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[LOGO]
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August 20, 1997
Dear Contract Owner,
We are pleased to present the June 30, 1997 semiannual report for
Milestones, offered exclusively through PaineWebber. This report contains
important information about PaineWebber Series Trust, including financial
statements, for the six months ended June 30, 1997. As you know, PaineWebber
Life Variable Annuity Account holds shares of PaineWebber Series Trust to fund
Milestones Variable Annuity.
INVESTMENT OVERVIEW--DOMESTIC
THE EQUITY MARKET
Although the first two months of the period were characterized by
significant gains in the stock market, inflation fears grew quickly in the wake
of stronger than expected economic growth and rising employment. This in turn
prompted the Federal Reserve to raise interest rates by 25 basis points in March
in a preemptive strike against inflation, and volatile and difficult financial
markets ensued. By mid-period, however, stocks rallied on signs that economic
growth was decelerating and that the Federal Reserve would not move again on
interest rates. Better than expected earnings, combined with a significant
inflow of capital into equity mutual funds, also helped to drive stock prices
steadily higher.
Proof of the market's all-encompassing health during this time was the fact
that a broad range of sectors--most notably financials, technology and
healthcare--participated in the market's upward movement. Additionally, both
large capitalization and small capitalization stocks ("large-caps" and "small-
caps," respectively) gained ground. Small-caps, which have lagged large-caps
since the beginning of 1995, came back especially strong, rising almost as much
as large-caps over the last three months of the period.
THE FIXED INCOME MARKET
As a result of the Fed's decision to raise short-term interest rates to 5.5%
in March, virtually every bond sector posted negative total returns at the end
of the first half of the fiscal period. The high yield sector was the exception,
as gains in the first two months of the period more than offset the softness
following the Fed move.
Then, on April 28th, the report of the Employment Cost Index
(ECI)--considered to be the most comprehensive wage-inflation indicator, and
critical to Federal Reserve policy--indicated a very positive inflation picture.
This information, plus positive news on an agreed upon framework by President
Clinton and the Republicans to balance the budget by 2002, and an atypical
paydown in federal debt, turned market sentiment extremely bullish. Bonds
rallied strongly, sending the yield on the long bond from 7.1% on March 31, 1997
to 6.8% on June 30, 1997. Furthermore, all sectors contributed positively to
performance; again, however, the high yield sector outperformed others as
investors' willingness to accept higher credit risk produced higher returns.
INVESTMENT OVERVIEW--GLOBAL
THE EQUITY MARKETS
After a disappointing start, stock markets around the world fared better as
the six-month period progressed, in large part due to continued optimism about
the U.S. economy and markets.
Year-to-date, all European markets, with the exception of the United Kingdom
and Ireland, outperformed the U.S. in local currency terms, although in U.S.
dollar terms, returns in all were reduced due to a strengthening dollar.
Switzerland was Europe's best performer, rising by 31.1% year-to-date as of June
30, 1997 (as measured by the Europe Australasia Far East Index), followed by
Spain (up 20.7%) and the Netherlands (up 20.0%).
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Japan's equity market rose only 9.1% during the period. However, encouraging
signs of a turnaround in Japan's economy appear to be taking place. Elsewhere in
Asia, markets were volatile and underperformed other world markets as they
experienced a slowdown in earnings growth while valuations remained high.
THE FIXED INCOME MARKETS
Global bond performance improved during the period as the U.S. economy
slowed from an early torrid pace and economies in Europe and Japan continued to
languish. This allowed monetary policies in major countries to remain broadly
stable, with the exception of the United Kingdom and Canada, where policies were
tightened, and Australia, Italy and Spain, where policies were eased. Currency
movements proved more significant than bond price movements, with the Yen
appreciating strongly against all currencies as expanding Japanese trade
surpluses have once more become a concern for the U.S. government. Contrarily,
most European currencies weakened as the uncertainties surrounding the European
Economic and Monetary Union (EMU) weighed heavily on market sentiment.
MONEY MARKET PORTFOLIO
For the seven days ended June 30, 1997, the Portfolio's current yield was
4.31%, while its average weighted maturity (56 days as of June 30, 1997) was
maintained five to 10 days above the IBC (Donaghue) average in response to
economic data indicating low inflation with slight economic growth. Presently,
we intend to keep the average weighted maturity at this level.
As we enter the second half of 1997, the emerging view on the economy has
been for a slowdown in growth rates. While bond market participants have, over
the period, acquired a greater confidence in the Federal Reserve's management of
monetary policy, more critically abetting the market's runup has been a widening
perception that the Greenspan Fed is likely to be pragmatic--and not driven
strictly by classical resource utilization-based economic thought that currently
argues for aggressive monetary tightening. This, in fact, appears to be the
case, as evidenced by the Federal Reserve's decision not to move on interest
rates at the Federal Open Market Committee meeting on August 19, 1997.
Going forward, every economic number released will be closely scrutinized.
Inflation is always a concern and, as such, will be carefully monitored.
Investment decisions for the Money Market Portfolio will continue to be
dominated by credit, quality and liquidity. Although we are interested in
maintaining higher yields, we will not do so by sacrificing the Portfolio's
emphasis on security, quality and liquidity.
GROWTH PORTFOLIO
Early in the period, the overall market focused mainly on larger
capitalization, value-oriented names. Although the Growth Portfolio was
approximately 60% invested in large-cap companies (over $1 billion stock market
capitalization) in response to the liquidity-driven market during this period,
it was not well-positioned in value-oriented names. Ultimately, performance
suffered as a result.
Mid-period, we re-examined the Portfolio's investment process, which led to
the determination that the Portfolio's capitalization structure should be
repositioned. As a result, the Portfolio's median market capitalization is now
approximately $5 billion. In addition, several other changes were implemented: a
new quantitative growth model was adopted, the purpose of which is to better
identify when a stock should be purchased, sold or held; the Portfolio is now
using the Standard & Poor's 500 Index industry weightings as guidelines to
maintain diversification and exposure to the industries included in this Index;
and cash is generally now limited to 10% of assets under normal market
conditions.
The new investment process has changed the Portfolio's profile
substantially. As of June 30, 1997, the Portfolio had less than 15% of its
portfolio in companies with less than $1 billion in market captitalization.
Moreover, the Portfolio's performance, driven by a broader base of stocks, has
improved substantially.
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Going forward, we expect to see continued strength in the stock market.
Demand for stocks should persist as investors continue to place their 401(k)
investments in stock mutual funds due to the limited appeal of other
alternatives, such as bond and money market investments. This demand should
filter down to some of the small- and mid-cap stocks, as well. However, after
more than two years of double-digit stock market returns, individual and
institutional investors should expect some moderation in the market's growth
rate during the second half of 1997.
GLOBAL GROWTH PORTFOLIO
Year-to-date, the Portfolio has returned 12.15% versus 15.45% for its
benchmark index, the Morgan Stanley Capital International (MSCI) Index. This
underperformance relative to the benchmark is in large part due to the
Portfolio's underweighting in the U.S. market, which continued its rally during
the period. The Portfolio's subadviser, GE Investment Management (GEIM),
believes that other managers may have hedged to the U.S. dollar during the
period which, given the strong U.S. dollar, would have enhanced portfolio
performance. However, GEIM's philosophy is not to hedge due to the cost and what
GEIM believes is a questionable long-term performance benefit.
The Portfolio's underweighted position in Japan also contributed to its
underperformance relative to its benchmark index. Japan saw a marked recovery
during the quarter; helped by a rising Yen, the year-to-date return of Japan's
equity market was 9.1%. However, excellent stock picking in Japan resulted in
most of the Portfolio's holdings outperforming the MSCI Japan Index.
Conversely, the Portfolio's overweighted position in Latin America, a market
that was up 40.8% year-to-date, contributed positively to Portfolio performance.
Portfolio returns were also helped by overweighted positions in Hong Kong and
Switzerland.
Going forward, GEIM remains cautious with regard to the U.S. and, therefore,
will continue to underweight this market. As always, GEIM will continue to
determine geographic weights by employing a bottom-up stock selection process
based on growth at a reasonable price.
By region, as of June 30, 1997, approximately 46.2% of the Portfolio was
invested in Europe, 26.7% in North America, 9.7% in Japan, 6.5% in Asia, 5.6% in
Latin America, 3.3% in the Pacific Rim, 1.2% in the Middle East and 0.8% in
South Africa.
GLOBAL INCOME PORTFOLIO
The Portfolio's performance benefited from its overweighting in the bond
markets of Australia, Canada, the United Kingdom and Italy. However, its
underweighted exposure to the Yen negatively impacted performance.
During the period, the following changes were made to the Portfolio: we
increased its overall duration (a measure of a portfolio's sensitivity to
interest rates changes) by half a year with increased duration-weighted
allocations to the Dollar Bloc nations (United States, Canada, Australia and New
Zealand), the United Kingdom and Germany; we modestly increased the allocation
to short-term Hungarian bonds; and we increased the Portfolio's currency
positions in short-term Yen securities, and reduced hedges in European
currencies and the Canadian dollar.
Going forward, we believe it is unlikely that the U.S. economy will slow
sufficiently to alleviate the market's fears; however, valuations in the U.S.
Treasury market should remain attractive relative to other countries and other
dollar-denominated corporate and emerging market debt. Therefore, we plan to
maintain a neutral Treasury position.
European economic growth should accelerate and broaden as the effects of the
currently easy monetary conditions are felt. In Europe, we favor the United
Kingdom as yields are attractive; furthermore, the central bank was recently
granted independence, which should reduce the risk premium over time.
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By region, approximately 37.9% of the Portfolio was invested in Europe, 4.0%
in Asia, 44.3% in North America, 1.2% in South America, 6.9% in New Zealand and
5.7% in Australia, as of June 30, 1997.
STRATEGIC FIXED INCOME PORTFOLIO
During the period, the Portfolio followed an investment strategy that
focused on yield-enhancing mortgage securities, while keeping the average
duration of the Portfolio close to 5.5 years. Pacific Investment Management
Company (PIMCO), the Portfolio's subadviser, particularly focused on mortgage
pass-through securities. These instruments benefited from higher initial yields
and from an environment where volatility and prepayment expectations declined.
The Portfolio's duration was maintained slightly above that of its peers, a
circumstance that hurt performance relative to both its benchmark, the Lehman
Corporate Index, and short-term portfolios. However, the slightly negative
impact of interest rate strategy was more than offset by the inclusion of
mortgages as well as Treasury futures backed by cash equivalent securities--and
underscores the importance of multiple sources of value-added in a fixed income
portfolio.
PIMCO continues to view the long-term environment for bond investing as
attractive, given the view that inflation and real interest rates are headed
lower over a three- to five-year time horizon. Near term, PIMCO believes
economic growth for the latter half of 1997 will be somewhat below that expected
by the market. Slower growth and continued low inflation should allow the Fed to
maintain its current rate posture or, at worst, raise rates only one more time.
Consequently, the Portfolio continues to be positioned for rate declines later
in 1997, with the short-intermediate part of the yield curve likely to enjoy the
largest declines. Security selection will continue to focus on the mortgage
market, with low and current coupon pass-throughs, as well as select
Collateralized Mortgage Obligations that are attractively valued.
BALANCED PORTFOLIO
Early in the period, the Portfolio's allocation between stocks and bonds was
56%/44%, versus year-end 1996's stock/bond allocation of 64%/36%. We maintained
an overweighting in financials (particularly the insurance industry) versus the
S&P 500 Stock Index due to our belief that the sector will benefit from stable
to positive economic growth. The Portfolio's capital goods position also
continued to be slightly overweighted, as we expect this sector to benefit from
increased export growth to the Far East and Europe.
Later in the period, the Portfolio's allocation between stocks and bonds was
adjusted to 64% stocks, 30% bonds and 6% cash--in line with normal weightings.
While current stock valuations were high by any historical standard, they were
not great enough to trigger an asset allocation change in the Portfolio.
While the market appears to be fully valued, the supply/demand relationship
continues to favor market strength. Demand for stocks should be sustained at
high levels due to continual money flows into stock mutual funds through 401(k)
contributions, corporate share repurchases and merger and acquisition activity.
However, the history of the U.S. stock market suggests that, after more than two
years of double-digit stock market returns, both individual and institutional
investors should expect some moderation in the market's growth rate through the
remainder of 1997.
GROWTH AND INCOME PORTFOLIO
Early in the period, rising stock prices and volatility brought about by
forecasts of overall earnings disappointments created an unfavorable environment
for the technology sector, hurting the Portfolio's overall performance. However,
we chose to maintain our overweighting in this sector, as we believed technology
stocks would see higher growth rates than many other sectors and valuations
would become more attractive. In the second half of the period this was in fact
the case, and the Portfolio benefited as a result.
The Portfolio also maintained an overweighting in the financial sector, due
to our belief that this sector would benefit from a low inflation, reasonably
moderate-growth environment. Alternately, cyclicals
4
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such as basic industry were underweighted because, in our opinion, these
companies do not have the flexibility to pass on cost increases for raw
materials or commodities to the end user.
Going forward, we believe the economy will sustain a slow growth, low
inflation profile. While the market appears fully valued, the supply/demand
relationship continues to favor market strength. Demand for stocks should be
sustained at high levels due to continual money flows into stock mutual funds
through 401(k) contributions, corporate share repurchases and merger and
acquisitions activity. Additionally, companies have taken control of their cost
structures and are not experiencing any significant pricing pressures in the way
of employment costs or basic materials. Thus, they have been able to maintain
high profit margins. We expect earnings will continue to come in better than
expected through the rest of this year, making these valuations reasonable.
AGGRESSIVE GROWTH PORTFOLIO
During the period, and for the first time since early in 1996, the market
broadened to the extent that smaller and mid-capitalization stocks kept pace
with large cap stocks. Also encouraging was the fact that growth stocks kept
pace with value stocks. In short, there was wider participation in the market
during the period, as opposed to the very narrow, blue chip market leadership
that has been prevalent over the past several quarters.
However, the market continues to focus on companies with moderate earnings
growth, dividends and valuations. Growth stock investing is founded on the
relationship between earnings and price; a company's stock price is ultimately
driven by the earnings or profitability of the company itself. In seeking
superior investment results, the Portfolio's subadviser, Nicholas-Applegate
Capital Management, attempts to invest in those companies that it believes have
the best prospects for continued earnings acceleration. Although the
subadviser's success rate is very high, the market does not always embrace
high-growth stocks. However, the subadviser's experience is that consistent
investment in these companies will be rewarded with superior returns over time.
Therefore, the Portfolio will remain fully invested in high-growth companies
at all times. The market over the past three years has been liquidity-driven,
and index funds have become the new "momentum stocks." A return to a focus on
fundamental earnings strength could cause a dramatic shift in market leadership,
one which should benefit the Portfolio. The subadviser sees such factors as a
low interest rate environment, the prospects for a capital gains tax cut,
extreme oversold conditions in the lower-tier markets and very attractive
valuations (within the subadviser's investment style) as presenting a strong
case for such a shift. Most importantly, recent indications are that such a
change in market leadership may be in progress.
HIGH GRADE FIXED INCOME PORTFOLIO
Early in the period, the bond market was on a positive return path as
inflation statistics remained benign and the consensus attitude was that strong
economic growth seen in the prior quarter would not continue. However, this
notion began unraveling as evidence to the contrary emerged. As a result, for
the three months ended March 31, 1997, the bond market produced negative price
returns across nearly all sectors. Bond market performance fared much better
during the latter part of the period, as low inflation and slowing economic
growth, combined with bullish technicals, resulted in positive returns in all
sectors. These returns effectively offset the negative returns experienced in
the first three months of the period. Additionally, yields across all maturities
declined, with two-, 10- and 30-year yields dropping 35, 40 and 32 basis points,
respectively.
Throughout the period, the Portfolio remained overweighted in corporates and
mortgage-backed securities (MBS), taking advantage of strong company
fundamentals and low volatility, thus enhancing the Portfolio's yield.
Going forward, we believe that the fundamentals are in place for above-trend
growth. Furthermore, a tight labor market and increased utilization rates will
probably heighten inflation fears. Under these
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conditions, we believe the Fed will lean toward a tightening by year-end.
Therefore, we will maintain a defensive stance with regard to the Portfolio's
structure, and will continue to overweight in corporates and MBS in pursuit of
higher yield.
Our ultimate objective in managing your investments is to help you
successfully meet your financial goals. We thank you for your continued support,
and welcome any comments or questions you may have.
Sincerely,
<TABLE>
<S> <C>
[SIG] [SIG]
DENNIS HESS MARGO ALEXANDER
Chairman and Chief Executive Officer, President,
PaineWebber Life Insurance Company Mitchell Hutchins Asset Management Inc.
</TABLE>
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PaineWebber Series Trust
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Portfolios of Investments
June 30, 1997 (unaudited)
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MONEY MARKET PORTFOLIO
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<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- -------------------- ---------------- -----------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--5.99%
$ 200 Federal Home Loan Bank...................................... 10/16/97 to 06/25/98 5.900 to 6.040% $ 200,000
250 Federal National Mortgage Association....................... 02/18/98 5.500 249,524
250 U.S. Treasury Notes......................................... 03/31/98 6.125 250,599
-----------
Total U.S. Government and Agency Obligations
(cost--$700,123)........................................................ 700,123
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BANK NOTES (DOMESTIC)--7.70%
200 BankAmerica Corp............................................ 07/15/97 6.000 199,996
500 Fifth Third Bank Northwestern Ohio.......................... 07/08/97 5.670 500,001
200 Lasalle National Bank Chicago Illinois...................... 04/13/98 6.230 200,000
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Total Bank Notes (cost--$899,997)....................................... 899,997
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CERTIFICATE OF DEPOSIT--6.42%
DOMESTIC--2.14%
250 Morgan Guaranty Trust Co.................................... 03/19/98 5.910 249,932
YANKEE--4.28%
500 Societe Generale............................................ 07/14/97 to 01/06/98 5.700 to 5.720 499,944
-----------
Total Certificate of Deposits (cost--$749,876).......................... 749,876
-----------
COMMERCIAL [email protected]%
ASSET-BACKED--7.02%
421 Delaware Funding Corp....................................... 07/07/97 5.580 420,608
400 Triple-A One Funding Corp................................... 07/15/97 5.570 399,134
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819,742
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BANKING--11.03%
500 Cregem North America Inc.................................... 07/11/97 5.640 499,217
400 Nordbanken North America Inc................................ 12/11/97 5.620 389,821
400 Unifunding.................................................. 07/03/97 5.540 399,877
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1,288,915
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BROKER-DEALER--8.77%
525 Lehman Brothers Holdings Inc................................ 07/01/97 6.500 525,000
501 Merrill Lynch & Company Inc................................. 07/18/97 to 07/22/97 5.560 499,438
-----------
1,024,438
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BUSINESS SERVICES--3.41%
400 Block Financial Corp........................................ 07/18/97 5.600 398,942
-----------
COMPUTER--4.26%
500 IBM Credit Corp............................................. 07/24/97 5.530 498,234
-----------
ELECTRONICS--3.86%
451 Vermont American Corp....................................... 07/07/97 5.490 450,587
-----------
ENERGY--3.41%
400 Mobil Australia Finance Co.................................. 07/21/97 5.520 398,773
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FINANCE-CONDUIT--3.40%
400 ANZ (Delaware) Inc.......................................... 08/19/97 5.270 397,131
-----------
FINANCE-DIVERSIFIED--3.42%
400 Barclays US Funding Corp.................................... 07/07/97 5.550 399,630
-----------
FINANCE-INDEPENDENT--3.55%
415 National Rural Utilities Cooperative Finance Corp........... 07/07/97 5.530 414,618
-----------
FINANCE-INSURANCE--4.26%
500 American General Capital Services........................... 07/25/97 5.520 498,160
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FINANCE-RETAIL--4.26%
500 American Express Credit Corp................................ 07/23/97 5.530 498,310
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</TABLE>
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PaineWebber Series Trust
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MONEY MARKET PORTFOLIO
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<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- -------------------- ---------------- -----------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER@--(CONCLUDED)
FINANCE SUBSIDIARY--4.27%
$ 500 Creditanstalt Finance Inc................................... 07/17/97 5.560% $ 498,764
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FOOD, BEVERAGE & TOBACCO--4.17%
100 BAT Capital Corp............................................ 07/22/97 5.570 99,675
388 Heinz (HJ) Co............................................... 07/11/97 5.560 387,401
-----------
487,076
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INSURANCE--0.86%
100 Prudential Funding Corp..................................... 07/01/97 5.550 100,000
-----------
TELECOMMUNICATIONS--4.27%
500 MCI Communications Corp..................................... 07/07/97 5.600 499,533
-----------
Total Commercial Paper (cost--$8,672,853)............................... 8,672,853
-----------
SHORT-TERM CORPORATE OBLIGATIONS--6.00%
AUTOMOTIVE--2.15%
250 Ford Motor Credit Co. MTN................................... 02/05/98 6.450 250,859
-----------
BROKER-DEALER--1.71%
200 Bear Stearns Companies Inc.*................................ 02/06/98 5.400 200,000
-----------
FINANCE-DIVERSIFIED--2.14%
250 Associates Corp. North America.............................. 02/01/98 6.125 249,883
-----------
Total Short-Term Corporate Obligations (cost--$700,742)................. 700,742
-----------
Total Investments (cost--$11,723,591)--100.33%.......................... 11,723,591
Liabilities in excess of other assets--(0.33)%.......................... (38,972)
-----------
Net Assets--100.00%..................................................... $11,684,619
-----------
-----------
</TABLE>
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* Variable rate security--Maturity dates reflect earlier of reset dates or
stated maturity. The interest rates shown are the current rates as of June
30, 1997.
