......... -- -- 114,874 50,551 128,535 13,698
--------- ------------ ---------- -------- ------------- --------
NET INVESTMENT
INCOME.............. 16,694 3,973 98,443 276,887 68,002 103,370
NET REALIZED AND
UNREALIZED GAIN (LOSS)
FROM INVESTMENTS AND
FOREIGN CURRENCY
Net realized gain
(loss) from:
Investments.......... 7,132 9,113 889,126 145,608 441,475 --
Distribution of
realized gains from
underlying funds.... 52,565 40,013 -- -- -- --
Foreign currency
transactions........ -- -- -- -- (91,888) --
--------- ------------ ---------- -------- ------------- --------
59,697 49,126 889,126 145,608 349,587 --
Change in unrealized
appreciation
(depreciation) during
the period on:
Investments.......... 9,275 11,306 478,771 (1,829) 1,810,379 --
Translations of
assets and
liabilities in
foreign
currencies.......... -- -- -- -- (7,261) --
--------- ------------ ---------- -------- ------------- --------
9,275 11,306 478,771 (1,829) 1,803,118 --
--------- ------------ ---------- -------- ------------- --------
NET REALIZED AND
UNREALIZED GAIN...... 68,972 60,432 1,367,897 143,779 2,152,705 --
--------- ------------ ---------- -------- ------------- --------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS............. $ 85,666 $ 64,405 $1,466,340 $420,666 $2,220,707 $103,370
--------- ------------ ---------- -------- ------------- --------
--------- ------------ ---------- -------- ------------- --------
</TABLE>
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
31
<PAGE>
PB SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
CAPITAL INCOME GROWTH &
PRESERVATION ORIENTED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
------------ -------- ---------
<S> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS FOR THE YEAR
ENDED
DECEMBER 31, 1998
Net investment
income............... $26,456 $ 706 $ 11,904
Net realized gain...... 14,394 883 20,424
Change in unrealized
appreciation
(depreciation)
during the year...... (6,410) 69 4,159
------------ -------- ---------
Net increase in net
assets resulting from
operations........... 34,440 1,658 36,487
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment
income............... (26,549) (708) (11,937)
Net realized gain...... (14,516) (883) (20,426)
FUND SHARE TRANSACTIONS
(NOTE 5)............. 708,038 26,012 422,742
------------ -------- ---------
TOTAL INCREASE
(DECREASE) IN NET
ASSETS............... 701,413 26,079 426,866
NET ASSETS:
Beginning of year...... 26,774 8,256 180,830
------------ -------- ---------
End of year (a)........ $728,187 $34,335 $607,696
------------ -------- ---------
------------ -------- ---------
(a) Including
undistributed net
investment income...... $ -- $ -- $ --
------------ -------- ---------
------------ -------- ---------
</TABLE>
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
32
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MAXIMUM HIGH FIXED MONEY
GROWTH APPRECIATION QUALITY INCOME INTERNATIONAL MARKET
PORTFOLIO PORTFOLIO STOCK FUND FUND ACTIVE FUND FUND
----------- ------------ ----------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS FOR THE YEAR
ENDED
DECEMBER 31, 1998
Net investment
income............... $ 16,694 $ 3,973 $ 98,443 $ 276,887 $ 68,002 $ 103,370
Net realized gain...... 59,697 49,126 889,126 145,608 349,587 --
Change in unrealized
appreciation
(depreciation)
during the year...... 9,275 11,306 478,771 (1,829) 1,803,118 --
----------- ------------ ----------- ---------- ------------- ----------
Net increase in net
assets resulting from
operations........... 85,666 64,405 1,466,340 420,666 2,220,707 103,370
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment
income............... (16,694) (4,005) (98,201 ) (276,727) -- (103,370)
Net realized gain...... (61,448) (50,254) (989,068 ) (145,608) -- --
FUND SHARE TRANSACTIONS
(NOTE 5)............. 591,082 644,185 1,414,212 554,647 108,096 (134,073)
----------- ------------ ----------- ---------- ------------- ----------
TOTAL INCREASE
(DECREASE) IN NET
ASSETS............... 598,606 654,331 1,793,283 552,978 2,328,803 (134,073)
NET ASSETS:
Beginning of year...... 816,349 244,738 12,515,064 5,606,687 9,804,265 2,361,341
----------- ------------ ----------- ---------- ------------- ----------
End of year (a)........ $ 1,414,955 $899,069 $14,308,347 $6,159,665 $12,133,068 $2,227,268
----------- ------------ ----------- ---------- ------------- ----------
----------- ------------ ----------- ---------- ------------- ----------
(a) Including
undistributed net
investment income...... $ -- $ -- $ 257 $ 160 $ 1,490 $ --
----------- ------------ ----------- ---------- ------------- ----------
----------- ------------ ----------- ---------- ------------- ----------
</TABLE>
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
33
<PAGE>
PB SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD MAY 9, 1997* THROUGH DECEMBER 31, 1997
<TABLE>
<CAPTION>
CAPITAL INCOME GROWTH &
PRESERVATION ORIENTED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
------------ -------- ---------
<S> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS FOR THE
PERIOD ENDED
DECEMBER 31, 1997
Net investment income.. $ 605 $ 152 $ 2,992
Net realized gain
(loss) 73 40 1,968
Change in unrealized
appreciation
(depreciation)
during the period.... (191) (75) 912
------------ -------- ---------
Net increase (decrease)
in net assets
resulting from
operations........... 487 117 5,872
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income.. (603) (152) (2,989)
Net realized gain...... (73) (40) (2,026)
FUND SHARE TRANSACTIONS
(NOTE 5)............. 26,963 8,331 179,973
------------ -------- ---------
TOTAL INCREASE IN NET
ASSETS............... 26,774 8,256 180,830
NET ASSETS:
Beginning of period.... -- -- --
------------ -------- ---------
End of period (a)...... $26,774 $8,256 $180,830
------------ -------- ---------
------------ -------- ---------
(a) Including
undistributed
(distribution in excess
of) net
investment income...... $ 2 $ -- 19
------------ -------- ---------
------------ -------- ---------
</TABLE>
* Commencement of investment operations.
