PAINEWEBBER SERIES TRUST, 497, 1995-04-04

PAINEWEBBER SERIES TRUST
497, 1995-04-04

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<PAGE>

PAINEWEBBER SERIES TRUST

SUPPLEMENT TO PROSPECTUS DATED MAY 1, 1994, AS SUPPLEMENTED
NOVEMBER 21, 1994 AND DECEMBER 23, 1994

The following amends the information regarding the Global Growth Portfolio
appearing under the caption "Management" on page PW 21 of the PaineWebber
Series Trust Prospectus:

GE Investment Management Incorporated ("GEIM") now serves as
sub-adviser for the Global Growth Portfolio ("Fund") pursuant to an
interim sub-advisory agreement ("Interim Agreement") between Mitchell
Hutchins Asset Management Inc. ("Mitchell Hutchins") and GEIM that was
approved by the board of trustees of PaineWebber Series Trust ("Trust").
Under the Interim Agreement, GEIM makes and implements all investment
decisions with respect to the Fund's portfolio. Under its existing
Investment Advisory and Administration Contract with respect to the Fund,
Mitchell Hutchins supervises the activities of GEIM with respect to the
Fund and continues to supervise all other aspects of the Fund's
operations. Mitchell Hutchins (not the Fund) pays GEIM for its services
under the Interim Agreement at the annual rate of 0.29% of the Fund's
average daily net assets. The Interim Agreement will continue in effect
for the shorter of 120 days from March 23, 1995 (the date of the Interim
Agreement) or the date that a new sub-advisory contract is approved by the
Fund's shareholders.

GEIM is located at 3003 Summer Street, P.O. Box 7900, Stamford
Connecticut 06904 and is a wholly owned subsidiary of General Electric
Company. GEIM is a registered investment adviser, and its principal
officers and directors serve in similar capacities with respect to General
Electric Investment Corporation ("GEIC"), also a registered investment
adviser and a wholly owned subsidiary of General Electric Company. GEIM
and GEIC provide investment management services to various institutional
accounts with total assets of approximately $45.8 billion as of February
28, 1995.

The Trust's board of trustees expects to call a special meeting
of the shareholders of the Fund prior to the termination of the Interim
Agreement.

The following replaces the last paragraph appearing under the caption
"Management" on page PW 25:

Effective March 22, 1995, Ralph R. Layman became the individual
primarily responsible for the day-to-day management of the Fund's
portfolio. Mr. Layman is an executive vice president a senior investment
manager of GEIM and GEIC. From 1989 to 1991, Mr. Layman served as
executive vice president, partner and portfolio manager of Northern
Capital Management Co. and, prior thereto, served as vice president and
portfolio manager of Templeton Investment Counsel.

Dated: March 23, 1995
<PAGE>

PAINEWEBBER SERIES TRUST
1285 Avenue of the Americas
New York, New York 10019

PaineWebber Series Trust ("Fund") is a professionally managed, open-end
investment company that offers the seven series of shares ("Portfolios") listed
below. All the Portfolios except the Global Income Portfolio are diversified,
and each has its own investment objective and policies. Shares of each
Portfolio are offered only to insurance company separate accounts that fund
certain variable contracts ("Contracts"). Advisory and administrative services
are provided to the Fund by Mitchell Hutchins Asset Management Inc. ("Mitchell
Hutchins"), a wholly owned subsidiary of PaineWebber Incorporated
("PaineWebber").

* The MONEY MARKET PORTFOLIO seeks maximum current income consistent with
liquidity and conservation of capital. This Portfolio invests in high
grade money market instruments with remaining maturities of 13 months or
less, and repurchase agreements secured by such instruments. An
investment in the Portfolio is neither insured nor guaranteed by the
U.S. government. While the Portfolio seeks to maintain a stable net
asset value of $1.00 per share, there can be no assurance that it will
be able to do so.

* The GROWTH PORTFOLIO seeks long-term capital appreciation. This
Portfolio invests primarily in common stocks of companies that, in the
judgment of Mitchell Hutchins, have substantial potential for capital
growth.

* The DIVIDEND GROWTH PORTFOLIO seeks current income and capital growth.
This Portfolio invests primarily in dividend-paying common stocks with
the potential for increasing dividends.

* The GLOBAL GROWTH PORTFOLIO seeks long-term capital appreciation. This
Portfolio invests primarily in common stocks of companies based in the
United States, Europe, Japan and the Pacific Basin.

* The GLOBAL INCOME PORTFOLIO primarily seeks high current income and
secondarily seeks capital appreciation. This Portfolio invests
principally in high quality debt securities of foreign and U.S. issuers.

* The GOVERNMENT PORTFOLIO primarily seeks high current income consistent
with the preservation of capital and secondarily seeks capital
appreciation. This Portfolio invests primarily in high quality debt
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities.

* The ASSET ALLOCATION PORTFOLIO seeks a high total return with low
volatility. This Portfolio invests primarily in a combination of equity
securities, bonds and money market instruments.

This Prospectus concisely sets forth information about the Fund that a
prospective investor should know before investing. Investors are advised to
read this Prospectus and the applicable Contract prospectus and retain them for
future reference. A Statement of Additional Information dated May 1, 1994
(which is incorporated by reference herein) has been filed with the Securities
and Exchange Commission. The Statement of Additional Information can be
obtained without charge and further inquiries can be made by contacting the
Fund or your PaineWebber investment executive or by calling toll free
1-800-986-0088.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

The date of this Prospectus is May 1, 1994.

PW 1
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Financial Information..................................................... PW 3
The Fund, Its Investment Objectives and Policies.......................... PW 9
Description of Securities and Investment Techniques....................... PW 13
Purchases, Redemptions and Exchanges...................................... PW 19
Dividends, Other Distributions and Federal Income Tax..................... PW 19
Valuation of Shares....................................................... PW 21
Management................................................................ PW 21
General Information....................................................... PW 23
Appendix A................................................................ PW 24
Appendix B................................................................ PW 27
</TABLE>

PW 2
<PAGE>

FINANCIAL INFORMATION

The tables below provide selected per share data and ratios for one share of
each Portfolio for the periods shown. This information is supplemented by the
financial statements and accompanying notes appearing in the Fund's Annual
Report to Shareholders for the fiscal year ended December 31, 1993, which are
incorporated by reference into the Statement of Additional Information. The
financial statements and notes, as well as the information in the tables
appearing below insofar as it relates to the five years ended December 31,
1993 have been audited by Ernst & Young, independent auditors, whose report
thereon is also included in the Annual Report to Shareholders. Additional
information about the performance of each Portfolio is also included in the
Annual Report to Shareholders, which may be obtained without charge. The
information appearing below for periods prior to the year ended December 31,
1989 also has been audited by Ernst & Young whose reports thereon were
unqualified.

<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
--------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, FOR THE PERIOD
------------------------------------------------- MAY 4, 1987+ TO
1993 1992 1991 1990 1989 1988 DECEMBER 31, 1987
------- ------- ------- ------ ------ ------ -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. 0.02 0.03 0.05 0.05 0.08 0.06 0.03
------- ------- ------- ------ ------ ------ ------
TOTAL INCOME FROM
INVESTMENT OPERATIONS.. 0.02 0.03 0.05 0.05 0.08 0.06 0.03
------- ------- ------- ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income..... (0.02) (0.03) (0.05) (0.05) (0.08) (0.06) (0.03)
------- ------- ------- ------ ------ ------ ------
TOTAL DISTRIBUTIONS..... (0.02) (0.03) (0.05) (0.05) (0.08) (0.06) (0.03)
------- ------- ------- ------ ------ ------ ------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ====== ====== ====== ======
Total return(1)......... 2.45% 3.00% 5.00% 5.00% 8.00% 6.00% 3.40%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000's)......... $15,468 $19,383 $20,249 $8,720 $4,367 $3,278 $2,974
Ratio of expenses to
average net assets**... 0.86% 0.81% 1.00% 2.02% 1.55% 1.56% 1.54%*
Ratio of net investment
income to average net
assets**............... 2.43% 3.13% 4.92% 6.13% 7.62% 5.74% 5.40%*
</TABLE>
- --------
* Annualized.
(1) Total return is calculated assuming a $1,000 investment on the first day
of each period reported, reinvestment of all dividends at net asset value
on the payable date, and a sale at net asset value on the last day of each
period reported. Total return information for periods less than one year
has not been annualized.
** During certain periods presented above, Mitchell Hutchins agreed to
reimburse the Portfolio for a portion of its operating expenses and waived
all or a portion of its advisory fee. If such reimbursements and waivers
had not been made, the annualized ratio of expenses to average net assets
and the annualized ratio of net investment income to average net assets
would have been 2.04% and 6.11%, 2.17% and 6.99%, 2.36% and 4.94%, and
4.60% and 2.34%, respectively, for the years ending December 31, 1990, 1989
and 1988 and for the period ended December 31, 1987.
+ Commencement of operations.

PW 3
<PAGE>

<TABLE>
<CAPTION>
GROWTH PORTFOLIO
----------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, FOR THE PERIOD
--------------------------------------------------- MAY 4, 1987+ TO
1993 1992 1991 1990 1989 1988 DECEMBER 31, 1987
------- ------- ------- ------- ------ ------ -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 15.68 $ 14.92 $ 10.57 $ 11.66 $10.38 $ 8.76 $10.00
------- ------- ------- ------- ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. -- 0.11 0.10 0.14 0.09 0.21 0.09
Net realized and
unrealized gains
(losses) from
investment
transactions.......... 3.08 0.76 4.35 (1.09) 3.90 1.41 (1.24)
------- ------- ------- ------- ------ ------ ------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS.. 3.08 0.87 4.45 (0.95) 3.99 1.62 (1.15)
------- ------- ------- ------- ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income..... -- (0.11) (0.10) (0.14) (0.30) -- (0.09)
Distributions from net
realized gains on
investments........... (0.70) -- -- -- (2.41) -- --
------- ------- ------- ------- ------ ------ ------
TOTAL DISTRIBUTIONS..... (0.70) (0.11) (0.10) (0.14) (2.71) -- (0.09)
------- ------- ------- ------- ------ ------ ------
Net asset value, end of
period................. $ 18.06 $ 15.68 $ 14.92 $ 10.57 $11.66 $10.38 $ 8.76
======= ======= ======= ======= ====== ====== ======
Total return(1)......... 19.61% 5.83% 42.10% (8.15)% 38.44% 18.49% (11.52)%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000's)......... $51,696 $46,479 $37,470 $12,283 $4,264 $ 802 $3,891
Ratio of expenses to
average net assets**... 0.92% 0.94% 1.13% 1.85% 1.76% 1.80% 1.79%*
Ratio of net investment
income to average net
assets**............... 0.00% 0.78% 1.07% 1.90% 1.53% 0.63% 3.00%*
Portfolio turnover...... 34.95% 29.36% 27.89% 35.20% 67.79% 189.62% 2.36%
</TABLE>
- --------
* Annualized.
(1) Total return is calculated assuming a $1,000 investment on the first day
of each period reported, reinvestment of all dividends and other
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported. Total return
information for periods less than one year has not been annualized.
** During certain periods presented above, Mitchell Hutchins agreed to
reimburse the Portfolio for a portion of its operating expenses and waived
all or a portion of its advisory fee. If such reimbursements and waivers
had not been made, the annualized ratio of expenses to average net assets
and the annualized ratio of net investment income (loss) to average net
assets would have been 1.91% and 1.84%, 3.61% and (0.31)%, 3.58% and
(1.15)%, and 5.44% and (0.64)%, respectively, for the years ending
December 31, 1990, 1989 and 1988 and for the period ended December 1987.
+ Commencement of operations.

PW 4
<PAGE>

<TABLE>
<CAPTION>
GLOBAL GROWTH PORTFOLIO
----------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, FOR THE PERIOD
--------------------------------------------------- MAY 4, 1987+ TO
1993 1992 1991 1990 1989 1988 DECEMBER 31, 1987
------- ------- ------- ------- ------ ------ -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 11.10 $ 12.06 $ 11.76 $ 11.43 $10.49 $ 8.35 $10.00
------- ------- ------- ------- ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. 0.03 0.10 0.23 0.19 0.07 0.07 0.05
Net realized and
unrealized gains
(losses) from
investment
transactions.......... 4.42 (1.01) 0.35 0.67 1.94 2.07 (1.59)
------- ------- ------- ------- ------ ------ ------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS.. 4.45 (0.91) 0.58 0.86 2.01 2.14 (1.54)
------- ------- ------- ------- ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income..... -- (0.05) (0.23) (0.19) (0.07) -- (0.05)
Distributions in excess
of net investment
income................ -- -- -- -- (0.19) -- --
Distributions from net
realized gains on
investments........... (0.58) -- (0.05) (0.34) (0.81) -- (0.06)
------- ------- ------- ------- ------ ------ ------
TOTAL DISTRIBUTIONS..... (0.58) (0.05) (0.28) (0.53) (1.07) -- (0.11)
------- ------- ------- ------- ------ ------ ------
Net asset value, end of
period................. $ 14.97 $ 11.10 $ 12.06 $ 11.76 $11.43 $10.49 $ 8.35
======= ======= ======= ======= ====== ====== ======
Total return(1)......... 40.02% (7.55)% 4.93% 7.53% 19.18% 25.63% (15.42)%*
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000's)......... $38,035 $21,493 $24,308 $16,149 $3,806 $3,250 $3,135
Ratio of expenses to
average net assets**... 1.40% 1.46% 1.53% 2.07% 2.10% 2.08% 2.10%*
Ratio of net investment
income to average net
assets**............... 0.38% 0.82% 2.12% 3.29% 0.71% 0.68% 1.09%*
Portfolio turnover...... 266.96% 127.06% 89.39% 119.65% 200.96% 32.86% 5.28%
</TABLE>
- --------
* Annualized.
(1) Total return is calculated assuming a $1,000 investment on the first day
of each fiscal period reported, reinvestment of all dividends and other
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported. Total return
information for periods less than one year has not been annualized.
** During certain periods presented above, Mitchell Hutchins agreed to
reimburse the Portfolio for a portion of its operating expenses and waived
all or a portion of its advisory fee. If such reimbursements and waivers
had not been made, the annualized ratio of expenses to average net assets
and the annualized ratio of net investment income (loss) to average net
assets would have been 2.19% and 3.17%, 4.35% and (1.54)%, 4.55% and
(1.79)% and 4.87% and (1.68)%, respectively, for the years ended
December 31, 1990, 1989, and 1988 and for the period ended
December 31, 1987.
+ Commencement of operations.

PW 5
<PAGE>

<TABLE>
<CAPTION>
GLOBAL INCOME PORTFOLIO
-------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, FOR THE PERIOD
------------------------------------------ MAY 1, 1988+ TO
1993 1992 1991 1990 1989 DECEMBER 31, 1988
------- ------- ------- ------- ------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 11.17 $ 11.65 $ 11.16 $ 10.19 $10.67 $10.00
------- ------- ------- ------- ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. 0.96 0.80 0.75 0.52 0.94 0.28
Net realized and
unrealized gains
(losses) from
investment
transactions.......... 0.90 (0.65) 0.40 1.00 (0.22) 0.39
------- ------- ------- ------- ------ ------
TOTAL INCOME FROM
INVESTMENT OPERATIONS.. 1.86 0.15 1.15 1.52 0.72 0.67
------- ------- ------- ------- ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income..... (0.94) (0.56) (0.65) (0.52) (1.06) --
Distributions in excess
of current year net
investment income..... (0.16) -- -- -- -- --
Distributions from net
realized gains from
investments........... (0.21) (0.07) (0.01) (0.03) (0.14) --
------- ------- ------- ------- ------ ------
TOTAL DISTRIBUTIONS..... (1.31) (0.63) (0.66) (0.55) (1.20) --
------- ------- ------- ------- ------ ------
Net asset value, end of
period................. $ 11.72 $ 11.17 $ 11.65 $ 11.16 $10.19 $10.67
======= ======= ======= ======= ====== ======
Total return(1)......... 16.65% 1.29% 10.30% 14.92% 6.80% 6.70%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000's)......... $64,610 $63,172 $51,988 $30,778 $7,425 $7,298
Ratio of expenses to
average net assets**... 0.98% 1.07% 1.20% 1.72% 1.86% 1.86%*
Ratio of net investment
income to average net
assets**............... 7.47% 7.20% 7.59% 8.64% 9.00% 6.35%*
Portfolio turnover rate. 68.60% 75.44% 14.29% 110.23% 32.28% 136.21%
</TABLE>
- --------
* Annualized.
(1) Total return is calculated assuming a $1,000 investment on the first day
of each fiscal period reported, reinvestment of all dividends and other
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported. Total return
information for periods less than one year has not been annualized.
** During certain periods presented above, Mitchell Hutchins agreed to
reimburse the Portfolio for a portion of its operating expenses and waived
all or a portion of its advisory fee. If such reimbursements and waivers
had not been made, the annualized ratio of expenses to average net assets
and the annualized ratio of net investment income to average net assets
would have been 1.75% and 8.61%, 2.59% and 8.27% and 3.30% and 4.91%,
respectively, for the years ended December 31, 1990 and 1989, and for the
period ended December 31, 1988.
+ Commencement of operations.

PW 6
<PAGE>

<TABLE>
<CAPTION>
GOVERNMENT PORTFOLIO
----------------------------------------------------
FOR THE YEARS ENDED
DECEMBER 31, FOR THE PERIOD
--------------------------------- JULY 5, 1989+ TO
1993 1992 1991 1990 DECEMBER 31, 1989
------- ------- ------- ------ -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................ $ 11.58 $ 11.61 $ 10.49 $10.17 $10.00
------- ------- ------- ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.... 0.87 0.74 0.47 0.45 0.10
Net realized and
unrealized gains from
investment transactions. 0.48 0.05 1.12 0.32 0.17
------- ------- ------- ------ ------
TOTAL INCOME FROM
INVESTMENT OPERATIONS.... 1.35 0.79 1.59 0.77 0.27
------- ------- ------- ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income....... (0.87) (0.74) (0.47) (0.45) (0.10)
Distributions from net
realized gains on
investments............. (0.13) (0.08) -- -- --
------- ------- ------- ------ ------
TOTAL DISTRIBUTIONS....... (1.00) (0.82) (0.47) (0.45) (0.10)
------- ------- ------- ------ ------
Net asset value, end of
period................... $ 11.93 $ 11.58 $ 11.61 $10.49 $10.17
======= ======= ======= ====== ======
Total return(1)........... 11.66% 6.76% 15.17% 7.58% 2.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's).................. $22,354 $24,103 $15,690 $5,192 $1,294
Ratio of expenses to
average net assets**..... 0.79% 0.76% 1.25% 1.55% 1.55%*
Ratio of net investment
income to average net
assets**................. 6.13% 6.59% 6.43% 6.80% 6.17%*
Portfolio turnover........ 7.93% 23.13% 1.39% 66.14% 0.37%
</TABLE>
- --------
* Annualized.
(1) Total return is calculated assuming a $1,000 investment on the first day
of each period reported, reinvestment of all dividends and other
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported. Total return
information for periods less than one year has not been annualized.
** During certain periods presented above, Mitchell Hutchins agreed to
reimburse the Portfolio for a portion of its operating expenses and waived
all or a portion of its advisory fee. If such reimbursements and waivers
had not been made, the annualized ratio of expenses to average net assets
and the annualized ratio of net investment income (loss) to average net
assets would have been 1.28% and 6.40%, 3.14% and 5.20% and 13.87% and
(6.15)%, respectively, for the years ending December 31, 1991 and 1990, and
for the period ended December 31, 1989.
+ Commencement of operations.