@ Interest rates shown are discount rates at date of purchase.
MTN Medium Term Note
Weighted average maturity--56 days
See accompanying notes to financial statements
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PaineWebber Series Trust
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GROWTH PORTFOLIO
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<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- -----------
<C> <S> <C>
COMMON STOCKS--84.79%
AGRICULTURE, FOOD & BEVERAGE--2.66%
12,000 The Coca-Cola Co........................................................................................ $ 810,000
6,000 Pepsico Inc............................................................................................. 225,375
-----------
1,035,375
-----------
AIRLINES--0.43%
1,800 AMR Corp.*.............................................................................................. 166,500
-----------
APPAREL, RETAIL--0.43%
7,000 Woolworth Corp.*........................................................................................ 168,000
-----------
BANKS--1.54%
3,500 Charter One Financial Inc............................................................................... 188,562
1,850 Chase Manhattan Corp.................................................................................... 179,566
2,500 First Union Corp........................................................................................ 231,250
-----------
599,378
-----------
CHEMICALS--3.81%
12,500 Cytec Industries Inc.*.................................................................................. 467,187
7,000 IMC Global Inc.......................................................................................... 245,000
16,200 Sealed Air Corp.*....................................................................................... 769,500
-----------
1,481,687
-----------
COMPUTER HARDWARE--3.75%
6,000 Cisco Systems Inc.*..................................................................................... 402,750
2,300 Compaq Computer Corp.*.................................................................................. 228,275
2,200 Dell Computer Corp.*.................................................................................... 258,224
5,000 EMC Corp.*.............................................................................................. 195,000
10,000 Sun Microsystems Inc.*.................................................................................. 372,187
-----------
1,456,436
-----------
COMPUTER SOFTWARE--4.11%
5,000 Cadence Design Systems Inc.*............................................................................ 167,500
3,000 Computer Associates International Inc................................................................... 166,875
1,500 Microsoft Corp.*........................................................................................ 189,563
4,000 Oracle Systems Corp.*................................................................................... 201,500
70,000 Playnet Technologies Inc.* (2).......................................................................... 350,000
15,926 Sterling Commerce Inc.*................................................................................. 523,567
-----------
1,599,005
-----------
CONSUMER DURABLES--0.05%
1,000 Furniture Brands International Inc.*.................................................................... 19,312
-----------
DEFENSE/AEROSPACE--1.29%
3,000 McDonnell Douglas Corp.................................................................................. 205,500
5,000 Precision Castparts Corp................................................................................ 298,125
-----------
503,625
-----------
DIVERSIFIED RETAIL--0.68%
11,200 Knoll Inc.*............................................................................................. 266,000
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- -----------
<C> <S> <C>
DRUGS & MEDICINE--6.74%
6,000 Amgen, Inc.*............................................................................................ $ 348,750
14,000 Elan Corp. PLC, ADS* (1)................................................................................ 633,500
13,000 Teva Pharmaceutical Industries Ltd., ADS................................................................ 841,750
10,000 Triangle Pharmaceuticals Inc.*.......................................................................... 248,750
13,000 Watson Pharmaceuticals, Inc.*........................................................................... 549,250
-----------
2,622,000
-----------
ELECTRIC UTILITIES--0.11%
1,600 Qwest Communications International Inc.................................................................. 43,600
-----------
ELECTRICAL EQUIPMENT--1.79%
4,000 Motorola Inc............................................................................................ 304,000
2,500 SCI Systems Inc.*....................................................................................... 159,375
6,500 Waters Corp.*........................................................................................... 233,188
-----------
696,563
-----------
ELECTRICAL POWER--0.68%
10,500 Alcatel Alsthom, ADR.................................................................................... 265,125
-----------
ENERGY RESERVES & PRODUCTION--1.74%
7,500 Lomak Petroleum Inc.*................................................................................... 133,594
3,600 Royal Dutch Petroleum Co................................................................................ 195,750
9,000 Unocal Corp............................................................................................. 349,312
-----------
678,656
-----------
ENTERTAINMENT--3.53%
20,000 Cinar Films Inc.*....................................................................................... 650,000
15,000 Time Warner Inc......................................................................................... 723,750
-----------
1,373,750
-----------
ENVIRONMENTAL SERVICES--0.96%
15,000 Republic Industries Inc.* (1)........................................................................... 373,125
-----------
FINANCIAL SERVICES--4.87%
4,000 American Express Co..................................................................................... 298,000
8,000 Federal Home Loan Mortgage Corp......................................................................... 275,000
12,500 Federal National Mortgage Association................................................................... 546,874
9,000 MBNA Corp............................................................................................... 329,063
3,500 Student Loan Marketing Association...................................................................... 444,500
-----------
1,893,437
-----------
FOOD RETAIL--0.95%
8,000 Safeway Inc.*........................................................................................... 369,000
-----------
GAS UTILITY--0.36%
4,600 MCN Energy Group Corp................................................................................... 140,875
-----------
</TABLE>
9
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PaineWebber Series Trust
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GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
HOTELS--4.05%
30,000 Extended Stay America Inc.*............................................................................. $ 472,500
19,000 HFS Inc.*............................................................................................... 1,102,000
-----------
1,574,500
-----------
INDUSTRIAL PARTS--1.41%
6,000 Illinois Tool Works, Inc................................................................................ 299,625
3,000 United Technologies Corp................................................................................ 249,000
-----------
548,625
-----------
INDUSTRIAL SERVICES/SUPPLIES--2.00%
10,000 ADT Ltd.*............................................................................................... 332,500
12,500 CUC International, Inc.*................................................................................ 322,656
5,000 Watsco Inc.............................................................................................. 125,000
-----------
780,156
-----------
INFORMATION & COMPUTER SERVICES--3.06%
6,000 HBO & Co................................................................................................ 413,250
6,500 Keane Inc............................................................................................... 338,000
12,500 Princeton Video Image 437,500
Inc. (2)..............................................................................................
-----------
1,188,750
-----------
LIFE INSURANCE--1.52%
5,000 SunAmerica Inc.......................................................................................... 243,750
5,500 The Travelers Group, Inc................................................................................ 346,844
-----------
590,594
-----------
LONG DISTANCE & PHONE COMPANIES--3.13%
15,000 Teleport Communications Inc.*........................................................................... 511,875
22,000 WorldCom Inc.*.......................................................................................... 704,000
-----------
1,215,875
-----------
MANUFACTURING--HIGH TECHNOLOGY--0.73%
1,500 ASM Lithography Holdings N.V............................................................................ 87,750
4,000 KLA Instruments Corp.*.................................................................................. 195,000
-----------
282,750
-----------
MEDIA--4.15%
8,000 Clear Channel Communications............................................................................ 492,000
22,500 Liberty Media Group, Series A*.......................................................................... 534,375
11,500 Outdoor Systems Inc.*................................................................................... 438,438
10,000 Tele-Communications, Inc. Class A*...................................................................... 148,750
-----------
1,613,563
-----------
MEDICAL PRODUCTS--0.53%
3,200 Johnson & Johnson....................................................................................... 206,000
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- -----------
<C> <S> <C>
MEDICAL PROVIDERS--2.39%
27,000 Phycor Inc.*............................................................................................ $ 929,813
-----------
MINING & METALS--0.96%
5,000 Potash Corp. of Saskatchewan Inc........................................................................ 375,313
-----------
MOTOR VEHICLES--0.57%
5,000 Lear Corp.*............................................................................................. 221,875
-----------
OIL REFINING--0.96%
5,000 British Petroleum PLC, ADR.............................................................................. 374,375
-----------
OIL SERVICES--5.89%
10,000 Camco International Inc................................................................................. 542,500
8,000 EVI Inc................................................................................................. 336,000
5,000 Ensco International Inc.*............................................................................... 263,750
19,000 Global Marine Inc.*..................................................................................... 441,750
5,000 Halliburton Co.......................................................................................... 396,250
2,500 Schlumberger Ltd........................................................................................ 312,500
-----------
2,292,750
-----------
OTHER INSURANCE--1.37%
2,000 American International Group Inc........................................................................ 298,250
5,000 Everest Reinsurance Holdings Inc........................................................................ 196,875
750 MGIC Investment Corp.................................................................................... 35,953
-----------
531,078
-----------
PUBLISHING--1.84%
1,500 Gannett, Inc............................................................................................ 148,125
25,000 Getty Communications plc, ADR*.......................................................................... 368,750
4,000 New York Times Co., Class A............................................................................. 198,000
-----------
714,875
-----------
RAILROADS--0.84%
11,500 Canadian Pacific Ltd.................................................................................... 327,031
-----------
REAL PROPERTY--1.77%
1,400 Boston Properties Inc.*................................................................................. 38,063
1,000 Crescent Operating Inc.*................................................................................ 12,000
10,000 Crescent Real Estate Equities........................................................................... 317,500
7,500 Starwood Lodging Trust.................................................................................. 320,156
-----------
687,719
-----------
SEMICONDUCTOR--1.37%
4,000 Applied Materials, Inc.*................................................................................ 283,250
1,750 Intel Corp.............................................................................................. 248,172
-----------
531,422
-----------
</TABLE>
10
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- -----------
<C> <S> <C>
COMMON STOCKS--(CONCLUDED)
SPECIALTY RETAIL--5.00%
25,000 General Nutrition Companies, Inc.*...................................................................... $ 700,000
2,500 Home Depot Inc.......................................................................................... 172,344
33,000 Staples, Inc.* (1)...................................................................................... 767,250
3,500 Tiffany & Co............................................................................................ 161,438
7,500 Viking Office Products, Inc.*........................................................................... 142,500
-----------
1,943,532
-----------
THRIFT--0.77%
5,000 Washington Mutual Inc.* (1)............................................................................. 298,750
-----------
Total Common Stocks (cost--$21,577,953)............................................................................. 32,980,795
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- -----------
<C> <S> <C>
INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED--4.79%
1,430,371 Liquid Assets Portfolio................................................................................. $ 1,430,371
432,454 TempCash Portfolio...................................................................................... 432,454
-----------
Total Investments of Cash Collateral for Securities Loaned (cost--$1,862,825)....................................... 1,862,825
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
--------- -------------------- ---------------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--15.37%
$6,000 U.S. Treasury Bills (cost--$5,977,279).................. 07/17/97 to 08/28/97 4.810 to 4.960%@ 5,977,279
-----------
REPURCHASE AGREEMENT--0.92%
355 Repurchase Agreement dated 06/30/97 with State
Street Bank & Trust Co., collateralized by
$362,694 U.S. Treasury Notes, 6.250%, due
03/31/99; proceeds: $355,049 (cost--$355,000)......... 07/01/97 5.000 355,000
-----------
Total Investments (cost--$29,773,057)--105.87%...................... 41,175,899
Liabilities in excess of other assets--(5.87)%...................... (2,281,382)
-----------
Net Assets--100.00%................................................. $38,894,517
-----------
-----------
</TABLE>
- ---------------
* Non-income producing security
@ Interest rates shown are discount rates at date of purchase.
ADR American Depositary Receipt
ADS American Depositary Shares
(1) Security, or a portion thereof, was on loan at June 30, 1997.
(2) Illiquid securities represent 2.02% of Net Assets.
See accompanying notes to financial statements
11
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--98.35%
AUSTRALIA--1.79%
BEVERAGES--0.64%
12,414 Coca Cola Amatil Ltd. ................................. $ 161,368
-----------
FINANCIAL SERVICES--0.09%
8,839 Colonial Ltd. ......................................... 22,579
-----------
FOOD--1.06%
144,591 Burns, Philp & Co., Ltd. .............................. 268,816
-----------
Total Australia Common Stocks..................................... 452,763
-----------
AUSTRIA--2.00%
ENGINEERING SERVICES--1.52%
2,106 VA Technologie AG...................................... 385,403
-----------
OIL & GAS--0.48%
943 OMV AG................................................. 120,794
-----------
Total Austria Common Stocks....................................... 506,197
-----------
CANADA--1.11%
ENERGY--0.42%
3,833 Renaissance Energy Ltd. ............................... 106,584
-----------
MACHINERY (DIVERSIFIED)--0.69%
7,667 Bombardier Inc. ....................................... 173,777
-----------
Total Canada Common Stocks........................................ 280,361
-----------
CROATIA--0.12%
PHARMACEUTICAL--0.12%
1,804 Pliva D.D. GDR*........................................ 29,315
-----------
FINLAND--2.92%
FINANCIAL SERVICES--0.55%
41,635 Merita Ltd. ........................................... 138,710
-----------
MANUFACTURING--0.75%
11,088 Valmet Corp. .......................................... 191,748
-----------
MULTI-LINE INSURANCE--1.62%
4,215 Sampo Vakuutusosak..................................... 409,913
-----------
Total Finland Common Stocks....................................... 740,371
-----------
FRANCE--7.83%
AUTOMOTIVE--1.87%
3,894 Michelin............................................... 233,838
3,841 Valeo S.A. ............................................ 238,563
-----------
472,401
-----------
CONSTRUCTION--0.39%
968 Lyonnaise Des Eaux S.A. ............................... 97,513
-----------
ELECTRONICS--0.47%
2,237 Schneider S.A. ........................................ 119,069
-----------
ENERGY--1.86%
4,666 Total S.A. (Class B)................................... 471,626
-----------
FINANCIAL SERVICES--0.58%
2,380 AXA.................................................... 148,024
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
FRANCE--(CONCLUDED)
OIL-FIELD SERVICE--1.13%
9,469 Coflexip S.A. ADR...................................... $ 285,254
-----------
RETAIL--1.53%
533 Carrefour S.A. ........................................ 387,095
-----------
Total France Common Stocks........................................ 1,980,982
-----------
GERMANY--5.37%
CHEMICALS--0.64%
4,418 BASF AG................................................ 163,259
-----------
DIVERSIFIED INDUSTRIES--0.91%
3,866 Siemens AG............................................. 229,531
-----------
ENERGY--1.11%
5,000 Veba AG................................................ 280,947
-----------
MACHINERY (DIVERSIFIED)--1.53%
867 Mannesmann AG.......................................... 386,250
-----------
MEDICAL EQUIPMENT--0.42%
1,208 Fresenius Medical Care AG*............................. 106,664
-----------
PHARMACEUTICAL--0.76%
2,832 Gehe AG................................................ 193,227
-----------
Total Germany Common Stocks....................................... 1,359,878
-----------
GREECE--0.54%
BANKING--0.54%
2,001 Alpha Credit Bank...................................... 136,159
-----------
HONG KONG--3.84%
BROADCASTING--0.21%
12,000 Television Broadcasting Ltd. .......................... 53,903
-----------
ELECTRONICS--0.28%
23,500 Johnson Electric Holdings.............................. 70,070
-----------
FINANCIAL SERVICES--2.32%
18,000 Cheung Kong Holdings Ltd. ............................. 177,739
13,629 HSBC Holdings.......................................... 409,892
-----------
587,631
-----------
REAL ESTATE--0.28%
12,000 New World Developement Ltd. ........................... 71,560
-----------
RETAIL--0.75%
277,000 Giordano International Ltd. ........................... 189,498
-----------
Total Hong Kong Common Stocks..................................... 972,662
-----------
INDONESIA--1.97%
AUTOMOTIVE--1.89%
91,500 Astra International.................................... 376,233
88,500 Steady Safe............................................ 103,711
-----------
479,944
-----------
CERAMIC PRODUCTS--0.08%
37,000 Mulia Industrindo...................................... 19,398
-----------
Total Indonesia Common Stocks..................................... 499,342
-----------
</TABLE>
12
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
ISRAEL--1.41%
COMPUTER SOFTWARE & SERVICES--0.25%
1,964 Tecnomatix Technologies Ltd. .......................... $ 63,830
-----------
TELECOMMUNICATIONS--1.16%
9,882 ECI Telecommunications Ltd. ........................... 293,989
-----------
Total Israel Common Stocks........................................ 357,819
-----------
ITALY--3.82%
ENERGY--0.58%
29,606 Edison................................................. 147,284
-----------
FURNITURE/HOME APPLIANCES--1.06%
10,492 Industrie Natuzzi SPA ADR.............................. 268,857
-----------
OIL & GAS--0.35%
15,699 ENI.................................................... 88,907
-----------
TELECOMMUNICATIONS--1.83%
142,652 Telecom Italia Mobilare................................ 461,638
-----------
Total Italy Common Stocks......................................... 966,686
-----------
JAPAN--9.73%
AUTOMOTIVE--1.11%
6,000 Honda Motor Co. ....................................... 180,597
8,000 Suzuki Motor Corp., Ltd. .............................. 101,204
-----------
281,801
-----------
COMPUTER SOFTWARE & SERVICES--1.22%
8 NTT Data Corp. ........................................ 309,196
-----------
ELECTRONICS--3.17%
16,000 Canon Inc. ............................................ 435,526
4,200 Sony Corp. ............................................ 366,062
-----------
801,588
-----------
EQUIPMENT--0.82%
2,000 Rohm Co. Ltd. ......................................... 205,898
-----------
FINANCIAL SERVICES--1.18%
12,245 Credit Saison Co. Ltd. (1)............................. 299,127
-----------
TELECOMMUNICATIONS--2.23%
52 DDI Corp. Inc. ........................................ 383,807
13,000 NEC Corp............................................... 181,469
-----------
565,276
-----------
Total Japan Common Stocks......................................... 2,462,886
-----------
MALAYSIA--0.48%
BANKING--0.48%
19,600 AMMB Holdings Berhad................................... 121,918
-----------
MEXICO--1.26%
BANKING--0.53%
13,374 Grupo Financiero Bancomer ADR+ (1)..................... 133,740
-----------
FOOD--0.22%
11,853 Gruma S.A. de C.V.*.................................... 55,182
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
MEXICO--(CONCLUDED)
TELECOMMUNICATIONS--0.51%
15,414 Grupo Carso, S.A. de C.V. (Series A)................... $ 107,641
1,596 Grupo Carso, S.A. de C.V. ADR.......................... 22,504
-----------
130,145
-----------
Total Mexico Common Stocks........................................ 319,067
-----------
NETHERLANDS--2.87%
ENTERTAINMENT--1.00%
4,832 Polygram N.V. ......................................... 253,551
-----------
FINANCIAL SERVICES--1.87%
10,232 Internationale Nederlander Groep N.V. ................. 471,749
-----------
Total Netherlands Common Stocks................................... 725,300
-----------
NORWAY--0.49%
COMMERCIAL SERVICES--0.03%
1,697 Petroleum Geo-Service ASA*............................. 81,734
-----------
OIL & GAS--0.46%
2,232 Saga Petroleum......................................... 42,330
-----------
Total Norway Common Stocks........................................ 124,064
-----------
PANAMA--1.76%
AGRICULTURE, FOOD & BEVERAGES--1.09%
8,438 Panamerican Beverages, Inc. ADR Class A................ 277,399
-----------
BANKING--0.67%
3,911 Banco Latinoamericano de Exportaciones S.A. ADR........ 168,662
-----------
Total Panama Common Stocks........................................ 446,061
-----------
PERU--1.19%
TELECOMMUNICATIONS--1.19%
11,498 Telefonica Del Peru S.A. ADR........................... 301,104
-----------
PHILIPPINES--1.02%
BREWERY--0.77%
73,710 San Miguel Corp. (1)................................... 194,224
-----------
TELECOMMUNICATIONS--0.25%
125,400 Philippino Telegraph & Telephone Corp.*................ 62,995
-----------
Total Philippines Common Stocks................................... 257,219
-----------
PORTUGAL--1.82%
BANKING--0.50%
6,643 Banco Commerce Portugues International Ltd............. 125,455
-----------
RETAIL--0.96%
5,796 Sonae Investimentos.................................... 242,332
-----------
SERVICES--0.22%
669 Telecel Comunicacaoes Pessoais*........................ 55,493
-----------
</TABLE>
13
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
PORTUGAL--(CONCLUDED)
UTILITIES--0.14%
2,000 Electricidade De Portugal.............................. $ 36,702
-----------
Total Portugal Common Stocks...................................... 459,982
-----------
SOUTH AFRICA--0.83%
COMPUTER SOFTWARE & SERVICES--0.26%
16,591 Dimension Data Holdings Ltd. .......................... 65,823
-----------
STEEL--0.57%
218,766 South African Iron & Steel Industrial Corp. ........... 144,654
-----------
Total South Africa Common Stocks.................................. 210,477
-----------
SOUTH KOREA--0.64%
BANKING--0.30%
3,340 Kook Min Bank.......................................... 63,532
544 Kook Min Bank GDR*..................................... 11,832
-----------
75,364
-----------
ENERGY--0.34%
2,930 Korea Electric Power Corp. ............................ 87,438
-----------
Total South Korea Common Stocks................................... 162,802
-----------
SPAIN--1.68%
BANKING--0.62%
5,121 Banco Santander S.A. .................................. 157,783
-----------
OIL & GAS--1.06%
6,327 Repsol S.A. ........................................... 267,507
-----------
Total Spain Common Stocks......................................... 425,290
-----------
SWEDEN--1.21%
AUTOMOTIVE MANUFACTURING--1.21%
7,978 Autoliv Inc. .......................................... 306,826
-----------
SWITZERLAND--8.02%
BUILDING PRODUCTS--CEMENT--0.38%
102 Holderbank Financiere Glarus AG........................ 96,341
-----------
DIVERSIFIED-INDUSTRIAL--1.94%
324 ABB AG................................................. 490,438
-----------
DRUGS & MEDICINE--2.84%
449 Novartis AG............................................ 717,785
-----------
MULTI-LINE INSURANCE--0.87%
554 Zuerich Versicherungs.................................. 220,462
-----------
PHARMACEUTICAL--0.71%
20 Roche Holdings AG...................................... 180,890
-----------
REINSURANCE--0.41%
73 Schweizerische Rueckversicherungs...................... 103,250
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
SWITZERLAND--(CONCLUDED)
SPECIALTY RETAIL--0.87%
1,468 Tag Heuer*............................................. $ 220,200
-----------
Total Switzerland Common Stocks................................... 2,029,366
-----------
THAILAND--0.06%
BANKING--0.05%
3,200 Thai Farmers Bank PLC.................................. 13,588
-----------
METALS & MINING--0.01%
100 Banpu Public Company Ltd. ............................. 1,459
-----------
Total Thailand Common Stocks...................................... 15,047
-----------
UNITED KINGDOM--7.14%
AUTOMOTIVE--0.94%
68,761 Lucas Varity PLC....................................... 238,176
-----------
CAPITAL GOODS--1.73%
25,871 Siebe PLC.............................................. 438,585
-----------
DRUGS & MEDICINE--0.99%
58,781 Medeva PLC............................................. 251,572
-----------
ENTERTAINMENT--1.44%
24,816 Granada Group PLC...................................... 326,476
13,194 Thorn PLC.............................................. 37,353
-----------
363,829
-----------
PUBLISHING--1.38%
36,014 Reed International PLC................................. 347,850
-----------
RAILROADS--0.38%
9,219 Railtrack Group PLC.................................... 95,646
-----------
SERVICES--0.28%
3,717 Airtours PLC........................................... 71,927
-----------
Total United Kingdom Common Stocks................................ 1,807,585
-----------
UNITED STATES--25.43%
BANKING--1.44%
3,029 Citicorp............................................... 365,184
-----------
CHEMICALS--3.19%
13,557 Airgas Inc.*........................................... 268,598
4,673 Allied-Signal, Inc. ................................... 392,532
3,646 Avery Dennison Corp. .................................. 146,296
-----------
807,426
-----------
COMPUTER HARDWARE--0.46%
4,214 Zebra Technologies Corp.* (Class A).................... 117,465
-----------
DRUGS & MEDICINE--1.09%
5,321 R.P. Scherer Corp.*.................................... 274,697
-----------
ELECTRICAL EQUIPMENT--2.99%
7,725 Harman International Industries Inc.................... 325,416
9,406 UCAR International Inc.*............................... 430,324
-----------
755,740
-----------
</TABLE>
14
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONCLUDED)
UNITED STATES--(CONCLUDED)
ELECTRONICS--2.64%
2,208 Intel Corp. ........................................... $ 313,122
4,686 Motorola Inc. ......................................... 356,136
-----------
669,258
-----------
FINANCIAL SERVICES--1.76%
7,063 The Travelers Group, Inc. ............................. 445,411
-----------
HOUSEHOLD PRODUCTS--1.13%
4,365 Colgate-Palmolive Co. ................................. 284,816
-----------
INDUSTRIAL SERVICES & SUPPLIES--1.55%
8,203 Ecolab, Inc. .......................................... 391,693
-----------
INFORMATION & COMPUTER SERVICES--4.39%
13,467 Electronic Data Systems Corp. ......................... 552,147
12,738 First Data Corp. ...................................... 559,676
-----------
1,111,823
-----------
MANUFACTURING--HIGH TECHNOLOGY--0.53%
10,397 Sensormatic Electronics Corp. ......................... 133,861
-----------
SPECIALTY RETAIL--2.74%
4,694 Home Depot Inc. ....................................... 323,593
6,881 Sears Roebuck & Co. ................................... 369,854
-----------
693,447
-----------
TELECOMMUNICATIONS--1.52%
14,089 Airtouch Communications, Inc.*......................... 385,686
-----------
Total United States Common Stocks................................. 6,436,507
-----------
Total Common Stocks (cost--$20,313,983)........................... 24,894,036
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
PREFERRED STOCKS--1.94%
BRAZIL--1.47%
TELECOMMUNICATIONS--1.47%
1,140,333 Telecomunicacoes de Sao Paulo S.A.*.................... $ 372,325
-----------
GERMANY--0.47%
MEDICAL EQUIPMENT--0.47%
1,665 Fresenius Medical AG*.................................. 119,522
-----------
Total Preferred Stocks (cost--$440,985)........................... 491,847
-----------
INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED--2.43%
534,278 Liquid Assets Portfolio................................ 534,278
81,572 TempFund Portfolio..................................... 81,572
-----------
Total Investments of Cash Collateral for Securities Loaned
(cost--$615,850).................................................. 615,850
-----------
Total Investments (cost--$21,370,818)-- 102.72%................... 26,001,733
Liabilities in excess of other assets--(2.72)%.................... (688,177)
-----------
Net Assets--100.00%............................................... $25,313,556
-----------
-----------
</TABLE>
- ---------------
* Non-income producing security
+ Security exempt from registration under 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified insitutional buyers.