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
34
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MAXIMUM HIGH FIXED MONEY
GROWTH APPRECIATION QUALITY INCOME INTERNATIONAL MARKET
PORTFOLIO PORTFOLIO STOCK FUND FUND ACTIVE FUND FUND
----------- ------------ ----------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS FOR THE
PERIOD ENDED
DECEMBER 31, 1997
Net investment income.. $ 3,441 $ 1,462 $ 85,262 $ 173,609 $ 68,081 $ 66,964
Net realized gain
(loss) 2,459 2,634 229,655 16,311 (736,159) --
Change in unrealized
appreciation
(depreciation)
during the period.... 4,262 5,659 1,669,979 128,025 286,351 --
----------- ------------ ----------- ---------- ------------- ----------
Net increase (decrease)
in net assets
resulting from
operations........... 10,162 9,755 1,984,896 317,945 (381,727) 66,964
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income.. (3,441) (1,462) (85,247 ) (173,971) (17,693) (66,964)
Net realized gain...... (2,492) (2,649) (142,176 ) (16,311) -- --
FUND SHARE TRANSACTIONS
(NOTE 5)............. 812,120 239,094 10,757,591 5,479,024 10,203,685 2,356,341
----------- ------------ ----------- ---------- ------------- ----------
TOTAL INCREASE IN NET
ASSETS............... 816,349 244,738 12,515,064 5,606,687 9,804,265 2,356,341
NET ASSETS:
Beginning of period.... -- -- -- -- -- 5,000
----------- ------------ ----------- ---------- ------------- ----------
End of period (a)...... $ 816,349 $244,738 $12,515,064 $5,606,687 $9,804,265 $2,361,341
----------- ------------ ----------- ---------- ------------- ----------
----------- ------------ ----------- ---------- ------------- ----------
(a) Including
undistributed
(distribution in excess
of) net
investment income...... $ -- $ 32 $ 15 $ -- $ (12,039) $ --
----------- ------------ ----------- ---------- ------------- ----------
----------- ------------ ----------- ---------- ------------- ----------
</TABLE>
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
35
<PAGE>
PB SERIES TRUST
FINANCIAL HIGHLIGHTS
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
CAPITAL PRESERVATION INCOME ORIENTED PORTFOLIO
PORTFOLIO
------------------------- -------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
12/31/98 12/31/97* 12/31/98 12/31/97*
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period......... $ 10.23 $ 10.00 $ 10.63 $ 10.00
----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................ 0.39 0.24 0.24 0.20
Net realized and unrealized gain on
investments................................. 0.13 0.26 0.58 0.68
----------- ----------- ----------- -----------
Total from investment operations............. 0.52 0.50 0.82 0.88
----------- ----------- ----------- -----------
LESS DISTRIBUTIONS FROM:
Net investment income........................ (0.39) (0.24) (0.24) (0.20)
Net realized gains........................... (0.21) (0.03) (0.29) (0.05)
----------- ----------- ----------- -----------
Total distributions.......................... (0.60) (0.27) (0.53) (0.25)
----------- ----------- ----------- -----------
Net asset value, end of period............... $ 10.15 $ 10.23 $ 10.92 $ 10.63
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Total return (2)............................. 5.17% 4.92% 7.73% 8.84%
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period.................... $ 728,187 $26,774 $ 34,335 $ 8,256
Ratio of operating expenses to average net
assets (1).................................. -- -- -- --
Ratio of operating expenses to average net
assets, before voluntary expense
reimbursement............................... 5.47% 161.07% 216.12% 1,978.36%
Ratio of net investment income to average net
assets (1).................................. 4.42% 8.69% 4.66% 26.94%
Ratio of net investment loss to average net
assets, before voluntary expense
reimbursement............................... (1.05)% (152.38)% (211.46)% (1,951.42)%
Portfolio turnover rate...................... 92% 32% 11% %0
</TABLE>
- ------------------------
(1) Net investment income and operating expenses are after reimbursement of
certain fees and expenses by PB Investment Advisors, Inc. (See Note 3 to the
financial statements). Had PB Investment Advisors, Inc. not reimbursed
expenses related to the Portfolios and Funds, the ratios of net investment
income and operating expenses to average net assets would have been as noted
above.
(2) Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the periods shown.
* Investment operations commenced on May 9, 1997. Percentage amounts for the
period have been annualized, except total return and portfolio turnover rate.