PW 7
<PAGE>

<TABLE>
<CAPTION>
ASSET ALLOCATION PORTFOLIO DIVIDEND GROWTH PORTFOLIO
-------------------------------------------------------------- -------------------------------------
FOR THE YEARS ENDED DECEMBER 31, FOR THE PERIOD FOR THE YEAR FOR THE PERIOD
------------------------------------------- JUNE 1, 1988+ TO ENDED JANUARY 2, 1992+ TO
1993 1992 1991 1990 1989 DECEMBER 31, 1988 DECEMBER 31, 1993 DECEMBER 31, 1992
------- ------- ------- ------- ------- ----------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 11.63 $ 11.39 $ 9.99 $ 10.37 $ 10.54 $ 10.00 $ 10.26 $ 10.00
------- ------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. 0.33 0.35 0.47 0.65 0.66 0.28 0.16 0.08
Net realized and
unrealized gains
(losses) from
investment
transactions.......... 1.48 0.24 1.40 (0.38) 0.52 0.26 (0.39) 0.26
------- ------- ------- ------- ------- ------- ------- -------
TOTAL INCOME FROM
INVESTMENT OPERATIONS.. 1.81 0.59 1.87 0.27 1.18 0.54 (0.23) 0.34
------- ------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net
investment income..... (0.33) (0.35) (0.47) (0.65) (0.94) -- (0.16) (0.08)
Distributions from net
realized gains on
investments........... (1.16) -- -- -- (0.41) -- -- --
------- ------- ------- ------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS..... (1.49) (0.35) (0.47) (0.65) (1.35) -- (0.16) (0.08)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $ 11.95 $ 11.63 $ 11.39 $ 9.99 $ 10.37 $ 10.54 $ 9.87 $ 10.26
======= ======= ======= ======= ======= ======= ======= =======
Total return(1)......... 15.76% 5.18% 18.73% 2.63% 11.10% 5.40% (2.26)% 3.40%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000's)......... $33,367 $38,583 $33,327 $25,681 $26,851 $22,845 $16,281 $20,037
Ratio of expenses to
average net assets**... 0.95% 0.93% 0.94% 1.48% 1.25% 1.24%* 1.12% 1.29%*
Ratio of net investment
income to average net
assets**............... 2.27% 3.11% 4.64% 5.71% 6.54% 6.11%* 1.37% 1.21%*
Portfolio turnover...... 60.36% 30.74% 100.84% 168.87% 230.12% 69.86% 51.68% 13.74%
</TABLE>
- --------
* Annualized.
(1) Total return is calculated assuming a $1,000 investment on the first day
of each period reported, reinvestment of all dividends and other
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported. Total return
information for periods less than one year has not been annualized.
** During certain periods presented above, Mitchell Hutchins agreed to
reimburse the Asset Allocation Portfolio for a portion of its operating
expenses and waived all or a portion of its advisory fee. If such
reimbursements and waivers had not been made, the annualized ratio of
expenses to average net assets and the annualized ratio of net investment
income to average net assets would have been 1.50% and 5.69%, 1.39% and
6.40% and 1.44% and 5.91%, respectively, for the years ending December 31,
1990 and 1989 and for the period ended December 31, 1988.
+ Commencement of operations.

PW 8
<PAGE>

THE FUND, ITS INVESTMENT OBJECTIVES AND POLICIES

The Fund is a professionally managed mutual fund. The Fund offers seven
Portfolios, each of which represents a segregated, separately managed portfolio
of securities with its own investment objective, as set forth on page PW 1, and
its own investment policies, which are summarized on page PW 1 and set forth in
more detail below. There can be no assurance that any Portfolio's investment
objective will be met. The Global Income Portfolio is managed as a non-
diversified investment company; the other Portfolios are all managed as
diversified investment companies.

Shares of each Portfolio are offered only to insurance company separate
accounts that fund the Contracts. An insurance company separate account's
interest is limited to the Portfolio(s) in which the separate account invests.
Separate accounts may purchase or redeem shares at net asset value without any
sales or redemption charge. Fees and charges imposed by the separate account,
however, will affect the actual return to the holder of a Contract. A separate
account may also impose certain restrictions or limitations on the allocation
of purchase payments or Contract value to one or more Portfolios, and not all
Portfolios may be available in connection with a particular Contract.
Prospective investors should consult the applicable Contract prospectus for
information regarding fees and expenses of the Contract and separate account
and any applicable restrictions or limitations.

Shares of the Portfolios may be offered to separate accounts of various
insurance companies ("shared funding") and may serve as the underlying
investments for both annuity and life insurance Contracts ("mixed funding").
Due to differences in tax treatment or other considerations, the interests of
various Contract owners might at some time be in conflict. The Fund currently
does not foresee any such conflict. However, the Fund's board of trustees
intends to monitor events to identify any material irreconcilable conflict that
may arise and to determine what action, if any, should be taken in response to
such conflict. If such a conflict were to occur, one or more insurance
companies' separate accounts might be required to withdraw its investments in
one or more Portfolios. This might force a Portfolio to sell securities at
disadvantageous prices.

The MONEY MARKET PORTFOLIO invests in high grade money market instruments, with
remaining maturities of 13 months or less, and repurchase agreements secured by
such instruments and maintains a dollar-weighted average portfolio maturity of
90 days or less. These instruments include (1) U.S. government securities
(which may or may not be backed by the full faith and credit of the United
States), (2) obligations (including certificates of deposit, bankers'
acceptances and similar obligations) of U.S. banks, including foreign branches
of domestic banks and domestic branches of foreign banks, having total assets
in excess of $1.5 billion at the time of purchase, (3) interest-bearing savings
deposits in U.S. commercial and savings banks having total assets of $1.5
billion or less, provided that the principal amounts at each such bank are
fully insured by the Federal Deposit Insurance Corporation and the aggregate
amount of such deposits (plus interest earned) does not exceed 5% of the
Portfolio's asset value and (4) commercial paper and other short-term corporate
obligations including variable and floating rate securities and participation
interests. Participation interests are pro rata interests in securities held by
others.

The commercial paper and other short-term corporate obligations purchased by
the Money Market Portfolio consist only of obligations that Mitchell Hutchins
determines, pursuant to procedures adopted by the Fund's board of trustees,
present minimal credit risks and are either (1) rated in the highest short-term
rating category by at least two nationally recognized statistical rating
organizations ("NRSROs"), (2) rated in the highest short-term rating category
by a single NRSRO if only that NRSRO has assigned the obligations a short-term
rating or (3) unrated, but determined by Mitchell Hutchins to be of comparable
quality ("First Tier Securities"). The Money Market Portfolio generally may
invest no more than 5% of its total assets in the securities of a single issuer
(other than securities issued by the U.S. government, its agencies or
instrumentalities).

The GROWTH PORTFOLIO invests primarily in common stocks issued by companies
that, in the judgment of Mitchell Hutchins, have substantial potential for
capital growth. In selecting stocks for

PW 9
<PAGE>

investment by the Portfolio, Mitchell Hutchins considers all of those factors
it believes affect potential for capital appreciation, including an issuer's
current and projected revenues, earnings, cash flow and assets, as well as
general market conditions in relevant industries. Under normal circumstances,
at least 65% of the Portfolio's total assets is invested in common stocks. For
potential capital appreciation (when, for instance, Mitchell Hutchins
anticipates that market interest rates may decline or credit factors or ratings
affecting particular issues may improve), the Portfolio's investment policies
also permit investment in debt securities, including debt securities
convertible into equity securities, rated BBB or better by Standard & Poor's
Ratings Group ("S&P"), Baa or better by Moody's Investors Service Inc.
("Moody's"), comparably rated by another NRSRO or, if unrated, determined by
Mitchell Hutchins to be of comparable quality. (For an explanation of the
ratings assigned to debt securities by S&P and Moody's, see the Statement of
Additional Information.) Consistent with its investment objective, the
Portfolio may also invest up to 25% of its total assets in U.S. dollar-
denominated securities of foreign issuers if the securities are regularly
traded on recognized U.S. exchanges or in the U.S. over-the-counter ("OTC")
market.

The DIVIDEND GROWTH PORTFOLIO, under normal circumstances, invests at least 65%
of its total assets in dividend-paying common stocks of issuers that, at the
time of purchase, meet the following criteria:

--at least 5% compound annual growth in earnings per share over the past
five years;

--at least 5% compound annual growth in dividends per common share over the
past five years; and

--an increased dividend per common share in each of the past five years.

If a common stock owned by the Portfolio ceases to meet these criteria after
purchase, Mitchell Hutchins will consider selling the stock, but is not
required to do so. Over the past 20 years, the universe of issuers that have
met these criteria has varied between 100 and 250 companies. The Portfolio may
invest up to 35% of its total assets in common stocks not meeting all the above
criteria, as well as convertible debt securities, convertible preferred stocks,
U.S. government securities, money market instruments and corporate debt
securities rated BBB or better by S&P, Baa or better by Moody's, comparably
rated by another NRSRO or, if unrated, determined by Mitchell Hutchins to be of
comparable quality. The Portfolio will invest in instruments other than common
stocks when, in the opinion of Mitchell Hutchins, their projected total return
is equal to or greater than that of common stocks or when such holdings might
reduce the volatility of its portfolio. The Portfolio purchases common stocks
only of issuers whose market capitalizations exceed $300 million. The Portfolio
may invest up to 25% of its total assets in U.S. dollar-denominated securities
of foreign issuers that are regularly traded on recognized U.S. exchanges or in
the U.S. OTC market.

The GLOBAL GROWTH PORTFOLIO invests primarily in the common stocks of companies
based in the United States, Europe, Japan and the Pacific Basin. Under normal
conditions, at least 65% of the Portfolio's total assets is invested in common
stocks and securities convertible into common stocks. The Portfolio will at all
times hold securities of issuers located in at least five countries and will
invest no more than 20% of its total assets in issuers located in any single
country outside the United States, except that the Portfolio may invest up to
35% of its total assets in issuers located in Japan. Mitchell Hutchins seeks to
identify those companies, both in the United States and abroad, likely to
benefit from long-term trends and shifting trade patterns as they develop in
the global economy. The Portfolio may also hold other types of securities,
including non-convertible corporate debt securities, government and money
market securities of U.S. and foreign issuers, and cash (foreign currencies or
U.S. dollars), in such proportions as, in the opinion of Mitchell Hutchins,
prevailing market, economic or political conditions warrant.

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<PAGE>

The GLOBAL INCOME PORTFOLIO invests principally in high quality debt securities
of foreign and U.S. issuers. Debt securities will be considered high quality if
they are assigned one of S&P's or Moody's two highest ratings, comparably rated
by another NRSRO or, if unrated, determined by Mitchell Hutchins to be of
comparable quality. Normally, at least 65% of the Portfolio's total assets are
invested in high quality debt securities, denominated in foreign currencies or
U.S. dollars, that are issued or guaranteed by foreign and U.S. governments or
their agencies, instrumentalities or political subdivisions or by supranational
organizations such as the World Bank, or that are issued by foreign and U.S.
companies, banks and bank holding companies. Such issuers will be located in at
least five of the following countries: Australia, Austria, Belgium, Canada,
Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, Thailand, the United Kingdom and the United States. No more than
20% of the Portfolio's total assets will be invested in securities of issuers
located in any one country, except that the Portfolio may invest up to 35% of
its total assets in securities of issuers located in any one of the following
countries: Australia, Canada, France, Germany, Japan and the United Kingdom.
There is no limit on the amount of assets that may be invested in securities of
U.S. issuers. Mitchell Hutchins expects that normally more than 50% of the
Portfolio's total assets will be invested in U.S. and foreign government
securities in order to minimize credit risk and to capitalize on opportunities
that historically have been presented by, and are perceived to exist today with
respect to, such instruments. Up to 35% of the Portfolio's total assets may be
invested in debt securities rated below the two highest grades assigned by a
NRSRO but rated BBB or better by S&P, or Baa or better by Moody's, comparably
rated by another NRSRO or, if unrated, determined by Mitchell Hutchins to be of
comparable quality. The Portfolio may invest up to 20% of its total assets in
sovereign debt securities rated below BBB by S&P, Baa by Moody's or comparably
rated by another NRSRO but no lower than BB by S&P, Ba by Moody's or comparably
rated by another NRSRO or, in the case of such securities assigned a commercial
paper rating, no lower than B by S&P or comparably rated by another NRSRO or,
if unrated, determined by Mitchell Hutchins to be of comparable quality.
Mitchell Hutchins will purchase such securities for the Portfolio only when it
concludes that the anticipated return to the Portfolio on such investment
warrants exposure to the additional level of risk. Fundamental economic
strength, credit quality and currency and interest rate trends are the
principal determinants of the various country, geographic and industry sector
weightings within the Portfolio. Up to 5% of the Portfolio's total assets may
be invested in debt securities convertible into equity, although the Portfolio
has no current intention of converting such securities into equity or holding
them as equity upon conversion.

The Global Income Portfolio is "non-diversified," as that term is defined in
the Investment Company Act of 1940 ("1940 Act"), but intends to continue to
qualify as a "regulated investment company" for federal income tax purposes.
This means, in general, that although more than 5% of the Portfolio's total
assets may be invested in the securities of one issuer (including a foreign
government), at the close of each quarter of the Portfolio's taxable year the
aggregate amount of such holdings may not exceed 50% of the value of its total
assets, and no more than 25% of the value of its total assets may be invested
in the securities of a single issuer. To the extent that the Portfolio at times
may hold the securities of a smaller number of issuers than if it were
"diversified" (as defined in the 1940 Act), the Portfolio will at such times be
subject to greater risk with respect to its portfolio securities than a fund
that invests in a broader range of securities, because changes in the financial
condition or market assessment of a single issuer may cause greater
fluctuations in the Portfolio's total return and the net asset value of its
shares.

During its 1993 fiscal year, Global Income Portfolio had 100% of its average
annual net assets in debt securities that received a rating from S&P. The
Portfolio had the following percentages of its average annual net assets
invested in rated securities: AAA (including cash items)--69.3%,AA--10.3%, A--
0.1%, BBB--6.0% and BB--14.3%. It should be noted that this information
reflects the average composition of the Portfolio's assets during the fiscal
year ended December 31, 1993 and

PW 11
<PAGE>

is not necessarily representative of the Portfolio's assets as of the end of
that fiscal year, the current fiscal year, or at any time in the future.

The GOVERNMENT PORTFOLIO invests primarily in high quality U.S. government
securities, which include U.S. Treasury obligations and obligations issued or
guaranteed by U.S. government agencies or instrumentalities. These latter
obligations may be backed by the full faith and credit of the U.S. government
or supported primarily or solely by the creditworthiness of the particular
agency or instrumentality. Under normal market conditions, at least 65% of the
Portfolio's total assets is invested in U.S. government securities. The
Portfolio also may invest in certain zero coupon securities that are U.S.
Treasury notes and bonds that have been stripped of their unmatured interest
coupon receipts or interests in such U.S. Treasury securities or coupons, such
as Certificates of Accrual Treasury Securities ("CATS") and Treasury Income
Growth Receipts ("TIGRs"). The staff of the Securities and Exchange Commission
("SEC") currently takes the position that "stripped" U.S. government securities
that are not issued through the U.S. Treasury STRIPS program are not U.S.
government securities. As long as the SEC staff takes this position, CATS and
TIGRs will not be counted as U.S. government securities for purposes of the 65%
investment requirement. The Portfolio may invest up to 35% of its total assets
in high quality debt securities issued or guaranteed by foreign governments,
their agencies, instrumentalities or political subdivisions or by supranational
organizations such as the World Bank ("foreign government securities"). The
Portfolio will invest only in those foreign government securities that are, at
the time of purchase, rated within one of the two highest grades assigned by
S&P or Moody's, assigned a comparable rating by another NRSRO or, if unrated,
determined by Mitchell Hutchins to be of comparable quality. If the Portfolio
invests in foreign government securities, it will invest in issuers located in
at least two countries, except that the Portfolio may invest up to 35% of its
total assets in issuers located in any one of the following countries:
Australia, Canada, France, Germany, Japan or the United Kingdom. No more than
55% of the total assets of the Portfolio may be represented by U.S. Treasury
obligations to assure the Portfolio's compliance with the diversification
requirements imposed by the Internal Revenue Code on segregated asset accounts
used to fund variable annuity contracts.

The ASSET ALLOCATION PORTFOLIO invests in a broad range of equity securities,
bonds and money market instruments. The Portfolio follows a management strategy
developed by PaineWebber Asset Management ("PWAM"), a division of Mitchell
Hutchins, for the allocation of investments pursuant to a philosophy that, over
time, equity securities will outperform other financial assets; undervaluation
can be determined among equity securities; and active asset allocation can add
value by reducing risk. This investment strategy is intended for long-term
results. The Portfolio may invest any percentage, from zero to 100%, of its
assets in equity, debt or money market instruments. In determining the
percentage of the Portfolio's assets invested in each of these categories,
Mitchell Hutchins takes into account the recommendations of the PWAM Investment
Advisory Committee, which is composed of senior representatives of PaineWebber
and Mitchell Hutchins economics, fixed income, international, fundamental
research, technical research and portfolio management groups. Once Mitchell
Hutchins establishes the asset allocation guidelines, it selects individual
securities for the Portfolio as follows:

Equity Securities. Asset Allocation Portfolio invests in equity securities
based on the PWAM Equity Valuation Discipline, which is intended to identify
those industries, and companies within industries, that appear relatively
undervalued or overvalued. This strategy tracks issuers with a minimum market
capitalization of $300 million that are of primary interest to institutional
investors and currently includes approximately 700 issuers. It determines
relative investment merit by appraising the historical performance of
industries and companies through fundamental analysis of income statement and
balance sheet data, and relates this historical record to the earnings outlook
and current stock prices.

