MITCHELL HUTCHINS SERIES TRUST/MA/, 497, 1999-05-19

MITCHELL HUTCHINS SERIES TRUST/MA/
497, 1999-05-19

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MITCHELL HUTCHINS SERIES TRUST

MONEY MARKET PORTFOLIO
HIGH GRADE FIXED INCOME PORTFOLIO
STRATEGIC FIXED INCOME PORTFOLIO
STRATEGIC INCOME PORTFOLIO
GLOBAL INCOME PORTFOLIO
HIGH INCOME PORTFOLIO
BALANCED PORTFOLIO
GROWTH AND INCOME PORTFOLIO
TACTICAL ALLOCATION PORTFOLIO
GROWTH PORTFOLIO
AGGRESSIVE GROWTH PORTFOLIO
SMALL CAP PORTFOLIO
GLOBAL GROWTH PORTFOLIO

Each fund offers its Class H and Class I shares only to insurance company
separate accounts that fund certain variable annuity and variable life insurance
contracts. This prospectus should be read together with the prospectus for those
contracts.

PROSPECTUS
May 1, 1999

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

AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED ANY FUND'S SHARES OR DETERMINED WHETHER THIS PROSPECTUS
IS COMPLETE OR ACCURATE. TO STATE OTHERWISE IS A CRIME.

<PAGE>

Mitchell Hutchins Series Trust
- ------------------------------------------------
CONTENTS
THE FUNDS
- ------------------------------------------------------------

What every investor 4 Money Market Portfolio
should know about
the funds 6 High Grade Fixed Income Portfolio

8 Strategic Fixed Income Portfolio

10 Strategic Income Portfolio

11 Global Income Portfolio

13 High Income Portfolio

14 Balanced Portfolio

16 Growth and Income Portfolio

18 Tactical Allocation Portfolio

19 Growth Portfolio

21 Aggressive Growth Portfolio

23 Small Cap Portfolio

24 Global Growth Portfolio

26 More About Risks and Investment Strategies

INVESTING IN THE FUNDS
- ------------------------------------------------------

Information for 28 Purchases, Redemptions and Exchanges
managing your fund
account 28 Pricing and Valuation

2
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Mitchell Hutchins Series Trust
- ----------------------------------------
ADDITIONAL INFORMATION
----------------------------------------

Additional important 29 Management
information about
the funds 32 Dividends and Taxes

33 Financial Highlights

Where to learn more Back Cover
about these funds

------------------------------
The funds are not complete
or balanced investment
programs.
------------------------------

3
<PAGE>

Mitchell Hutchins Money Market Portfolio
- -------------------------------------------------

MONEY MARKET PORTFOLIO

INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

FUND OBJECTIVE:

Maximum current income consistent with liquidity and conservation of capital.

PRINCIPAL INVESTMENT STRATEGIES:

The fund is a money market mutual fund and is subject to maturity, quality and
diversification requirements designed to help it maintain a stable price of
$1.00 per share.

The fund invests in a diversified portfolio of high quality, short-term money
market instruments of U.S. and foreign issuers, including money market
instruments with variable and floating rate of interest. All the fund's
investments are denominated in U.S. dollars. Its investments include

o commercial paper and other short-term obligations of corporations,
partnerships, trusts and other entities

o government securities

o bank obligations

o repurchase agreements

Mitchell Hutchins Asset Management Inc., the fund's investment adviser,
evaluates its investments based on credit analysis and interest rate outlook.
Because the fund buys and sells its portfolio securities based on considerations
of safety of principal and liquidity, the fund may not buy securities that pay
the highest yield. The fund may attempt to increase its yield by trading to take
advantage of short-term market variations.

PRINCIPAL RISKS:

An investment in the fund is not a bank deposit and is neither insured nor
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. While the fund seeks to maintain the value of your investment at $1.00
per share, it is possible to lose money by investing in the fund.

Although the fund's investments are considered by Mitchell Hutchins to have
minimal credit risk, they are not risk free and an issuer may not make principal
or interest payments when due. The fund is subject to interest rate risk, which
means that the value of its investments generally will fall when interest rates
rise and its yield will tend to lag behind prevailing short-term interest rates.
The fund's investments in money market instruments of foreign issuers may
present greater risk than investments in the money market instruments of U.S.
issuers.

More information about these and other risks of an investment in the fund is
provided below in "More About Risks and Investment Strategies" under the
following headings:

o Credit Risk

o Interest Rate Risk

o Foreign Securities Risk

INFORMATION ON THE FUND'S RECENT INVESTMENT HOLDINGS CAN BE FOUND IN ITS CURRENT
ANNUAL/SEMI-ANNUAL REPORTS (SEE BACK COVER FOR INFORMATION ON ORDERING THESE
REPORTS)

4
<PAGE>

Mitchell Hutchins Money Market Portfolio
- -------------------------------------------------

PERFORMANCE

RISK/RETURN BAR CHART AND TABLE:

The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.

The fund's shares are sold only to insurance company separate accounts that fund
certain variable annuity and variable life contracts. The bar chart and table do
not reflect sales charges or other expenses of these contracts. If those sales
charges and expenses were included, the total returns shown would be lower.

The bar chart shows how the fund's performance has varied from year to year. The
bar chart shows Class H shares, which were the only class outstanding during the
periods shown.

The table that follows the bar chart shows the average annual returns over
several time periods.

The fund's past performance does not necessarily indicate how the fund will
perform in the future.