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
36
<PAGE>
PB SERIES TRUST
FINANCIAL HIGHLIGHTS
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
GROWTH & INCOME PORTFOLIO CAPITAL GROWTH PORTFOLIO
------------------------- -------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
12/31/98 12/31/97* 12/31/98 12/31/97*
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 10.72 $ 10.00 $ 11.04 $ 10.00
----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................... 0.23 0.18 0.14 0.13
Net realized and unrealized gain on
investments............................ 0.77 0.84 1.03 1.13
----------- ----------- ----------- -----------
Total from investment operations........ 1.00 1.02 1.17 1.26
----------- ----------- ----------- -----------
LESS DISTRIBUTIONS FROM:
Net investment income................... (0.23) (0.18) (0.14) (0.13)
Net realized gains...................... (0.40) (0.12) (0.53) (0.09)
----------- ----------- ----------- -----------
Total distributions..................... (0.63) (0.30) (0.67) (0.22)
----------- ----------- ----------- -----------
Net asset value, end of period.......... $ 11.09 $ 10.72 $ 11.54 $ 11.04
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Total return (2)........................ 9.33% 10.25% 10.65% 12.67%
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period............... $ 607,696 $180,830 $1,414,955 $ 816,349
Ratio of operating expenses to average
net
assets (1)............................. -- -- -- --
Ratio of operating expenses to average
net assets, before voluntary expense
reimbursement.......................... 9.96% 30.27% 4.91% 20.00%
Ratio of net investment income to
average net
assets (1)............................. 3.62% 7.93% 2.50% 6.13%
Ratio of net investment loss to average
net assets, before voluntary expense
reimbursement.......................... (6.34)% (22.34)% (2.41)% (13.87)%
Portfolio turnover rate................. %4 24% 77% %2
</TABLE>
- ------------------------
(1) Net investment income and operating expenses are after reimbursement of
certain fees and expenses by PB Investment Advisors, Inc. (See Note 3 to the
financial statements). Had PB Investment Advisors, Inc. not reimbursed
expenses related to the Portfolios and Funds, the ratios of net investment
income and operating expenses to average net assets would have been as noted
above.
(2) Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the periods shown.
* Investment operations commenced on May 9, 1997. Percentage amounts for the
period have been annualized, except total return and portfolio turnover rate.
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
37
<PAGE>
PB SERIES TRUST
FINANCIAL HIGHLIGHTS
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
MAXIMUM APPRECIATION
HIGH QUALITY
PORTFOLIO STOCK FUND
------------------------- -------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
12/31/98 12/31/97* 12/31/98 12/31/97*
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 11.29 $ 10.00 $ 11.74 $ 10.00
----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................... 0.06 0.07 0.09 0.08
Net realized and unrealized gain on
investments............................ 1.32 1.41 1.29 1.88
----------- ----------- ----------- -----------
Total from investment operations........ 1.38 1.48 1.38 1.96
----------- ----------- ----------- -----------
LESS DISTRIBUTIONS FROM:
Net investment income................... (0.06) (0.07) (0.09) (0.08)
Net realized gains...................... (0.71) (0.12) (0.94) (0.14)
----------- ----------- ----------- -----------
Total distributions..................... (0.77) (0.19) (1.03) (0.22)
----------- ----------- ----------- -----------
Net asset value, end of period.......... $ 11.90 $ 11.29 $ 12.09 $ 11.74
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Total return (2)........................ 12.28% 14.82% 11.78% 19.72%
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period............... $ 899,069 $244,738 1$4,308,347 1$2,515,064
Ratio of operating expenses to average
net assets (1)......................... -- -- 0.90% 0.90%
Ratio of operating expenses to average
net assets, before voluntary expense
reimbursement.......................... 7.04% 24.59% 1.78% 1.08%
Ratio of net investment income to
average net assets (1)................. 0.85% 3.19% 0.77% 1.18%
Ratio of net investment income (loss) to
average net assets, before voluntary
expense reimbursement.................. (6.19)% (21.40)% (0.11)% 1.00%
Portfolio turnover rate................. 25% 6% 35% 14%
</TABLE>
- ------------------------
(1) Net investment income and operating expenses are after reimbursement of
certain fees and expenses by PB Investment Advisors, Inc. (See Note 3 to the
financial statements). Had PB Investment Advisors, Inc. not reimbursed
expenses related to the Portfolios and Funds, the ratios of net investment
income and operating expenses to average net assets would have been as noted
above.
(2) Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the periods shown.
* Investment operations commenced on May 9, 1997. Percentage amounts for the
period have been annualized, except total return and portfolio turnover rate.