Debt Securities. The Portfolio's investments in debt securities are based on
analyses of the maturity structure and the risk structure (comparing yields on
Treasury securities to yields on riskier

PW 12
<PAGE>

types of debt securities). The Portfolio may invest in a broad variety of non-
convertible debt securities, including debt securities rated at least A by S&P
or Moody's, comparably rated by another NRSRO or, if unrated, determined by
Mitchell Hutchins to be of comparable quality, and debt securities issued or
guaranteed by the U.S. government, its agencies and instrumentalities. The
Portfolio may invest up to 20% of its total assets in non-convertible debt
securities that are rated as low as BBB by S&P, Baa by Moody's, comparably
rated by another NRSRO or, if unrated, determined by Mitchell Hutchins to be of
comparable quality. The Portfolio may invest up to 10% of its total assets in
non-investment grade convertible debt securities that are rated at least B by
S&P or Moody's, comparably rated by another NRSRO or, if unrated, determined by
Mitchell Hutchins to be of comparable quality.

Money Market Instruments. The Portfolio may invest in high grade money market
instruments, which are debt securities with maturities of 13 months or less.
Such instruments will be chosen by Mitchell Hutchins based on its judgment of
their utility in furthering the Portfolio's investment objective.

The Portfolio may invest in U.S. dollar-denominated securities of foreign
issuers that are regularly traded on recognized U.S. exchanges or in the U.S.
OTC market. For a more detailed description of the types of equity securities,
debt securities and money market instruments in which the Portfolio invests,
see the Statement of Additional Information.

DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES

U.S. GOVERNMENT SECURITIES. Under normal market conditions, the Government
Portfolio invests at least 65% of its total assets in U.S. government
securities. The Global Income Portfolio also is authorized to invest a
substantial portion of its assets in U.S. government securities and the other
Portfolios may invest in U.S. government securities consistent with their
investment objectives. The U.S. government securities in which the Portfolios
may invest include direct obligations of the U.S. government (such as Treasury
bills, notes and bonds) and obligations issued by U.S. government agencies and
instrumentalities, including securities that are backed by the full faith and
credit of the U.S. government (such as Government National Mortgage Association
("Ginnie Mae") certificates and securities that are supported primarily or
solely by the creditworthiness of the issuer (such as securities of the Federal
National Mortgage Association ("Fannie Mae"), the Federal Home Loan Mortgage
Corporation ("Freddie Mac") and the Tennessee Valley Authority). U.S.
government securities are considered among the most creditworthy of fixed
income investments. Because of this, the yields available from U.S. government
securities are generally lower than the yields available from corporate debt
securities. Nevertheless, the values of U.S. government securities (like those
of fixed income securities generally) will change as interest rates fluctuate.

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. Mortgage-backed securities
represent direct or indirect participations in, or are secured by and payable
from, mortgage loans secured by real property and include single- and multi-
class pass-through securities and collateralized mortgage obligations ("CMOs").
U.S. government mortgage-backed securities include mortgage-backed securities
issued or guaranteed by Ginnie Mae, Fannie Mae or Freddie Mac. Other mortgage-
backed securities are issued by private issuers, generally originators of and
investors in mortgage loans, including savings associations, mortgage bankers,
commercial banks, investment bankers and special purpose entities
(collectively, "Private Mortgage Lenders"). Such private mortgage-backed
securities may be supported by pools of mortgage loans or other mortgage-backed
securities that are guaranteed, directly or indirectly, by the U.S. government
or one of its agencies or instrumentalities, or they may be issued without any
government guarantee of the underlying mortgage assets but with some form of
non-governmental credit enhancement. For more information concerning the types
of mortgage-backed securities in which the Portfolios may invest, see Appendix
A to this Prospectus.

Asset-backed securities have structural characteristics similar to mortgage-
backed securities. However, the underlying assets are not first-lien mortgage
loans or interests therein, but include

PW 13
<PAGE>

assets such as motor vehicle installment loan contracts, home equity loans,
leases of various types of real and personal property and receivables from
revolving credit (credit card) agreements. Such assets are securitized through
the use of trusts or special purpose corporations. Payments or distributions of
principal and interest on asset-backed securities may be guaranteed up to
certain amounts and for a certain time period by a letter of credit or a pool
insurance policy issued by a financial institution unaffiliated with the issuer
or other credit enhancements may be present. Asset-backed securities are
described briefly in Appendix A to this Prospectus and are discussed further in
the Statement of Additional Information.

The yield characteristics of mortgage-backed securities and asset-backed
securities differ from those of traditional debt securities. Among the major
differences are that interest and principal payments on mortgage-backed and
asset-backed securities are made more frequently (usually monthly), and that
principal may be prepaid at any time because the underlying mortgage loans or
other assets generally may be prepaid at any time. As a result, if a Portfolio
purchases these securities at a premium, a prepayment rate that is faster than
expected will reduce yield to maturity, while a prepayment rate that is slower
than expected will have the opposite effect of increasing yield to maturity.
Conversely, if a Portfolio purchases these securities at a discount, faster
than expected prepayments will increase, while slower than expected prepayments
will reduce, yield to maturity. Amounts available for reinvestment are likely
to be greater during a period of declining interest rates and, as a result, are
likely to be reinvested at lower interest rates than during a period of rising
interest rates. Accelerated prepayments on securities purchased by a Portfolio
at a premium also impose a risk of loss of principal because the premium may
not have been fully amortized at the time the principal is repaid in full. The
market for privately issued mortgage-backed and asset-backed securities is
smaller and less liquid than the market for mortgage-backed securities of
government issuers. Derivative securities, such as stripped mortgage-backed
securities ("SMBS"), generally are more sensitive to changes in prepayment and
interest rates and the market for such securities is less liquid than is the
case for traditional debt securities and mortgage-backed and asset-backed
securities. In some cases, the market value of SMBS may be extremely volatile.

It should be noted that new types of mortgage-backed and asset-backed
securities and derivative securities are developed and marketed from time to
time and that, consistent with their investment limitations, the Portfolios
expect to invest in those new types of securities that Mitchell Hutchins
believes may assist the Portfolio in achieving its investment objective.

FOREIGN SECURITIES. The Global Growth and Global Income Portfolios invest a
substantial portion of their assets in foreign securities, and the Government
Portfolio may invest up to 35% of its total assets in foreign government
securities. In addition, the Growth and Dividend Growth Portfolios may each
invest up to 25% of its total assets in U.S. dollar-denominated securities of
foreign issuers if such securities are regularly traded on recognized U.S.
exchanges or in the U.S. OTC market and the Asset Allocation Portfolio also may
invest in such securities. Accordingly, an investment in any of these
Portfolios involves risks relating to political, social and economic
developments abroad, as well as risks resulting from the differences between
the regulations to which U.S. and foreign issuers and markets are subject.
These risks are greater with respect to the Global Growth, Global Income and
Government Portfolios because a substantially greater portion of their assets
may be invested in such securities and because these Portfolios may invest in
foreign securities that are denominated in foreign currencies and traded
outside the U.S. securities markets. These risks may include expropriation,
confiscatory taxation, withholding taxes on dividends and interest, limitations
on the use or transfer of Portfolio assets and political or social instability
or diplomatic developments. Moreover, individual foreign economies may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross national product, rate of inflation, capital reinvestment, resource self-
sufficiency and balance of payments position. Securities of many foreign
companies may be less liquid and their prices more volatile than securities of
comparable U.S. companies. While the Portfolios generally invest only in
securities that are regularly traded on recognized exchanges or in

PW 14
<PAGE>

OTC markets, from time to time foreign securities may be difficult to liquidate
rapidly without significantly depressing the price of such securities. There
may be less publicly available information concerning foreign issues of
securities held by these Portfolios than is available concerning U.S.
companies. Transactions in foreign securities may be subject to less efficient
settlement practices. Legal remedies for defaults and disputes may have to be
pursued in foreign courts, whose procedures differ substantially from those of
U.S. courts.

Because foreign securities ordinarily are denominated in currencies other than
the U.S. dollar (as are some securities of U.S. issuers), changes in foreign
currency exchange rates will affect a Portfolio's net asset value, the value of
dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and capital gain, if any, to be
distributed to shareholders by the Portfolio. If the value of a foreign
currency rises against the U.S. dollar, the value of a Portfolio's assets
denominated in that currency will increase; correspondingly, if the value of a
foreign currency declines against the U.S. dollar, the value of a Portfolio's
assets denominated in that currency will decrease. The exchange rates between
the U.S. dollar and other currencies are determined by supply and demand in the
currency exchange markets, international balances of payments, speculation and
other economic and political conditions. In addition, some foreign currency
values may be volatile and there is the possibility of governmental controls on
currency exchange or governmental intervention in currency markets. Foreign
securities trading practices, including those involving securities settlement
where Portfolio assets may be released prior to receipt of payment, may expose
a Portfolio to increased risk in the event of a failed trade or the insolvency
of a foreign broker-dealer. Any of these factors could adversely affect these
Portfolios.

The costs attributable to foreign investing that the Global Growth, Global
Income and Government Portfolios must bear frequently are higher than those
attributable to domestic investing. For example, the costs of maintaining
custody of securities in foreign countries exceed custodian costs for domestic
securities.

FOREIGN GOVERNMENT SECURITIES. Foreign government securities generally consist
of obligations supported by national, state or provincial governments or
similar political subdivisions. Foreign government securities also include debt
obligations of supranational entities, which include international
organizations designated or supported by governmental entities to promote
economic reconstruction or development, international banking institutions and
related government agencies. Examples include the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the InterAmerican Development Bank.

Foreign government securities also include debt securities of "quasi-
governmental agencies" and debt securities denominated in multinational
currency units of an issuer (including supranational issuers). An example of a
multinational currency unit is the European Currency Unit ("ECU"). An ECU
represents specified amounts of the currencies of certain member states of the
European Community. Debt securities of quasi-governmental agencies are issued
by entities owned by either a national, state or equivalent government or are
obligations of a political unit that is not backed by the national government's
full faith and credit and general taxing powers. Foreign government securities
also include mortgage-related securities issued or guaranteed by national,
state or provincial governmental instrumentalities, including quasi-
governmental agencies.

PW 15
<PAGE>

deposits, currency controls, interest limitations or other governmental
restrictions that might affect the payment of principal or interest on the
securities held by a Portfolio. Additionally, there may be less publicly
available information about foreign banks and foreign branches of U.S. banks,
as these institutions may not be subject to the same regulatory requirements as
domestic banks.

DEBT SECURITIES. The Growth, Dividend Growth, Global Growth, Global Income and
Asset Allocation Portfolios all may invest a substantial portion of their
assets in debt securities rated within any one of the four highest grades
assigned by S&P or Moody's or assigned a comparable rating by another NRSRO.
Debt securities rated Baa by Moody's or BBB by S&P are investment grade,
although Moody's considers securities rated Baa to have speculative
characteristics. Changes in economic conditions or other circumstances are more
likely to lead to a weakened capacity for such securities to make principal and
interest payments than is the case for higher grade debt securities. The Asset
Allocation Portfolio may invest up to 10% of its total assets in non-investment
grade convertible debt securities and the Global Income Portfolio may invest up
to 20% of its total assets in non-investment grade sovereign debt securities.
Debt securities rated below investment grade are deemed by these agencies to be
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal and may involve major risk exposures to adverse conditions.
Such securities are commonly referred to as "junk bonds." All Portfolios are
permitted to purchase debt securities that are not rated by S&P, Moody's or
another NRSRO but that Mitchell Hutchins determines to be of comparable quality
to that of rated securities in which such Portfolio may invest. Such securities
are included in the computation of any percentage limitations applicable to the
comparable rated securities.

The market value of debt securities generally varies inversely with the
interest rate changes. Ratings of debt securities represent the rating agency's
opinion regarding their quality, are not a guarantee of quality and may be
reduced after a Portfolio has acquired the security. Mitchell Hutchins will
consider such an event in determining whether the Portfolio should continue to
hold the security but the Portfolio is not required to dispose of it. Credit
ratings attempt to evaluate the safety of principal and interest payments and
do not evaluate the risks of fluctuations in market value. Also, rating
agencies may fail to make timely changes in response to subsequent events, so
that an issuer's financial condition may be better or worse than the rating
indicates. Lower rated debt securities generally offer a higher current yield
than that available from higher grade issues, but they involve higher risks, in
that they are especially subject to adverse changes in general economic
conditions and in the industries in which the issuers are engaged, to changes
in the financial condition of the issuers and to price fluctuation in response
to changes in interest rates. During periods of economic downturn or rising
interest rates, highly leveraged issuers may experience financial stress which
could adversely affect their ability to make payments of principal and interest
and increase the possibility of default. In addition, such issuers may not have
more traditional methods of financing available to them, and may be unable to
repay debt at maturity by refinancing. The risk of loss due to default by such
issuers is significantly greater because such securities frequently are
unsecured and subordinated to the prior payment of senior indebtedness.

The market for lower rated securities has expanded rapidly in recent years, and
its growth paralleled a long economic expansion. In the past, the prices of
many lower rated debt securities declined substantially, reflecting an
expectation that many issuers of such securities might experience financial
difficulties. As a result, the yields on lower rated debt securities rose
dramatically, but such higher yields did not reflect the value of the income
stream that holders of such securities expected, but rather the risk that
holders of such securities could lose a substantial portion of their value as a
result of the issuers' financial restructuring or default. There can be no
assurance that such declines will not recur. The market for lower rated debt
securities generally is thinner and less active than that for higher quality
securities, which may limit a Portfolio's ability to sell such securities at
fair value in response to changes in the economy or the financial markets.
Adverse publicity and investor perceptions, whether or not based on fundamental
analysis, may also decrease the values and liquidity of lower rated securities,
especially in a thinly traded market.

PW 16
<PAGE>

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Each Portfolio may purchase
securities on a "when-issued" basis or may purchase or sell securities for
delayed delivery. In when-issued or delayed delivery transactions, delivery of
the securities occurs beyond normal settlement periods, but a Portfolio would
not pay for such securities or start earning interest on them until they are
delivered. However, when a Portfolio purchases securities on a when-issued or
delayed delivery basis, it immediately assumes the risks of ownership,
including the risk of price fluctuation. Failure by a counter party to deliver
a security purchased on a when-issued or delayed delivery basis may result in a
loss or missed opportunity to make an alternative investment. Depending on
market conditions, the Portfolio's when-issued and delayed-delivery purchase
commitments could cause its net asset value per share to be more volatile,
because such securities may increase the amount by which the Portfolio's total
assets, including the value of when-issued and delayed-delivery securities held
by the Portfolio, exceed its net assets.

REPURCHASE AGREEMENTS. Each Portfolio may enter into repurchase agreements.
Repurchase agreements are transactions in which a Portfolio purchases
securities from a bank or recognized securities dealer and simultaneously
commits to resell the securities to the bank or dealer at an agreed-upon date
and price reflecting a market rate of interest unrelated to the coupon rate or
maturity of the purchased securities. Repurchase agreements carry certain risks
not associated with direct investments in securities, including possible
decline in the market value of the underlying securities and delays and costs
to each Portfolio if the other party to the repurchase agreement becomes
insolvent, each Portfolio intends to enter into repurchase agreements only with
banks and dealers in transactions believed by Mitchell Hutchins to present
minimal credit risks in accordance with guidelines established by the Fund's
board of trustees.

REVERSE REPURCHASE AGREEMENTS. The Global Income Portfolio may enter into
reverse repurchase agreements with banks and broker-dealers up to an aggregate
value of not more than 10% of its total assets. Such agreements involve the
sale of securities held by the Portfolio subject to the Portfolio's agreement
to repurchase the securities at an agreed-upon date. The market value of
securities sold under reverse repurchase agreements typically is greater than
the proceeds of the sale, and accordingly, the market value of the securities
sold is likely to be greater than the value of the securities in which the
Global Income Portfolio invests those proceeds. Thus, reverse repurchase
agreements involve the risk that the buyer of the securities sold by the
Portfolio might be unable to deliver them when the Portfolio seeks to
repurchase. In the event the buyer of securities under a reverse repurchase
agreement files for bankruptcy or becomes insolvent, such buyer or its trustee
or receiver may receive an extension of time to determine whether to enforce
the Portfolio's obligation to repurchase the securities and the Portfolio's use
of the proceeds of the reverse repurchase agreement may effectively be
restricted pending such decision. Such agreements are considered to be
borrowings and may be entered into only for temporary purposes. The Portfolio
will not purchase securities while borrowings (including reverse repurchase
agreements) in excess of 5% of the value of the Portfolio's total assets are
outstanding.

PW 17
<PAGE>

options and buy put and call options on foreign currencies, buy or sell foreign
currency futures contracts, buy put and call options and write covered call
options on such contracts. These Portfolios may enter into forward currency
contracts for the purchase or sale of a specified currency at a specified
future date either with respect to specific transactions or with respect to
portfolio positions. For example, when Mitchell Hutchins anticipates making a
currency exchange transaction in connection with the purchase or sale of a
security, a Portfolio may enter into a forward contract in order to set the
exchange rate at which the transaction will be made. A Portfolio also may enter
into a forward contract to sell an amount of a foreign currency approximating
the value of some or all of the Portfolio's securities positions denominated in
such currency. A Portfolio may use forward contracts in one currency or a
basket of currencies to hedge against fluctuations in the value of another
currency when Mitchell Hutchins anticipates that there will be a correlation
between the two and may use forward currency contracts to shift a Portfolio's
exposure to foreign currency fluctuations from one country to another. The
purpose of entering into these contracts is to minimize the risk to a Portfolio
from adverse changes in the relationship between the U.S. dollar and foreign
currencies.

Global Income Portfolio may enter into interest rate protection transactions,
including interest rate swaps and interest rate caps, collars and floors, for
hedging purposes. For example, the Portfolio may enter into interest rate
protection transactions to preserve a return or spread on a particular
investment or portion of its portfolio or to protect against any increase in
the price of securities the Portfolio anticipates purchasing at a later date.
The Portfolio will enter into interest rate protection transactions only with
banks and recognized securities dealers believed by Mitchell Hutchins to
present minimal credit risks in accordance with guidelines established by the
Fund's board of trustees.