ADR American Depositary Receipt
GDR Global Depositary Receipt
(1) Security, or a portion thereof, was loaned at June 30, 1997.
See accompanying notes to financial statements
15
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000)* DATES RATES VALUE
- ---------- -------------------- ------------------ ------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT SECURITIES--79.91%
AUSTRALIA--5.25%
400 New South Wales Treasury Corp. ................... 12/01/01 12.000% $ 366,414
903 Queensland Treasury Corp. Global Issue............ 08/14/01 to 08/15/01 8.000 to 12.000 783,098
------------
1,149,512
------------
CANADA--5.37%
1,700 Ontario Hydro Global.............................. 04/11/09 to 04/11/11 8.605 to 10.406@ 514,636
212 Ontario Hydro Global.............................. 03/16/99 3.165+ 153,532
US$ 539 Province of Ontario............................... 02/21/06 6.000 507,053
------------
1,175,221
------------
CHILE--1.15%
US$ 250 Empresa Nacional de Electricidad, S.A. ........... 02/01/37 7.325 251,755
------------
DENMARK--1.98%
2,550 Government of Denmark............................. 05/15/03 8.000 433,875
------------
GERMANY--6.69%
2,245 Federal Republic of Germany....................... 07/22/02 to 11/11/04 7.500 to 8.000 1,465,218
------------
HUNGARY--1.54%
63,800 Government of Hungary............................. 01/12/99 to 04/12/99 16.500 to 19.500 337,737
------------
ITALY--7.29%
2,475,000 Republic of Italy................................. 02/01/99 to 04/01/04 8.500 to 12.000 1,596,426
------------
NEW ZEALAND--6.36%
1,233 Government of New Zealand......................... 03/15/02 10.000 944,533
650 FNMA Euro MTN..................................... 06/20/02 7.250 447,252
------------
1,391,785
------------
POLAND--3.17%
1,000 Republic of Poland................................ 06/12/02 12.000 243,024
US$ 225 Republic of Poland, DISC.......................... 10/27/24 6.9375 219,938
270 Republic of Poland, PDI........................... 10/27/14 4.000++ 230,513
------------
693,475
------------
SPAIN--1.52%
41,700 Government of Spain............................... 03/25/00 12.250 332,633
------------
UNITED KINGDOM--10.48%
1,263 United Kingdom Gilt............................... 09/30/98 to 12/07/15 7.250 to 15.500 2,294,706
------------
UNITED STATES--29.11%
1,000 Clorox Corp....................................... 07/15/01 8.800 1,071,693
1,000 Ford Motor Credit Corp. .......................... 07/01/01 9.500 1,092,220
622 U.S. Treasury Bond................................ 02/15/27 6.625 608,394
3,599 U.S. Treasury Notes............................... 04/30/99 to 07/15/06 5.625 to 7.000 3,601,306
------------
6,373,613
------------
Total Long-Term Debt Securities (cost--$17,683,532)........... 17,495,956
------------
SHORT-TERM DEBT SECURITIES--10.69%
HUNGARY--1.29%
51,600 Government of Hungary............................. 03/21/98 to 05/17/98 23.500 to 24.000 283,011
------------
JAPAN--3.75%
94,077,393 Deutsche Bank CD.................................. 07/23/97 0.410 820,848
------------
POLAND--1.05%
780 Republic of Poland Treasury Bills................. 07/23/97 to 10/15/97 20.350 to 21.000@ 228,984
------------
</TABLE>
16
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ---------- -------------------- ------------------ ------------
<C> <S> <C> <C> <C>
SHORT-TERM DEBT SECURITIES--(CONCLUDED)
UNITED STATES--4.60%
$ 1,000 The Chase Manhattan Corp. ........................ 12/01/97 7.500% $ 1,006,587
------------
Total Short-Term Debt Securities (cost--$2,371,628)........... 2,339,430
------------
REPURCHASE AGREEMENT--1.92%
420 Repurchase Agreement dated 06/30/97 with Brown
Brothers Harriman & Company, collateralized by
$427,697 U.S. Treasury Notes, 6.125% due
03/31/98; proceeds: $420,058 (cost--$420,000)... 07/01/97 5.000 420,000
------------
Total Investments (cost--$20,475,160)--92.52%................. 20,255,386
Other assets in excess of liabilities--7.48%.................. 1,639,017
------------
Net Assets--100.00%........................................... $ 21,894,403
------------
------------
</TABLE>
- ------------
Note: The Portfolio of Investments is listed by the security issuer's country
of origin.
* In local currency unless otherwise indicated.
@ Yield to maturity
+ Reflects rate at June 30, 1997 on variable coupon rate instruments
++ Reflects rate at June 30, 1997 on step coupon rate instruments
CD Certificate of Deposit
DISC Discount Bond
PDI Past Due Interest Bond
MTN Medium Term Note
17
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL INCOME PORTFOLIO
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT TO MATURITY APPRECIATION
DELIVER IN EXCHANGE FOR DATES (DEPRECIATION)
------------- ----------------- -------------------- --------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 580,000 U.S.$ 452,574 07/10/97 $ 14,688
Australian Dollars...................... 432,000 U.S.$ 336,096 08/13/97 10,033
Australian Dollars...................... 350,000 U.S.$ 267,012 09/03/97 2,653
Belgian Francs.......................... 20,000,000 U.S.$ 651,508 07/14/97 95,673
Belgian Francs.......................... 17,000,000 U.S.$ 557,377 09/30/97 84,917
British Pounds.......................... 368,000 U.S.$ 613,088 07/31/97 918
British Pounds.......................... 205,000 U.S.$ 337,369 08/26/97 (3,558)
British Pounds.......................... 167,000 U.S.$ 272,868 07/14/97 to 7/16/97 (5,049)
Canadian Dollars........................ 575,000 U.S.$ 413,574 07/23/97 (2,806)
German Deutschemarks.................... 600,000 U.S.$ 382,190 01/21/98 38,134
Italian Lira............................ 1,234,000,000 U.S.$ 729,492 07/21/97 to 07/31/97 4,484
Italian Lira............................ 1,057,000,000 U.S.$ 622,607 07/21/97 1,457
New Zealand Dollars..................... 773,000 U.S.$ 531,881 08/29/97 to 09/19/97 7,992
New Zealand Dollars..................... 680,000 U.S.$ 469,200 07/14/97 7,551
New Zealand Dollars..................... 400,000 U.S.$ 274,800 08/06/97 3,405
Spanish Pesetas......................... 79,712,034 U.S.$ 578,307 08/20/97 to 02/10/98 37,436
U.S. Dollars............................ 651,720 BFR 20,000,000 07/14/97 (95,886)
U.S. Dollars............................ 508,890 BFR 17,000,000 09/30/97 (36,431)
U.S. Dollars............................ 420,276 CAD 575,000 07/23/97 (3,896)
U.S. Dollars............................ 366,674 DEM 600,000 01/21/98 (22,618)
U.S. Dollars............................ 549,112 ESP 79,712,034 08/20/97 to 02/10/98 (8,241)
--------------
$ 130,856
--------------
--------------
</TABLE>
CURRENCY TYPE ABBREVIATIONS:
BFR --Belgian Francs
CAD --Canadian Dollars
DEM --German Deutschemarks
ESP --Spanish Pesetas
See accompanying notes to financial statements
18
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STRATEGIC FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- -------- -------------------- -------------------- -----------
<C> <S> <C> <C> <C>
MORTGAGE-BACKED SECURITIES--74.25%
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION CERTIFICATES--12.33%
$558 GNMA ARM.......................................... 11/20/21 6.875% $ 572,624
107 GNMA ARM.......................................... 02/20/25 7.000 109,884
611 GNMA ARM.......................................... 05/20/25 to 09/20/25 7.125 629,444
-----------
Total Government National Mortgage Association Certificates
(cost--$1,303,948)......................................... 1,311,952
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION CERTIFICATES--4.56%
499 FHLMC ARM (cost--$483,752)........................ 03/01/27 5.945 484,611
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION CERTIFICATES--8.87%
914 FNMA ARM (cost--$922,396)......................... 05/01/25 7.587 943,236
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS--48.31%
132 Chase Mortgage Finance Corp REMIC Series 1993-N,
Class A1........................................ 11/25/24 6.750 131,834
68 Countrywide Mortgage Backed Securities Inc., REMIC
Series 1993-E, Class A1......................... 01/25/24 6.500 68,228
818 FHLMC REMIC Series 1067, Class IZ................. 04/15/21 8.000 839,567
111 FHLMC REMIC Series 1614, Class QZ................. 11/15/23 6.500 92,938
142 FHLMC REMIC Series 1628, Class KZ................. 12/15/23 6.250 119,288
615 FHLMC REMIC Series 1628, Class LZ................. 12/15/23 6.500 509,593
181 FNMA REMIC Series 1991-57, Class Z................ 05/25/21 6.500 167,404
433 FNMA REMIC Series 1991-59, Class K................ 05/25/16 8.000 436,878
287 FNMA REMIC Series 1993-112, Class ZB.............. 07/25/23 7.000 247,854
90 FNMA REMIC Series 1993-163, Class ZA.............. 09/25/23 7.000 79,959
132 FNMA REMIC Series 1993-96, Class PZ............... 06/25/23 7.000 120,528
296 FNMA REMIC Series G92-40, Class ZC................ 07/25/22 7.000 282,378
235 FNMA REMIC Series G93-16, Class K................. 04/25/23 5.000 187,412
101 Greenwich Capital Acceptance Inc., REMIC
Series 1991-B, Class A1, ARM.................... 01/25/22 7.605 101,470
307 Greenwich Capital Acceptance Inc., REMIC
Series 1992-LB6, Class A1, ARM.................. 10/25/22 7.041 309,012
500 Merrill Lynch Mortgage Investors Inc., REMIC
Series 1993-I, Class A3, FRN.................... 11/15/23 6.308 513,125
373 Prudential Home Mortgage Securities Corp. REMIC
Series 1993-38, Class A7........................ 09/25/23 6.950 303,779
29 Residential Funding Mortgage Services, REMIC
Series 1995-S3, Class A1........................ 04/25/25 7.650 29,275
649 Westam Mortgage Financial Corp., REMIC
Series 14A, Class A............................. 06/26/20 5.350 597,575
-----------
Total Collateralized Mortgage Obligations
(cost--$5,079,263)........................................... 5,138,097
-----------
STRIPPED COLLATERALIZED MORTGAGE OBLIGATIONS--0.18%
35 FNMA REMIC Series 1993-235, Class G*
(cost--$17,964)................................. 09/25/23 7.100+ 19,073
-----------
Total Mortgage-Backed Securities (cost--$7,807,323).......... 7,896,969
-----------
</TABLE>
19
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STRATEGIC FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- -------- -------------------- -------------------- -----------
<C> <S> <C> <C> <C>
CORPORATE BONDS--24.96%
$500 Ford Motor Credit Corp. FRN....................... 11/09/98 6.330% $ 500,089
200 Gulf Canada Resources Ltd......................... 08/15/99 9.000 209,073
300 Lehman Brothers Holdings Inc., FRN................ 01/12/99 6.590 299,387
500 Noranda Inc., FRN................................. 08/18/00 6.563 506,531
500 RJR Nabisco Inc. ................................. 12/01/02 8.625 511,678
500 United Airlines Equipment Trust Certificate 91B... 02/19/15 10.850 627,403
-----------
Total Corporate Bonds (cost--$2,648,317)..................... 2,654,161
-----------
COMMERCIAL PAPER--4.66%
100 KFW International Finance Inc. ................... 07/02/97 5.520 99,985
400 National Rural Utilities Corp. ................... 09/05/97 5.540 395,691
-----------
Total Commercial Paper (cost--$495,922)...................... 495,676
-----------
FOREIGN GOVERNMENT OBLIGATION--1.69%
257 Canada Government Real Return (cost--$187,153).... 12/01/26 4.250 179,317
-----------
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--0.14%
15 U.S. Treasury Bills++ (cost--$14,996)............. 07/03/97 5.100@ 14,996
-----------
REPURCHASE AGREEMENT--2.62%
279 Repurchase Agreement dated 06/30/97 with State
Street Bank & Trust Company, collateralized by
$285,445 U.S. Treasury Notes, 6.250% due
03/31/99; proceeds: $279,039 (cost--$279,000)... 07/01/97 5.000 279,000
-----------
Total Investments (cost--$11,432,711)--108.32%............... 11,520,119
Liabilities in excess of other assets--(8.32)%............... (884,999)
-----------
Net Assets--100.00%.......................................... $10,635,120
-----------
-----------
</TABLE>
- ------------
<TABLE>
<S> <C>
+ Estimated yield to maturity at June 30, 1997.
++ Entire or partial amount pledged as collateral for futures transactions.
* Principal Only - This security entitles the holder to receive principal payments from an underlying pool
of mortgages. High prepayments return principal faster than expected and cause the yield to increase; low
prepayments return the principal more slowly than expected and cause the yield to decrease.
@ Yield to maturity
ARM Adjustable Rate Mortgage - The rate shown is the current rate as of June 30, 1997.
FRN Floating Rate Note - The interest rate shown is as of June 30, 1977.