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
38
<PAGE>
PB SERIES TRUST
FINANCIAL HIGHLIGHTS
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
FIXED INTERNATIONAL
INCOME FUND ACTIVE FUND
------------------------- -------------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
12/31/98 12/31/97* 12/31/98 12/31/97*
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 10.26 $ 10.00 $ 9.60 $ 10.00
----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................... 0.52 0.34 0.07 0.07
Net realized and unrealized gain (loss)
on investments......................... 0.28 0.29 2.12 (0.45)
----------- ----------- ----------- -----------
Total from investment operations........ 0.80 0.63 2.19 (0.38)
----------- ----------- ----------- -----------
LESS DISTRIBUTIONS FROM:
Net investment income................... (0.52) (0.34) -- (0.02)
Net realized gains...................... (0.27) (0.03) -- --
----------- ----------- ----------- -----------
Total distributions..................... (0.79) (0.37) -- (0.02)
----------- ----------- ----------- -----------
Net asset value, end of period.......... $ 10.27 $ 10.26 $ 11.79 $ 9.60
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Total return (2)........................ 7.82% 6.30% 22.78% (3.80)%
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period............... $6,159,665 $5,606,687 1$2,133,068 $9,804,265
Ratio of operating expenses to average
net assets (1)......................... 0.90% 0.90% 1.15% 1.15%
Ratio of operating expenses to average
net assets, before voluntary expense
reimbursement.......................... 3.01% 1.57% 2.80% 1.68%
Ratio of net investment income to
average net assets (1)................. 4.93% 5.13% 0.61% 1.04%
Ratio of net investment income (loss) to
average net assets, before voluntary
expense reimbursement.................. 2.82% 4.46% (1.04)% 0.51%
Portfolio turnover rate................. 29% 157% 35% 61%
</TABLE>
- ------------------------
(1) Net investment income and operating expenses are after reimbursement of
certain fees and expenses by PB Investment Advisors, Inc. (See Note 3 to the
financial statements). Had PB Investment Advisors, Inc. not reimbursed
expenses related to the Portfolios and Funds, the ratios of net investment
income and operating expenses to average net assets would have been as noted
above.
(2) Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the periods shown.
* Investment operations commenced on May 9, 1997. Percentage amounts for the
period have been annualized, except total return and portfolio turnover rate.
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
39
<PAGE>
PB SERIES TRUST
FINANCIAL HIGHLIGHTS
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
MONEY MARKET FUND
-------------------------------
YEAR PERIOD
ENDED ENDED
12/31/98 12/31/97*
-------------- --------------
<S> <C> <C>
Net asset value, beginning of period.... $ 1.00 $ 1.00
-------------- --------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................... 0.05 0.03
Net realized and unrealized gain on
investments............................ -- --
-------------- --------------
Total from investment operations........ 0.05 0.03
-------------- --------------
LESS DISTRIBUTIONS FROM:
Net investment income................... (0.05) (0.03)
Net realized gains...................... -- --
-------------- --------------
Total distributions..................... (0.05) (0.03)
-------------- --------------
Net asset value, end of period.......... $ 1.00 $ 1.00
-------------- --------------
-------------- --------------
Total return (2)........................ 5.02% 3.31%
-------------- --------------
-------------- --------------
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period............... $ 2,227,268 $ 2,361,341
Ratio of operating expenses to average
net assets (1)......................... 0.65% 0.65%
Ratio of operating expenses to average
net assets, before voluntary expense
reimbursement.......................... 6.92% 2.67%
Ratio of net investment income to
average net assets (1)................. 4.90% 5.03%
Ratio of net investment income (loss) to
average net assets, before voluntary
expense reimbursement.................. (1.37)% 3.01%
Portfolio turnover rate................. N/A N/A
</TABLE>
- ------------------------
(1) Net investment income and operating expenses are after reimbursement of
certain fees and expenses by PB Investment Advisors, Inc. (See Note 3 to the
financial statements). Had PB Investment Advisors, Inc. not reimbursed
expenses related to the Portfolios and Funds, the ratios of net investment
income and operating expenses to average net assets would have been as noted
above.
(2) Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the periods shown.
* Investment operations commenced on May 9, 1997. Percentage amounts for the
period have been annualized, except total return and portfolio turnover rate.
THE NOTES TO THE FINANCIALS ARE AN INTEGRAL PART OF THIS REPORT.
40
<PAGE>
PB SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1 -- ORGANIZATION
PB Series Trust (the "Trust"), formerly Providian Series Trust, was organized as
a Massachusetts business trust on October 22, 1996 and is registered under the
Investment Company Act of 1940 and the Securities Act of 1933 as a diversified,
no-load, open-end management investment company. The Trust is a "series type" of
mutual fund which issues separate classes (or series) of stock, each of which
represents a separate diversified portfolio of investments. The Trust is
currently composed of nine series which consist of five investment portfolios
(Capital Preservation Portfolio, Income Oriented Portfolio, Growth and Income
Portfolio, Capital Growth Portfolio, and Maximum Appreciation
Portfolio-collectively, the "Portfolios") and four underlying funds (High
Quality Stock Fund, Fixed Income Fund, International Active Fund, and Money
Market Fund - collectively the "Funds").
The Portfolios seek to achieve their investment objectives by investing within
specific ranges among the Funds. Each Fund has differing investment objectives
and policies. Shares of the Portfolios are offered to separate accounts of
insurance companies to fund variable annuity contracts.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements.
VALUATION OF INVESTMENTS -- Securities held by the Funds (other than the Money
Market Fund) that are traded on a national securities exchange are valued on the
basis of the last sale price as of the close of business on the day the
securities are being valued, or lacking any sales, at the last quoted bid price.
Bonds and other fixed income securities with maturities greater than 60 days at
the time of purchase are valued by a pricing service. Securities and assets for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of Trustees of
the Trust. Short-term securities and debt securities with a remaining maturity
of 60 days or less are valued at amortized cost which approximates market value.