A Portfolio might not employ any of the strategies described above, and there
can be no assurance that any strategy used will succeed. If Mitchell Hutchins
incorrectly forecasts interest rates, market values or other economic factors
for a Portfolio, the Portfolio would be in a better position had it not hedged
at all. The use of these strategies involves certain special risks, including
(1) the fact that skills needed to use hedging instruments are different from
those needed to select the Portfolios' securities, (2) possible imperfect
correlation, or even no correlation, between price movements of hedging
instruments and price movements of the investments being hedged, (3) the fact
that, while hedging strategies can reduce the risk of loss, they can also
reduce the opportunity for gain, or even result in losses, by offsetting
favorable price movements in hedged investments and (4) the possible inability
of a Portfolio to purchase or sell a portfolio security at a time that
otherwise would be favorable for it to do so, or the possible need for a
Portfolio to sell a portfolio security at a disadvantageous time, due to the
need for the Portfolio to maintain "cover" or to segregate securities in
connection with hedging transactions and the possible inability of a Portfolio
to close out or to liquidate its hedged position.

New financial products and risk management techniques continue to be developed.
Each Portfolio may use these instruments and techniques to the extent
consistent with its investment objectives and regulatory and federal tax
considerations.

ILLIQUID SECURITIES. Each Portfolio may invest up to 10% of its net assets in
illiquid securities, including certain cover for OTC options, repurchase
agreements with maturities in excess of seven days and securities whose
disposition is restricted under the federal securities laws (other than "Rule
144A" securities which Mitchell Hutchins has determined to be liquid under
procedures approved by the Trust's board of trustees). Rule 144A establishes a
"safe harbor" from the registration requirements of the Securities Act of 1933
("1933 Act"). Institutional markets for restricted securities have developed as
a result of Rule 144A, providing both readily ascertainable values for
restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. An

PW 18
<PAGE>

insufficient number of qualified institutional buyers interested in purchasing
Rule 144A-eligible restricted securities held by a Portfolio, however, could
affect adversely the marketability of such portfolio securities and the
Portfolio might be unable to dispose of such securities promptly or at
favorable prices.

PORTFOLIO TURNOVER. The portfolio turnover rate may vary greatly from year to
year and will not be a limiting factor when Mitchell Hutchins deems portfolio
changes appropriate. A higher turnover rate may involve correspondingly greater
brokerage and other transaction costs, which will be borne directly by the
affected Portfolio.

OTHER INFORMATION. When Mitchell Hutchins believes unusual circumstances
warrant a defensive posture, each Portfolio temporarily may commit all or any
portion of its assets to cash, U.S. government securities or money market
instruments, including repurchase agreements. The Global Growth, Global Income
and Government Portfolios may hold cash in U.S. dollars or foreign currencies
and money market instruments of U.S. or foreign issuers, including instruments
backed by the U.S. or foreign governments, their agencies or instrumentalities
and repurchase agreements secured thereby. Each Portfolio may borrow money for
temporary purposes but not in excess of 10% of its total assets.

Each Portfolio's investment objective and certain investment limitations, as
described in the Statement of Additional Information, are fundamental policies
that may not be changed without shareholder approval. All other investment
policies may be changed by the Fund's board of trustees without shareholder
approval.

PURCHASES, REDEMPTIONS AND EXCHANGES

Shares of the Portfolios are offered only to the insurance company separate
accounts that fund the Contracts. All such shares may be purchased or redeemed
by the separate accounts without any sales or redemption charge at net asset
value. Proceeds from redemptions in any of the Portfolios will be paid on or
before the seventh day following the request for redemption by a Contract
holder.

A separate account may exchange shares of one Portfolio for shares of another
Portfolio at their relative net asset values per share.

DIVIDENDS, OTHER DISTRIBUTIONS AND FEDERAL INCOME TAX

DIVIDENDS AND OTHER DISTRIBUTIONS. With the exception of the Money Market
Portfolio, each Portfolio distributes all of its net investment income as
dividends to its shareholders shortly after the close of the Fund's fiscal year
on December 31. At the same time, those Portfolios also distribute to their
shareholders all of their net short-term capital gain and their net capital
gain (the excess of net long-term capital gain over net short-term capital
loss) and any net gains from foreign currency transactions. Those Portfolios
may make a second distribution of net investment income, net short-term capital
gain, net capital gain and net gains from foreign currency transactions if
necessary to avoid income tax.

PW 19
<PAGE>

premium and applicable expenses. Net investment income is calculated and
dividends are declared immediately prior to the determination of net asset
value per share. The Portfolio generally distributes to its shareholders any
net short-term capital gain annually after the end of its fiscal year on
December 31 but may make more frequent distributions of that gain if necessary
to maintain its net asset value per share at $1.00 or to avoid income tax. The
Portfolio does not expect to realize long-term capital gain and thus does not
anticipate any distributions of net capital gain.

Dividends and capital gain distributions from a Portfolio are paid in
additional shares of that Portfolio at net asset value per share, unless the
Fund's transfer agent is instructed otherwise. See the applicable Contract
prospectus for information regarding the federal income tax treatment of
distributions to the separate accounts.

FEDERAL INCOME TAX. Each Portfolio intends to continue to qualify for treatment
as a regulated investment company ("RIC") under Subchapter M of the Internal
Revenue Code so that it will be relieved of federal income tax on that part of
its investment company taxable income (consisting generally of net investment
income, net gains from certain foreign currency transactions and net short-term
capital gain) and net capital gain that is distributed to its shareholders.

Dividends and other distributions declared by a Portfolio in October, November
or December of any year and payable to shareholders of record on a date in any
of those months will be deemed to have been paid by the Portfolio and received
by the shareholders on December 31 of that year if the distributions are paid
by the Portfolio during the succeeding January.

Portfolio shares are offered only to insurance company separate accounts that
fund variable annuity and variable life insurance contracts. Under the Internal
Revenue Code, no tax is imposed on an insurance company with respect to income
of a qualifying separate account properly allocable to the value of eligible
variable annuity or variable life insurance contracts. See the applicable
Contract prospectus for a discussion of the federal income tax status of (1)
the separate accounts that purchase and hold shares of the Portfolios and (2)
the holders of Contracts funded through those accounts.

Each Portfolio intends to continue to comply with the diversification
requirements imposed by section 817(h) of the Internal Revenue Code and the
regulations thereunder. These requirements, which are in addition to the
diversification requirements imposed on the Portfolios by the 1940 Act and
Subchapter M, place certain limitations on the assets of each separate
account--and, because section 817(h) and those regulations treat the assets of
each Portfolio as assets of the related separate account, of each Portfolio--
that may be invested in securities of a single issuer. Specifically, the
regulations provide that, except as permitted by the "safe harbor" described
below, as of the end of each calendar quarter or within 30 days thereafter no
more than 55% of the total assets of a Portfolio may be represented by any one
investment, no more than 70% by any two investments, no more than 80% by any
three investments and no more than 90% by any four investments. For this
purpose, all securities of the same issuer are considered a single investment,
and while each U.S. government agency and instrumentality is considered a
separate issuer, a particular foreign government and its agencies,
instrumentalities and political subdivisions all will be considered the same
issuer. Section 817(h) provides, as a safe harbor, that a separate account will
be treated as being adequately diversified if the diversification requirements
under Subchapter M are satisfied and no more than 55% of the value of the
account's total assets are cash and cash items, government securities and
securities of other RICs. Failure of a Portfolio to satisfy the section 817(h)
requirements would result in taxation of the insurance company issuing the
Contracts and treatment of the Contract holders other than as described in the
applicable Contract prospectus.

The foregoing is only a summary of some of the important federal income tax
considerations generally affecting the Portfolios and their shareholders; see
the Statement of Additional Information for a more detailed discussion.
Prospective shareholders are urged to consult their tax advisers.

PW 20
<PAGE>

VALUATION OF SHARES

The net asset value of each Portfolio's shares fluctuates and is determined as
of the close of regular trading on the NYSE (currently 4:00 p.m., eastern time)
on each Business Day. For each Portfolio other than the Money Market Portfolio,
net asset value per share is computed by dividing the value of the securities
held by the Portfolio plus any cash or other assets minus all liabilities by
the total number of Portfolio shares outstanding. Except for the Money Market
Portfolio, each Portfolio values its assets based on the current market value
where market quotations are readily available. If such value cannot be
established, the assets are valued at fair value as determined in good faith by
or under the direction of the Fund's board of trustees. The amortized cost
method of valuation generally is used to value debt obligations with 60 days or
less remaining to maturity, unless the board of trustees determines that this
does not represent fair value. All investments denominated in foreign currency
are valued daily in U.S. dollars on the basis of the then-prevailing exchange
rates.

The Money Market Portfolio intends to use its best efforts to maintain its net
asset value at $1.00 per share. The value of each share of this Portfolio is
computed by dividing its net assets by the number of its outstanding shares.
"Net assets" equals the value of the investments and other assets minus its
liabilities. The Money Market Portfolio values its portfolio securities using
the amortized cost method of valuation, under which market value is
approximated by amortizing the difference between the acquisition cost and
value at maturity of the instrument on a straight-line basis over its remaining
life. All cash, receivables and current payables are generally carried at their
face value. Other assets are valued at fair value as determined in good faith
by or under the direction of the Fund's board of trustees. All investments
denominated in foreign currencies are valued daily in U.S. dollars based on the
then-prevailing exchange rate. It should be recognized that judgment plays a
greater role in valuing lower rated debt securities because there is less
reliable, objective data available.

MANAGEMENT

On March 24, 1994, the Fund's board of trustees approved for submission to
shareholders a sub-advisory contract between Mitchell Hutchins and Mitchell
Hutchins Institutional Investors Inc. ("MHII"), a wholly owned subsidiary of
Mitchell Hutchins, with respect to the Dividend Growth Portfolio. A special
meeting of shareholders will be held on May 26, 1994, at which time the
shareholders of the Dividend Growth Portfolio will be asked to approve the sub-
advisory contract. Upon approval, the sub-advisory contract will be implemented
immediately. If the sub-advisory contract is not approved, Mitchell Hutchins
will continue to make and implement all investment decisions and supervise all
aspects of the Portfolio's operations. In the event the sub-advisory contract
is not approved, this Prospectus will be supplemented accordingly.

PW 21
<PAGE>

For advisory and administrative services, the Fund pays Mitchell Hutchins a
fee, computed daily and paid monthly, at the following annual rates for each
Portfolio:

<TABLE>
<CAPTION>
% OF AVERAGE
PORTFOLIO DAILY NET ASSETS
<S> <C>
Money Market Portfolio .50
Growth Portfolio .75
Dividend Growth Portfolio .70
Global Growth Portfolio .75
Global Income Portfolio .75
Government Portfolio .50
Asset Allocation Portfolio .75
</TABLE>

The fee of .75% of average net assets paid by the Growth, Global Growth and
Global Income Portfolios is higher than that paid by most funds to their
advisers but is not higher than fees paid by many funds with similar objectives
and policies. THE FEE OF .75% OF AVERAGE NET ASSETS PAID BY THE ASSET
ALLOCATION PORTFOLIO IS HIGHER THAN THAT PAID BY FUNDS WITH SIMILAR INVESTMENT
OBJECTIVES AND POLICIES TO THEIR ADVISERS.

For the fiscal year ended December 31, 1993, total expenses stated as a
percentage of average net assets for each Portfolio were 0.86% for the Money
Market Portfolio, 0.92% for the Growth Portfolio, 1.40% for the Global Growth
Portfolio, .98% for the Global Income Portfolio, .95% for the Asset Allocation
Portfolio, .79% for the Government Portfolio and 1.12% for the Dividend Growth
Portfolio.

Mitchell Hutchins is located at 1285 Avenue of the Americas, New York, New York
10019. It is a wholly owned subsidiary of PaineWebber, which is in turn wholly
owned by Paine Webber Group Inc., a publicly owned financial services holding
company. At March 31, 1994 Mitchell Hutchins was adviser or sub-adviser to 31
investment companies with 60 separate portfolios and aggregate assets of over
$25 billion.

Under the proposed sub-advisory contract between Mitchell Hutchins and MHII,
Mitchell Hutchins (not the Portfolio) will pay MHII a fee for its services as
sub-adviser for the Dividend Growth Portfolio in the amount of .25% of the
Portfolio's average daily net assets. MHII is a wholly owned subsidiary of
Mitchell Hutchins. The principal business address of MHII is 1285 Avenue of the
Americas, New York, New York 10019. MHII provides asset management services to
corporations, mutual funds, governmental organizations, employee benefit plans,
insurance funds, endowments and foundations, and as of March 31, 1994, managed
approximately $8.9 billion in assets.

Edward M. Rosenzweig is primarily responsible for the day-to-day management of
the Government Portfolio. Mr. Rosenzweig is a senior vice president of Mitchell
Hutchins and assumed responsibility for the Government Portfolio in June 1993.
Prior to joining Mitchell Hutchins in January 1993, Mr. Rosenzweig was a
portfolio manager at Gabelli O'Connor Fixed Income, where he started up and
managed the intermediate fixed income products. From April 1987 to January 1992
he was Director of Portfolio Management at the Rockefeller Group, Inc.

Stuart Waugh is primarily responsible for the day-to-day management of the
Global Income Portfolio. Mr. Waugh is a vice president of the Fund, a managing
director and a portfolio manager of Mitchell Hutchins responsible for global
fixed income investments and currency trading. He has held his Global Income
Portfolio responsibilities since its inception in May 1988 and has been
employed by Mitchell Hutchins as a portfolio manager for the last five years.

PW 22
<PAGE>

for Dividend Growth Portfolio since its inception in January 1992 and assumed
responsibility for the Asset Allocation Portfolio in February 1993. He has been
employed by Mitchell Hutchins as a portfolio manager for the last five years.
Upon implementation of the sub-advisory contract with MHII, Gyanendra (Joe)
Joshi will assume primary responsibility for managing the Dividend Growth
portfolio. Mr. Joshi has been a Managing Director, Equity Investments of MHII
since 1989.

Ellen R. Harris is primarily responsible for the day-to-day management of the
Growth Portfolio. Ms. Harris is a vice president of the Fund and chief domestic
equity strategist, a managing director and chief investment officer-domestic of
Mitchell Hutchins. She has held her Growth Portfolio responsibilities since its
inception in May 1987 and has been employed by Mitchell Hutchins as a portfolio
manager since 1983.

Frank Jennings is primarily responsible for the day-to-day management of the
Global Growth Portfolio. Mr. Jennings is a vice president of the Fund and a
managing director of Mitchell Hutchins responsible for global equities. He
assumed responsibility for the Global Growth Portfolio in December 1992, when
he joined Mitchell Hutchins. Prior to December 1992, Mr. Jennings served as
managing director of global investments for AIG Global Investors.

GENERAL INFORMATION

The Fund is registered with the SEC as an open-end management investment
company and was organized as a business trust under the laws of the
Commonwealth of Massachusetts by Declaration of Trust dated November 21, 1986.
The Fund commenced operations as an investment company on May 4, 1987. The
trustees have authority to issue an unlimited number of shares of beneficial
interest of separate series, par value $.001 per share. Shares of ten series
are authorized.

The Fund does not hold annual meetings of shareholders. There normally will be
no meetings of shareholders to elect trustees unless fewer than a majority of
the trustees holding office have been elected by shareholders. Shareholders of
record of no less than two-thirds of the outstanding shares of the Fund may
remove a trustee by votes cast in person or by proxy at a meeting called for
that purpose. The trustees are required to call a meeting of shareholders for
the purpose of voting upon the question of removal of any trustee when so
requested in writing by the shareholders of record of not less than 10% of the
Fund's outstanding shares. Each share of a Portfolio has equal voting, dividend
and liquidation rights. The shares of each Portfolio will be voted separately
except when an aggregate vote of all series is required by the 1940 Act.

CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 1776
Heritage Drive, North Quincy, Massachusetts 02171, is custodian of the assets
of the Money Market, Growth, Dividend Growth, Government and Asset Allocation
Portfolios. Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts 02109, is custodian of the assets of the Global Growth and Global
Income Portfolios and employs foreign subcustodians approved by the board of
trustees in accordance with those requirements to provide custody of the
foreign assets of these Portfolios. PFPC Inc., a subsidiary of PNC Bank,
National Association, whose principal business address is 103 Bellevue Parkway,
Wilmington, Delaware 19809, is the Fund's transfer and dividend disbursing
agent.

CONFIRMATIONS AND STATEMENTS. Shareholders receive confirmations of purchases
and redemptions of Portfolio shares. Monthly statements sent to each separate
account report that account's Portfolio activity.

PW 23
<PAGE>

APPENDIX A

GINNIE MAE CERTIFICATES. Ginnie Mae guarantees certain mortgage pass-through
certificates ("Ginnie Mae certificates") that are issued by Private Mortgage
Lenders and that represent ownership interests in individual pools of
residential mortgage loans. These securities are designed to provide monthly
payments of interest and principal to the investor. Timely payment of interest
and principal is backed by the full faith and credit of the U.S. government.
Each mortgagor's monthly payments to his lending institution on his residential
mortgage are "passed through" to certificateholders such as a Portfolio.
Mortgage pools consist of whole mortgage loans or participations in loans. The
terms and characteristics of the mortgage instruments are generally uniform
within a pool but may vary among pools. Lending institutions that originate
mortgages for the pools are subject to certain standards, including credit and
other underwriting criteria for individual mortgages included in the pools.

FANNIE MAE CERTIFICATES. Fannie Mae facilitates a national secondary market in
residential mortgage loans insured or guaranteed by U.S. government agencies
and in privately insured or uninsured residential mortgage loans (sometimes
referred to as "conventional mortgage loans" or "conventional loans") through
its mortgage purchase and mortgage-backed securities sales activities. Fannie
Mae issues guaranteed mortgage pass-through certificates ("Fannie Mae
certificates"), which represent pro rata shares of all interest and principal
payments made and owed on the underlying pools. Fannie Mae guarantees timely
payment of interest and principal on Fannie Mae certificates. The Fannie Mae
guarantee is not backed by the full faith and credit of the U.S. government.

FREDDIE MAC CERTIFICATES. Freddie Mac also facilitates a national secondary
market for conventional residential and U.S. government-issued mortgage loans
through its mortgage purchase and mortgage-backed securities sales activities.
Freddie Mac issues two types of mortgage pass-through securities: mortgage
participation certificates ("PCs") and guaranteed mortgage certificates
("GMCs"). Each PC represents a pro rata share of all interest and principal
payments made and owed on the underlying pool. Freddie Mac generally guarantees
timely monthly payment of interest on PCs and the ultimate payment of
principal, but it also has a PC program under which it guarantees timely
payment of both principal and interest. GMCs also represent a pro rata interest
in a pool of mortgages. These instruments, however, pay interest semi-annually
and return principal once a year in guaranteed minimum payments. The Freddie
Mac guarantee is not backed by full faith and credit of the U.S. government.