REMIC Real Estate Mortgage Investment Conduit
</TABLE>
FUTURE CONTRACTS
<TABLE>
<CAPTION>
NUMBER OF IN EXPIRATION UNREALIZED
CONTRACTS CONTRACT TO RECEIVE EXCHANGE FOR DATE APPRECIATION
- --------------- --------------------------------------------------------- ------------ ------------- -------------
<C> <S> <C> <C> <C>
11 10 year U.S. Treasury Notes.............................. $1,178,906 September 97 $ 7,719
------
------
</TABLE>
See accompanying notes to financial statements
20
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--64.31%
AGRICULTURE, FOOD & BEVERAGE--0.28%
2,800 RJR Nabisco Holdings Corp. ................................................................... $ 92,400
-----------
AIRLINES--0.62%
2,200 AMR Corp.*.................................................................................... 203,500
-----------
APPAREL, RETAIL--0.48%
6,600 Woolworth Corp.*.............................................................................. 158,400
-----------
APPAREL, TEXTILES--0.68%
4,000 Nine West Group Inc.*......................................................................... 152,750
1,800 Westpoint Stevens Inc.*....................................................................... 70,425
-----------
223,175
-----------
BANKS--4.46%
3,000 BB & T Corp. ................................................................................. 135,000
5,000 BankAmerica Corp. ............................................................................ 322,812
5,000 Barnett Banks Inc. ........................................................................... 262,500
4,900 Charter One Financial Inc. ................................................................... 263,988
2,000 Chase Manhattan Corp. ........................................................................ 194,125
2,000 First Union Corp. ............................................................................ 185,000
1,600 NationsBank Corp. ............................................................................ 103,200
-----------
1,466,625
-----------
CHEMICALS--2.76%
1,800 Dow Chemical Co. ............................................................................. 156,825
5,000 DuPont (E.I.) de Nemours & Co. ............................................................... 314,375
3,000 IMC Global Inc. .............................................................................. 105,000
8,500 Olin Corp. ................................................................................... 332,031
-----------
908,231
-----------
COMPUTER HARDWARE--2.82%
4,500 Cisco Systems Inc.*........................................................................... 302,062
2,000 Compaq Computer Corp.*........................................................................ 198,500
1,300 Dell Computer Corp.*.......................................................................... 152,669
1,000 International Business Machines............................................................... 90,188
1,350 Seagate Technology Inc.*...................................................................... 47,503
3,700 Sun Microsystems Inc.*........................................................................ 137,709
-----------
928,631
-----------
COMPUTER SOFTWARE--1.48%
3,950 Cadence Design Systems Inc.*.................................................................. 132,325
3,300 Computer Associates International Inc. ....................................................... 183,769
5,500 Sterling Software Inc.*....................................................................... 171,875
-----------
487,969
-----------
CONSUMER DURABLES--0.06%
1,000 Furniture Brands International Inc.*.......................................................... 19,375
-----------
DEFENSE/AEROSPACE--3.13%
4,000 Allied-Signal Inc. ........................................................................... 336,000
2,000 Lockheed Martin Corp. ........................................................................ 207,125
4,000 McDonnell Douglas Corp. ...................................................................... 274,000
2,500 Precision Castparts Corp. .................................................................... 149,062
2,500 Tracor Inc.*.................................................................................. 62,813
-----------
1,029,000
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
DIVERSIFIED RETAIL--1.78%
2,925 Dayton Hudson Corp. .......................................................................... $ 155,573
7,000 Federated Department Stores, Inc.*............................................................ 243,250
1,700 Fred Meyer Inc.*.............................................................................. 87,869
4,200 Knoll Inc.*................................................................................... 99,750
-----------
586,442
-----------
DRUGS & MEDICINE--2.72%
3,000 Bristol Myers Squibb Co. ..................................................................... 243,000
1,200 Pfizer Inc. .................................................................................. 143,400
8,000 Schering-Plough Corp. ........................................................................ 383,000
3,000 Watson Pharmaceuticals Inc.*.................................................................. 126,750
-----------
896,150
-----------
ELECTRICAL EQUIPMENT--2.17%
4,200 Johnson Controls Inc. ........................................................................ 172,463
3,750 KLA Instruments Corp.*........................................................................ 182,812
2,800 SCI Systems Inc.*............................................................................. 178,500
5,000 Waters Corp.*................................................................................. 179,375
-----------
713,150
-----------
ELECTRICAL POWER--1.09%
5,000 Philips Electronics N V....................................................................... 359,375
-----------
ENERGY RESERVES & PRODUCTION--4.09%
2,500 Amoco Corp. .................................................................................. 217,344
5,000 Mobil Corp. .................................................................................. 349,375
3,200 Royal Dutch Petroleum Co. .................................................................... 174,000
2,650 Texaco Inc. .................................................................................. 288,188
8,200 Unocal Corp. ................................................................................. 318,262
-----------
1,347,169
-----------
FINANCIAL SERVICES--1.94%
3,300 Countrywide Credit Industries Inc. ........................................................... 102,919
5,100 Morgan Stanley Dean Witter.................................................................... 219,618
2,500 Student Loan Marketing Association............................................................ 317,500
-----------
640,037
-----------
FOREST PRODUCTS, PAPER--0.37%
3,300 James River Corp. ............................................................................ 122,100
-----------
FOOD RETAIL--0.70%
5,000 Safeway Inc.*................................................................................. 230,625
-----------
GAS UTILITY--0.65%
1,500 Columbia Gas System Inc. ..................................................................... 97,875
3,800 MCN Energy Group Corp. ....................................................................... 116,375
-----------
214,250
-----------
HEAVY MACHINERY--1.58%
5,500 Agco Corp. ................................................................................... 197,656
3,000 Caterpillar Inc. ............................................................................. 322,125
-----------
519,781
-----------
HOTELS--1.20%
5,000 Hilton Hotels Corp. .......................................................................... 132,813
3,000 Marriott International Inc. .................................................................. 184,125
4,000 Prime Hospitality Corp.*...................................................................... 79,000
-----------
395,938
-----------
</TABLE>
21
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
INDUSTRIAL PARTS--2.67%
1,250 American Standard Companies Inc.*............................................................. $ 55,938
6,000 Crane Co. .................................................................................... 250,875
5,500 Ingersoll Rand Co............................................................................. 339,625
2,800 United Technologies Corp. .................................................................... 232,400
-----------
878,838
-----------
INDUSTRIAL SERVICES/SUPPLIES--1.38%
13,750 ADT Ltd.*..................................................................................... 453,750
-----------
LIFE INSURANCE--2.75%
3,000 Reliastar Financial Corp. .................................................................... 219,375
5,000 SunAmerica Inc. .............................................................................. 243,750
7,000 The Travelers Group, Inc. .................................................................... 441,437
-----------
904,562
-----------
MANUFACTURING--GENERAL--0.36%
3,400 Lucasvarity PLC, ADR.......................................................................... 117,725
-----------
MEDICAL PRODUCTS--0.84%
2,000 Johnson & Johnson............................................................................. 128,750
5,000 Mentor Corp. ................................................................................. 148,125
-----------
276,875
-----------
MEDICAL PROVIDERS--2.05%
5,000 HEALTHSOUTH Corp.*............................................................................ 124,688
5,800 Lincare Holdings Inc.*........................................................................ 249,400
10,125 Tenet Healthcare Corp.*....................................................................... 299,320
-----------
673,408
-----------
MINING & METALS--1.23%
5,000 Freeport-McMoran Copper & Gold Inc.*.......................................................... 147,500
3,000 Phelps Dodge Corp. ........................................................................... 255,563
-----------
403,063
-----------
MOTOR VEHICLES--0.67%
5,000 Lear Corp.*................................................................................... 221,875
-----------
OIL REFINING--2.41%
2,300 British Petroleum PLC, ADR.................................................................... 172,213
4,000 Coastal Corp. ................................................................................ 212,750
5,000 Repsol S.A., ADR.............................................................................. 212,187
5,000 Tejas Gas Corp.*.............................................................................. 196,250
-----------
793,400
-----------
OIL SERVICES--2.92%
2,000 Camco International Inc. ..................................................................... 109,500
3,000 Diamond Offshore Drilling Inc.*............................................................... 234,375
3,000 Ensco International Inc.*..................................................................... 158,250
3,100 Global Marine Inc.*........................................................................... 72,075
4,900 Halliburton Co. .............................................................................. 388,325
-----------
962,525
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
OTHER INSURANCE--4.31%
2,500 ACE Ltd. ..................................................................................... $ 184,688
2,500 Allstate Corp. ............................................................................... 182,500
1,600 American International Group Inc. ............................................................ 239,000
1,500 CIGNA Corp. .................................................................................. 266,250
5,000 Everest Reinsurance Holdings Inc. ............................................................ 198,125
2,000 Loews Corp. .................................................................................. 200,250
3,750 Travelers Aetna Property Casualty Corp. ...................................................... 149,531
-----------
1,420,344
-----------
PUBLISHING--0.75%
5,000 New York Times Co., Class A................................................................... 247,500
-----------
RAILROADS--1.07%
3,125 Canadian Pacific Ltd. ........................................................................ 88,867
8,300 Trinity Industries Inc. ...................................................................... 263,525
-----------
352,392
-----------
REAL PROPERTY--2.73%
1,000 Boston Properties Inc.*....................................................................... 27,500
4,000 Chelsea GCA Realty Inc. ...................................................................... 152,000
500 Crescent Operating Inc.*...................................................................... 6,000
5,000 Crescent Real Estate Equities................................................................. 158,750
7,125 Equity Residential Properties Trust........................................................... 338,437
1,700 Spieker Properties Inc. ...................................................................... 59,819
3,350 Starwood Lodging Trust........................................................................ 143,003
1,250 Wellsford Real Properties Inc.*............................................................... 13,750
-----------
899,259
-----------
SEMICONDUCTOR--0.73%
2,000 Applied Materials Inc.*....................................................................... 141,625
700 Intel Corp. .................................................................................. 99,269
-----------
240,894
-----------
SPECIALTY RETAIL--1.14%
6,250 Dollar General Corp. ......................................................................... 234,375
3,300 General Nutrition Companies, Inc.*............................................................ 92,400
2,500 Zale Corp.*................................................................................... 49,531
-----------
376,306
-----------
THRIFT--0.43%
3,300 Ahmanson, H F & Co. .......................................................................... 141,900
-----------
TOBACCO--0.81%
6,000 Phillip Morris Companies Inc. ................................................................ 266,250
-----------
Total Common Stocks (cost--$16,492,112)................................................................... 21,173,189
-----------
</TABLE>
22
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
PREFERRED STOCKS--3.29%
BANKS--1.04%
5,000 Banco Commercial Portugues International Ltd. ................................................ $ 342,500
-----------
ENERGY RESERVES & PRODUCTION--1.07%
5,000 Devon Financing Trust+........................................................................ 352,500
-----------
MINING & METALS--0.16%
1,000 Timet Capital Trust+.......................................................................... 52,500
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
OTHER INSURANCE--0.68%
3,000 Frontier Financing Trust+..................................................................... $ 223,875
-----------
THRIFT--0.34%
2,000 Tosco Financing Trust+........................................................................ 113,000
-----------
Total Preferred Stocks (cost--$800,000)................................................................... 1,084,375
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
- --------- -------------------- ----------------
<C> <S> <C> <C> <C>
CORPORATE BONDS--10.95%
$ 250 ABN-AMRO Bank NV.................................... 12/01/26 7.300% 236,453
225 American Re Corp. .................................. 12/15/26 7.450 222,342
330 BT Institutional Capital Trust A+................... 12/01/26 8.090 321,667
250 Banc One Corp. ..................................... 03/24/00 6.700 251,223
225 Bear Stearns Cos Inc. .............................. 03/01/07 7.000 220,677
225 Continental Cablevision Inc. ....................... 05/15/06 8.300 238,666
125 Equitable Life+..................................... 12/01/05 6.950 122,810
250 Ford Motor Credit Corp. ............................ 01/25/01 5.750 242,903
280 Lehman Brothers Holdings Inc. ...................... 09/15/03 7.125 279,668
225 Loews Corp. ........................................ 12/15/06 6.750 217,393
350 Lumbermans Mutual Casualty Co.+..................... 07/01/26 9.150 384,100
225 Occidental Petroleum Corp. ......................... 09/15/04 8.500 231,790
360 Phillip Morris Companies Inc. ...................... 01/15/27 7.750 352,512
290 Santander Finance Issuances......................... 07/15/05 6.800 283,222
-----------
Total Corporate Bonds (cost--$3,588,689)........................ 3,605,426
-----------
U.S. GOVERNMENT OBLIGATIONS--11.77%
1,000 U.S. Treasury Bills................................. 07/24/97 4.960@ 996,831
1,186 U.S. Treasury Bonds................................. 02/15/21 7.875 1,321,649
1,543 U.S. Treasury Notes (1)............................. 04/30/99 to 07/31/01 5.875 to 7.125 1,555,289
-----------
Total U.S. Government Obligations (cost--$3,843,610)............ 3,873,769
-----------
MORTGAGE BACKED SECURITIES--10.14%
FEDERAL NATIONAL MORTGAGE ASSOCIATION CERTIFICATES--3.89%
467 FNMA................................................ 02/01/25 to 01/01/26 7.500 to 9.000 485,165
805 FNMA ARM............................................ 07/01/27 6.089 795,944
-----------
Total Federal National Mortgage Association Certificates
(cost--$1,284,527)............................................ 1,281,109
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION CERTIFICATES--2.41%
752 GNMA (cost--$792,567)............................... 11/15/17 8.500 793,358
-----------
</TABLE>
23
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- -------------------- ---------------- -----------
<C> <S> <C> <C> <C>
MORTGAGE BACKED SECURITIES--(CONCLUDED)
COLLATERALIZED MORTGAGE OBLIGATION--3.84%
$ 115 Amresco Commercial Mortgage Funding I Corp., Series
1997-C1, Class A1................................. 06/17/29 6.730% $ 114,820
86 CS First Boston Mortgage Securities Corp., Series
1995-WF1, Class A1................................ 12/21/27 6.452 84,783
116 CS First Boston Mortgage Securities Corp., Series
1997-2, Class A+.................................. 06/01/20 7.500 115,673
75 DLJ Mortgage Acceptance Corp., Series 1997-CF1,
Class A1A+........................................ 05/15/06 7.400 76,486
107 FDIC REMIC Series 1996-C1 Class 1A.................. 05/25/26 6.750 107,115
153 FDIC REMIC Trust 1994-C1, Class 2A2................. 09/25/25 7.850 155,557
160 FNMA REMIC Series 1996-M4 Class A................... 03/17/17 7.750 162,186
116 FNMA REMIC Series 1996-M6 Class E................... 09/17/19 7.750 117,671
99 GMAC Commercial Mortgage Security, Series 1996-C1,
Class A2A......................................... 09/15/03 6.790 98,720
115 Merrill Lynch Mortgage Investments Inc., Series
1996-C1, Class A1................................. 04/25/28 7.150 115,799
115 Morgan Stanley Capital 1 Inc., Series 1997-WF1,
Class A1+......................................... 10/15/06 6.830 114,928
-----------
Total Collateralized Mortgage Obligations (cost--$1,262,794).... 1,263,738
-----------
Total Mortgage Backed Securities (cost--$3,339,888)............. 3,338,205
-----------
REPURCHASE AGREEMENT--1.53%
$ 505 Repurchase Agreement dated 06/30/97, with State
Street Bank & Trust Company, collateralized by
$515,944 U.S. Treasury Notes, 6.250%, due
03/31/99; proceeds: $505,070 (cost--$505,000)..... 07/01/97 5.000 505,000
-----------
<CAPTION>
NUMBER OF
SHARES
- ---------
<C> <S> <C> <C> <C>
INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED--3.12%
1,027,125 Liquid Assets Portfolio..................................................................... 1,027,125
356 TempCash Portfolio.......................................................................... 356
19 TempFund Portfolio.......................................................................... 19
-----------
Total Investments of Cash Collateral for Securities Loaned
(cost--$1,027,500).................................................................................... 1,027,500
-----------
Total Investments (cost--$29,596,799)--105.11%.......................................................... 34,607,464
Liabilities in excess of other assets--(5.11)%.......................................................... (1,682,314)
-----------
Net Assets--100.00%..................................................................................... $32,925,150
-----------
-----------
</TABLE>
- ---------------
* Non-income producing security
+ Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
@ Interest rates shown are discount rates at date of purchase.
ADR American Depositary Receipt
ARM Adjustable rate mortgage security. The interest rate noted is the current
rate at June 30, 1997.
REMIC Real Estate Mortgage Investment Conduit
(1) Security, or a portion thereof, was loaned at June 30, 1997.
See accompanying notes to financial statements
24
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--90.19%
AGRICULTURE, FOOD & BEVERAGE--0.77%
4,600 RJR Nabisco Holdings Corp. ............................................................. $ 151,800
-----------
AIRLINES--1.76%
1,400 AMR Corp.*.............................................................................. 129,500
2,900 Continental Airlines Inc.*.............................................................. 101,319
1,600 UAL Corp.*.............................................................................. 114,500
-----------
345,319
-----------
APPAREL, RETAIL--1.40%
6,800 TJX Companies Inc. New.................................................................. 179,350
4,000 Woolworth Corp.*........................................................................ 96,000
-----------
275,350
-----------
APPAREL, TEXTILES--1.09%
2,200 Fruit of the Loom, Inc.*................................................................ 68,200
2,800 Nine West Group, Inc.*.................................................................. 106,925
1,000 Westpoint Stevens Inc.*................................................................. 39,125
-----------
214,250
-----------
BANKS--7.55%
1,700 BB & T Corp. ........................................................................... 76,500
3,400 The Bank of New York Co. Inc. .......................................................... 147,900
4,600 BankAmerica Corp. ...................................................................... 296,987
4,600 Barnett Banks, Inc. .................................................................... 241,500
3,100 Charter One Financial, Inc. ............................................................ 167,013
2,172 Chase Manhattan Corp. .................................................................. 210,820
1,500 First Union Corp. ...................................................................... 138,750
3,100 NationsBank Corp. ...................................................................... 199,950
-----------
1,479,420
-----------
CHEMICALS--4.02%
2,300 Dow Chemical Co. ....................................................................... 200,388
5,200 DuPont (E.I.) de Nemours & Co. ......................................................... 326,950
1,100 IMC Global Inc. ........................................................................ 38,500
5,700 Olin Corp. ............................................................................. 222,656
-----------
788,494
-----------
COMPUTER HARDWARE--4.79%
2,900 Cisco Systems Inc.*..................................................................... 194,662
2,400 Compaq Computer Corp.*.................................................................. 238,200
1,600 Dell Computer Corp.*.................................................................... 187,900
2,000 International Business Machines......................................................... 180,375
600 Seagate Technology, Inc.*............................................................... 21,113
3,200 Sun Microsystems Inc.*.................................................................. 119,100
-----------
941,350
-----------
COMPUTER SOFTWARE--1.58%
3,150 Cadence Design Systems Inc.*............................................................ 105,525
2,000 Computer Associates International Inc. ................................................. 111,375
3,000 Sterling Software Inc.*................................................................. 93,750
-----------
310,650
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
CONSUMER DURABLES--0.10%
1,000 Furniture Brands International Inc.*.................................................... $ 19,375
-----------
DEFENSE/AEROSPACE--5.41%
3,300 Allied-Signal Inc. ..................................................................... 277,200
3,000 Lockheed Martin Corp. .................................................................. 310,687
4,050 McDonnell Douglas Corp. ................................................................ 277,425
2,500 Precision Castparts Corp. .............................................................. 149,062
1,900 Tracor Inc.*............................................................................ 47,738
-----------
1,062,112
-----------
DIVERSIFIED RETAIL--1.95%
3,075 Dayton Hudson Corp. .................................................................... 163,552
2,900 Federated Department Stores, Inc.*...................................................... 100,775
1,000 Fred Meyer Inc.*........................................................................ 51,687
2,800 Knoll Inc.*............................................................................. 66,500
-----------
382,514
-----------
DRUGS & MEDICINE--3.41%
1,900 Bristol-Myers Squibb Co. ............................................................... 153,900
1,700 Pfizer, Inc. ........................................................................... 203,150
4,600 Schering-Plough Corp. .................................................................. 220,225
2,200 Watson Pharmaceuticals, Inc.*........................................................... 92,950
-----------
670,225
-----------
ELECTRICAL EQUIPMENT--2.28%
3,200 Johnson Controls, Inc. ................................................................. 131,400
2,750 KLA Instruments Corp.*.................................................................. 134,062
1,800 SCI Systems Inc.*....................................................................... 114,750
1,900 Waters Corp.*........................................................................... 68,163
-----------
448,375
-----------
ELECTRICAL POWER--1.29%
2,000 General Electric Co. ................................................................... 130,750
1,700 Philips Electronics N.V. ............................................................... 122,188
-----------
252,938
-----------
ENERGY RESERVES & PRODUCTION--5.41%
1,700 Amoco Corp. ............................................................................ 147,794
5,200 Mobil Corp. ............................................................................ 363,350
3,600 Royal Dutch Petroleum Co. .............................................................. 195,750
1,700 Texaco, Inc. ........................................................................... 184,875
4,400 Unocal Corp. ........................................................................... 170,775
-----------
1,062,544
-----------
FINANCIAL SERVICES--2.60%
1,000 American Express Co. ................................................................... 74,500
2,000 Countrywide Credit Industries, Inc. .................................................... 62,375
6,100 Loral Space & Communication*............................................................ 91,500
3,900 Morgan Stanley Dean Witter.............................................................. 167,944
900 Student Loan Marketing Association...................................................... 114,300
-----------
510,619
-----------
FOREST PRODUCTS, PAPER--0.66%
3,500 James River Corp. ...................................................................... 129,500
-----------
</TABLE>
25
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
FOOD RETAIL--0.75%
3,200 Safeway Inc.*........................................................................... $ 147,600
-----------
GAS UTILITY--1.37%
2,900 Columbia Gas System, Inc. .............................................................. 189,225
2,600 MCN Corp. .............................................................................. 79,625
-----------
268,850
-----------
HEAVY MACHINERY--3.59%
2,900 Agco Corp. ............................................................................. 104,219
3,300 Case Corp. ............................................................................. 227,287
3,475 Caterpillar, Inc. ...................................................................... 373,128
-----------
704,634
-----------
HOTELS--1.38%
4,500 Hilton Hotels Corp. .................................................................... 119,531
1,700 Marriott International, Inc. ........................................................... 104,338
2,400 Prime Hospitality Corp.*................................................................ 47,400
-----------
271,269
-----------
INDUSTRIAL PARTS--2.48%
1,900 American Standard Companies Inc.*....................................................... 85,025
3,000 Ingersoll Rand Co. ..................................................................... 185,250
1,900 United Technologies Corp. .............................................................. 157,700
1,300 York International Corp. ............................................................... 59,800
-----------
487,775
-----------
INDUSTRIAL SERVICES/SUPPLIES--1.22%
7,250 ADT Ltd.*............................................................................... 239,250
-----------
LIFE INSURANCE--4.11%
2,300 Reliastar Financial Corp. .............................................................. 168,188
3,600 SunAmerica Inc. ........................................................................ 175,500
7,333 The Travelers Group, Inc. .............................................................. 462,437
-----------
806,125
-----------
LONG DISTANCE & PHONE COMPANIES--0.38%
1,200 SBC Communications Inc. ................................................................ 74,250
-----------
MANUFACTURING-GENERAL--1.02%
3,450 Crane Co. .............................................................................. 144,253
1,620 Lucasvarity PLC ADR..................................................................... 56,093
-----------
200,346
-----------
MEDICAL PRODUCTS--0.71%
1,700 Johnson & Johnson....................................................................... 109,438
1,000 Mentor Corp. ........................................................................... 29,625
-----------
139,063
-----------
MEDICAL PROVIDERS--1.79%
4,600 HEALTHSOUTH Corp.*...................................................................... 114,712
2,300 Lincare Holdings Inc.*.................................................................. 98,900
4,650 Tenet Healthcare Corp.*................................................................. 137,466
-----------
351,078
-----------
MINING & METALS--1.34%
2,300 Freeport-McMoran Copper & Gold, Inc. ................................................... 67,850
2,300 Phelps Dodge Corp. ..................................................................... 195,931
-----------
263,781
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
MOTOR VEHICLES--1.29%
3,400 Breed Technologies, Inc. ............................................................... $ 78,200
2,050 Echlin, Inc. ........................................................................... 73,800
2,300 Lear Corp.*............................................................................. 102,062
-----------
254,062
-----------
OIL REFINING--2.39%
2,000 British Petroleum plc................................................................... 149,750
2,300 Coastal Corp. .......................................................................... 122,331
900 Repsol S.A., ADR........................................................................ 38,194
300 Shell Transport & Trading PLC........................................................... 37,725
3,100 Tejas Gas Corp.*........................................................................ 121,675
-----------
469,675
-----------
OIL SERVICES--3.96%
2,600 Camco International Inc. ............................................................... 142,350
2,300 Diamond Offshore Drilling Inc.*......................................................... 179,687
2,200 Ensco International Inc.*............................................................... 116,050
2,300 Global Marine Inc.*..................................................................... 53,475
3,600 Halliburton Co. ........................................................................ 285,300
-----------
776,862
-----------
OTHER INSURANCE--7.19%
2,900 ACE Ltd. ............................................................................... 214,237
4,591 Allstate Corp. ......................................................................... 335,143
1,950 American International Group Inc. ...................................................... 291,281
1,100 CIGNA Corp. ............................................................................ 195,250
3,700 Everest Reinsurance Holdings Inc. ...................................................... 146,613
1,200 Loews Corp. ............................................................................ 120,150
2,750 Travelers Aetna Property Casualty Corp. ................................................ 109,656
-----------
1,412,330
-----------
PUBLISHING--0.58%
2,300 New York Times Co., Class A............................................................. 113,850
-----------
RAILROADS--1.14%
2,275 Canadian Pacific Ltd. .................................................................. 64,695
5,000 Trinity Industries Inc. ................................................................ 158,750
-----------
223,445
-----------
REAL PROPERTY--2.55%
600 Boston Properties Inc.*................................................................. 16,500
1,500 Chelsea GCA Realty Inc. ................................................................ 57,000
350 Crescent Operating Inc.*................................................................ 4,200
3,500 Crescent Real Estate Equities........................................................... 111,125
2,937 Equity Residential Properties Trust..................................................... 139,507
1,000 Spieker Properties Inc. ................................................................ 35,188
3,050 Starwood Lodging Trust.................................................................. 130,197
575 Wellsford Real Properties Inc.*......................................................... 6,325
-----------
500,042
-----------
</TABLE>
26
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONCLUDED)
SEMICONDUCTOR--1.26%
2,300 Applied Materials, Inc.*................................................................ $ 162,869
600 Intel Corp. ............................................................................ 85,087
-----------
247,956
-----------
SPECIALTY RETAIL--1.24%
4,050 Dollar General Corp. ................................................................... 151,875
2,000 General Nutrition Companies, Inc.*...................................................... 56,000
1,800 Zale Corp.*............................................................................. 35,663
-----------
243,538
-----------
THRIFT--0.44%
2,000 Ahmanson, H F & Co. .................................................................... 86,000
-----------
TOBACCO--1.94%
8,600 Phillip Morris Companies Inc. .......................................................... 381,625
-----------
Total Common Stocks (cost--$13,430,572)............................................................ 17,708,241
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
PREFERRED STOCKS--3.85%
BANKS--0.87%
2,500 Banco Commercial Portugues International Ltd. .......................................... $ 171,250
-----------
FINANCIAL SERVICES--0.72%
2,000 Devon Financing Trust+.................................................................. 141,000
-----------
FOREST PRODUCTS, PAPER--0.80%
3,000 International Paper Capital Trust+...................................................... 156,750
-----------
MINING & METALS--0.27%
1,000 Timet Capital Trust+.................................................................... 52,500
-----------
OTHER INSURANCE--0.76%
2,000 Frontier Financing Trust+............................................................... 149,250
-----------
THRIFT--0.43%
1,500 Tosco Financing Trust+.................................................................. 84,750
-----------
Total Preferred Stocks (cost--$580,627)............................................................ 755,500
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
- --------- -------------------- --------------
<C> <S> <C> <C> <C>
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--2.28%
$ 450 U.S. Treasury Bills (cost--$448,611).............. 07/24/97 4.830%@ 448,611
-----------
REPURCHASE AGREEMENT--3.44%
675 Repurchase Agreement dated 06/30/97 with State
Street Bank & Trust Company, collateralized by
$689,628 U.S. Treasury Notes, 6.250% due
03/31/99; proceeds: $675,094
(cost--$675,000)................................ 07/01/97 5.000 675,000
-----------
Total Investments (cost--$15,134,810)--99.76%................ 19,587,352
Other assets in excess of liabilities--0.24%................. 47,896
-----------
Net Assets--100.00%.......................................... $19,635,248
-----------
-----------
</TABLE>
- ------------
* Non-income producing security
+ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
@ Yield to maturity for discounted securities.