The Money Market Fund by the approval of the Board of Trustees utilizes the
amortized cost method for valuing securities, whereby all investments are valued
at cost on the date of purchase and thereafter adjusted to reflect a constant
amortization to maturity of the difference between the principal amount due at
maturity and the investments cost. This method generally results in values that
approximate market.
FOREIGN SECURITIES -- Foreign securities traded on a recognized securities
exchange are valued at the last sale price in the principal market where they
are traded, or if closing prices are unavailable, at the last bid price
available prior to the time a Fund's net asset value is determined. Foreign
prices are furnished by quotation services expressed in the local currency's
value and translated into U.S. dollars at the current rate of exchange.
REPURCHASE AGREEMENTS -- The Trust may enter into repurchase agreements with
institutions that the Trust's investment advisor, PB Investment Advisors, Inc.
(formerly Providian Investment Advisors, Inc.), has determined are creditworthy
pursuant to criteria adopted by the Board of Trustees. In connection with
transactions in repurchase agreements, the Trust's custodian takes possession of
the underlying collateral securities, the value of which is at least equal to
102 percent of the principal amount, including interest, of the repurchase
agreement. The value of the collateral is marked-to-market on a daily basis to
ensure the adequacy of the collateral. In the event of default of the obligation
to repurchase, the Trust has the right to liquidate the collateral and apply the
proceeds in satisfaction of the obligation. Under certain circumstances, in the
event of default or bankruptcy by the other party to the agreement, realization
and or retention of the collateral or proceeds may be subject to legal
proceedings.
41
<PAGE>
NOTE 2 (CONTINUED)
The Trust may enter into a Joint Repurchase Agreement whereby its uninvested
cash balance is deposited into a joint cash account to be used to invest in one
or more repurchase agreements with government securities dealers recognized by
the Federal Reserve Board and/or member banks of the Federal Reserve System. The
value and face amount of the Joint Repurchase Agreement are allocated to the
Funds based on their pro-rata interest.
INVESTMENT TRANSACTIONS -- Investment security transactions are accounted for on
the date the securities are purchased or sold. Realized gains and losses from
security transactions are determined on an identified cost basis, which is also
used for tax purposes.
INVESTMENT INCOME -- Dividend income is recorded on the ex-dividend date, except
that certain dividends from foreign securities are recorded as soon as the Fund
is informed of the ex-dividend date. Interest income is accrued as earned.
Premiums and discounts (including original issue discounts) on debt securities
are amortized. Investment income is recorded net of foreign taxes withheld if
recovery of such taxes is uncertain.
FOREIGN CURRENCY TRANSLATIONS -- The accounting records of the Trust are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S. dollars
based on current exchange rates supplied by a quotation service. The effects of
changes in foreign currency exchange rates on investments in securities are
included in net realized and unrealized gain or loss on investments in the
statement of operations.
Reported net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses realized
between the trade and settlement dates on security transactions, and the
difference between the amount of net investment income accrued and the U.S.
dollar amount actually received. Net unrealized foreign currency exchange gains
and losses arise from changes in the value of receivables and payables due to
changes in exchange rates.
FORWARD CURRENCY CONTRACTS -- A forward foreign currency contract ("Forward") is
an agreement between two parties to buy and sell a currency at a set price on a
future date. The market value of the Forward fluctuates with changes in currency
exchange rates. The Forward is marked-to-market daily and the change in the
market value is recorded by a Fund as an unrealized gain or loss. Realized gains
and losses are recognized when contracts are settled and are reflected in the
statement of operations. The Fund could be exposed to risk if a counter-party is
unable to meet the terms of the contract (such risk is limited to the unrealized
gain, if any) or if the value of the currency changes unfavorably. The
International Active Fund may enter into these contracts for the purpose of
hedging against foreign exchange risk arising from the Fund's investment or
anticipated investment in securities denominated in foreign currencies. The Fund
also may enter into these contracts for the purpose of increasing exposure to a
foreign currency to hedge against adverse changes in the value of another
currency when exchange rates between the two currencies are positively
correlated.
EXPENSES -- Expenses directly attributable to a Portfolio or Fund are charged to
that Portfolio or Fund. Expenses not directly attributable to a Portfolio or
Fund are allocated among the affected Portfolios and Funds based on relative net
assets of each Portfolio and Fund. Costs related to the organization and
registration of the Trust have been funded by Commonwealth General Corporation
(CGC) and its subsidiaries. The Trust will not reimburse CGC for these
organizational costs.
ESTIMATES -- The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of these financial statements and the reported amounts
of increases and decreases in net assets from operations during the reporting
period. Actual results could differ from those estimates.
42
<PAGE>
NOTE 2 (CONTINUED)
DISTRIBUTIONS TO SHAREHOLDERS -- Each of the Portfolios and Funds (except the
Money Market Fund) declares and distributes dividends from net investment income
and distributes its net realized capital gains, if any, at least annually. The
Money Market Fund declares dividends daily and distributes monthly. All
distributions are reinvested in the shares of the relevant Portfolio/Fund at net
asset value. Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
market discount, foreign currency transactions, losses deferred due to wash
sales and "post October 31 losses." Distributions are recorded on the
ex-dividend date.