PRIVATE, RTC AND SIMILAR MORTGAGE-BACKED SECURITIES. Mortgage-backed securities
issued by Private Mortgage Lenders are structured similarly to the pass-through
certificates and CMOs issued or guaranteed by Ginnie Mae, Fannie Mae and
Freddie Mac. Such mortgage-backed securities may be supported by pools of U.S.
government or agency insured or guaranteed mortgage loans or by other mortgage-
backed securities issued by a government agency or instrumentality, but they
generally are supported by pools of conventional (i.e., non-government
guaranteed or insured) mortgage loans. Since such mortgage-backed securities
normally are not guaranteed by an entity having the credit standing of Ginnie
Mae, Fannie Mae or Freddie Mac, they normally are structured with one or more
types of credit enhancement. See "--Types of Credit Enhancement."

The Resolution Trust Corporation ("RTC"), which was organized by the U.S.
government in connection with the savings and loan crisis, holds assets of
failed savings associations as either a conservator or receiver for such
associations, or it acquires such assets in its corporate capacity. These
assets include, among other things, single family and multi-family mortgage
loans, as well as commercial mortgage loans. In order to dispose of such assets
in an orderly manner, RTC has established a vehicle registered with the SEC
through which it sells mortgage-backed securities. RTC mortgage-backed
securities represent pro rata interests in pools of mortgage loans that RTC
holds

PW 24
<PAGE>

or has acquired, as described above, and are supported by one or more of the
types of private credit enhancements used by Private Mortgage Lenders.

COLLATERALIZED MORTGAGE OBLIGATIONS AND MULTI-CLASS MORTGAGE PASS-THROUGHS.
CMOs are debt obligations that are collateralized either by mortgage loans or
mortgage pass-through securities (such collateral collectively being called
"Mortgage Assets"). CMOs may be issued by Private Mortgage Lenders or by
government entities such as Fannie Mae or Freddie Mac. Multi-class mortgage
pass-through securities are interests in trusts that are comprised of Mortgage
Assets and that have multiple classes similar to those of CMOs. Unless the
context indicates otherwise, references herein to CMOs include multi-class
mortgage pass-through securities. Payments of principal of and interest on the
Mortgage Assets (and in the case of CMO's any reinvestment income thereon)
provide the funds to pay debt service on the CMOs or to make scheduled
distributions on the multi-class mortgage pass-through securities. In a CMO, a
series of bonds or certificates is issued in multiple classes. Each class of
CMO, also referred to as a "tranche," is issued at a specific fixed or floating
coupon rate and has a stated maturity or final distribution date. Principal
prepayments on the Mortgage Assets may cause CMOs to be retired substantially
earlier than their stated maturities or final distribution dates. Interest is
paid or accrues on all classes of a CMO (other than any PO class) on a monthly,
quarterly or semi-annual basis. The principal and interest on the Mortgage
Assets may be allocated among the several classes of a CMO in many ways. In one
structure, payments of principal, including any principal prepayments, on the
Mortgage Assets are applied to the classes of a CMO in order of their
respective stated maturities or final distribution dates so that no payment of
principal will be made on any class of the CMO until all other classes having
an earlier stated maturity or final distribution date have been paid in full.
In some CMO structures, all or a portion of the interest attributable to one or
more of the CMO classes may be added to the principal amounts attributable to
such classes, rather than passed through to certificateholders on a current
basis, until other classes of the CMO are paid in full.

Parallel pay CMOs are structured to provide payments of principal on each
payment date to more than one class. These simultaneous payments are taken into
account in calculating the stated maturity date or final distribution date of
each class, which, as with other CMO structures, must be retired by its stated
maturity date or final distribution date but may be retired earlier. Planned
amortization class mortgage-backed securities ("PAC Bonds") are a form of
parallel pay CMO. PAC Bonds are designed to provide relatively predictable
payments of principal provided that, among other things, the actual prepayment
experience on the underlying mortgage loans falls within a contemplated range.
If the actual prepayment experience on the underlying mortgage loans is at a
rate faster or slower than the contemplated range, or if deviations from other
assumptions occur, principal payments on a PAC Bond may be greater or smaller
than predicted. The magnitude of the contemplated range varies from one PAC
Bond to another; a narrower range increases the risk that prepayments will be
greater or smaller than contemplated.

ARM AND FLOATING RATE MORTGAGE-BACKED SECURITIES. ARM mortgage-backed
securities are mortgage-backed securities that represent a right to receive
interest payments at a rate that is adjusted to reflect the interest earned on
a pool of mortgage loans bearing variable or adjustable rates of interest (such
mortgage loans are referred to as "ARMs"). Floating rate mortgage-backed
securities are classes of mortgage-backed securities that have been structured
to represent the right to receive interest payments at rates that fluctuate in
accordance with an index but that generally are supported by pools comprised of
fixed-rate mortgage loans. Because the interest rates on ARM and floating rate
mortgage-backed securities are reset in response to changes in a specified
market index, the values of such securities tend to be less sensitive to
interest rate fluctuations than the values of fixed-rate securities.

STRIPPED MORTGAGE-BACKED SECURITIES. Stripped mortgage-backed securities
("SMBS") are classes of mortgage-backed securities that receive different
proportions of the interest and principal

PW 25
<PAGE>

distributions from the underlying pool of Mortgage Assets and may be issued by
agencies or instrumentalities of the U.S. government or by Private Mortgage
Lenders. In the most extreme case, one class will be entitled to receive all or
a portion of the interest but none of the principal from the Mortgage Assets
(the interest-only or "IO" class) and one class will be entitled to receive all
or a portion of the principal but none of the interest (the principal-only or
"PO" class).

The yields on IO and PO classes created from mortgage-backed securities that
are not PAC Bonds generally are extremely sensitive to the rate of principal
payments (including prepayments) on the underlying Mortgage Assets. If the
underlying Mortgage Assets of such an IO class experience greater than
anticipated prepayments of principal, an investor may fail to recoup fully its
initial investment even if the securities are rated in the highest rating
category.

TYPES OF CREDIT ENHANCEMENT. To lessen the effect of failures by obligors on
Mortgage Assets to make payments, mortgage-backed securities may contain
elements of credit enhancement. Such credit enhancement falls into two
categories: (1) liquidity protection; and (2) protection against losses
resulting after default by an obligor on the underlying assets and collection
of all amounts recoverable directly from the obligor and through liquidation of
the collateral. Liquidity protection refers to the provision of advances,
generally by the entity administering the pool of assets (usually the bank,
savings association or mortgage banker that transferred the underlying loans to
the issuer of the security), to ensure that the receipt of payments on the
underlying pool occurs in a timely fashion. Protection against losses resulting
after default and liquidation ensures ultimate payment of the obligations on at
least a portion of the assets in the pool. Such protection may be provided
through guarantees, insurance policies or letters of credit obtained by the
issuer or sponsor from third parties, through various means of structuring the
transaction or through a combination of such approaches. The Portfolios will
not pay any additional fees for such credit enhancement, although the existence
of credit enhancement may increase the price of a security.

Examples of credit enhancement arising out of the structure of the transaction
include "senior-subordinated securities" (multiple class securities with one or
more classes subordinate to other classes as to the payment of principal
thereof and interest thereon, with the result that defaults on the underlying
assets are borne first by the holders of the subordinated class), creation of
"spread accounts" or "reserve funds" (where cash or investments, sometimes
funded from a portion of the payments on the underlying assets, are held in
reserve against future losses) and "over-collateralization" (where the
scheduled payments on, or the principal amount of, the underlying assets exceed
that required to make payment of the securities and pay any servicing or other
fees). The degree of credit enhancement provided for each issue generally is
based on historical information regarding the level of credit risk associated
with the underlying assets. Delinquency or loss in excess of that anticipated
could adversely affect the return on an investment in such a security.

PW 26
<PAGE>

APPENDIX B

HEDGING AND OPTION INCOME INSTRUMENTS

Certain Portfolios may use the following hedging instruments:

OPTIONS ON EQUITY AND DEBT SECURITIES AND FOREIGN CURRENCIES--A call option
is a short-term contract pursuant to which the purchaser of the option, in
return for a premium, has the right to buy the security or currency
underlying the option at a specified price at any time during the term of
the option. The writer of the call option, who receives the premium, has
the obligation, upon exercise of the option during the option term, to
deliver the underlying security or currency against payment of the exercise
price. A put option is a similar contract that gives its purchaser, in
return for a premium, the right to sell the underlying security or currency
at a specified price during the option term. The writer of the put option,
who receives the premium, has the obligation, upon exercise of the option
during the option term, to buy the underlying security or currency at the
exercise price.

OPTIONS ON STOCK INDEXES--A stock index assigns relative values to the
stocks included in the index and fluctuates with changes in the market
values of those stocks. A stock index option operates in the same way as a
more traditional stock option, except that exercise of a stock index option
is effected with cash payment and does not involve delivery of securities.
Thus, upon exercise of a stock index option, the purchaser will realize,
and the writer will pay, an amount based on the difference between the
exercise price and the closing price of the stock index.

STOCK INDEX FUTURES CONTRACTS--A stock index futures contract is a
bilateral agreement pursuant to which one party agrees to accept, and the
other party agrees to make, delivery of an amount of cash equal to a
specified dollar amount times the difference between the stock index value
at the close of trading of the contract and the price at which the futures
contract is originally struck. No physical delivery of the stocks
comprising the index is made. Generally, contracts are closed out prior to
the expiration date of the contract.

INTEREST RATE AND FOREIGN CURRENCY FUTURES CONTRACTS--Interest rate and
foreign currency futures contracts are bilateral agreements pursuant to
which one party agrees to make, and the other party agrees to accept,
delivery of a specified type of debt security or currency at a specified
future time and at a specified price. Although such futures contracts by
their terms call for actual delivery or acceptance of debt securities or
currency, in most cases the contracts are closed out before the settlement
date without the making or taking of delivery.

OPTIONS ON FUTURES CONTRACTS--Options on futures contracts are similar to
options on securities or currency, except that an option on a futures
contract gives the purchaser the right, in return for the premium, to
assume a position in a futures contract (a long position if the option is a
call and a short position if the option is a put), rather than to purchase
or sell a security or currency, at a specified price at any time during the
option term. Upon exercise of the option, the delivery of the futures
position to the holder of the option will be accompanied by delivery of the
accumulated balance that represents the amount by which the market price of
the futures contract exceeds, in the case of a call, or is less than, in
the case of a put, the exercise price of the option on the future. The
writer of an option, upon exercise, will assume a short position in the
case of a call and a long position in the case of a put.

FORWARD CURRENCY CONTRACTS--A forward currency contract involves an
obligation to purchase or sell a specific currency at a specified future
date, which may be any fixed number of days from the contract date agreed
upon by the parties, at a price set at the time the contract is entered
into.

PW 27
<PAGE>

PAINEWEBBER SERIES TRUST

SUPPLEMENT TO PROSPECTUS DATED MAY 1, 1994, AS SUPPLEMENTED
NOVEMBER 21, 1994 AND DECEMBER 23, 1994

The following amends the information regarding the Global Growth Portfolio
appearing under the caption "Management" on page PW 25 of the PaineWebber
Series Trust Prospectus:

The Trust's board of trustees expects to call a special meeting
of the shareholders of the Fund prior to the termination of the Interim
Agreement.

The following replaces the last paragraph appearing under the caption
"Management" on page PW 25:

Dated: March 23, 1995
<PAGE>

PAINEWEBBER SERIES TRUST
1285 Avenue of the Americas
New York, New York 10019

PaineWebber Series Trust ("Fund") is a professionally managed, open-end
investment company that offers the ten series of shares ("Portfolios") listed
below. All the Portfolios except the Global Income Portfolio are diversified,
and each has its own investment objective and policies. Shares of each
Portfolio are offered only to insurance company separate accounts that fund
certain variable contracts ("Contracts"). Advisory and administrative services
are provided to the Fund by Mitchell Hutchins Asset Management Inc. ("Mitchell
Hutchins"), a wholly owned subsidiary of PaineWebber Incorporated
("PaineWebber"), and certain Portfolios, as indicated below, have sub-advisers.

* The FIXED INCOME PORTFOLIO primarily seeks current income consistent
with the preservation of capital and secondarily seeks capital
appreciation. This Portfolio invests primarily in debt securities issued
or guaranteed by the U.S. government, its agencies or instrumentalities
and high quality corporate debt securities and mortgage-backed and
asset-backed securities of private issuers. Wolf, Webb, Burk & Campbell,
Inc. serves as sub-adviser to this Portfolio.

* The BALANCED PORTFOLIO seeks total return while preserving capital. This
Portfolio invests in growth equity securities but also invests no less
than 25% of its assets in fixed income securities. Provident Investment
Counsel serves as sub-adviser to this Portfolio.

* The ASSET ALLOCATION PORTFOLIO seeks a high total return with low
volatility. This Portfolio invests primarily in a combination of equity
securities, bonds and money market instruments.

* The DIVIDEND GROWTH PORTFOLIO seeks current income and capital growth.
This Portfolio invests primarily in dividend-paying common stocks with
the potential for increasing dividends.

* The AGGRESSIVE GROWTH PORTFOLIO seeks to maximize long-term capital
appreciation. This Portfolio invests primarily in the common stocks of
U.S. companies. Nicholas-Applegate Capital Management serves as sub-
adviser to this Portfolio.

* The GLOBAL GROWTH PORTFOLIO seeks long-term capital appreciation. This
Portfolio invests primarily in common stocks of companies based in the
United States, Europe, Japan and the Pacific Basin.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is May 1, 1994.

PW 1
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Financial Highlights...................................................... PW 3
The Fund, Its Investment Objectives and Policies.......................... PW 10
Description of Securities and Investment Techniques....................... PW 16
Purchases, Redemptions and Exchanges...................................... PW 23
Dividends, Other Distributions and Federal Income Tax..................... PW 23
Valuation of Shares....................................................... PW 24
Management................................................................ PW 25
General Information....................................................... PW 28
Appendix A................................................................ PW 29
Appendix B................................................................ PW 32
</TABLE>

PW 2
<PAGE>

FINANCIAL HIGHLIGHTS

The tables below provide selected per share data and ratios for one share of
each Portfolio during the periods shown. This information is supplemented by
the financial statements and accompanying notes appearing in the Fund's Annual
Report to Shareholders for the fiscal year ended December 31, 1993, which are
incorporated by reference into the Statement of Additional Information. The
financial statements and notes, as well as the information in the tables
appearing below insofar as it relates to the five years ended December 31,
1993, have been audited by Ernst & Young, independent auditors, whose report
thereon is also included in the Annual Report to Shareholders. Further
information about the performance of each Portfolio is also included in the
Annual Report to Shareholders, which may be obtained without charge. The
information appearing below for periods prior to the year ended December 31,
1989 also has been audited by Ernst & Young whose reports thereon were
unqualified.

PW 3
<PAGE>

<TABLE>
<CAPTION>
GOVERNMENT PORTFOLIO
----------------------------------------------------
FOR THE YEARS ENDED
DECEMBER 31, FOR THE PERIOD
--------------------------------- JULY 5, 1989+ TO
1993 1992 1991 1990 DECEMBER 31, 1989
------- ------- ------- ------ -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................ $ 11.58 $ 11.61 $ 10.49 $10.17 $10.00
------- ------- ------- ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.... 0.87 0.74 0.47 0.45 0.10
Net realized and
unrealized gains from
investment transactions. 0.48 0.05 1.12 0.32 0.17
------- ------- ------- ------ ------
TOTAL INCOME FROM
INVESTMENT OPERATIONS.... 1.35 0.79 1.59 0.77 0.27
------- ------- ------- ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income....... (0.87) (0.74) (0.47) (0.45) (0.10)
Distributions from net
realized gains on
investments............. (0.13) (0.08) -- -- --
------- ------- ------- ------ ------
TOTAL DISTRIBUTIONS....... (1.00) (0.82) (0.47) (0.45) (0.10)
------- ------- ------- ------ ------
Net asset value, end of
period................... $ 11.93 $ 11.58 $ 11.61 $10.49 $10.17
======= ======= ======= ====== ======
Total return (1).......... 11.66% 6.76% 15.17% 7.58% 2.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's).................. $22,354 $24,103 $15,690 $5,192 $1,294
Ratio of expenses to
average net assets**..... 0.79% 0.76% 1.25% 1.55% 1.55%*
Ratio of net investment
income to average net
assets**................. 6.13% 6.59% 6.43% 6.80% 6.17%*
Portfolio turnover........ 7.93% 23.13% 1.39% 66.14% 0.37%
</TABLE>
- --------
* Annualized.
(1) Total return is calculated assuming a $1,000 investment on the first day
of each period reported, reinvestment of all dividends and other
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported. Total return
information for periods less than one year has not been annualized.
** During certain periods presented above, Mitchell Hutchins agreed to
reimburse the Portfolio for a portion of its operating expenses and waived
all or a portion of its advisory fee. If such reimbursements and waivers
had not been made, the annualized ratio of expenses to average net assets
and the annualized ratio of net investment income (loss) to average net
assets would have been 1.28% and 6.40%, 3.14% and 5.20% and 13.87% and
(6.15)%, respectively, for the years ending December 31, 1991 and 1990, and
for the period ended December 31, 1989.
+ Commencement of operations.