ADR American Depositary Receipt
See accompanying notes to financial statements
27
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--93.81%
AGRICULTURE, FOOD & BEVERAGE--3.10%
5,400 Dekalb Genetics Corp. .................................. $ 430,650
3,700 Smithfield Foods Inc. .................................. 227,550
-----------
658,200
-----------
APPAREL, RETAIL--3.58%
20,600 TJX Companies Inc. New.................................. 543,325
9,000 Woolworth Corp.*........................................ 216,000
-----------
759,325
-----------
APPAREL, TEXTILES--2.53%
4,300 Liz Claiborne, Inc. .................................... 200,488
11,100 Wolverine World Wide Inc. .............................. 337,162
-----------
537,650
-----------
BANKS--1.34%
5,500 First Financial Corp. .................................. 161,562
2,900 Star Banc Corp. ........................................ 122,525
-----------
284,087
-----------
CHEMICALS--2.58%
2,000 Avery Dennison Corp. ................................... 80,250
9,200 Gencorp Inc. ........................................... 212,750
4,600 Tredegar Industries Inc. ............................... 255,300
-----------
548,300
-----------
COMPUTER HARDWARE--4.20%
3,400 Adaptec Inc.*........................................... 118,150
6,600 Gateway 2000 Inc. ...................................... 214,087
9,000 Quantum Corp. .......................................... 182,813
3,600 Stratus Computer Inc. .................................. 180,000
5,100 Wind River Systems Inc. ................................ 195,075
-----------
890,125
-----------
COMPUTER SOFTWARE--10.17%
7,200 BMC Software Inc.*...................................... 398,700
2,800 Cadence Design Systems Inc.*............................ 93,800
10,000 Compuware Corp.*........................................ 477,500
8,800 Manugistics Group Inc. ................................. 391,600
3,300 McAfee Associates Inc.*................................. 208,312
5,300 National Instruments Corp. ............................. 186,825
2,600 Parametric Technology Corp.*............................ 110,663
5,500 Peoplesoft Inc.*........................................ 290,125
-----------
2,157,525
-----------
CONSTRUCTION, REAL PROPERTY--0.67%
3,000 Mastec Inc. ............................................ 141,938
-----------
CONSUMER DURABLES--4.89%
5,600 Ethan Allen Interiors Inc. ............................. 319,200
14,700 Furniture Brands International Inc.*.................... 284,812
5,800 Miller Herman Inc. ..................................... 208,800
8,500 Pier 1 Imports Inc. .................................... 225,250
-----------
1,038,062
-----------
DIVERSIFIED RETAIL--0.88%
5,900 Carson Pirie Scott & Co.*............................... 187,325
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
DRUGS & MEDICINE--3.04%
7,300 Bio Technology General Corp............................. $ 98,550
3,800 Dura Pharmaceuticals Inc. .............................. 151,525
8,200 Herbalife International Inc. ........................... 133,250
5,250 Medicis Pharmaceutical Corp. (1)........................ 261,844
-----------
645,169
-----------
ELECTRICAL EQUIPMENT--8.52%
4,100 Boston Technology Inc.*................................. 121,206
5,500 Comverse Technology Inc.*............................... 286,000
6,600 Digital Microwave Corp. ................................ 198,000
2,900 Hutchinson Technology Inc. ............................. 70,688
7,300 Jabil Circuit Inc. ..................................... 612,287
1,700 Kimball International Inc. ............................. 68,425
3,300 SCI Systems Inc.*....................................... 210,375
3,800 Sanmina Corp. (1)....................................... 241,300
-----------
1,808,281
-----------
ENERGY RESERVES & PRODUCTION--0.79%
9,100 Snyder Oil Corp. ....................................... 167,213
-----------
ENTERTAINMENT--1.05%
6,900 Westwood One Inc.*...................................... 222,525
-----------
FINANCIAL SERVICES--1.78%
10,700 Americredit Corp. ...................................... 224,700
4,300 Green Tree Financial Corp. ............................. 153,187
-----------
377,887
-----------
FREIGHT, AIR, SEA, LAND--0.94%
7,000 Expeditores International Washington Inc. .............. 198,625
-----------
INDUSTRIAL PARTS--3.01%
5,100 Crane Co. .............................................. 213,244
1,800 Kaydon Corp. ........................................... 89,325
5,200 SPX Corp. .............................................. 337,025
-----------
639,594
-----------
INDUSTRIAL SERVICES/SUPPLIES--1.02%
2,500 Corrections Corp. of America*........................... 99,375
2,500 Robert Half International Inc.*......................... 117,656
-----------
217,031
-----------
INFORMATION & COMPUTER SERVICES--2.03%
4,600 HBO & Co. .............................................. 316,825
2,200 Keane Inc. ............................................. 114,400
-----------
431,225
-----------
LIFE INSURANCE--3.28%
8,800 Conseco Inc. ........................................... 325,600
7,600 SunAmerica Inc. ........................................ 370,500
-----------
696,100
-----------
MEDICAL PROVIDERS--3.86%
2,250 Health Management Associates Inc.*...................... 64,125
4,900 Lincare Holdings Inc.*.................................. 210,700
17,000 Novacare Inc.*.......................................... 235,875
4,300 Oxford Health Plans Inc.*............................... 308,525
-----------
819,225
-----------
</TABLE>
28
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONCLUDED)
MINING & METALS--1.19%
10,800 Zeigler Coal Holding Co. ............................... $ 252,450
-----------
MOTOR VEHICLES--1.86%
7,100 Arvin Industries Inc. .................................. 193,475
9,600 Mascotech Inc. ......................................... 200,400
-----------
393,875
-----------
OIL SERVICES--7.64%
5,330 Camco International Inc. ............................... 291,817
5,800 Cliffs Drilling Co.*.................................... 211,700
5,600 EVI Inc. ............................................... 235,200
15,800 Global Marine Inc.*..................................... 367,350
13,700 Marine Drilling Companies Inc. ......................... 268,863
7,600 Varco International Inc. ............................... 245,100
-----------
1,620,030
-----------
OTHER INSURANCE--0.90%
2,600 Orion Capital Corp. .................................... 191,750
-----------
PUBLISHING--1.11%
3,300 Central Newspapers Inc. ................................ 236,363
-----------
REAL PROPERTY--1.89%
2,700 Medusa Corp. ........................................... 103,612
6,800 Southdown, Inc.*........................................ 296,650
-----------
400,262
-----------
RESTAURANTS--1.07%
13,900 Foodmaker Inc. ......................................... 227,613
-----------
SECURITIES & ASSET MANAGEMENT--0.73%
4,520 Bear Stearns Co. Inc. .................................. 154,528
-----------
SEMICONDUCTOR--6.57%
4,200 Altera Corp. ........................................... 212,100
8,500 Cellstar Corp. ......................................... 260,313
5,900 Dallas Semiconductor Corp. ............................. 231,575
15,700 Oak Technology Corp. ................................... 154,056
4,200 Unitrode Corp. ......................................... 211,575
9,900 Vitesse Semiconductor Corp. ............................ 323,606
-----------
1,393,225
-----------
SPECIALTY RETAIL--4.18%
4,900 Cole National Corp. .................................... 215,600
4,400 Dollar Tree Stores Inc. ................................ 221,650
7,600 General Nutrition Companies, Inc.*...................... 212,800
8,700 MacFrugals Bargains Closeouts Inc.*..................... 237,075
-----------
887,125
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
THRIFT--3.41%
3,400 Greenpoint Financial Corp. ............................. $ 226,312
2,600 Security Capital Corp. Wisconsin........................ 245,700
4,200 Washington Mutual Inc.*(1).............................. 250,950
-----------
722,962
-----------
Total Common Stocks (cost--$15,014,029)............................. 19,905,595
-----------
INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED--2.90%
230,515 Liquid Assets Portfolio................................. 230,515
385,085 TempCash Portfolio...................................... 385,085
-----------
Total Investments of Cash Collateral for Securities Loaned
(cost--$615,600)................................................ 615,600
-----------
<CAPTION>
NUMBER OF
RIGHTS
- ---------
<C> <S> <C>
STOCK RIGHTS--6.64%
APPAREL, TEXTILES--0.78%
12,800 Stride Rite Corp.,expiring 07/17/07..................... 164,800
-----------
COMPUTER HARDWARE--2.24%
15,000 Western Digital Corp.,expiring 11/30/98................. 474,375
-----------
FREIGHT: AIR, SEA, LAND--0.87%
4,200 Tidewater Inc.,expiring 5/1/00.......................... 184,800
-----------
HOUSEHOLD PRODUCTS--0.66%
5,200 Church & Dwight Inc., expiring 5/17/98.................. 139,100
-----------
MINING & METALS--0.99%
20,200 Bethleham Steel Corp., expiring 10/18/98................ 210,838
-----------
MOTOR VEHICLES--1.10%
6,700 Federal Mogul Corp., expiring 11/14/98.................. 234,500
-----------
Total Stock Rights (cost--$1,023,773)............................... 1,408,413
-----------
Total Investments (cost--$16,653,402)--
103.35%......................................................... 21,929,608
Liabilities in excess of other assets--
(3.35)%......................................................... (711,183)
-----------
Net Assets--100.00%................................................. $21,218,425
-----------
-----------
</TABLE>
- ---------------
* Non-income producing security
(1) Security, or a portion thereof, was on loan at June 30, 1997.
See accompanying notes to financial statements
29
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HIGH GRADE FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- -------------------- -------------------- ----------
<C> <S> <C> <C> <C>
U. S. GOVERNMENT OBLIGATIONS--17.69%
$ 900 U.S. Treasury Bills............................... 07/24/97 to 08/28/97 4.830 to 4.960%@ $ 895,751
200 U.S. Treasury Lincs............................... 08/15/09 6.000 186,757
317 U.S. Treasury Notes............................... 12/31/99 to 09/30/01 6.375 to 7.750 325,044
----------
Total U. S. Government Obligations (cost--$1,417,192)......... 1,407,552
----------
MORTGAGE-BACKED SECURITIES--40.65%
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION CERTIFICATES--9.08%
451 GNMA.............................................. 01/15/24 7.000 442,997
265 GNMA.............................................. 11/15/17 8.500 279,809
----------
Total Government National Mortgage Association Certificates
(cost--$702,810)............................................ 722,806
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION CERTIFICATES--22.29%
265 FNMA.............................................. 02/02/06 5.875 249,449
70 FNMA.............................................. 12/01/08 6.000 67,764
425 FNMA ARM.......................................... 07/01/27 6.089 420,219
536 FNMA.............................................. 04/01/09 to 10/01/23 7.000 527,434
363 FNMA.............................................. 07/01/09 7.500 367,387
139 FNMA.............................................. 09/01/11 8.000 141,924
----------
Total Federal National Mortgage Association Certificates
(cost--$1,772,395).......................................... 1,774,177
----------
COLLATERALIZED MORTGAGE OBLIGATIONS--9.28%
100 Amresco Commercial Mortgage Funding I Corp.,
Series 1997-C1, Class A1........................ 06/17/29 6.730 99,844
86 CS First Boston Mortgage Securities Corp., Series
1995-WF1-A1..................................... 12/21/27 6.452 84,783
128 FDIC REMIC Trust 1994-C1, Class 2A2............... 09/25/25 7.850 129,631
72 FDIC REMIC Trust 1996-C1, Class 1A................ 05/25/26 6.750 71,410
191 Merrill Lynch Mortgage Investments Inc., Series
1996-C1, Class A1............................... 04/25/28 7.150 192,998
160 Morgan Stanley Capital I, Series 1997-WF1, Class
A1+............................................. 07/15/29 6.830 159,900
----------
Total Collateralized Mortgage Obligations (cost--$739,402).... 738,566
----------
Total Mortgage-Backed Securities (cost--$3,214,607)........... 3,235,549
----------
CORPORATE BONDS--46.97%
BANKS--8.39%
200 BankAmerica Corp. ................................ 06/15/04 7.625 206,244
225 JP Morgan &Company Inc. .......................... 09/15/04 7.625 233,821
235 MBNA Capital I.................................... 12/01/26 8.278 227,398
----------
667,463
----------
DIVERSIFIED RETAIL--2.95%
250 Wal Mart Stores Inc. ............................. 10/15/05 5.875 234,695
----------
FINANCIAL SERVICES--3.77%
300 Commercial Credit Group Inc. ..................... 05/01/02 6.875 300,121
----------
HOUSEHOLD PRODUCTS--2.54%
225 Procter & Gamble Corp. ........................... 01/15/26 6.450 202,155
----------
INSURANCE--12.06%
250 American Re Corp. ................................ 12/15/26 7.450 247,046
250 Equitable Life+................................... 12/01/05 6.950 245,620
225 Loews Corp. ...................................... 12/15/06 6.750 217,393
250 Travelers Property Casualty Corp. ................ 04/15/01 6.750 249,509
----------
959,568
----------
</TABLE>
30
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HIGH GRADE FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- -------------------- -------------------- ----------
<C> <S> <C> <C> <C>
CORPORATE BONDS--(CONCLUDED)
MEDIA--3.00%
$ 225 Continental Cablevision Inc. ..................... 05/15/06 8.300% $ 238,666
----------
SECURITIES & ASSET MANAGEMENT--2.82%
225 Lehman Brothers Holdings Inc. .................... 09/15/03 7.125 224,733
----------
YANKEE BONDS--11.44%
225 ABN-AMRO Bank NV.................................. 05/15/23 7.750 227,443
225 Dresdner Bank AG.................................. 09/15/05 6.625 218,952
225 Societe Generale New York......................... 06/01/06 7.400 227,365
250 Toronto Dominion Bank of Ontario.................. 08/15/08 6.500 237,072
----------
910,832
----------
Total Corporate Bonds (cost--$3,690,609)...................... 3,738,233
----------
REPURCHASE AGREEMENT--2.76%
220 Repurchase Agreement dated 06/30/97 with State
Street Bank & Trust Company, collateralized by
$224,768 U.S. Treasury Notes, 6.250%, due
03/31/99; proceeds: $220,031 (cost--$220,000)... 07/01/97 5.000 220,000
----------
Total Investments (cost--$8,542,408)--108.07%................. 8,601,334
Liabilities in excess of other assets--(8.07)%................ (642,067)
----------
Net Assets--100.00%........................................... $7,959,267
----------
----------
</TABLE>
- ---------------
+ Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
@ Yield to maturity for discounted securities
ARM Adjustable rate mortgage security. The interest rate noted is the
current rate at June 30, 1997.