FEDERAL INCOME TAXES -- Each Portfolio and Fund is treated as a separate entity
for federal tax purposes. Each Portfolio and Fund intends to qualify each year
as a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986. By so qualifying, each Portfolio and Fund will not be subject to
federal income taxes to the extent that they distribute all of their taxable
income, including realized capital gains, for the fiscal year. In addition, by
distributing substantially all of their net investment income, capital gains and
certain other amounts during the calendar year, the Portfolios and Funds will
not be subject to a federal excise tax. As of December 31, 1998, the
International Active Fund has a capital loss carryforward, for Federal income
tax purposes, of $232,191 expiring in December 31, 2005.
On the Statement of Assets and Liabilities, as a result of permanent book-tax
differences, reclassifications have been made between the paid in capital,
undistributed (distribution in excess of ) net investment income, and
accumulated net realized gain (loss) on investments and foreign currency
transactions accounts. These reclassifications have no impact on the net asset
value of the Portfolios and Funds.
The Portfolios and Funds designated long term capital gain dividends paid during
the year ended December 31, 1998 for the purpose of the dividends paid deduction
on each Portfolio's and Fund's federal income tax return as follows:
<TABLE>
<S> <C>
Capital Preservation Portfolio $ 6,219
Income Oriented Portfolio 491
Growth & Income Portfolio 10,542
Capital Growth Portfolio 22,350
Maximum Appreciation Portfolio 16,168
High Quality Stock Fund 342,120
Fixed Income Fund 145,608
</TABLE>
NOTE 3 -- AGREEMENTS AND FEES
PB Investment Advisors, Inc. (the "Advisor"), a wholly owned subsidiary of CGC,
which is a wholly owned indirect subsidiary of AEGON N.V., has been retained
under an Investment Advisory Agreement ( the "Agreement") with the Trust, to
supervise the management and investment program of the Trust. The Advisor
manages the affairs of the Trust subject to the supervision of the Board of
Trustees. The Advisor does not receive an investment management fee for the
advisory and asset allocation services it provides to the Portfolios.
As full compensation for its services under the Agreement, each Fund will pay
the Advisor a monthly fee at the following annual rates based on the average
daily net assets of each Fund:
<TABLE>
<S> <C>
High Quality Stock Fund 0.65%
Fixed Income Fund 0.65%
International Active Fund 0.90%
Money Market Fund 0.40%
</TABLE>
43
<PAGE>
NOTE 3 (CONTINUED)
Under the Agreement, the Advisor has agreed to waive and absorb all operating
expenses of each Portfolio and to limit the operating expenses of each Fund so
that the ratio of expenses (excluding advisory fees) to net assets on an annual
basis does not exceed 0.25%. Expenses in excess of such amount will be assumed
by the Advisor until the earlier of the end of three years after commencement of
operations or the termination by the Trustees but not the Advisor of the
Agreement. For the period ended December 31, 1998, the Advisor agreed to
reimburse the Trust $711,751 for expenses in excess of the voluntary expense
limitations. As of December 31, 1998, $85,978 was owed to the Trust by the
Advisor.
The Advisor has entered into a Sub-Advisory Agreement with Atlanta Capital
Management Company, L.L.C. ("Atlanta Capital"), wherein Atlanta Capital will
serve as sub-advisor to the Portfolios. Subject to the supervision and direction
of the Board of Trustees, Atlanta Capital will determine how each Portfolio's
assets will be invested in the Funds. Atlanta Capital also serves as sub-advisor
of the High Quality Stock Fund and the Fixed Income Fund. As compensation for
its services, with respect to the High Quality Stock Fund and the Fixed Income
Fund, the Advisor pays Atlanta Capital a fee equal to 0.50% annually on assets
up to $25 million, 0.40% annually on assets above $25 million and up to $50
million, and 0.30% annually on assets above $50 million.
The Advisor has entered into a Sub-Advisory Agreement with Blairlogie Capital
Management ("Blairlogie"), wherein Blairlogie will serve as sub-advisor to the
International Active Fund. As compensation for its services, the Advisor pays
Blairlogie a fee equal to 0.65% annually on assets up to $50 million, and 0.50%
annually on assets above $50 million.
The Advisor has entered into a Sub-Advisory Agreement with Federated Investment
Counseling ("Federated"), wherein Federated will serve as sub-advisor to the
Money Market Fund. As compensation for its services, the Advisor pays Federated
a fee equal to 0.25% annually on assets up to $75 million, and 0.20% annually on
assets above $75 million.
Each Trustee of the Trust who is not an interested person of the Trust, Advisor
or Sub-Advisors receives $1,500 for each Trustees' meeting in which he
participates.
44
<PAGE>
NOTE 4 -- INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities, for the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
Non-U.S. U.S. Non-U.S. U.S.