PW 4
<PAGE>

<TABLE>
<CAPTION>
GLOBAL INCOME PORTFOLIO
-------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, FOR THE PERIOD
------------------------------------------ MAY 1, 1988+ TO
1993 1992 1991 1990 1989 DECEMBER 31, 1988
------- ------- ------- ------- ------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 11.17 $ 11.65 $ 11.16 $ 10.19 $10.67 $10.00
------- ------- ------- ------- ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. 0.96 0.80 0.75 0.52 0.94 0.28
Net realized and
unrealized gains
(losses) from
investment
transactions.......... 0.90 (0.65) 0.40 1.00 (0.22) 0.39
------- ------- ------- ------- ------ ------
TOTAL INCOME FROM
INVESTMENT OPERATIONS.. 1.86 0.15 1.15 1.52 0.72 0.67
------- ------- ------- ------- ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income..... (0.94) (0.56) (0.65) (0.52) (1.06) --
Distribution in excess
of current year net
investment income..... (0.16) -- -- -- -- --
Distributions from net
realized gains from
investments........... (0.21) (0.07) (0.01) (0.03) (0.14) --
------- ------- ------- ------- ------ ------
TOTAL DISTRIBUTIONS..... (1.31) (0.63) (0.66) (0.55) (1.20) --
------- ------- ------- ------- ------ ------
Net asset value, end of
period................. $ 11.72 $ 11.17 $ 11.65 $ 11.16 $10.19 $10.67
======= ======= ======= ======= ====== ======
Total return(1)......... 16.65% 1.29% 10.30% 14.92% 6.80% 6.70%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000's)......... $64,610 $63,172 $51,988 $30,778 $7,425 $7,298
Ratio of expenses to
average net assets**... 0.98% 1.07% 1.20% 1.72% 1.86% 1.86%*
Ratio of net investment
income to average net
assets**............... 7.47% 7.20% 7.59% 8.64% 9.00% 6.35%*
Portfolio turnover rate. 68.60% 75.44% 14.29% 110.23% 32.28% 136.21%
</TABLE>
- --------
* Annualized.
(1) Total return is calculated assuming a $1,000 investment on the first day
of each fiscal period reported, reinvestment of all dividends and other
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported. Total return
information for periods less than one year has not been annualized.
** During certain periods presented above, Mitchell Hutchins agreed to
reimburse the Portfolio for a portion of its operating expenses and waived
all or a portion of its advisory fee. If such reimbursements and waivers
had not been made, the annualized ratio of expenses to average net assets
and the annualized ratio of net investment income to average net assets
would have been 1.75% and 8.61%, 2.59% and 8.27% and 3.30% and 4.91%,
respectively, for the years ended December 31, 1990 and 1989, and for the
period ended December 31, 1988.
+ Commencement of operations.

PW 5
<PAGE>

PW 6
<PAGE>

<TABLE>
<CAPTION>
GROWTH PORTFOLIO
----------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, FOR THE PERIOD
--------------------------------------------------- MAY 4, 1987+ TO
1993 1992 1991 1990 1989 1988 DECEMBER 31, 1987
------- ------- ------- ------- ------ ------ -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 15.68 $ 14.92 $ 10.57 $ 11.66 $10.38 $ 8.76 $10.00
------- ------- ------- ------- ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. -- 0.11 0.10 0.14 0.09 0.21 0.09
Net realized and
unrealized gains
(losses) from
investment
transactions.......... 3.08 0.76 4.35 (1.09) 3.90 1.41 (1.24)
------- ------- ------- ------- ------ ------ ------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS.. 3.08 0.87 4.45 (0.95) 3.99 1.62 (1.15)
------- ------- ------- ------- ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income..... -- (0.11) (0.10) (0.14) (0.30) -- (0.09)
Distributions from net
realized gains on
investments........... (0.70) -- -- -- (2.41) -- --
------- ------- ------- ------- ------ ------ ------
TOTAL DISTRIBUTIONS..... (0.70) (0.11) (0.10) (0.14) (2.71) -- (0.09)
------- ------- ------- ------- ------ ------ ------
Net asset value, end of
period................. $ 18.06 $ 15.68 $ 14.92 $ 10.57 $11.66 $10.38 $ 8.76
======= ======= ======= ======= ====== ====== ======
Total return(1)......... 19.61% 5.83% 42.10% (8.15)% 38.44% 18.49% (11.52)%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000's)......... $51,696 $46,479 $37,470 $12,283 $4,264 $ 802 $3,891
Ratio of expenses to
average net assets**... 0.92% 0.94% 1.13% 1.85% 1.76% 1.80% 1.79%*
Ratio of net investment
income to average net
assets**............... 0.00% 0.78% 1.07% 1.90% 1.53% 0.63% 3.00%*
Portfolio turnover...... 34.95% 29.36% 27.89% 35.20% 67.79% 189.62% 2.36%
</TABLE>
- --------
* Annualized.
(1) Total return is calculated assuming a $1,000 investment on the first day
of each period reported, reinvestment of all dividends and other
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported. Total return
information for periods less than one year has not been annualized.
** During certain periods presented above, Mitchell Hutchins agreed to
reimburse the Portfolio for a portion of its operating expenses and waived
all or a portion of its advisory fee. If such reimbursements and waivers
had not been made, the annualized ratio of expenses to average net assets
and the annualized ratio of net investment income (loss) to average net
assets would have been 1.91% and 1.84%, 3.61% and (0.31)%, 3.58% and
(1.15)%, and 5.44% and (0.64)%, respectively, for the years ending December
31, 1990, 1989 and 1988 and for the period ended December 31, 1987.
+ Commencement of operations.

PW 7
<PAGE>

<TABLE>
<CAPTION>
GLOBAL GROWTH PORTFOLIO
----------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, FOR THE PERIOD
--------------------------------------------------- MAY 4, 1987+ TO
1993 1992 1991 1990 1989 1988 DECEMBER 31, 1987
------- ------- ------- ------- ------ ------ -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 11.10 $ 12.06 $ 11.76 $ 11.43 $10.49 $ 8.35 $10.00
------- ------- ------- ------- ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. 0.03 0.10 0.23 0.19 0.07 0.07 0.05
Net realized and
unrealized gains
(losses) from
investment
transactions.......... 4.42 (1.01) 0.35 0.67 1.94 2.07 (1.59)
------- ------- ------- ------- ------ ------ ------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS.. 4.45 (0.91) 0.58 0.86 2.01 2.14 (1.54)
------- ------- ------- ------- ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income..... -- (0.05) (0.23) (0.19) (0.07) -- (0.05)
Distributions in excess
of net investment
income................ -- -- -- -- (0.19) -- --
Distributions from net
realized gains on
investments........... (0.58) -- (0.05) (0.34) (0.81) -- (0.06)
------- ------- ------- ------- ------ ------ ------
TOTAL DISTRIBUTIONS..... (0.58) (0.05) (0.28) (0.53) (1.07) -- (0.11)
------- ------- ------- ------- ------ ------ ------
Net asset value, end of
period................. $ 14.97 $ 11.10 $ 12.06 $ 11.76 $11.43 $10.49 $ 8.35
======= ======= ======= ======= ====== ====== ======
Total return(1)......... 40.02% (7.55)% 4.93% 7.53% 19.18% 25.63% (15.42)%*
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000's)......... $38,035 $21,493 $24,308 $16,149 $3,806 $3,250 $3,135
Ratio of expenses to
average net assets**... 1.40% 1.46% 1.53% 2.07% 2.10% 2.08% 2.10%*
Ratio of net investment
income to average net
assets**............... 0.38% 0.82% 2.12% 3.29% 0.71% 0.68% 1.09%*
Portfolio turnover...... 266.96% 127.06% 89.39% 119.65% 200.96% 32.86% 5.28%
</TABLE>
- --------
* Annualized.
(1) Total return is calculated assuming a $1,000 investment on the first day
of each fiscal period reported, reinvestment of all dividends and other
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported. Total return
information for periods less than one year has not been annualized.
** During certain periods presented above, Mitchell Hutchins agreed to
reimburse the Portfolio for a portion of its operating expenses and waived
all or a portion of its advisory fee. If such reimbursements and waivers
had not been made, the annualized ratio of expenses to average net assets
and the annualized ratio of net investment income (loss) to average net
assets would have been 2.19% and 3.17%, 4.35% and (1.54)%, 4.55% and
(1.79)% and 4.87% and (1.68)%, respectively, for the years ended December
31, 1990, 1989, and 1988 and for the period ended December 31, 1987.
+ Commencement of operations.

PW 8
<PAGE>

<TABLE>
<CAPTION>
AGGRESSIVE GROWTH BALANCED FIXED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
-------------------- -------------------- --------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
NOVEMBER 2, 1993+ NOVEMBER 2, 1993+ NOVEMBER 8, 1993+
TO DECEMBER 31, 1993 TO DECEMBER 31, 1993 TO DECEMBER 31, 1993
-------------------- -------------------- --------------------
<S> <C> <C> <C>
Net asset value, begin-
ning of period......... $10.00 $10.00 $10.00
------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. 0.01 0.01 0.02
Net realized and
unrealized losses from
investment transac
tions................. (0.05) (0.11) (0.39)
------ ------ ------
TOTAL LOSS FROM INVEST-
MENT OPERATIONS........ (0.04) (0.10) (0.37)
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net in-
vestment income....... (0.01) (0.01) (0.02)
------ ------ ------
TOTAL DISTRIBUTIONS..... (0.01) (0.01) (0.02)
------ ------ ------
Net asset value, end of
period................. $ 9.95 $ 9.89 $ 9.61
====== ====== ======
Total return(1)......... (0.36)% (0.97)% (3.73)%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000's)........ $2,814 $2,262 $1,480
Ratio of expenses to
average net assets**.. 0.00% 0.00% 0.00%
Ratio of net investment
income (loss) to aver-
age net assets**...... 3.31%* 2.92%* 3.90%*
Portfolio turnover..... 0.00% 0.00% 0.00%
</TABLE>
- --------
* Annualized.
(1) Total return is calculated assuming a $1,000 investment on the first day
of each period reported, reinvestment of all dividends and other
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported. Total return for
periods less than one year has not been annualized.
** During periods presented above, Mitchell Hutchins agreed to reimburse the
Portfolios for a portion of their operating expenses and waived all or a
portion of their advisory fees. If such reimbursements and waivers had not
been made, the annualized ratio of expenses to average net assets and the
annualized ratio of net investment income (loss) to average net assets
would have been 12.28% and (8.97)%, 15.95% and (13.03)%, and 23.52% and
(19.62)%, respectively, for the Aggressive Growth, Balanced and Fixed
Income Portfolios, respectively.
+ Commencement of operations.

PW 9
<PAGE>

THE FUND, ITS INVESTMENT OBJECTIVES AND POLICIES

The Fund is a professionally managed mutual fund. The Fund offers ten
Portfolios, each of which represents a segregated, separately managed portfolio
of securities with its own investment objective, as set forth on page PW 1, and
its own investment policies, which are summarized on page PW 1 and set forth in
more detail below. There can be no assurance that any Portfolio's investment
objective will be met. The Global Income Portfolio is managed as a non-
diversified investment company; the other Portfolios are all managed as
diversified investment companies.

Shares of the Portfolios are offered to the separate account of PaineWebber
Life Insurance Company and shares of certain Portfolios are also offered to the
separate accounts of unaffiliated insurance companies ("shared funding").
Shares of the Portfolios may serve as the underlying investments for both
annuity and life insurance Contracts ("mixed funding"). Due to differences in
tax treatment or other considerations, the interests of various Contract owners
might at some time be in conflict. The Fund currently does not foresee any such
conflict. However, the Fund's board of trustees intends to monitor events to
identify any material irreconcilable conflict that may arise and to determine
what action, if any, should be taken in response to such conflict. If such a
conflict were to occur, one or more insurance companies' separate accounts
might be required to withdraw its investments in one or more Portfolios. This
might force a Portfolio to sell securities at disadvantageous prices.

PW 10
<PAGE>

generally may invest no more than 5% of its total assets in the securities of a
single issuer (other than securities issued by the U.S. government, its
agencies or instrumentalities).

The GOVERNMENT PORTFOLIO invests primarily in high quality U.S. government
securities, which include U.S. Treasury obligations and obligations issued or
guaranteed by U.S. government agencies or instrumentalities. These latter
obligations may be backed by the full faith and credit of the U.S. government
or supported primarily or solely by the creditworthiness of the particular
agency or instrumentality. Under normal market conditions, at least 65% of the
Portfolio's total assets is invested in U.S. government securities. The
Portfolio also may invest in certain zero coupon securities that are U.S.
Treasury notes and bonds that have been stripped of their unmatured interest
coupon receipts or interests in such U.S. Treasury securities or coupons, such
as Certificates of Accrual Treasury Securities ("CATS") and Treasury Income
Growth Receipts ("TIGRS"). The staff of the Securities and Exchange Commission
("SEC") currently takes the position that "stripped" U.S. government securities
that are not issued through the U.S. Treasury STRIPS program are not U.S.
government securities. As long as the SEC staff takes this position, CATS and
TIGRS will not be counted as U.S. government securities for purposes of the 65%
investment requirement. The Portfolio may invest up to 35% of its total assets
in high quality debt securities issued or guaranteed by foreign governments,
their agencies, instrumentalities or political subdivisions or by supranational
organizations such as the World Bank ("foreign government securities"). The
Portfolio will invest only in those foreign government securities that are, at
the time of purchase, rated within one of the two highest grades assigned by
Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service Inc.
("Moody's"), assigned a comparable rating by another NRSRO or, if unrated,
determined by Mitchell Hutchins to be of comparable quality. (For an
explanation of the ratings assigned to debt securities by S&P and Moody's, see
the Statement of Additional Information.) If the Portfolio invests in foreign
government securities, it will invest in issuers located in at least two
countries, except that the Portfolio may invest up to 35% of its total assets
in issuers located in any one of the following countries: Australia, Canada,
France, Germany, Japan or the United Kingdom. No more than 55% of the total
assets of the Portfolio may be represented by U.S. Treasury obligations to
assure the Portfolio's compliance with the diversification requirements imposed
by the Internal Revenue Code on segregated asset accounts used to fund variable
annuity contracts.

The FIXED INCOME PORTFOLIO invests in U.S. government securities, which include
U.S. Treasury obligations and obligations issued or guaranteed by U.S.
government agencies or instrumentalities, including mortgage-backed securities.
These latter obligations may be backed by the full faith and credit of the U.S.
government or supported primarily or solely by the creditworthiness of the
particular agency or instrumentality. The Portfolio may also invest in
corporate debt securities, including corporate bonds, debentures and non-
convertible fixed income preferred stocks, and may invest in mortgage-backed
and asset-backed securities of private issuers. The Portfolio will invest only
in those debt securities of private issuers that are, at the time of purchase,
rated within one of the two highest grades assigned by S&P or Moody's, assigned
a comparable rating by another NRSRO or, if unrated, determined by the
Portfolio's sub-adviser, Wolf, Webb, Burk & Campbell, Inc. ("WWBC") to be of
comparable quality, except that the Portfolio may invest up to 20% of its total
assets in corporate debt securities of U.S. issuers rated at least A at the
time of purchase by S&P or Moody's, assigned a comparable rating by another
NRSRO or, if unrated, determined by WWBC to be of comparable quality. The
Portfolio may invest up to 15% of its total assets in U.S. dollar-denominated
bonds sold in the United States by foreign issuers if the securities are
regularly traded on recognized U.S. exchanges or in the U.S. over-the-counter
("OTC") market. The Portfolio will not invest more than 25% of its total assets
in mortgage-backed and asset-backed securities of private issuers. No more than
55% of the total assets of the Portfolio may be represented by U.S. Treasury
obligations to assure the Portfolio's compliance with the diversification
requirements imposed by the Internal Revenue Code on segregated asset accounts
used to fund variable annuity contracts. WWBC will seek to vary the average
maturity of the Portfolio's securities depending on WWBC's perception

PW 11
<PAGE>

of future interest rate movements, so that the average maturity will be
shortened when WWBC believes that interest rates may rise and will be
lengthened when WWBC anticipates a decline in interest rates.

The GLOBAL INCOME PORTFOLIO invests principally in high quality debt securities
of foreign and U.S. issuers. Debt securities will be considered high quality if
they are assigned one of S&P's or Moody's two highest ratings, comparably rated
by another NRSRO or, if unrated, determined by Mitchell Hutchins to be of
comparable quality. Normally, at least 65% of the Portfolio's total assets are
invested in high quality debt securities, denominated in foreign currencies or
U.S. dollars, that are issued or guaranteed by foreign and U.S. governments or
their agencies, instrumentalities or political subdivisions or by supranational
organizations such as the World Bank, or that are issued by foreign and U.S.
companies, banks and bank holding companies. Such issuers will be located in at
least five of the following countries: Australia, Austria, Belgium, Canada,
Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, Thailand, the United Kingdom and the United States. No more than
20% of the Portfolio's total assets will be invested in securities of issuers
located in any one country, except that the Portfolio may invest up to 35% of
its total assets in securities of issuers located in any one of the following
countries: Australia, Canada, France, Germany, Japan and the United Kingdom.
There is no limit on the amount of assets that may be invested in securities of
U.S. issuers. Mitchell Hutchins expects that normally more than 50% of the
Portfolio's total assets will be invested in U.S. and foreign government
securities in order to minimize credit risk and to capitalize on opportunities
that historically have been presented by, and are perceived to exist today with
respect to, such instruments. Up to 35% of the Portfolio's total assets may be
invested in debt securities rated below the two highest grades assigned by a
NRSRO but rated BBB or better by S&P, Baa or better by Moody's, comparably
rated by another NRSRO or, if unrated, determined by Mitchell Hutchins to be of
comparable quality. The Portfolio may invest up to 20% of its total assets in
sovereign debt securities rated below BBB by S&P, Baa by Moody's or comparably
rated by another NRSRO but no lower than BB by S&P, Ba by Moody's or comparably
rated by another NRSRO or, in the case of such securities assigned a commercial
paper rating, no lower than B by S&P or comparably rated by another NRSRO or,
if unrated determined by Mitchell Hutchins to be of comparable quality.
Mitchell Hutchins will purchase such securities for the Portfolio only when it
concludes that the anticipated return to the Portfolio on such investment
warrants exposure to the additional level of risk. Fundamental economic
strength, credit quality and currency and interest rate trends are the
principal determinants of the various country, geographic and industry sector
weightings within the Portfolio. Up to 5% of the Portfolio's total assets may
be invested in debt securities convertible into equity, although the Portfolio
has no current intention of converting such securities into equity or holding
them as equity upon conversion.

During its 1993 fiscal year, Global Income Portfolio had 100% of its average
annual net assets in debt securities that received a rating from S&P. The
Portfolio had the following percentages of its

PW 12
<PAGE>

average annual net assets invested in rated securities: AAA (including cash
items)--69.3%, AA--10.3%, A--0.1%, BBB--6.0% and BB--14.3%. It should be noted
that this information reflects the average composition of the Portfolio's
assets during the fiscal year ended December 31, 1993 and is not necessarily
representative of the Portfolio's assets as of the end of that fiscal year, the
current fiscal year, or at any time in the future.

The BALANCED PORTFOLIO invests in equity securities, including common stocks
and securities having the characteristics of common stocks, such as convertible
preferred stocks, convertible debt securities and warrants. The equity
securities in which the Portfolio invests are those of issuers that, in the
opinion of the Portfolio's sub-adviser, Provident Investment Counsel ("PIC"),
are high quality growth companies with superior financial and earnings
characteristics. Specifically, PIC will select equity securities of issuers
that it believes are experiencing an above-average rate of earnings growth and
have a five-year average performance record of sales, earnings, pretax margins,
return on equity and reinvestment rate at an aggregate average of 1.5 times the
average performance of the Standard & Poor's 500 Composite Stock Price Index
("S&P 500") for the same period. The Portfolio invests in a range of small,
medium and large companies; the minimum market capitalization of an issuer of a
portfolio security is expected to be $250 million.