REMIC Real Estate Mortgage Investment Conduit
See accompanying notes to financial statements
31
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY
MARKET GROWTH
PORTFOLIO PORTFOLIO
------------- -------------
<S> <C> <C>
ASSETS
Investments, at value (cost--$11,723,591; $29,773,057; $21,370,818; $20,475,160;
$11,432,711; $29,596,799; $15,134,810; $16,653,402 and $8,542,408,
respectively).................................................................. $ 11,723,591 $ 41,175,899
Cash (including cash denominated in foreign currencies).......................... -- 5,093
Dividends and interest receivable................................................ 53,030 20,284
Receivable for investments sold.................................................. -- 642,404
Unrealized appreciation of forward foreign currency contracts.................... -- --
Other assets..................................................................... -- 861
------------- -------------
Total assets..................................................................... 11,776,621 41,844,541
------------- -------------
LIABILITIES
Dividends payable................................................................ 42,073 --
Payable to affiliate............................................................. 4,740 23,770
Payable for investments purchased................................................ -- 954,935
Collateral for securities loaned................................................. -- 1,861,500
Payable for shares of beneficial interest repurchased............................ -- --
Unrealized depreciation of forward foreign currency contracts.................... -- --
Accrued expenses and other liabilities........................................... 45,189 109,819
------------- -------------
Total liabilities................................................................ 92,002 2,950,024
------------- -------------
NET ASSETS
Beneficial interest shares of $0.001 par value outstanding--11,693,430;
2,145,911; 1,643,020; 1,955,733; 1,008,671; 2,671,520; 1,357,152; 1,490,319 and
856,898, respectively (unlimited amount authorized)............................ 11,695,030 22,768,880
Accumulated net investment income (loss)......................................... -- 23,177
Accumulated net realized gains (losses) from investment transactions............. (10,411) 4,699,618
Net unrealized appreciation (depreciation) of investments and other assets and
liabilities denominated in foreign currencies.................................. -- 11,402,842
------------- -------------
Net assets....................................................................... $ 11,684,619 $ 38,894,517
------------- -------------
------------- -------------
Net asset value, offering price and redemption value per share..................... $1.00 $18.12
------------- -------------
------------- -------------
</TABLE>
32
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH GRADE
GLOBAL GLOBAL STRATEGIC GROWTH AGGRESSIVE FIXED
GROWTH INCOME FIXED INCOME BALANCED AND INCOME GROWTH INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ------------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value
(cost--$11,723,591;
$29,773,057; $21,370,818;
$20,475,160; $11,432,711;
$29,596,799; $15,134,810;
$16,653,402 and $8,542,408,
respectively)................ $26,001,733 $20,255,386 $11,520,119 $34,607,464 $19,587,352 $21,929,608 $ 8,601,334
Cash (including cash denominated
in foreign currencies)....... 84,739 1,231,277 -- -- 1,966 -- 940
Dividends and interest
receivable................... 68,889 478,508 121,210 170,093 19,702 10,299 74,329
Receivable for investments
sold......................... 142,282 1,655,145 -- 596,585 261,440 46,998 --
Unrealized appreciation of
forward foreign currency
contracts.................... -- 309,341 -- -- -- -- --
Other assets..................... 3,233 -- 1,065 1,376 226 -- 144
----------- ----------- ------------- ----------- ------------ ----------- ------------
Total assets..................... 26,300,876 23,929,657 11,642,394 35,375,518 19,870,686 21,986,905 8,676,747
----------- ----------- ------------- ----------- ------------ ----------- ------------
LIABILITIES
Dividends payable................ -- -- -- -- -- -- --
Payable to affiliate............. 15,457 13,634 4,402 20,395 11,144 13,581 3,306
Payable for investments
purchased.................... 242,764 1,654,730 926,827 1,289,563 176,956 -- 681,419
Collateral for securities
loaned....................... 615,850 -- -- 1,027,500 -- 615,600 --
Payable for shares of beneficial
interest repurchased......... 9,114 41,955 -- -- -- -- --
Unrealized depreciation of
forward foreign currency
contracts.................... -- 178,485 -- -- -- -- --
Accrued expenses and other
liabilities.................. 104,135 146,450 76,045 112,910 47,338 139,299 32,755
----------- ----------- ------------- ----------- ------------ ----------- ------------
Total liabilities................ 987,320 2,035,254 1,007,274 2,450,368 235,438 768,480 717,480
----------- ----------- ------------- ----------- ------------ ----------- ------------
NET ASSETS
Beneficial interest shares of
$0.001 par value
outstanding--11,693,430;
2,145,911; 1,643,020;
1,955,733; 1,008,671;
2,671,520; 1,357,152;
1,490,319 and 856,898,
respectively (unlimited
amount authorized)........... 22,033,122 21,699,254 10,536,077 25,663,467 13,402,576 14,566,149 7,762,742
Accumulated net investment income
(loss)....................... 55,671 531,943 327,453 322,555 79,597 (59,372) 212,678
Accumulated net realized gains
(losses) from investment
transactions................. (1,402,918) (227,321) (322,273) 1,928,463 1,700,533 1,435,442 (75,079)
Net unrealized appreciation
(depreciation) of investments
and other assets and
liabilities denominated in
foreign currencies........... 4,627,681 (109,473) 93,863 5,010,665 4,452,542 5,276,206 58,926
----------- ----------- ------------- ----------- ------------ ----------- ------------
Net assets....................... $25,313,556 $21,894,403 $10,635,120 $32,925,150 $19,635,248 $21,218,425 $ 7,959,267
----------- ----------- ------------- ----------- ------------ ----------- ------------
----------- ----------- ------------- ----------- ------------ ----------- ------------
Net asset value, offering price
and redemption value per
share.......................... $15.41 $11.19 $10.54 $12.32 $14.47 $14.24 $9.29
----------- ----------- ------------- ----------- ------------ ----------- ------------
----------- ----------- ------------- ----------- ------------ ----------- ------------
</TABLE>
See accompanying notes to financial statements
33
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Operations
For the Six Months Ended June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY
MARKET GROWTH
PORTFOLIO PORTFOLIO
---------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Interest (net of foreign withholding taxes, if any)................................. $ 333,194 $ 208,836
Dividends (net of foreign withholding taxes, if any)................................ -- 70,748
---------- ------------
333,194 279,584
---------- ------------
EXPENSES:
Investment advisory and administration fees......................................... 29,846 148,023
Legal and audit..................................................................... 26,305 49,230
Reports and notices to shareholders................................................. 12,862 30,142
Trustees' fees and expenses......................................................... 3,750 3,750
Transfer agency fees and expenses................................................... 750 750
Custody and accounting.............................................................. 606 13,653
Other expenses...................................................................... 10,208 10,859
---------- ------------
84,327 256,407
---------- ------------
Net investment income (loss)........................................................ 248,867 23,177
---------- ------------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENT TRANSACTIONS:
Net realized gains (losses) from:
Investment transactions........................................................... -- 4,850,035
Foreign currency transactions..................................................... -- --
Net change in unrealized appreciation/depreciation of:
Investments....................................................................... -- (3,456,517)
Other assets, liabilities and forward contracts denominated in foreign
currencies...................................................................... -- --
---------- ------------
Net realized and unrealized gains (losses) from investment activities............... -- 1,393,518
---------- ------------
Net increase in net assets resulting from operations................................ $ 248,867 $ 1,416,695
---------- ------------
---------- ------------
</TABLE>
34
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH GRADE
GLOBAL GLOBAL STRATEGIC GROWTH AGGRESSIVE FIXED
GROWTH INCOME FIXED INCOME BALANCED AND INCOME GROWTH INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ---------- ------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest (net of foreign
withholding taxes, if
any)........................ $ 8,256 $ 929,119 $ 390,013 $ 404,094 $ 51,470 $ 11,653 $ 282,285
Dividends (net of foreign
withholding taxes, if
any)........................ 224,991 -- -- 170,773 123,905 48,874 --
---------- ---------- ------------- ----------- ----------- ------------ ------------
233,247 929,119 390,013 574,867 175,375 60,527 282,285
---------- ---------- ------------- ----------- ----------- ------------ ------------
EXPENSES:
Investment advisory and
administration fees......... 92,350 87,905 26,834 122,427 61,489 78,234 19,956
Legal and audit............... 9,055 29,941 13,041 62,401 12,947 14,971 17,731
Reports and notices to
shareholders................ 3,944 19,659 10,422 42,324 9,532 7,927 15,344
Trustees' fees and expenses... 3,750 3,750 3,750 3,750 3,750 3,750 3,750
Transfer agency fees and
expenses.................... 750 750 750 750 750 750 750
Custody and accounting........ 19,299 44,889 4,229 10,691 6,279 6,849 3,240
Other expenses................ 297 46,822 690 9,969 4,257 4,264 3,543
---------- ---------- ------------- ----------- ----------- ------------ ------------
129,445 233,716 59,716 252,312 99,004 116,745 64,314
---------- ---------- ------------- ----------- ----------- ------------ ------------
Net investment income
(loss)...................... 103,802 695,403 330,297 322,555 76,371 (56,218) 217,971
---------- ---------- ------------- ----------- ----------- ------------ ------------
REALIZED AND UNREALIZED GAINS
(LOSSES) FROM INVESTMENT
TRANSACTIONS:
Net realized gains (losses)
from:
Investment transactions..... 1,495,915 (12,490) (57,654) 1,937,091 1,709,262 1,430,745 (27,295)
Foreign currency
transactions................ (31,572) (214,733) 7,590 -- -- -- --
Net change in unrealized
appreciation/depreciation
of:
Investments................. 1,224,305 (559,165) 65,311 1,671,619 1,265,787 326,743 (23,649)
Other assets, liabilities
and forward contracts
denominated in foreign
currencies................ (2,937) 170,864 (1,117) -- -- -- --
---------- ---------- ------------- ----------- ----------- ------------ ------------
Net realized and unrealized
gains (losses) from
investment activities....... 2,685,711 (615,524) 14,130 3,608,710 2,975,049 1,757,488 (50,944)
---------- ---------- ------------- ----------- ----------- ------------ ------------
Net increase in net assets
resulting from operations... $2,789,513 $ 79,879 $ 344,427 $ 3,931,265 $3,051,420 $1,701,270 $ 167,027
---------- ---------- ------------- ----------- ----------- ------------ ------------
---------- ---------- ------------- ----------- ----------- ------------ ------------
</TABLE>
See accompanying notes to financial statements
35
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
----------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30, 1997 ENDED
(UNAUDITED) DECEMBER 31, 1996
-------------- ------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income.................................................... $ 248,867 $ 676,800
Net realized gains from investment transactions.......................... -- 5,435
-------------- ------------------
Net increase in net assets resulting from operations..................... 248,867 682,235
-------------- ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.................................................... (248,867) (676,800)
-------------- ------------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares..................................... 3,865,482 10,397,169
Cost of shares repurchased............................................... (4,717,928) (20,822,547)
Proceeds from dividends reinvested....................................... 249,904 732,906
-------------- ------------------
Net decrease in net assets derived from beneficial interest
transactions........................................................... (602,542) (9,692,472)
-------------- ------------------
Net decrease in net assets............................................... (602,542) (9,687,037)
NET ASSETS:
Beginning of period...................................................... 12,287,161 21,974,198
-------------- ------------------
End of period............................................................ $ 11,684,619 $ 12,287,161
-------------- ------------------
-------------- ------------------
</TABLE>
See accompanying notes to financial statements
36
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
----------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30, 1997 ENDED
(UNAUDITED) DECEMBER 31, 1996
-------------- ------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income (loss)............................................. $ 23,177 $ (126,059)
Net realized gains from investment transactions.......................... 4,850,035 6,920,115
Net change in unrealized appreciation/depreciation of investments........ (3,456,517) 492,510
-------------- ------------------
Net increase in net assets resulting from operations..................... 1,416,695 7,286,566
-------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains from investments...................................... -- (6,898,716)
-------------- ------------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares..................................... 905,228 5,722,479
Cost of shares repurchased............................................... (6,670,524) (16,565,313)
Proceeds from dividends reinvested....................................... 6,886,404 4,027,837
-------------- ------------------
Net increase (decrease) in net assets derived from beneficial interest
transactions........................................................... 1,121,108 (6,814,997)
-------------- ------------------
Net increase (decrease) in net assets.................................... 2,537,803 (6,427,147)
NET ASSETS:
Beginning of period...................................................... 36,356,714 42,783,861
-------------- ------------------
End of period (including accumulated net investment income of $23,177 at
June 30, 1997)......................................................... $ 38,894,517 $ 36,356,714
-------------- ------------------
-------------- ------------------
</TABLE>
See accompanying notes to financial statements
37
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL GROWTH PORTFOLIO
----------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30, 1997 ENDED
(UNAUDITED) DECEMBER 31, 1996
-------------- ------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income.................................................... $ 103,802 $ 122,459
Net realized gains (losses) from:
Investment transactions.............................................. 1,495,915 1,324,543
Foreign currency transactions........................................ (31,572) (28,307)
Net change in unrealized appreciation/depreciation of:
Investments.......................................................... 1,224,305 2,292,264
Other assets and liabilities denominated in foreign currencies....... (2,937) (2,576)
-------------- ------------------
Net increase in net assets resulting from operations..................... 2,789,513 3,708,383
-------------- ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.................................................... -- (142,283)
-------------- ------------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares..................................... 535,849 2,414,636
Cost of shares repurchased............................................... (3,855,351) (8,786,727)
Proceeds from dividends reinvested....................................... 142,283 --
-------------- ------------------
Net decrease in net assets derived from beneficial interest
transactions........................................................... (3,177,219) (6,372,091)
-------------- ------------------
Net decrease in net assets............................................... (387,706) (2,805,991)
NET ASSETS:
Beginning of period...................................................... 25,701,262 28,507,253
-------------- ------------------
End of period (including accumulated net investment income of $55,671 at
June 30, 1997)......................................................... $ 25,313,556 $ 25,701,262
-------------- ------------------
-------------- ------------------
</TABLE>
See accompanying notes to financial statements
38
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL INCOME PORTFOLIO
----------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30, 1997 ENDED
(UNAUDITED) DECEMBER 31, 1996
-------------- ------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income.................................................... $ 695,403 $ 2,013,056
Net realized gains (losses) from:
Investment transactions.............................................. (12,490) 552,474
Foreign currency transactions........................................ (214,733) (153,052)
Net change in unrealized appreciation/depreciation of:
Investments.......................................................... (559,165) (601,324)
Other assets, liabilities and forward contracts denominated in
foreign currencies................................................. 170,864 21,138
-------------- ------------------
Net increase in net assets resulting from operations..................... 79,879 1,832,292
-------------- ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.................................................... -- (1,740,961)
Net realized gains from investments...................................... -- (18,905)
-------------- ------------------
-- (1,759,866)
-------------- ------------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares..................................... 2,003,852 1,111,951
Cost of shares repurchased............................................... (4,625,493) (15,880,673)
Proceeds from dividends reinvested....................................... -- 3,432,887
-------------- ------------------
Net decrease in net assets derived from beneficial interest
transactions........................................................... (2,621,641) (11,335,835)
-------------- ------------------
Net decrease in net assets............................................... (2,541,762) (11,263,409)
NET ASSETS:
Beginning of period...................................................... 24,436,165 35,699,574
-------------- ------------------
End of period (including accumulated net investment income of $531,943 at
June 30, 1997)......................................................... $ 21,894,403 $ 24,436,165
-------------- ------------------
-------------- ------------------
</TABLE>
See accompanying notes to financial statements
39
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGIC FIXED INCOME PORTFOLIO
----------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30, 1997 ENDED
(UNAUDITED) DECEMBER 31, 1996
-------------- ------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income.................................................... $ 330,297 $ 737,966
Net realized gains (losses) from:
Investment transactions.............................................. (57,654) (172,806)
Foreign currency transactions........................................ 7,590 (921)
Net change in unrealized appreciation/depreciation of:
Investments.......................................................... 65,311 (217,268)
Other assets and liabilities denominated in foreign currencies....... (1,117) 9,255
-------------- ------------------
Net increase in net assets resulting from operations..................... 344,427 356,226
-------------- ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.................................................... -- (732,890)
Net realized gains from investments...................................... -- (99,878)
-------------- ------------------
-- (832,768)
-------------- ------------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares..................................... 454,802 1,827,507
Cost of shares repurchased............................................... (1,586,032) (6,631,576)
Proceeds from dividends reinvested....................................... 732,890 2,228,680
-------------- ------------------
Net decrease in net assets derived from beneficial interest
transactions........................................................... (398,340) (2,575,389)
-------------- ------------------
Net decrease in net assets............................................... (53,913) (3,051,931)
NET ASSETS:
Beginning of period...................................................... 10,689,033 13,740,964
-------------- ------------------
End of period (including accumulated net investment income of $327,453 at
June 30, 1997)......................................................... $ 10,635,120 $ 10,689,033
-------------- ------------------
-------------- ------------------
</TABLE>
See accompanying notes to financial statements
40
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED PORTFOLIO
----------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30, 1997 ENDED
(UNAUDITED) DECEMBER 31, 1996
-------------- ------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income.................................................... $ 322,555 $ 763,303
Net realized gains from investment transactions.......................... 1,937,091 3,319,346
Net change in unrealized appreciation/depreciation of investments........ 1,671,619 970,372
-------------- ------------------
Net increase in net assets resulting from operations..................... 3,931,265 5,053,021
-------------- ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.................................................... -- (762,589)
Net realized gains from investments...................................... -- (3,328,217)
-------------- ------------------
-- (4,090,806)
-------------- ------------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares..................................... 478,802 13,793,963
Cost of shares repurchased............................................... (4,799,416) (11,275,286)
Proceeds from dividends reinvested....................................... 4,090,806 2,329,515
-------------- ------------------
Net increase (decrease) in net assets derived from beneficial interest
transactions........................................................... (229,808) 4,848,192
-------------- ------------------
Net increase in net assets............................................... 3,701,457 5,810,407
NET ASSETS:
Beginning of period...................................................... 29,223,693 23,413,286
-------------- ------------------
End of period (including accumulated net investment income of $322,555 at
June 30, 1997)......................................................... $ 32,925,150 $ 29,223,693
-------------- ------------------
-------------- ------------------
</TABLE>
See accompanying notes to financial statements
41
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO
----------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30, 1997 ENDED
(UNAUDITED) DECEMBER 31, 1996
-------------- ------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income.................................................... $ 76,371 $ 77,619
Net realized gains from investment transactions.......................... 1,709,262 2,474,005
Net change in unrealized appreciation/depreciation of investments........ 1,265,787 572,936
-------------- ------------------
Net increase in net assets resulting from operations..................... 3,051,420 3,124,560
-------------- ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.................................................... -- (71,861)
Net realized gains from investments...................................... -- (2,474,302)
-------------- ------------------
-- (2,546,163)
-------------- ------------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares..................................... 2,226,969 3,555,574
Cost of shares repurchased............................................... (2,709,547) (4,567,939)
Proceeds from dividends reinvested....................................... 2,546,162 157,655
-------------- ------------------
Net increase (decrease) in net assets derived from beneficial interest
transactions........................................................... 2,063,584 (854,710)
-------------- ------------------
Net increase (decrease) in net assets.................................... 5,115,004 (276,313)
NET ASSETS:
Beginning of period...................................................... 14,520,244 14,796,557
-------------- ------------------
End of period (including accumulated net investment income of $79,597 at
June 30, 1997)......................................................... $ 19,635,248 $ 14,520,244
-------------- ------------------
-------------- ------------------
</TABLE>
See accompanying notes to financial statements
42
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO
----------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30, 1997 ENDED
(UNAUDITED) DECEMBER 31, 1996
-------------- ------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment loss...................................................... $ (56,218) $ (144,571)
Net realized gains from investment transactions.......................... 1,430,745 1,629,658
Net change in unrealized appreciation/depreciation of investments........ 326,743 2,835,132
-------------- ------------------
Net increase in net assets resulting from operations..................... 1,701,270 4,320,219
-------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains from investments...................................... -- (1,587,776)
-------------- ------------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares..................................... 1,256,645 2,195,993
Cost of shares repurchased............................................... (2,494,383) (3,954,371)
Proceeds from dividends reinvested....................................... 1,587,776 532,573
-------------- ------------------
Net increase (decrease) in net assets derived from beneficial interest
transactions........................................................... 350,038 (1,225,805)
-------------- ------------------
Net increase in net assets............................................... 2,051,308 1,506,638
NET ASSETS:
Beginning of period...................................................... 19,167,117 17,660,479
-------------- ------------------
End of period............................................................ $ 21,218,425 $ 19,167,117
-------------- ------------------
-------------- ------------------
</TABLE>
See accompanying notes to financial statements
43
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PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH GRADE FIXED
INCOME PORTFOLIO
----------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30, 1997 ENDED
(UNAUDITED) DECEMBER 31, 1996
-------------- ------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income.................................................... $ 217,971 $ 448,587
Net realized gains (losses) from investment transactions................. (27,295) 13,605
Net change in unrealized appreciation/depreciation of investments........ (23,649) (368,487)
-------------- ------------------
Net increase in net assets resulting from operations..................... 167,027 93,705
-------------- ------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.................................................... -- (451,613)
-------------- ------------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares..................................... 554,080 1,586,211
Cost of shares repurchased............................................... (1,115,490) (3,017,538)
Proceeds from dividends reinvested....................................... 451,612 544,295
-------------- ------------------
Net decrease in net assets derived from beneficial interest
transactions........................................................... (109,798) (887,032)
-------------- ------------------
Net increase (decrease) in net assets.................................... 57,229 (1,244,940)
NET ASSETS:
Beginning of period...................................................... 7,902,038 9,146,978
-------------- ------------------
End of period (including accumulated net investment income of $212,678 at
June 30, 1997)......................................................... $ 7,959,267 $ 7,902,038
-------------- ------------------
-------------- ------------------
</TABLE>
See accompanying notes to financial statements
44
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PaineWebber Series Trust
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- ------------------------------------------------------------
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Series Trust (the "Fund") is organized under Massachusetts law
by a Declaration of Trust dated November 21, 1986 and is registered with the
Securities and Exchange Commission ("SEC") under the Investment Company Act of
1940, as amended, as an open-end management investment company.