Government Government Government Government
Purchases Purchases Sales Sales
<S> <C> <C> <C> <C>
--------------------------------------------------
Capital Preservation
Portfolio...................... $ 619,874 $ -- $ 267,145 $ --
Income Oriented Portfolio....... 23,623 -- 1,466 --
Growth & Income Portfolio....... 390,788 -- 11,899 --
Capital Growth Portfolio........ 1,239,146 -- 566,112 --
Maximum Appreciation
Portfolio...................... 751,625 -- 118,384 --
High Quality Stock Fund......... 4,662,687 -- 4,331,906 --
Fixed Income Fund............... 102,027 1,072,227 -- 1,394,306
International Active Fund....... 4,187,899 -- 3,767,071 --
Money Market Fund............... -- -- -- --
</TABLE>
Gross unrealized appreciation and depreciation at December 31, 1998, based on
the identified cost for income tax purposes, are as follows:
<TABLE>
<CAPTION>
Net
Gross Gross Unrealized
Identified Unrealized Unrealized Appreciation
Cost Appreciation (Depreciation) (Depreciation)
<S> <C> <C> <C> <C>
----------------------------------------------------
Capital Preservation
Portfolio.................. $ 734,993 $ -- $ (6,720) $ (6,720)
Income Oriented Portfolio... 34,342 435 (441) (6)
Growth & Income Portfolio... 602,712 10,845 (5,847) 4,998
Capital Growth Portfolio.... 1,403,261 20,133 (8,439) 11,694
Maximum Appreciation
Portfolio.................. 883,280 15,789 -- 15,789
High Quality Stock Fund..... 12,166,101 2,814,863 (666,113) 2,148,750
Fixed Income Fund........... 5,971,897 127,210 (1,014) 126,196
International Active Fund... 10,067,891 2,522,885 (432,860) 2,090,025
Money Market Fund........... 2,242,000 -- -- --
</TABLE>
45
<PAGE>
NOTE 5 -- SHAREHOLDER TRANSACTIONS:
Transactions in shares and dollars were as follows:
<TABLE>
<CAPTION>
CAPITAL PRESERVATION PORTFOLIO
YEAR ENDED MAY 9, 1997* TO
DECEMBER 31, 1998 DECEMBER 31, 1997
-------------------- ---------------------
SHARES DOLLARS SHARES DOLLARS
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold............................. 116,072 $1,203,585 2,897 $ 29,813
Shares issued to shareholders in
reinvestment of dividends.............. 4,047 41,065 66 676
Shares redeemed......................... (50,971) (536,612) (345) (3,526)
--------- --------- --------- ----------
Net increase............................ 69,148 $ 708,038 2,618 $ 26,963
--------- --------- --------- ----------
--------- --------- --------- ----------
<CAPTION>
INCOME ORIENTED PORTFOLIO
YEAR ENDED MAY 9, 1997* TO
DECEMBER 31, 1998 DECEMBER 31, 1997
-------------------- ---------------------
SHARES DOLLARS SHARES DOLLARS
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold............................. 2,375 $ 26,155 759 $ 8,139
Shares issued to shareholders in
reinvestment of dividends.............. 146 1,591 18 192
Shares redeemed......................... (154) (1,734) -- --
--------- --------- --------- ----------
Net increase............................ 2,367 $ 26,012 777 $ 8,331
--------- --------- --------- ----------
--------- --------- --------- ----------
<CAPTION>
GROWTH & INCOME PORTFOLIO
YEAR ENDED MAY 9, 1997* TO
DECEMBER 31, 1998 DECEMBER 31, 1997
-------------------- ---------------------
SHARES DOLLARS SHARES DOLLARS
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold............................. 36,116 $ 403,380 17,738 $ 189,436
Shares issued to shareholders in
reinvestment of dividends.............. 2,932 32,363 468 5,015
Shares redeemed......................... (1,135) (13,001) (1,337) (14,478)
--------- --------- --------- ----------
Net increase............................ 37,913 $ 422,742 16,869 $ 179,973
--------- --------- --------- ----------
--------- --------- --------- ----------
<CAPTION>
CAPITAL GROWTH PORTFOLIO
YEAR ENDED MAY 9, 1997* TO
DECEMBER 31, 1998 DECEMBER 31, 1997
-------------------- ---------------------
SHARES DOLLARS SHARES DOLLARS
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold............................. 92,950 $1,079,786 73,664 $ 809,314
Shares issued to shareholders in
reinvestment of dividends.............. 6,822 78,142 538 5,933
Shares redeemed......................... (51,041) (566,846) (282) (3,127)
--------- --------- --------- ----------
Net increase............................ 48,731 $ 591,082 73,920 $ 812,120
--------- --------- --------- ----------
--------- --------- --------- ----------
</TABLE>
* Date of commencement of investment operations.