The Balanced Portfolio also invests no less than 25% of its total assets in
fixed income securities (including U.S. government and corporate debt
securities, mortgage- and asset-backed securities of U.S. government and
private issuers), both to earn current income and to achieve gains from an
increase in the value of such securities that may occur as a result of a
decrease in interest rates as well as a perception by investors that the credit
quality of the issuer has improved. Conversely, an increase in interest rates
or a deterioration in credit quality can lead to a decline in the value of the
fixed income security. In determining whether the Portfolio should invest in a
particular fixed income security, PIC considers such factors as the price,
coupon and yield to maturity; the credit quality of the issuer; the issuer's
cash flow and the related coverage ratios; the property, if any, securing the
obligation; and the terms of the debt instrument, including subordination,
default, sinking fund and early redemption provisions. The Balanced Portfolio
may invest up to 70% of its total assets in fixed income securities, but may
invest only in debt securities rated BBB or better by S&P, Baa or better by
Moody's, assigned a comparable rating by another NRSRO or, if unrated,
determined by PIC to be of comparable quality.

The Balanced Portfolio may invest up to 20% of its assets in U.S. dollar-
denominated securities of foreign issuers that are regularly traded on
recognized U.S. exchanges or in the U.S. OTC market.

Equity Securities. Asset Allocation Portfolio invests in equity securities
based on the PWAM Equity Valuation Discipline, which is intended to identify
those industries, and companies within

PW 13
<PAGE>

industries, that appear relatively undervalued or overvalued. This strategy
tracks issuers with a minimum market capitalization of $300 million that are of
primary interest to institutional investors and currently includes
approximately 700 issuers. It determines relative investment merit by
appraising the historical performance of industries and companies through
fundamental analysis of income statement and balance sheet data, and relates
this historical record to the earnings outlook and current stock prices.

Debt Securities. The Portfolio's investments in debt securities are based on
analyses of the maturity structure and the risk structure (comparing yields on
Treasury securities to yields on riskier types of debt securities). The
Portfolio may invest in a broad variety of non-convertible debt securities,
including debt securities rated at least A by S&P or Moody's, comparably rated
by another NRSRO or, if unrated, determined by Mitchell Hutchins to be of
comparable quality, and debt securities issued or guaranteed by the U.S.
government, its agencies and instrumentalities. The Portfolio may invest up to
20% of its total assets in non-convertible debt securities that are rated as
low as BBB by S&P, Baa by Moody's, comparably rated by another NRSRO or, if
unrated, determined by Mitchell Hutchins to be of comparable quality. The
Portfolio may invest up to 10% of its total assets in non-investment grade
convertible debt securities that are rated at least B by S&P or Moody's,
comparably rated by another NRSRO or, if unrated, determined by Mitchell
Hutchins to be of comparable quality.

--at least 5% compound annual growth in earnings per share over the past
five years;

--at least 5% compound annual growth in dividends per common share over the
past five years; and

--an increased dividend per common share in each of the past five years.

PW 14
<PAGE>

The GROWTH PORTFOLIO invests primarily in common stocks issued by companies
that, in the judgment of Mitchell Hutchins, have substantial potential for
capital growth. In selecting stocks for investment by the Portfolio, Mitchell
Hutchins considers all of those factors it believes affect potential for
capital appreciation, including an issuer's current and projected revenues,
earnings, cash flow and assets, as well as general market conditions in
relevant industries. Under normal circumstances, at least 65% of the
Portfolio's total assets is invested in common stocks. For potential capital
appreciation (when, for instance, Mitchell Hutchins anticipates that market
interest rates may decline or credit factors or ratings affecting particular
issues may improve), the Portfolio's investment policies also permit investment
in debt securities, including debt securities convertible into equity
securities, rated BBB or better by S&P, Baa or better by Moody's, comparably
rated by another NRSRO or, if unrated, determined by Mitchell Hutchins to be of
comparable quality. Consistent with its investment objective, the Portfolio may
also invest up to 25% of its total assets in U.S. dollar-denominated securities
of foreign issuers if the securities are regularly traded on recognized U.S.
exchanges or in the U.S. OTC market.

The AGGRESSIVE GROWTH PORTFOLIO invests primarily in common stocks of U.S.
companies the assets and stock prices of which are expected by the Portfolio's
sub-adviser, Nicholas-Applegate Capital Management ("Nicholas-Applegate"), to
grow faster than the average rate of companies in the S&P 500. Companies in
which the Portfolio invests are diversified over a cross-section of industries
and may be growth companies, cyclical companies or companies believed to be
undergoing a basic change in operations or markets which, in the opinion of
Nicholas-Applegate, would result in a significant improvement in earnings. The
securities of such companies may be subject to more volatile market movements
than securities of larger, more established companies. The Portfolio is not
restricted to investments in companies of any particular size.

Under normal market conditions, the Portfolio will invest at least 75% of its
total assets in common stocks. The Aggressive Growth Portfolio may invest up to
25% of its total assets in preferred and convertible securities issued by
similar growth companies, corporate debt securities rated BBB or better by S&P,
Baa or better by Moody's, assigned a comparable rating by another NRSRO or, if
unrated, determined by Nicholas-Applegate to be of comparable quality, and
securities issued or guaranteed by the U.S. government, its agencies and
instrumentalities.

In making decisions with respect to common stocks for the Aggressive Growth
Portfolio, Nicholas-Applegate will use a proprietary investment methodology
that consists of investment techniques and processes designed to identify
companies with attractive earnings growth potential and to evaluate their
investment prospects.

The Aggressive Growth Portfolio may invest up to 25% of its total assets in
U.S. dollar-denominated securities of foreign issuers that are regularly traded
on recognized U.S. exchanges or in the U.S. OTC market.

PW 15
<PAGE>

from long-term trends and shifting trade patterns as they develop in the global
economy. The Portfolio may also hold other types of securities, including non-
convertible corporate debt securities, government and money market securities
of U.S. and foreign issuers, and cash (foreign currencies or U.S. dollars), in
such proportions as, in the opinion of Mitchell Hutchins, prevailing market,
economic or political conditions warrant.

DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES

U.S. GOVERNMENT SECURITIES. Under normal market conditions, the Government
Portfolio invests at least 65% of its total assets in U.S. government
securities. The Fixed Income Portfolio and the Global Income Portfolio are
authorized to invest a substantial portion of their assets in U.S. government
securities and the other Portfolios may invest in U.S. government securities
consistent with their investment objectives. The U.S. government securities in
which the Portfolios may invest include direct obligations of the U.S.
government (such as Treasury bills, notes and bonds) and obligations issued by
U.S. government agencies and instrumentalities, including securities that are
backed by the full faith and credit of the U.S. government (such as Government
National Mortgage Association ("Ginnie Mae") certificates) and securities that
are supported primarily or solely by the creditworthiness of the issuer (such
as securities of the Federal National Mortgage Association ("Fannie Mae"), the
Federal Home Loan Mortgage Corporation ("Freddie Mac") and the Tennessee Valley
Authority). U.S. government securities are considered among the most
creditworthy of fixed income investments. Because of this, the yields available
from U.S. government securities are generally lower than the yields available
from corporate debt securities. Nevertheless, the values of U.S. government
securities (like those of fixed income securities generally) will change as
interest rates fluctuate.

Asset-backed securities have structural characteristics similar to mortgage-
backed securities. However, the underlying assets are not first-lien mortgage
loans or interests therein, but include assets such as motor vehicle
installment loan contracts, home equity loans, leases of various types of real
and personal property and receivables from revolving credit (credit card)
agreements. Such assets are securitized through the use of trusts or special
purpose corporations. Payments or distributions of principal and interest on
asset-backed securities may be guaranteed up to certain amounts and for a
certain time period by a letter of credit or a pool insurance policy issued by
a financial institution unaffiliated with the issuer or other credit
enhancements may be present. Asset-backed securities are described briefly in
Appendix A to this Prospectus and are discussed further in the Statement of
Additional Information.

PW 16
<PAGE>

on mortgage-backed and asset-backed securities are made more frequently
(usually monthly), and that principal may be prepaid at any time because the
underlying mortgage loans or other assets generally may be prepaid at any time.
As a result, if a Portfolio purchases these securities at a premium, a
prepayment rate that is faster than expected will reduce yield to maturity,
while a prepayment rate that is slower than expected will have the opposite
effect of increasing yield to maturity. Conversely, if a Portfolio purchases
these securities at a discount, faster than expected prepayments will increase,
while slower than expected prepayments will reduce, yield to maturity. Amounts
available for reinvestment are likely to be greater during a period of
declining interest rates and, as a result, are likely to be reinvested at lower
interest rates than during a period of rising interest rates. Accelerated
prepayments on securities purchased by a Portfolio at a premium also impose a
risk of loss of principal because the premium may not have been fully amortized
at the time the principal is repaid in full. The market for privately issued
mortgage-backed and asset-backed securities is smaller and less liquid than the
market for mortgage-backed securities of government issuers. Derivative
securities, such as stripped mortgage-backed securities ("SMBS"), generally are
more sensitive to changes in prepayment and interest rates and the market for
such securities is less liquid than is the case for traditional debt securities
and mortgage-backed and asset-backed securities. In some cases, the market
value of SMBS may be extremely volatile.

It should be noted that new types of mortgage-backed and asset-backed
securities and derivative securities are developed and marketed from time to
time and that, consistent with their investment limitations, the Portfolios
expect to invest in those new types of securities that Mitchell Hutchins or the
applicable sub-adviser believes may assist the Portfolio in achieving its
investment objective.

FOREIGN SECURITIES. The Global Growth and Global Income Portfolios invest a
substantial portion of their assets in foreign securities and the Government
Portfolio may invest up to 35% of its total assets in foreign government
securities. In addition, the Growth, Dividend Growth, Fixed Income, Balanced
and Aggressive Growth Portfolios may each invest a portion of its total assets
in U.S. dollar-denominated securities of foreign issuers if such securities are
regularly traded on recognized U.S. exchanges or in the U.S. OTC market and the
Asset Allocation Portfolio also may invest in such securities. Accordingly, an
investment in any of these Portfolios involves risks relating to political,
social and economic developments abroad, as well as risks resulting from the
differences between the regulations to which U.S. and foreign issuers and
markets are subject. These risks are greater with respect to the Global Growth,
Global Income and Government Portfolios because a substantially greater portion
of their assets may be invested in such securities and because these Portfolios
may invest in foreign securities that are denominated in foreign currencies and
traded outside the U.S. securities markets. These risks may include
expropriation, confiscatory taxation, withholding taxes on dividends and
interest, limitations on the use or transfer of Portfolio assets and political
or social instability or diplomatic developments. Moreover, individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position.
Securities of many foreign companies may be less liquid and their prices more
volatile than securities of comparable U.S. companies. While the Portfolios
generally invest only in securities that are regularly traded on recognized
exchanges or in OTC markets, from time to time foreign securities may be
difficult to liquidate rapidly without significantly depressing the price of
such securities. There may be less publicly available information concerning
foreign issuers of securities held by these Portfolios than is available
concerning U.S. companies. Transactions in foreign securities may be subject to
less efficient settlement practices. Legal remedies for defaults and disputes
may have to be pursued in foreign courts, whose procedures differ substantially
from those of U.S. courts.

PW 17
<PAGE>

shareholders by the Portfolio. If the value of a foreign currency rises against
the U.S. dollar, the value of a Portfolio's assets denominated in that currency
will increase; correspondingly, if the value of a foreign currency declines
against the U.S. dollar, the value of a Portfolio's assets denominated in that
currency will decrease. The exchange rates between the U.S. dollar and other
currencies are determined by supply and demand in the currency exchange
markets, international balances of payments, speculation and other economic and
political conditions. In addition, some foreign currency values may be volatile
and there is the possibility of governmental controls on currency exchange or
governmental intervention in currency markets. Foreign securities trading
practices, including those involving securities settlement where Portfolio
assets may be released prior to receipt of payment, may expose a Portfolio to
increased risk in the event of a failed trade or the insolvency of a foreign
broker-dealer. Any of these factors could adversely affect these Portfolios.

FOREIGN BANK AND FOREIGN BRANCH INSTRUMENTS. The Money Market Portfolio may
invest in obligations of domestic branches of foreign banks and foreign
branches of domestic banks. The Global Income Portfolio may invest in these
instruments and also in obligations of bank holding companies and foreign
banks. The other Portfolios may invest in such securities consistent with their
investment objectives and policies. Such investments may involve risks that are
different from investments in obligations of U.S. branches of domestic banks.
These risks may include future unfavorable political and economic developments,
possible withholding taxes, seizure of foreign deposits, currency controls,
interest limitations or other governmental restrictions that might affect the
payment of principal or interest on the securities held by a Portfolio.
Additionally, there may be less publicly available information about foreign
banks and foreign branches of U.S. banks, as these institutions may not be
subject to the same regulatory requirements as domestic banks.

DEBT SECURITIES. The Global Income, Balanced, Asset Allocation, Dividend
Growth, Growth, Aggressive Growth and Global Growth Portfolios all may invest a
substantial portion of their assets in debt securities rated within any one of
the four highest grades assigned by S&P or Moody's or assigned a comparable
rating by another NRSRO. Debt securities rated Baa by Moody's or BBB by S&P are
investment grade, although Moody's considers securities rated Baa to have
speculative

PW 18
<PAGE>

characteristics. Changes in economic conditions or other circumstances are more
likely to lead to a weakened capacity for such securities to make principal and
interest payments than is the case for higher grade debt securities. The Asset
Allocation Portfolio may invest up to 10% of its total assets in non-investment
grade convertible debt securities and the Global Income Portfolio may invest up
to 20% of its total assets in non-investment grade sovereign debt securities.
Debt securities rated below investment grade are deemed by these agencies to be
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal and may involve major risk exposures to adverse conditions.
Such securities are commonly referred to as "junk bonds." All Portfolios are
permitted to purchase debt securities that are not rated by S&P, Moody's or
another NRSRO but that Mitchell Hutchins or the applicable sub-adviser
determines to be of comparable quality to that of rated securities in which
such Portfolio may invest. Such securities are included in the computation of
any percentage limitations applicable to the comparable rated securities.

The market value of debt securities generally varies inversely with interest
rate changes. Ratings of debt securities represent the rating agency's opinion
regarding their quality, are not a guarantee of quality and may be reduced
after a Portfolio has acquired the security. Mitchell Hutchins or the
applicable sub-adviser will consider such an event in determining whether the
Portfolio should continue to hold the security but the Portfolio is not
required to dispose of it. Credit ratings attempt to evaluate the safety of
principal and interest payments and do not evaluate the risks of fluctuations
in market value. Also, rating agencies may fail to make timely changes in
response to subsequent events, so that an issuer's financial condition may be
better or worse than the rating indicates.

Lower rated debt securities generally offer a higher current yield than that
available from higher grade issues, but they involve higher risks, in that they
are especially subject to adverse changes in general economic conditions and in
the industries in which the issuers are engaged, to changes in the financial
condition of the issuers and to price fluctuation in response to changes in
interest rates. During periods of economic downturn or rising interest rates,
highly leveraged issuers may experience financial stress which could adversely
affect their ability to make payments of principal and interest and increase
the possibility of default. In addition, such issuers may not have more
traditional methods of financing available to them, and may be unable to repay
debt at maturity by refinancing. The risk of loss due to default by such
issuers is significantly greater because such securities frequently are
unsecured and subordinated to the prior payment of senior indebtedness.

PW 19
<PAGE>

in a loss or missed opportunity to make an alternative investment. Depending on
market conditions, a Portfolio's when-issued and delayed-delivery purchase
commitments could cause its net asset value per share to be more volatile,
because such securities may increase the amount by which the Portfolio's total
assets, including the value of when-issued and delayed-delivery securities held
by the Portfolio, exceed its net assets.

REPURCHASE AGREEMENTS. Each Portfolio may enter into repurchase agreements.
Repurchase agreements are transactions in which a Portfolio purchases
securities from a bank or recognized securities dealer and simultaneously
commits to resell the securities to the bank or dealer at an agreed-upon date
and price reflecting a market rate of interest unrelated to the coupon rate or
maturity of the purchased securities. Repurchase agreements carry certain risks
not associated with direct investments in securities, including possible
decline in the market value of the underlying securities and delays and costs
to a Portfolio if the other party to the repurchase agreement becomes
insolvent, each Portfolio intends to enter into repurchase agreements only with
banks and dealers in transactions believed by Mitchell Hutchins or the
applicable sub-adviser to present minimal credit risks in accordance with
guidelines established by the Fund's board of trustees.

REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS. The Global Income and Balanced
Portfolios each may enter into reverse repurchase agreements with banks and
broker-dealers up to an aggregate value of not more than 10% of its total
assets. Such agreements involve the sale of securities held by the Portfolio
subject to the Portfolio's agreement to repurchase the securities at an agreed-
upon date and price. Such agreements are considered to be borrowings and may be
entered into only for temporary purposes. The market value of securities sold
under reverse repurchase agreements typically is greater than the proceeds of
the sale, and accordingly, the market value of the securities sold is likely to
be greater than the value of the securities in which the Global Income
Portfolio or Balanced Portfolio invests those proceeds. Thus, reverse
repurchase agreements involve the risk that the buyer of the securities sold by
the Portfolio might be unable to deliver them when the Portfolio seeks to
repurchase. In the event the buyer of securities under a reverse repurchase
agreement files for bankruptcy or becomes insolvent, such buyer or its trustee
or receiver may receive an extension of time to determine whether to enforce
the Portfolio's obligation to repurchase the securities and the Portfolio's use
of the proceeds of the reverse repurchase agreement may effectively be
restricted pending such decision. Neither Portfolio will purchase securities
while borrowings (including reverse repurchase agreements) in excess of 5% of
the value of the Portfolio's total assets are outstanding.

The Balanced Portfolio may enter into dollar rolls, in which the Portfolio
sells mortgage-backed or other securities for delivery in the current month and
simultaneously contracts to repurchase substantially similar securities on a
specified future date. In the case of dollar rolls involving mortgage-backed
securities, the mortgage-backed securities that are repurchased will be of the
same type, and will have the same interest rate and maturity, as those sold but
generally will be supported by different pools of mortgages with substantially
similar prepayment characteristics. The Portfolio forgoes principal and
interest paid during the roll period on the securities sold in a dollar roll,
but the Portfolio is compensated by the difference between the current sales
price and the lower price for the future purchase as well as by any interest
earned on the proceeds of the securities sold. The Portfolio also could be
compensated through the receipt of fee income equivalent to a lower forward
price.