The Fund has nine series of shares available for investment, each having its
own investment objectives and policies: the Money Market Portfolio, the Growth
Portfolio, the Global Growth Portfolio, the Global Income Portfolio, the
Strategic Fixed Income Portfolio, the Balanced Portfolio, the Growth and Income
Portfolio, the Aggressive Growth Portfolio and the High Grade Fixed Income
Portfolio (collectively referred to as the "Portfolios"). At the close of
business on January 26, 1996, shares of the former Asset Allocation Portfolio
were substituted for all shares of the former Balanced Portfolio, the
sub-advisory agreement between Mitchell Hutchins and Provident Investment
Counsel, Inc. was terminated, and the former Asset Allocation Portfolio was
renamed the Balanced Portfolio.
All series of shares are diversified except Global Income Portfolio. Shares
of each series of the Fund are offered only to insurance company separate
accounts which fund certain variable contracts. Shares of each series of the
Fund are offered to separate accounts of PaineWebber Life Insurance Company
("PaineWebber Life"). PaineWebber Life is a wholly-owned subsidiary of
PaineWebber Life Holdings Inc., which in turn is a wholly-owned subsidiary of
PaineWebber Group Inc.
The preparation of financial statements in accordance with generally
accepted accounting principles requires the Fund's management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies:
VALUATION OF INVESTMENTS--Securities that are listed on U.S. and foreign
stock exchanges are valued at the last sale price on the day the securities are
being valued or, lacking any sales on such day, at the last available bid price.
In cases where securities are traded on more than one exchange, the securities
are generally valued on the exchange designated by Mitchell Hutchins Asset
Management Inc. ("Mitchell Hutchins"), the portfolios adviser and a wholly owned
subsidiary of PaineWebber Incorporated ("PaineWebber"), or by the applicable
sub-adviser, as the primary market for each Portfolio. Securities traded in the
over-the-counter ("OTC") market and listed on The Nasdaq Stock Market, Inc.
("Nasdaq") are valued at the last trade price on Nasdaq prior to the time of
valuation; other OTC securities (other than short-term debt securities described
below) are valued at the last quoted bid price available in the OTC market prior
to the time of valuation. The amortized cost method of valuation, which
approximates market value, is used to value short-term debt obligations with
sixty days or less remaining to maturity, including the Money Market Portfolio
which values all of its investments at amortized cost, unless the Fund's board
of trustees determines that this does not represent fair value. Securities and
assets for which market quotations are not readily available (including
restricted securities subject to limitations as to their
45
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- ------------------------------------------------------------
sale) are valued at fair value as determined in good faith by or under the
direction of the Fund's board of trustees.
All investments quoted in foreign currencies are valued daily in U.S.
dollars on the basis of the foreign currency exchange rate prevailing at the
time such valuation is determined by the Fund's custodians, unless the board of
trustees determines that this does not represent fair value. Foreign currency
exchange rates are generally determined prior to the close of the New York Stock
Exchange ("NYSE"). Occasionally, events affecting the value of foreign
investments and such exchange rates occur between the time at which they are
determined and the close of the NYSE, which will not be reflected in a
computation of the Portfolios' net asset values. If events materially affecting
the value of such investments or currency exchange rates occurs during such time
period, the securities are valued at their fair value as determined in good
faith by or under the direction of the Fund's board of trustees.
REPURCHASE AGREEMENTS--Each Portfolio's custodian takes possession of the
collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to ensure that the value,
including accrued interest, is at least equal to the repurchase price. In the
event of default of the obligation to repurchase, the Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings. Each Portfolio occasionally
participates in joint repurchase agreement transactions with other funds managed
by Mitchell Hutchins.
REVERSE REPURCHASE AGREEMENTS--Each Portfolio may enter into reverse
repurchase agreements with banks and broker-dealers up to an aggregate value of
not more than 5% of its total assets (10% of total assets for the Global Income
and Balanced Portfolios). For the six months ended June 30, 1997, the Portfolios
had no reverse repurchase agreements outstanding.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME--Investment transactions are
recorded on the trade date. Realized gains and losses from investment
transactions are calculated using the identified cost basis. Dividend income and
other distributions are recorded on the ex-dividend date ("ex-date") (except for
certain dividends from foreign securities that are recorded as soon after the
ex-date as the respective Portfolios, using reasonable diligence, become aware
of such dividends). Interest income is recorded on an accrual basis. Discounts
are accreted and premiums are amortized as adjustments to interest income and
the identified cost of investments.
FOREIGN CURRENCY TRANSLATION--The books and records of the Portfolios are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities and other assets and liabilities stated in foreign
currencies are translated at the exchange rates prevailing at the end of the
period; and (2) purchases, sales, income and expenses are translated at the rate
of exchange prevailing on the respective dates of such transactions. The
resulting exchange gains and losses are included in the Statement of Operations.
46
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- ------------------------------------------------------------
Although the net assets and the market values of the Portfolios are
presented at the foreign exchange rates at the end of the period, the Portfolios
do not generally isolate the effect of fluctuations in foreign exchange rates
from the effects of fluctuations in the market price of investment securities.
However, the Portfolios do isolate the effect of fluctuations in foreign
exchange rates when determining the realized gain or loss upon the sale or
maturity of foreign currency-denominated debt obligations. Pursuant to federal
income tax regulations, realized currency gain/loss on investment transactions
includes realized foreign exchange gains/losses from the sale of portfolio debt
securities, sales of foreign currencies, currency gains/ losses realized between
trade and settlement dates on securities transactions, and the difference
between the amount of dividends, interest and foreign withholding taxes recorded
on the Portfolios' books and the U.S. dollar equivalent of the amounts received
or paid. Gains/losses from translating foreign currency denominated assets and
liabilities at the year end exchange rates are included in change in unrealized
appreciation/depreciation of other assets and liabilities denominated in foreign
currencies. Net realized foreign currency gain (loss) is treated as ordinary
income for income tax reporting purposes.
FORWARD FOREIGN CURRENCY CONTRACTS--Certain Portfolios may enter into
forward foreign currency exchange contracts ("forward contracts") in connection
with planned purchases or sales of securities or to hedge the U.S. dollar value
of portfolio securities denominated in a particular currency. These Portfolios
may also engage in cross-hedging by using forward contracts in one currency to
hedge fluctuations in the value of securities denominated in a different
currency if Mitchell Hutchins, or the applicable sub-adviser, anticipates that
there is a correlation between the two currencies. Forward contracts may also be
used to shift a Portfolio's exposure to foreign currency fluctuations from one
country to another.
These Portfolios have no specific limitation on the percentage of assets
which may be committed to such contracts; however, the value of all forward
contracts will not exceed the total market value of a Portfolio's total assets.
The Portfolios may enter into forward contracts or maintain a net exposure to
forward contracts only if (1) the consummation of the contracts would not
obligate the Portfolio to deliver an amount of foreign currency in excess of the
value of the positions being hedged by such contracts or (2) the Portfolios
maintain cash, U.S. government securities or liquid, high-grade debt securities
in a segregated account in an amount not less than the value of the Portfolio's
total assets committed to the consummation of the forward contracts and not
covered as provided in (1) above, as marked-to-market daily.
Risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts and from
unanticipated movements in the value of foreign currencies relative to the U.S.
dollar.
Fluctuations in the value of forward contracts are recorded for financial
reporting purposes as unrealized gains or losses by the Portfolios. Realized
gains and losses include net gains or losses recognized by the Portfolios on
contracts which have matured.
OPTION WRITING--Certain Portfolios may write (sell) put and call options in
order to gain exposure to or protect against changes in the markets. When a
Portfolio writes a call or a put option, an amount equal to the premium received
by the Portfolio is included in the Portfolio's Statement of Assets and
Liabilities as
47
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- ------------------------------------------------------------
an asset and as an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the option
written. If an option which the Portfolio has written either expires on its
stipulated expiration date or the Portfolio enters into a closing purchase
transaction, the Portfolio realizes a gain (or loss if the cost of a closing
purchase transaction exceeds the premium received when the option was written)
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option is extinguished. If a call option which the
Portfolio has written is exercised, the Portfolio realizes a capital gain or
loss (long-term or short-term, depending on the holding period of the underlying
security) from the sale of the underlying security and the proceeds from the
sale are increased by the premium originally received. If a put option which the
Portfolio has written is exercised, the amount of the premium originally
received reduces the cost of the security which the Portfolio purchases upon
exercise of the option.
FUTURES CONTRACTS--Strategic Fixed Income Portfolio is the only Portfolio
currently engaged in future contracts as an alternative investment for
traditional treasury securities. Using financial futures contracts involves
various market risks. The maximum amount at risk from the purchase of a futures
contract is the contract value.
Upon entering into a financial futures contract, a Portfolio is required to
pledge to a broker an amount equal to a certain percentage of the contract
amount. This amount is known as the "initial margin." Subsequent payments known
as "variation margin," are made or received by the Portfolio each day, depending
on the daily fluctuations in the value of the underlying financial futures
contracts. Such variation margin is recorded for financial statement purposes on
a daily basis as an unrealized gain or loss until the financial futures contract
is closed, at which time the net gain or loss is reclassified to realized.
DIVIDENDS AND DISTRIBUTIONS-- Dividends and distributions to shareholders
are recorded on the ex-date. The amount of dividends and distributions are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification.
CONCENTRATION OF RISK
Investing in securities of foreign issuers and currency transactions may
involve certain considerations and risks not typically associated with
investments in the United States. These risks include revaluation of currencies,
adverse fluctuations in foreign currency values and possible adverse political,
social and economic developments, including those particular to a specific
industry, country or region, which could cause the securities and their markets
to be less liquid and prices more volatile than those of comparable U.S.
companies and U.S. government securities. These risks are greater with respect
to securities of issuers located in emerging market countries in which certain
portfolios are authorized to invest. The ability of the issuers of debt
securities held by the Fund to meet their obligations may be affected by
economic and political developments particular to a specific industry, country
or region.
48
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- ------------------------------------------------------------
Small cap companies may be more vulnerable than larger companies to adverse
business or economic developments. Small cap companies may also have limited
product lines, markets or financial resources, and may be dependent on a
relatively small management group. Securities of such companies may be less
liquid and more volatile than securities of larger companies or the market
averages in general and, therefore, may involve greater risk investing in larger
companies. In addition, small cap companies may not be well-known to the
investing public, may not have institutional ownership and may have only
cyclical, static or moderate growth prospects.
The ability of the issuers of debt securities held by the Portfolios to meet
their obligations may be affected by economic and political developments
particular to a specific industry, country or region.
WRITTEN OPTION ACTIVITY
Written option activity for the six months ended June 30, 1997 for the
Strategic Fixed Income Portfolio was as follows:
<TABLE>
<CAPTION>
AMOUNT OF
NUMBER OF PREMIUMS
OPTIONS RECEIVED
--------- ---------
<S> <C> <C>
Options outstanding at December 31, 1996.......... 0 0
Options written during the period ended June 30,
1997............................................ 4 $ 2,455
Options expired prior to exercise................. (4) (2,455)
--- ---------
Options outstanding at June 30, 1997.............. 0 $ 0
--- ---------
--- ---------
</TABLE>
INVESTMENT ADVISER AND ADMINISTRATOR
The Fund's board of trustees has approved an investment advisory and
administration contract with Mitchell Hutchins, under which Mitchell Hutchins
serves as investment adviser and administrator of the Fund and each Portfolio.
Mitchell Hutchins receives compensation from the Fund, computed daily and
payable monthly, as follows:
<TABLE>
<CAPTION>
ANNUAL RATE
AS A PERCENTAGE
OF EACH PORTFOLIO'S
AVERAGE DAILY NET ASSETS
-------------------------
<S> <C>
Money Market Portfolio................................................ 0.50%
Growth Portfolio...................................................... 0.75
Global Growth Portfolio............................................... 0.75
Global Income Portfolio............................................... 0.75
Strategic Fixed Income Portfolio...................................... 0.50
Balanced Portfolio.................................................... 0.75
Growth and Income Portfolio........................................... 0.70
Aggressive Growth Portfolio........................................... 0.80
High Grade Fixed Income Portfolio..................................... 0.50
</TABLE>
49
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- ------------------------------------------------------------
Under separate contracts, Mitchell Hutchins pays GE Investment Management
Incorporated, Pacific Investment Management Company and Nicholas Applegate
Capital Management, to serve as the respective sub-advisers of the Global Growth
Portfolio, the Strategic Fixed Income Portfolio and the Aggressive Growth
Portfolio. Mitchell Hutchins (not the Portfolios) pays the sub-advisers a fee,
computed daily and paid monthly, at an annual rate of 0.29%, 0.25% and 0.50%,
respectively, of each Portfolio's average daily net assets. Prior to January 26,
1996, Provident Investment Counsel, Inc. served as the former Balanced
Portfolio's sub-adviser pursuant to a sub-advisory contract with Mitchell
Hutchins. Mitchell Hutchins (not the Portfolio) paid Provident Investment
Counsel, Inc. a fee, computed daily and paid monthly, at an annual rate of 0.45%
of the Portfolio's average net assets.
During the six months ended June 30, 1997, the Growth Portfolio, the
Balanced Portfolio, the Growth and Income Portfolio and the Aggressive Growth
Portfolio paid $1,260, $1,722, $366 and $529, respectively, in brokerage
commissions to PaineWebber for transactions executed on behalf of these
Portfolios.
SECURITIES LENDING
Each Portfolio may lend up to 33 1/3% of its total assets to qualified
institutions. The loans are secured at all times by cash or U.S. government
securities in an amount at least equal to the market value of the securities
loaned, plus accrued interest and dividends, determined on a daily basis and
adjusted accordingly. The Portfolios will regain record ownership of loaned
securities to exercise certain beneficial rights, however, the Portfolios may
bear the risk of delay in recovery of, or even loss of rights in, the securities
loaned should the borrower fail financially. The Portfolios receive
compensation, which is included in interest income, for lending its securities
from interest earned on the cash or U.S. government securities held as
collateral, net of fee rebates paid to the borrower plus reasonable
administrative and custody fees. PaineWebber, who is the Portfolio's lending
agent, received compensation from the Portfolios for the six months ended June
30, 1997 as follows:
<TABLE>
<CAPTION>
COMPENSATION
-------------
<S> <C>
Growth Portfolio............................................................... $5,419
Global Growth Portfolio........................................................ $355
Global Income.................................................................. $80
Balanced Portfolio............................................................. $378
Growth and Income Portfolio.................................................... $136
Aggressive Growth Portfolio.................................................... $754
</TABLE>
As of June 30, 1997, the Growth Portfolio's custodian held cash and cash
equivalents having an aggregate value of $1,861,500 as collateral for portfolio
securities loaned having a market value of $1,814,625.
As of June 30, 1997, the Global Growth Portfolio's custodian held cash and
cash equivalents having an aggregate value of $615,850 as collateral for
portfolio securities loaned having a market value of $566,355.
50
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- ------------------------------------------------------------
As of June 30, 1997, the Balanced Portfolio's custodian held cash and cash
equivalents having an aggregate value of $1,027,500 as collateral for portfolio
securities loaned having a market value of $1,005,312.
As of June 30, 1997, the Aggressive Growth Portfolio's custodian held cash
and cash equivalents having an aggregate value of $615,600 as collateral for
portfolio securities loaned having a market value of $607,888.
INVESTMENTS IN SECURITIES
For the six months ended June 30, 1997, aggregate purchases and sales of
portfolio securities, excluding short-term securities, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------- -------------
<S> <C> <C>
Growth Portfolio............................................... $ 16,537,811 $ 25,490,564
Global Growth Portfolio........................................ $ 9,433,683 $ 11,859,266
Global Income Portfolio........................................ $ 14,819,606 $ 16,128,048
Strategic Fixed Income Portfolio............................... $ 5,480,748 $ 4,986,241
Balanced Portfolio............................................. $ 30,084,259 $ 34,455,118
Growth and Income Portfolio.................................... $ 10,110,485 $ 9,874,032
Aggressive Growth Portfolio.................................... $ 10,736,421 $ 11,774,003
High Grade Fixed Income Portfolio.............................. $ 4,366,655 $ 5,292,985
</TABLE>
At June 30, 1997, the components of net unrealized appreciation
(depreciation) of investments were as follows:
<TABLE>
<CAPTION>
NET
GROSS GROSS UNREALIZED
APPRECIATION DEPRECIATION APPRECIATION
------------- ------------ -------------
<S> <C> <C> <C>
Growth Portfolio..................................................... $ 11,588,402 $ (185,560) $ 11,402,842
Global Growth Portfolio.............................................. $ 5,164,631 $ (533,716) $ 4,630,915
Global Income Portfolio.............................................. $ 209,270 $ (429,044) $ (219,774)
Strategic Fixed Income Portfolio..................................... $ 122,456 $ (35,048) $ 87,408
Balanced Portfolio................................................... $ 5,219,219 $ (208,554) $ 5,010,665
Growth and Income Portfolio.......................................... $ 4,557,858 $ (105,316) $ 4,452,542
Aggressive Growth Portfolio.......................................... $ 5,485,208 $ (209,002) $ 5,276,206
High Grade Fixed Income Portfolio.................................... $ 109,881 $ (50,955) $ 58,926
</TABLE>
For federal income tax purposes, the cost of securities owned at June 30,
1997 was substantially the same as the cost of securities for financial
statement purposes.
51
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PaineWebber Series Trust
- --------------------------------------------------------------------------------
- ------------------------------------------------------------
FEDERAL INCOME TAX STATUS
Each of the Portfolios intends to distribute all of its taxable income and
to comply with the other requirements of the Internal Revenue Code applicable to
regulated investment companies. Accordingly, no provision for federal income
taxes is required.
At December 31, 1996, the following Portfolios had capital loss
carryforwards available as reductions, to the extent provided in the
regulations, of any future net gains realized before the end of the fiscal years
indicated below:
<TABLE>
<CAPTION>
STRATEGIC HIGH GRADE
MONEY GLOBAL FIXED FIXED
MARKET GROWTH INCOME INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
2002........................................................... $ 10,411 -- -- $ 11,786
2003........................................................... -- $ 2,822,246 -- --
2004........................................................... -- -- $ 291,490 --
--------- ------------ ---------- -----------
$ 10,411 $ 2,822,246 $ 291,490 $ 11,786
--------- ------------ ---------- -----------
--------- ------------ ---------- -----------
</TABLE>
To the extent that such losses are used to offset future capital gains, it
is probable that the gains so offset will not be distributed.
52
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- ------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST
There was an unlimited amount of $0.001 par value shares of beneficial
interest authorized. Transactions in shares of beneficial interest for each of
the Portfolios were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1997
--------------------------------------------------------------------------------------------------------------
STRATEGIC GROWTH HIGH GRADE
MONEY GLOBAL GLOBAL FIXED AND AGGRESSIVE FIXED
MARKET GROWTH GROWTH INCOME INCOME BALANCED INCOME GROWTH INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- --------- --------- ---------- --------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold......... 3,865,482 53,305 38,262 180,802 43,931 42,596 171,926 96,357 50,814
Shares redeemed..... (4,717,928) (388,214) (276,156) (419,208 ) (154,522) (417,999) (208,729) (194,706) (122,359)
Reinvestment of
dividends......... 249,904 400,838 10,447 -- 72,277 377,729 210,079 124,336 59,957
----------- --------- --------- ---------- --------- ----------- --------- ---------- ----------
Net increase
(decrease) in
shares
outstanding....... (602,542) 65,929 (227,447) (238,406 ) (38,314) 2,326 173,276 25,987 (11,588)
----------- --------- --------- ---------- --------- ----------- --------- ---------- ----------
----------- --------- --------- ---------- --------- ----------- --------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
--------------------------------------------------------------------------------------------------------------
STRATEGIC GROWTH HIGH GRADE
MONEY GLOBAL GLOBAL FIXED AND AGGRESSIVE FIXED
MARKET GROWTH GROWTH INCOME INCOME BALANCED INCOME GROWTH INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- --------- --------- ---------- --------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold (1)..... 10,397,169 297,187 186,725 97,475 174,852 1,266,095 273,166 171,441 170,053
Shares redeemed..... (20,822,547) (883,234) (692,316) (1,397,542) (633,097) (1,000,938) (353,815) (311,017) (322,275)
Reinvestment of
dividends......... 732,906 230,902 -- 305,777 210,338 216,699 13,293 46,676 57,354
----------- --------- --------- ---------- --------- ----------- --------- ---------- ----------
Net increase
(decrease) in
shares
outstanding....... (9,692,472) (355,145) (505,591) (994,290) (247,907) 481,856 (67,356) (92,900) (94,868)
----------- --------- --------- ---------- --------- ----------- --------- ---------- ----------
----------- --------- --------- ---------- --------- ----------- --------- ---------- ----------
</TABLE>
- -----------------
(1) For the Balanced Portfolio, includes 1,198,513 shares issued in connection
with the acquisition of the former Balanced Portfolio.