46
<PAGE>
NOTE 5 (CONTINUED)
Transactions in shares and dollars were as follows:
<TABLE>
<CAPTION>
MAXIMUM APPRECIATION PORTFOLIO
YEAR ENDED MAY 9, 1997* TO
DECEMBER 31, 1998 DECEMBER 31, 1997
-------------------- ---------------------
SHARES DOLLARS SHARES DOLLARS
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold............................. 59,275 $ 708,305 21,714 $ 239,372
Shares issued to shareholders in
reinvestment of dividends.............. 4,602 54,259 365 4,111
Shares redeemed......................... (10,017) (118,379) (400) (4,389)
--------- --------- --------- ----------
Net increase............................ 53,860 $ 644,185 21,679 $ 239,094
--------- --------- --------- ----------
--------- --------- --------- ----------
<CAPTION>
HIGH QUALITY STOCK FUND
YEAR ENDED MAY 9, 1997* TO
DECEMBER 31, 1998 DECEMBER 31, 1997
-------------------- ---------------------
SHARES DOLLARS SHARES DOLLARS
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold............................. 113,975 $1,383,167 1,065,710 $10,755,139
Shares issued to shareholders in
reinvestment of dividends.............. 90,856 1,087,269 19,722 227,423
Shares redeemed......................... (87,079) (1,056,224) (19,810) (224,971)
--------- --------- --------- ----------
Net increase............................ 117,752 $1,414,212 1,065,622 $10,757,591
--------- --------- --------- ----------
--------- --------- --------- ----------
<CAPTION>
FIXED INCOME FUND
YEAR ENDED MAY 9, 1997* TO
DECEMBER 31, 1998 DECEMBER 31, 1997
-------------------- ---------------------
SHARES DOLLARS SHARES DOLLARS
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold............................. 100,063 $1,046,161 528,711 $5,297,080
Shares issued to shareholders in
reinvestment of dividends.............. 41,187 422,335 18,554 190,282
Shares redeemed......................... (87,806) (913,849) (798) (8,338)
--------- --------- --------- ----------
Net increase............................ 53,444 $ 554,647 546,467 $5,479,024
--------- --------- --------- ----------
--------- --------- --------- ----------
<CAPTION>
INTERNATIONAL ACTIVE FUND
YEAR ENDED MAY 9, 1997* TO
DECEMBER 31, 1998 DECEMBER 31, 1997
-------------------- ---------------------
SHARES DOLLARS SHARES DOLLARS
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold............................. 31,091 $ 345,792 1,019,442 $10,188,787
Shares issued to shareholders in
reinvestment of dividends.............. -- -- 1,860 17,693
Shares redeemed......................... (23,373) (237,696) (292) (2,795)
--------- --------- --------- ----------
Net increase............................ 7,718 $ 108,096 1,021,010 $10,203,685
--------- --------- --------- ----------
--------- --------- --------- ----------
</TABLE>
* Date of commencement of investment operations.
47
<PAGE>
NOTE 5 (CONTINUED)
Transactions in shares and dollars were as follows:
<TABLE>
<CAPTION>
MONEY MARKET FUND
YEAR ENDED MAY 9, 1997* TO
DECEMBER 31, 1998 DECEMBER 31, 1997
--------------------- ---------------------
SHARES DOLLARS SHARES DOLLARS
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold............................ 857,518 $ 857,518 2,378,461 $2,378,461
Shares issued to shareholders in
reinvestment of dividends............. 103,370 103,370 66,964 66,964
Shares redeemed........................ (1,094,961) (1,094,961) (89,084) (89,084)
--------- ---------- --------- ----------
Net increase........................... (134,073) $ (134,073) 2,356,341 $2,356,341
--------- ---------- --------- ----------
--------- ---------- --------- ----------
</TABLE>
* Date of commencement of investment operations.
NOTE 6 -- FORWARD FOREIGN CURRENCY CONTRACTS
At December 31, 1998, the outstanding forward exchange currency contracts, which
contractually obligate the Trust to deliver currencies at a specified date, were
as follows:
INTERNATIONAL ACTIVE FUND
<TABLE>
<CAPTION>
U.S. DOLLAR
COST ON U.S. DOLLAR UNREALIZED
CURRENCY CURRENCY SETTLEMENT ORIGINATION CURRENT APPRECIATION
PURCHASED SOLD DATE DATE VALUE (DEPRECIATION)
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
GBP....... USD 1/15/1999 $ 506,400 $ 497,820 $ (8,580)
USD....... DEM 1/15/1999 1,440,663 1,438,332 2,331
-------
$ (6,249)
-------
-------
</TABLE>
GBP - Great British Pound
DEM - Deutsche Mark
USD - United States Dollar
NOTE 7 -- SUBSEQUENT EVENT
On February 2, 1999, the PB Series Trust Board of Trustees approved a plan to
liquidate and close the Trust with a target date of March 31, 1999. In January
1999, a termination agreement was reached between Diversified Financial Products
and PGA Golf Enterprises to end the annuity program. The PB Series Trust
provided the investment options for that annuity program. The Trust will be
closed when all annuity contracts have been terminated.
48
<PAGE>
PB SERIES TRUST
------------------------
TRUSTEES AND EXECUTIVE OFFICERS
Thomas J. Hartlage, TRUSTEE, CHIEF EXECUTIVE OFFICER AND PRESIDENT *
David L. Eager, TRUSTEE
Jesse A. Holshouser III, TRUSTEE
William T. Mills III, TRUSTEE
Kirk W. Buese, TRUSTEE *
Michael G. Ayers, CHIEF FINANCIAL OFFICER
R. Michael Slaven, SECRETARY
Michael G. Herp, VICE PRESIDENT, TREASURER
* INTERESTED TRUSTEE
------------------------
Ernst & Young LLP, INDEPENDENT AUDITORS
Jorden Burt Boros Cicchetti Berenson & Johnson LLP, LEGAL COUNSEL
PB Investment Advisors, Inc., INVESTMENT ADVISOR
The information contained in this report is intended for general informational
purposes only. This report is not authorized for distribution to prospective
investors unless preceded or accompanied by current Trust and Separate Account
prospectuses which contain important information concerning the Trust, the
Company, and its current public offering of variable annuity contracts.