The dollar rolls and reverse repurchase agreements entered into by the Balanced
Portfolio normally will be arbitrage transactions in which the Portfolio will
maintain an offsetting position in securities or repurchase agreements that
mature on or before the settlement date on the related dollar roll or reverse
repurchase agreement. Since the Portfolio will receive interest on the
securities or repurchase agreements in which it invests the transaction
proceeds, such transactions may involve leverage. However, since such
securities or repurchase agreements must satisfy the quality

PW 20
<PAGE>

requirements of the Portfolio, and will mature on or before the settlement date
on the dollar roll or reverse repurchase agreement, PIC believes that such
arbitrage transactions do not present the risks to the Portfolio that are
associated with other types of leverage.

Dollar rolls and reverse repurchase agreements will be considered to be
borrowings and, accordingly, will be subject to the Balanced Portfolio's
limitations on borrowings, which will restrict the aggregate of such
transactions (plus any other borrowings) to 10% of the Portfolio's total
assets. The Portfolio will not enter into dollar rolls or reverse repurchase
agreements, other than in arbitrage transactions as described above, in an
aggregate amount in excess of 5% of the Portfolio's total assets. The Portfolio
has no present intention to enter into dollar rolls other than in such
arbitrage transactions, and it has no present intention to enter into reverse
repurchase agreements other than in such arbitrage transactions or for
temporary or emergency purposes.

HEDGING AND RELATED INCOME STRATEGIES. Except for the Money Market and Asset
Allocation Portfolios, each Portfolio may use options (both exchange-traded and
OTC) and futures contracts to attempt to enhance income and may attempt to
reduce the overall risk of its investments (hedge) by using options and futures
contracts, although the Fixed Income and Aggressive Growth Portfolios have no
intention of doing so during the coming year. The Government, Global Income and
Global Growth Portfolios may also use forward currency contracts. A Portfolio's
ability to use these strategies may be limited by market conditions, regulatory
limits and tax considerations. Appendix B to this Prospectus describes the
hedging instruments that the Portfolios may use. The Statement of Additional
Information contains further information on these strategies. Each Portfolio
eligible to use hedging and related income strategies may write (sell) covered
call and put options, buy call and put options on securities in which it is
authorized to invest and on stock indexes, sell stock index or interest rate
futures contracts and buy put and call options and write covered call options
on such futures contracts. The Government, Global Income and Global Growth
Portfolios each may write covered call options and buy put and call options on
foreign currencies, buy or sell foreign currency futures contracts, buy put and
call options and write covered call options on such contracts. These Portfolios
may enter into forward currency contracts for the purchase or sale of a
specified currency at a specified future date either with respect to specific
transactions or with respect to portfolio positions. For example, when Mitchell
Hutchins anticipates making a currency exchange transaction in connection with
the purchase or sale of a security, a Portfolio may enter into a forward
contract in order to set the exchange rate at which the transaction will be
made. A Portfolio also may enter into a forward contract to sell an amount of a
foreign currency approximating the value of some or all of the Portfolio's
securities positions denominated in such currency. A Portfolio may use forward
contracts in one currency or a basket of currencies to hedge against
fluctuations in the value of another currency when Mitchell Hutchins
anticipates that there will be a correlation between the two and may use
forward currency contracts to shift a Portfolio's exposure to foreign currency
fluctuations from one country to another. The purpose of entering into these
contracts is to minimize the risk to a Portfolio from adverse changes in the
relationship between the U.S. dollar and foreign currencies.

PW 21
<PAGE>

A Portfolio might not employ any of the strategies described above, and there
can be no assurance that any strategy used will succeed. If Mitchell Hutchins
or the applicable sub-adviser incorrectly forecasts interest rates, market
values or other economic factors for a Portfolio, the Portfolio would be in a
better position had it not hedged at all. The use of these strategies involves
certain special risks, including (1) the fact that skills needed to use hedging
instruments are different from those needed to select the Portfolios'
securities, (2) possible imperfect correlation, or even no correlation, between
price movements of hedging instruments and price movements of the investments
being hedged, (3) the fact that, while hedging strategies can reduce the risk
of loss, they can also reduce the opportunity for gain, or even result in
losses, by offsetting favorable price movements in hedged investments and (4)
the possible inability of a Portfolio to purchase or sell a portfolio security
at a time that otherwise would be favorable for it to do so, or the possible
need for a Portfolio to sell a portfolio security at a disadvantageous time,
due to the need for the Portfolio to maintain "cover" or to segregate
securities in connection with hedging transactions and the possible inability
of a Portfolio to close out or to liquidate its hedged position.

ILLIQUID SECURITIES. Each Portfolio may invest up to 10% of its net assets (15%
for the Aggressive Growth Portfolio) in illiquid securities, including certain
cover for OTC options, repurchase agreements with maturities in excess of seven
days and securities whose disposition is restricted under the federal
securities laws (other than "Rule 144A" securities which Mitchell Hutchins has
determined to be liquid under procedures approved by the Trust's board of
trustees). Rule 144A establishes a "safe harbor" from the registration
requirements of the Securities Act of 1933 ("1933 Act"). Institutional markets
for restricted securities have developed as a result of Rule 144A, providing
both readily ascertainable values for restricted securities and the ability to
liquidate an investment to satisfy share redemption orders. An insufficient
number of qualified institutional buyers interested in purchasing Rule 144A-
eligible restricted securities held by a Portfolio, however, could affect
adversely the marketability of such portfolio securities and the Portfolio
might be unable to dispose of such securities promptly or at favorable prices.

PORTFOLIO TURNOVER. The portfolio turnover rate may vary greatly from year to
year and will not be a limiting factor when Mitchell Hutchins or the applicable
sub-adviser deems portfolio changes appropriate. A higher turnover rate may
involve correspondingly greater brokerage and other transaction costs, which
will be borne directly by the affected Portfolio.

OTHER INFORMATION. When Mitchell Hutchins or the applicable sub-adviser
believes unusual circumstances warrant a defensive posture, each Portfolio
temporarily may commit all or any portion of its assets to cash, U.S.
government securities or money market instruments, including repurchase
agreements. The Government, Global Income and Global Growth Portfolios may hold
cash in U.S. dollars or foreign currencies and money market instruments of U.S.
or foreign issuers, including instruments backed by the U.S. or foreign
governments, their agencies or instrumentalities and repurchase agreements
secured thereby. Each Portfolio may borrow money for temporary purposes but not
in excess of 10% of its total assets (33 1/3% for the Fixed Income Portfolio
and 20% for the Aggressive Growth Portfolio).

PW 22
<PAGE>

PURCHASES, REDEMPTIONS AND EXCHANGES

A separate account may exchange shares of one Portfolio for shares of another
Portfolio at their relative net asset values per share.

DIVIDENDS, OTHER DISTRIBUTIONS AND FEDERAL INCOME TAX

The Money Market Portfolio declares as dividends on each Business Day all of
its net investment income, payable to shareholders of record as of the close of
regular trading on the New York Stock Exchange ("NYSE") (currently 4:00 p.m.,
eastern time) on the preceding Business Day; those dividends are paid monthly.
A "Business Day" is any day, Monday through Friday, on which the NYSE is open
for business. Net investment income of the Portfolio consists of accrued
interest and earned discount (including both original issue and market
discounts), less amortization of market premium and applicable expenses. Net
investment income is calculated and dividends are declared immediately prior to
the determination of net asset value per share. The Portfolio generally
distributes to its shareholders any net short-term capital gain annually after
the end of its fiscal year on December 31 but may make more frequent
distributions of that gain if necessary to maintain its net asset value per
share at $1.00 or to avoid income tax. The Portfolio does not expect to realize
long-term capital gain and thus does not anticipate any distributions of net
capital gain.

PW 23
<PAGE>

value of eligible variable annuity or variable life insurance contracts. See
the applicable Contract prospectus for a discussion of the federal income tax
status of (1) the separate accounts that purchase and hold shares of the
Portfolios and (2) the holders of Contracts funded through those accounts.

VALUATION OF SHARES

PW 24
<PAGE>

the then-prevailing exchange rate. It should be recognized that judgment plays
a greater role in valuing lower rated debt securities because there is less
reliable, objective data available.

MANAGEMENT

The Fund's board of trustees, as part of its overall management responsibility,
oversees various organizations responsible for each Portfolio's day-to-day
management. Mitchell Hutchins, the investment adviser and administrator for
each Portfolio, makes and implements all investment decisions and supervises
all aspects of the operations of the Money Market, Government, Global Income,
Asset Allocation, Dividend Growth, Growth and Global Growth Portfolios.
Mitchell Hutchins supervises the activities of WWBC, PIC and Nicholas-
Applegate, the sub-advisers for the Fixed Income, Balanced and Aggressive
Growth Portfolios, respectively, and supervises all other aspects of these
Portfolios' operations. WWBC, PIC and Nicholas-Applegate, as sub-advisers for
the Fixed Income, Balanced and Aggressive Growth Portfolios, respectively, make
and implement all investment decisions for these Portfolios. Brokerage
transactions for the Portfolios may be conducted through PaineWebber or its
affiliates in accordance with procedures adopted by the Fund's board of
trustees.

For advisory and administrative services, the Fund pays Mitchell Hutchins a
fee, computed daily and paid monthly, at the following annual rates for each
Portfolio:

<TABLE>
<CAPTION>
% OF AVERAGE
PORTFOLIO DAILY NET ASSETS
<S> <C>
Money Market Portfolio .50
Government Portfolio .50
Fixed Income Portfolio .50
Global Income Portfolio .75
Balanced Portfolio .75
Asset Allocation Portfolio .75
Dividend Growth Portfolio .70
Growth Portfolio .75
Aggressive Growth Portfolio .80
Global Growth Portfolio .75
</TABLE>

The fee of .75% of average net assets paid by the Global Income, Balanced,
Growth and Global Growth Portfolios and the fee of .80% of average net assets
paid by the Aggressive Growth Portfolio are higher than those paid by most
funds to their advisers but not higher than fees paid by many funds with
similar objectives and policies. THE FEE OF .75% OF AVERAGE NET ASSETS PAID BY
THE ASSET ALLOCATION PORTFOLIO IS HIGHER THAN THAT PAID BY FUNDS WITH SIMILAR
INVESTMENT OBJECTIVES AND POLICIES TO THEIR ADVISERS.

The Portfolios also incur other expenses in their operations, such as custody
fees, brokerage commissions, professional fees, expenses of board and
shareholder meetings, fees and expenses

PW 25
<PAGE>

relating to registration of their shares, taxes and governmental fees, fees and
expenses of the trustees, costs of obtaining insurance, organizational expenses
and extraordinary expenses, including costs or losses in any litigation.

For the fiscal year ended December 31, 1993, total expenses stated as a
percentage of average net assets were .86% for the Money Market Portfolio, .79%
for the Government Portfolio, .98% for the Global Income Portfolio, .95% for
the Asset Allocation Portfolio, 1.12% for the Dividend Growth Portfolio, .92%
for the Growth Portfolio and 1.40% for the Global Growth Portfolio.

For the fiscal period ended December 31, 1993 Mitchell Hutchins reimbursed
Fixed Income, Balanced and Aggressive Growth Portfolios for a portion of their
operating expenses and waived all or a portion of its advisory fees so that
each such Portfolio's total expenses stated as a percentage of average net
assets was 0.00%. If such reimbursements and waivers had not been made, the
annualized ratio of expenses to average net assets would have been 23.52%,
15.95% and 12.28%, respectively. Mitchell Hutchins does not expect to waive its
fees or reimburse expenses for any Portfolio during the current fiscal year.

Mitchell Hutchins (not the Fund) pays WWBC a fee for its services as sub-
adviser for the Fixed Income Portfolio in the amount of .30% of the Portfolio's
average daily net assets. WWBC is located at 1525 Locust Street, 11th Floor,
Philadelphia, Pennsylvania 19102, and is a corporation controlled by four
individuals, each of whom owns 25% of its capital stock. WWBC provides
investment advisory services to corporations, government funds, Taft-Hartley
plans, foundations and endowments and, as of March 31, 1994, managed
approximately $1.1 billion in assets.

Mitchell Hutchins (not the Fund) pays PIC a fee for its services as sub-adviser
for the Balanced Portfolio in the amount of .45% of the Portfolio's average
daily net assets. PIC is located at 300 North Lake Avenue, Pasadena, California
91109 and is a corporation controlled by five of its eight principals, Robert
M. Kommerstad, Jeffrey J. Miller, George E. Handtmann, Thomas J. Condon and
Larry D. Tashjian. These principals together own 97% of PIC's outstanding
shares. PIC provides investment advisory services to individual and
institutional clients and, as of March 31, 1994, managed approximately $13
billion in assets.

Under the proposed sub-advisory contract between Mitchell Hutchins and MHII,
Mitchell Hutchins (not the Fund) will pay MHII a fee for its services as sub-
adviser for the Dividend Growth Portfolio in the amount of .25% of the
Portfolio's average daily net assets. MHII is a wholly owned subsidiary of
Mitchell Hutchins. The principal business address of MHII is 1285 Avenue of the
Americas, New York, New York 10019. MHII provides asset management services to
corporations, mutual funds, governmental organizations, employee benefit plans,
insurance funds, endowments and foundations, and as of March 31, 1994, managed
approximately $8.9 billion in assets.

Mitchell Hutchins (not the Fund) pays Nicholas-Applegate a fee for its services
as sub-adviser for the Aggressive Growth Portfolio in the amount of .50% of the
Portfolio's average daily net assets. Nicholas-Applegate is located at 600 West
Broadway, 30th Floor, San Diego, California 92101 and is a California limited
partnership. Nicholas-Applegate's general partner is Nicholas-Applegate Capital
Management Inc., a California corporation owned by Arthur E. Nicholas. He and
five other partners manage a staff of 130 employees. As of March 31, 1994,
Nicholas-Applegate managed a total of approximately $13 billion in assets for
its client accounts, which include employee benefit plans of

PW 26
<PAGE>

corporations, public retirement systems and unions, university endowments and
other institutional investors.

William J. Campbell and Raymond J. Munsch are primarily responsible for the
day-to-day management of the Fixed Income Portfolio. Mr. Campbell is a vice
president and a principal of WWBC and has held these positions since 1980. He
has 23 years of investment experience. Mr. Munsch is a vice president and
portfolio manager of WWBC. Prior to December 1989, Mr. Munsch was a vice
president and manager of the Asset Management Department for Meritor Savings
Bank. Mr. Munsch has over 19 years of investment experience in all areas of
fixed income securities.

Thomas J. Condon, Paula B. Blacher and Thomas M. Mitchell are primarily
responsible for the day-to-day management of the Balanced Portfolio. Mr. Condon
has been a managing director of PIC since 1981. Ms. Blacher is a vice president
of PIC and has held that position since 1985. Mr. Mitchell is executive vice
president of PIC and has held that position since 1983.

Whitney Merrill is primarily responsible for the day-to-day management of the
Dividend Growth and Asset Allocation Portfolios. Mr. Merrill is a vice
president of the Fund and a managing director of Mitchell Hutchins responsible
for domestic equity investments. He has held his responsibilities for Dividend
Growth Portfolio since its inception in January 1992 and assumed responsibility
for the Asset Allocation Portfolio in February 1993. He has been employed by
Mitchell Hutchins as a portfolio manager for the last five years. Upon
implementation of the sub-advisory contract with MHII, Gyanendra (Joe) Joshi
will assume primary responsibility for managing the Dividend Growth portfolio.
Mr. Joshi has been a Managing Director, Equity Investments of MHII since 1989.

The Systems Driven Internal Research team at Nicholas-Applegate, which is
primarily responsible for the day-to-day management of the Aggressive Growth
Portfolio, is currently under the supervision of Arthur E. Nicholas (since
February 1994). Mr. Nicholas has been the chief investment officer and managing
partner of Nicholas-Applegate since its organization in 1984.

PW 27
<PAGE>

GENERAL INFORMATION

CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 1776
Heritage Drive, North Quincy, Massachusetts 02171, is custodian of the assets
of the Money Market, Government, Fixed Income, Balanced, Asset Allocation,
Dividend Growth, Growth and Aggressive Growth Portfolios. Brown Brothers
Harriman & Co., 40 Water Street, Boston, Massachusetts 02109, is custodian of
the assets of the Global Income and Global Growth Portfolios and employs
foreign subcustodians approved by the board of trustees in accordance with
those requirements to provide custody of the foreign assets of these
Portfolios. PFPC Inc., a subsidiary of PNC Bank, National Association, whose
principal business address is 103 Bellevue Parkway, Wilmington, Delaware 19809,
is the Fund's transfer and dividend disbursing agent.

PW 28
<PAGE>

APPENDIX A

PW 29
<PAGE>

or has acquired, as described above, and are supported by one or more of the
types of private credit enhancements used by Private Mortgage Lenders.

In a CMO, a series of bonds or certificates is issued in multiple classes. Each
class of CMO, also referred to as a "tranche," is issued at a specific fixed or
floating coupon rate and has a stated maturity or final distribution date.
Principal prepayments on the Mortgage Assets may cause CMOs to be retired
substantially earlier than their stated maturities or final distribution dates.
Interest is paid or accrues on all classes of a CMO (other than any PO class)
on a monthly, quarterly or semi-annual basis. The principal and interest on the
Mortgage Assets may be allocated among the several classes of a CMO in many
ways. In one structure, payments of principal, including any principal
prepayments, on the Mortgage Assets are applied to the classes of a CMO in the
order of their respective stated maturities or final distribution dates so that
no payment of principal will be made on any class of the CMO until all other
classes having an earlier stated maturity or final distribution date have been
paid in full. In some CMO structures, all or a portion of the interest
attributable to one or more of the CMO classes may be added to the principal
amounts attributable to such classes, rather than passed through to
certificateholders on a current basis, until other classes of the CMO are paid
in full.

PW 30
<PAGE>

STRIPPED MORTGAGE-BACKED SECURITIES. Stripped mortgage-backed securities
("SMBS") are classes of mortgage-backed securities that receive different
proportions of the interest and principal distributions from the underlying
pool of Mortgage Assets and may be issued by agencies or instrumentalities of
the U.S. government or by Private Mortgage Lenders. In the most extreme case,
one class will be entitled to receive all or a portion of the interest but none
of the principal from the Mortgage Assets (the interest-only or "IO" class) and
one class will be entitled to receive all or a portion of the principal but
none of the interest (the principal-only or "PO" class).

PW 31
<PAGE>

APPENDIX B

HEDGING AND OPTION INCOME INSTRUMENTS

Certain Portfolios may use the following hedging instruments:

PW 32