53
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PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights
- ------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
----------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, 1997 -----------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
--------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- --------- --------- --------- --------- ---------
Net investment income........................... 0.02 0.04 0.05 0.03 0.02 0.03
------- --------- --------- --------- --------- ---------
Dividends from net investment income............ (0.02) (0.04) (0.05) (0.03) (0.02) (0.03)
------- --------- --------- --------- --------- ---------
Net asset value, end of period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- --------- --------- --------- --------- ---------
------- --------- --------- --------- --------- ---------
Total investment return (1)..................... 2.18% 4.32% 5.22% 3.43% 2.45% 3.00%
------- --------- --------- --------- --------- ---------
------- --------- --------- --------- --------- ---------
Ratios/Supplemental Data:
Net assets, end of period (000's)............... $ 11,685 $ 12,287 $ 21,974 $ 25,042 $ 15,468 $ 19,383
Expenses to average net assets.................. 1.41%* 1.17% 0.79% 0.88% 0.86% 0.81%
Net investment income to average net assets..... 4.17%* 4.27% 5.23% 3.56% 2.43% 3.13%
</TABLE>
- ---------------
* Annualized
(1) Total investment 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 dates and a sale at net asset value on the last
day of each period reported. The figures do not include additional contract
level charges; results would be lower if such charges were included. Total
investment return for period of less than one year has not been annualized.
54
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights
- ------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
---------------------------------------------------------------------
FOR THE SIX
MONTHS
ENDED
JUNE 30, FOR THE YEARS ENDED DECEMBER 31,
1997 -------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
----------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $ 17.48 $ 17.57 $ 14.56 $ 18.06 $ 15.68 $ 14.92
----------- ------- ------- ------- ------- -------
Net investment income (loss)................. 0.01 (0.06) 0.04 0.01 0.00 0.11
Net realized and unrealized gains (losses)
from investments........................... 0.63 3.29 4.68 (2.13) 3.08 0.76
----------- ------- ------- ------- ------- -------
Net increase (decrease) from investment
operations................................. 0.64 3.23 4.72 (2.12) 3.08 0.87
----------- ------- ------- ------- ------- -------
Dividends from net investment income......... -- -- (0.08) (0.01) -- (0.11)
Distributions from net realized gains from
investments................................ -- (3.32) (1.63) (1.37) (0.70) --
----------- ------- ------- ------- ------- -------
Total dividends and distributions............ 0.00 (3.32) (1.71) (1.38) (0.70) (0.11)
----------- ------- ------- ------- ------- -------
Net asset value, end of period............... $ 18.12 $ 17.48 $ 17.57 $ 14.56 $ 18.06 $ 15.68
----------- ------- ------- ------- ------- -------
----------- ------- ------- ------- ------- -------
Total investment return (1).................. 3.66% 18.70% 32.50% (11.65)% 19.61% 5.83%
----------- ------- ------- ------- ------- -------
----------- ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)............ $38,895 $36,357 $42,784 $39,135 $51,696 $46,479
Expenses to average net assets............... 1.30%* 1.14% 1.02% 1.00% 0.92% 0.94%
Net investment income (loss) to average net
assets..................................... 0.12%* (0.29)% 0.23% 0.04% 0.00% 0.78%
Portfolio turnover........................... 47% 53% 41% 27% 35% 29%
Average commission rate paid (2)............. $0.0600 $0.0600 -- -- -- --
</TABLE>
- ---------------
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions, if any, at net asset value on the payable dates and a sale
at net asset value on the last day of each period reported. The figures do
not include additional contract level charges; results would be lower if
such charges were included. Total investment return for period of less than
one year has not been annualized.
(2) Effective for fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose the average commission rate paid per share of
common stock investments purchased or sold.
55
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights
- ------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
GLOBAL GROWTH PORTFOLIO
-----------------------------------------------------------------
FOR THE SIX
MONTHS
ENDED
JUNE 30, FOR THE YEARS ENDED DECEMBER 31,
1997 ---------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
----------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 13.74 $ 12.00 $ 12.44 $ 14.97 $ 11.10 $ 12.06
----------- ------- ------- ------- ------- -------
Net investment income (loss)...................... 0.06 0.14 0.01 (0.03) 0.03 0.10
Net realized and unrealized gains (losses) from
investments..................................... 1.61 1.68 (0.45) (1.76) 4.42 (1.01)
----------- ------- ------- ------- ------- -------
Net increase (decrease) from investment
operations...................................... 1.67 1.82 (0.44) (1.79) 4.45 (0.91)
----------- ------- ------- ------- ------- -------
Dividends from net investment income.............. -- (0.08) -- (0.01) -- (0.05)
Distributions from net realized gains from
investments..................................... -- -- -- (0.73) (0.58) --
----------- ------- ------- ------- ------- -------
Total dividends and distributions................. 0.00 (0.08) 0.00 (0.74) (0.58) (0.05)
----------- ------- ------- ------- ------- -------
Net asset value, end of period.................... $ 15.41 $ 13.74 $ 12.00 $ 12.44 $ 14.97 $ 11.10
----------- ------- ------- ------- ------- -------
----------- ------- ------- ------- ------- -------
Total investment return (1)....................... 12.15% 15.14% (3.54)% (11.94)% 40.02% (7.55)%
----------- ------- ------- ------- ------- -------
----------- ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)................. $25,314 $25,701 $28,507 $40,493 $38,035 $21,493
Expenses to average net assets.................... 1.05%* 1.10% 1.96% 1.48% 1.40% 1.46%
Net investment income (loss) to average net
assets.......................................... 0.84%* 0.46% 0.10% (0.13)% 0.38% 0.82%
Portfolio turnover................................ 38% 44% 157% 175% 267% 127%
Average commission rate paid (2).................. $0.0030 $0.0110 -- -- -- --
</TABLE>
- ---------------
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions, if any, at net asset value on the payable dates and a sale
at net asset value on the last day of each period reported. The figures do
not include additional contract level charges; results would be lower if
such charges were included. Total investment return for period of less than
one year has not been annualized.
(2) Effective for fiscal years beginning on or after September 1, 1995, the Fund
is required to disclose the average commission rate paid per share of common
stock investments purchased or sold.
56
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights
- ------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
GLOBAL INCOME PORTFOLIO
-----------------------------------------------------------------
FOR THE SIX
MONTHS
ENDED
JUNE 30, FOR THE YEARS ENDED DECEMBER 31,
1997 ---------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
----------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 11.14 $ 11.20 $ 10.88 $ 11.72 $ 11.17 $ 11.65
----------- ------- ------- ------- ------- -------
Net investment income (loss)...................... 0.35 0.87 (0.05) 0.97 0.96 0.80
Net realized and unrealized gains (losses) from
investments..................................... (0.30) (0.13) 1.52 (1.60) 0.90 (0.65)
----------- ------- ------- ------- ------- -------
Net increase (decrease) from investment
operations...................................... 0.05 0.74 1.47 (0.63) 1.86 0.15
----------- ------- ------- ------- ------- -------
Dividends from net investment income.............. -- (0.79) (1.15) (0.21) (0.94) (0.56)
Distributions in excess of net investment
income.......................................... -- -- -- -- (0.16) --
Distributions from net realized gains from
investments..................................... -- (0.01) -- -- (0.21) (0.07)
----------- ------- ------- ------- ------- -------
Total dividends and distributions................. 0.00 (0.80) (1.15) (0.21) (1.31) (0.63)
----------- ------- ------- ------- ------- -------
Net asset value, end of period.................... $ 11.19 $ 11.14 $ 11.20 $ 10.88 $ 11.72 $ 11.17
----------- ------- ------- ------- ------- -------
----------- ------- ------- ------- ------- -------
Total investment return (1)....................... 0.45% 6.62% 13.58% (5.56)% 16.65% 1.29%
----------- ------- ------- ------- ------- -------
----------- ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)................. $21,894 $24,436 $35,700 $52,688 $64,610 $63,172
Expenses to average net assets.................... 1.99%* 1.56% 1.19% 1.17% 0.98% 1.07%
Net investment income to average net assets....... 5.92%* 6.56% 7.21% 7.23% 7.47% 7.20%
Portfolio turnover................................ 76% 134% 160% 97% 69% 75%
</TABLE>
- ---------------
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions, if any, at net asset value on the payable dates and a sale
at net asset value on the last day of each period reported. The figures do
not include additional contract level charges; results would be lower if
such charges were included. Total investment return for period of less than
one year has not been annualized.
57
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights
- ------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
STRATEGIC FIXED INCOME PORTFOLIO
-----------------------------------------------------------------
FOR THE SIX
MONTHS
ENDED
JUNE 30, FOR THE YEARS ENDED DECEMBER 31,
1997 ---------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
----------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 10.21 $ 10.61 $ 10.34 $ 11.93 $ 11.58 $ 11.61
----------- ------- ------- ------- ------- -------
Net investment income............................. 0.33 1.40 0.88 0.85 0.87 0.74
Net realized and unrealized gains (losses) from
investments..................................... 0.00 (1.01) 1.03 (1.49) 0.48 0.05
----------- ------- ------- ------- ------- -------
Net increase (decrease) from investment
operations...................................... 0.33 0.39 1.91 (0.64) 1.35 0.79
----------- ------- ------- ------- ------- -------
Dividends from net investment income.............. -- (0.70) (0.88) (0.85) (0.87) (0.74)
Distributions from net realized gains from
investments..................................... -- (0.09) (0.76) (0.10) (0.13) (0.08)
----------- ------- ------- ------- ------- -------
Total dividends and distributions................. 0.00 (0.79) (1.64) (0.95) (1.00) (0.82)
----------- ------- ------- ------- ------- -------
Net asset value, end of period.................... $ 10.54 $ 10.21 $ 10.61 $ 10.34 $ 11.93 $ 11.58
----------- ------- ------- ------- ------- -------
----------- ------- ------- ------- ------- -------
Total investment return (1)....................... 3.23% 3.79% 18.51% (5.34)% 11.66% 6.76%
----------- ------- ------- ------- ------- -------
----------- ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)................. $10,635 $10,689 $13,741 $17,020 $22,354 $24,103
Expenses to average net assets.................... 1.11%* 1.52% 0.99% 0.89% 0.79% 0.76%
Net investment income to average net assets....... 6.15%* 5.88% 6.35% 6.64% 6.13% 6.59%
Portfolio turnover................................ 47% 317% 234% 54% 8% 23%
</TABLE>
- ---------------
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions, if any, at net asset value on the payable dates and a sale
at net asset value on the last day of each period reported. The figures do
not include additional contract level charges; results would be lower if
such charges were included. Total investment return for period of less than
one year has not been annualized.
58
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights
- ------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
BALANCED PORTFOLIO**
-----------------------------------------------------------------
FOR THE SIX
MONTHS
ENDED
JUNE 30, FOR THE YEARS ENDED DECEMBER 31,
1997 ---------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
----------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 10.95 $ 10.70 $ 9.54 $ 11.95 $ 11.63 $ 11.39
----------- ------- ------- ------- ------- -------
Net investment income............................. 0.12 0.57 0.35 0.30 0.33 0.35
Net realized and unrealized gains (losses) from
investments..................................... 1.25 1.21 1.88 (1.44) 1.48 0.24
----------- ------- ------- ------- ------- -------
Net increase (decrease) from investment
operations...................................... 1.37 1.78 2.23 (1.14) 1.81 0.59
----------- ------- ------- ------- ------- -------
Dividends from net investment income.............. -- (0.28) (0.35) (0.30) (0.33) (0.35)
Distributions from net realized gains from
investments..................................... -- (1.25) (0.72) (0.97) (1.16) --
----------- ------- ------- ------- ------- -------
Total dividends and distributions................. 0.00 (1.53) (1.07) (1.27) (1.49) (0.35)
----------- ------- ------- ------- ------- -------
Net asset value, end of period.................... $ 12.32 $ 10.95 $ 10.70 $ 9.54 $ 11.95 $ 11.63
----------- ------- ------- ------- ------- -------
----------- ------- ------- ------- ------- -------
Total investment return (1)....................... 12.51% 16.82% 23.27% (9.59)% 15.76% 5.18%
----------- ------- ------- ------- ------- -------
----------- ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)................. $32,925 $29,224 $23,413 $23,263 $33,367 $38,583
Expenses to average net assets.................... 1.55%* 1.24% 1.09% 1.03% 0.95% 0.93%
Net investment income to average net assets....... 1.97%* 2.29% 2.88% 2.30% 2.27% 3.11%
Portfolio turnover................................ 97% 235% 171% 112% 60% 31%
Average commission rate paid (2).................. $0.0600 $0.0616 -- -- -- --
</TABLE>
- ---------------
* Annualized
** Prior to the close of business on January 26, 1996, the Balanced Portfolio
was known as the Asset Allocation Portfolio.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions, if any, at net asset value on the payable dates and a sale at
net asset value on the last day of each period reported. The figures do not
include additional contract level charges; results would be lower if such
charges were included.
(2) Effective for fiscal years beginning on or after September 1, 1995, the Fund
is required to disclose the average commission rate paid per share of common
stock investments purchased or sold. Total investment return for period of
less than one year has not been annualized.
59
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights
- ------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO
---------------------------------------------------------------------------
FOR THE SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31, FOR THE PERIOD
JUNE 30, JANUARY 2, 1992+
1997 ---------------------------------------- TO DECEMBER 31,
(UNAUDITED) 1996 1995 1994 1993 1992
----------- ------- ------- ------- ------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 12.27 $ 11.83 $ 9.16 $ 9.87 $ 10.26 $ 10.00
----------- ------- ------- ------- ------- -------
Net investment income............................. 0.05 0.13 0.10 0.10 0.16 0.08
Net realized and unrealized gains (losses) from
investments..................................... 2.15 2.46 2.70 (0.71) (0.39) 0.26
----------- ------- ------- ------- ------- -------
Net increase (decrease) from investment
operations...................................... 2.20 2.59 2.80 (0.61) (0.23) 0.34
----------- ------- ------- ------- ------- -------
Dividends from net investment income.............. -- (0.06) (0.10) (0.10) (0.16) (0.08)
Distributions from net realized gains from
investments..................................... -- (2.09) (0.03) -- -- --
----------- ------- ------- ------- ------- -------
Total dividends and distributions................. 0.00 (2.15) (0.13) (0.10) (0.16) (0.08)
----------- ------- ------- ------- ------- -------
Net asset value, end of period.................... $ 14.47 $ 12.27 $ 11.83 $ 9.16 $ 9.87 $ 10.26
----------- ------- ------- ------- ------- -------
----------- ------- ------- ------- ------- -------
Total investment return (1)....................... 17.93% 22.12% 30.52% (6.18)% (2.26)% 3.40%
----------- ------- ------- ------- ------- -------
----------- ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)................. $19,635 $14,520 $14,797 $12,872 $16,281 $20,037
Expenses to average net assets.................... 1.13%* 1.58% 1.37% 1.35% 1.12% 1.29%*
Net investment income to average net assets....... 0.87%* 0.49% 0.94% 1.06% 1.37% 1.21%*
Portfolio turnover................................ 62% 99% 134% 150% 52% 14%
Average commission rate paid (2).................. $0.0600 $0.0598 -- -- -- --
</TABLE>
- ---------------
+ Commencement of operations
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions, if any, at net asset value on the payable dates and a sale at
net asset value on the last day of each period reported. The figures do not
include additional contract level charges; results would be lower if such
charges were included. Total investment return for periods of less than one
year has not been annualized.
(2) Effective for fiscal years beginning on or after September 1, 1995, the Fund
is required to disclose the average commission rate paid per share of common
stock investments purchased or sold.
60
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights
- ------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO
-------------------------------------------------------------------
FOR THE SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER
JUNE 30, 31, FOR THE PERIOD
1997 ----------------------------- NOVEMBER 2, 1993+
(UNAUDITED) 1996 1995 1994 TO DECEMBER 31, 1993
----------- ------- ------- ------- --------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 13.09 $ 11.34 $ 9.65 $ 9.95 $10.00
----------- ------- ------- ------- ------
Net investment income (loss)...................... (0.04) (0.10) 0.03 0.01 0.01
Net realized and unrealized gains (losses) from
investments..................................... 1.19 2.93 2.00 (0.30) (0.05)
----------- ------- ------- ------- ------
Net increase (decrease) from investment
operations...................................... 1.15 2.83 2.03 (0.29) (0.04)
----------- ------- ------- ------- ------
Dividends from net investment income.............. -- -- (0.02) (0.01) (0.01)
Distributions from net realized gains from
investments..................................... -- (1.08) (0.32) -- --
----------- ------- ------- ------- ------
Total dividends and distributions................. 0.00 (1.08) (0.34) (0.01) (0.01)
----------- ------- ------- ------- ------
Net asset value, end of period.................... $ 14.24 $ 13.09 $ 11.34 $ 9.65 $ 9.95
----------- ------- ------- ------- ------
----------- ------- ------- ------- ------
Total investment return (1)....................... 8.79% 25.23% 21.04% (2.90)% (0.36)%
----------- ------- ------- ------- ------
----------- ------- ------- ------- ------
Ratios/Supplemental Data:
Net assets, end of period (000's)................. $21,218 $19,167 $17,660 $13,600 $2,814
Expenses to average net assets**.................. 1.19% * 1.52% 1.29% 1.59% 0.00%
Net investment income (loss) to average net
assets**........................................ (0.57)%* (0.74)% 0.23% 0.07% 3.31%*
Portfolio turnover................................ 55% 115% 119% 90% 0%
Average commission rate paid per share of
common stock investments purchased/sold (2)..... $0.0519 $0.0593 -- -- --
</TABLE>
- ---------------
+ Commencement of operations
* Annualized
** During the period ended December 31, 1993, Mitchell Hutchins agreed to
reimburse the Portfolio for all of its operating expenses and waived all of
its 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 loss to average net assets would have been 12.28%
and (8.97)%, respectively.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions, if any, at net asset value on the payable dates and a sale
at net asset value on the last day of each period reported. The figures do
not include additional contract level charges; results would be lower if
such charges were included. Total investment return for periods of less
than one year has not been annualized.
(2) Effective for fiscal years beginning on or after September 1, 1995, the Fund
is required to disclose the average commission rate paid per share of common
stock investments purchased or sold.
61
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights
- ------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
HIGH GRADE FIXED INCOME PORTFOLIO
----------------------------------------------------------------
FOR THE SIX
MONTHS
ENDED FOR THE YEARS ENDED
JUNE 30, DECEMBER 31, FOR THE PERIOD
1997 -------------------------- NOVEMBER 8, 1993+
(UNAUDITED) 1996 1995 1994 TO DECEMBER 31, 1993
----------- ------ ------ ------ --------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 9.10 $ 9.49 $ 8.71 $ 9.61 $10.00
----------- ------ ------ ------ ------
Net investment income................... 0.25 1.04 0.56 0.26 0.02
Net realized and unrealized gains
(losses) from investments............. (0.06) (0.91) 0.79 (0.89) (0.39)
----------- ------ ------ ------ ------
Net increase (decrease) from investment
operations............................ 0.19 0.13 1.35 (0.63) (0.37)
----------- ------ ------ ------ ------
Dividends from net investment income.... 0.00 (0.52) (0.57) (0.27) (0.02)
----------- ------ ------ ------ ------
Net asset value, end of period.......... $ 9.29 $ 9.10 $ 9.49 $ 8.71 $ 9.61
----------- ------ ------ ------ ------
----------- ------ ------ ------ ------
Total investment return (1)............. 2.09% 1.41% 15.44% (6.56)% (3.73)%
----------- ------ ------ ------ ------
----------- ------ ------ ------ ------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $7,959 $7,902 $9,147 $7,638 $1,480
Expenses to average net assets**........ 1.61%* 1.62% 1.01% 1.56% 0.00%
Net investment income to average net
assets**.............................. 5.46%* 5.04% 5.56% 4.61% 3.90%*
Portfolio turnover...................... 55% 282% 136% 36% 0%
</TABLE>
- ---------------
+ Commencement of operations
* Annualized
** During the period ended December 31, 1993, Mitchell Hutchins agreed to
reimburse the Portfolio for all of its operating expenses and waived all of
its 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 loss to average net assets would have been 23.52% and
(19.62)%, respectively.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions, if any, at net asset value on the payable dates and a sale at
net asset value on the last day of each period reported. The figures do not
include additional contract level charges; results would be lower if such
charges were included. Total investment return for periods of less than one
year has not been annualized.
62
<PAGE>
[LOGO]
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- -REGISTERED TRADEMARK- REGISTERED TRADEMARK OF PAINEWEBBER INCORPORATED
811 0060 0897