MONEY MARKET PORTFOLIO -- TOTAL RETURN ON CLASS H SHARES

The chart below contains the following plot points:

1989 8.00%
1990 5.00%
1991 5.00%
1992 3.00%
1993 2.45%
1994 3.43%
1995 5.22%
1996 4.32%
1997 4.53%
1998 4.51%

Best quarter during years shown: 2nd quarter, 1995 - 1.36%
Worst quarter during years shown: 3rd quarter, 1993 - 0.57%

AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1998

CLASS CLASS H
(INCEPTION DATE) 5/04/87
---------------- -------
One Year 4.51%
Five Years 4.40%
Ten Years 4.55%

5
<PAGE>

Mitchell Hutchins High Grade Fixed Income Portfolio
- -----------------------------------------------------------

HIGH GRADE FIXED INCOME PORTFOLIO

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

FUND OBJECTIVES:

Primarily, current income consistent with the preservation of capital;
secondarily, capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES:

The fund invests primarily in

o U.S. government bonds

o mortgage and asset-backed bonds of both government and private issuers

o investment grade corporate bonds, principally high quality bonds (rated in
one of the two highest rating categories or of comparable quality)

To a lesser extent, the fund invests in securities of foreign issuers that are
denominated in U.S. dollars and traded in U.S. markets (Yankee bonds). The fund
can use interest rate futures contracts and other derivatives to help manage its
portfolio "duration." "Duration" is a measure of the fund's exposure to interest
rate risk.

Mitchell Hutchins Asset Management Inc., the fund's investment adviser,
allocates its assets among bond market sectors and industries by deciding which
sectors and industries provide the best relative values under prevailing
conditions. Mitchell Hutchins selects industries and companies within the
corporate bond sector by performing fundamental credit analysis based on cash
flows and the ability of the issuer to make required payments on its debt.
Mitchell Hutchins chooses specific securities that it believes provide the best
combination of income, liquidity and potential for gain relative to risk of
loss.

PRINCIPAL RISKS:

An investment in the fund is not guaranteed; investors may lose money by
investing in the fund.

The fund is subject to interest rate risk, which means that the value of its
investments generally will fall when interest rates rise. Because the fund
invests significantly in mortgage-backed securities, it also is subject to
prepayment risk, which means that the underlying mortgages may be paid earlier
or later than expected. The fund may have to reinvest prepayments that occur
faster than expected at lower interest rates. The market value of
mortgage-backed securities with prepayments that occur more slowly than expected
may fall, adversely affecting the fund's performance. The fund also is subject
to credit risk in that the issuers of its securities may not make principal or
interest payments when due.

More information about these and other risks of an investment in the fund is
provided below in "More About Risks and Investment Strategies" under the
following headings:

o Interest Rate Risk

o Prepayment Risk

o Credit Risk

o Foreign Securities Risk

o Derivatives Risk

INFORMATION ON THE FUND'S RECENT INVESTMENT STRATEGIES AND HOLDINGS CAN BE FOUND
IN ITS CURRENT ANNUAL/SEMI-ANNUAL REPORTS (SEE BACK COVER FOR INFORMATION ON
ORDERING THESE REPORTS).

6
<PAGE>
Mitchell Hutchins High Grade Fixed Income Portfolio
- -----------------------------------------------------------

PERFORMANCE

RISK/RETURN BAR CHART AND TABLE:

The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.

The bar chart shows how the fund's performance has varied from year to year. The
bar chart shows Class H shares, which were the only class outstanding during the
periods shown.

The table that follows the bar chart shows the average annual returns over
several time periods compared to the return of a broad-based market index.

The fund's past performance does not necessarily indicate how the fund will
perform in the future. This is especially true for periods prior to July 21,
1995, which is when Mitchell Hutchins assumed day-to-day portfolio management
responsibility from a sub-adviser.

HIGH GRADE FIXED INCOME PORTFOLIO -- TOTAL RETURN ON CLASS H SHARES

The chart below contains the following plot points:

1989 0
1990 0
1991 0
1992 0
1993 0
1994 (6.56%)
1995 15.44%
1996 1.41%
1997 8.13%
1998 6.83%

Best quarter during years shown: 2nd quarter, 1995 - 4.42%
Worst quarter during years shown: 1st quarter, 1994 - (4.79)%

AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1998

CLASS CLASS H LEHMAN BROTHERS
(INCEPTION DATE) 11/08/93 GOVERNMENT BOND INDEX
---------------- -------- ---------------------
One Year 6.83% 9.85%
Five Years 4.79% 7.18%
Life of Class 3.88% 7.14%*

* Return is for the period 11/30/93 to 12/31/98, annualized.

7
<PAGE>

Mitchell Hutchins Strategic Fixed Income Portfolio
- -------------------------------------------------------

STRATEGIC FIXED INCOME PORTFOLIO

INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

FUND OBJECTIVE:

Total return with low volatility.

PRINCIPAL INVESTMENT STRATEGIES:

The fund invests in bonds with varying maturities, although it normally limits
its overall portfolio "duration" to between three and eight years. "Duration" is
a measure of the fund's exposure to interest rate risk. The fund invests
primarily in

o mortgage- and asset-backed securities of both government and private
issuers

o investment grade corporate bonds

o U.S. and foreign government bonds

o money market instruments

The fund also invests, to a lesser extent, in bonds that are below investment
grade. Securities rated below investment grade are commonly known as "junk
bonds." The fund invests in when-issued or delayed delivery bonds as a
leveraging technique to increase its return. The fund uses interest rate futures
and other derivatives to help manage its portfolio duration.

The fund's investment adviser, Mitchell Hutchins Asset Management Inc., has
appointed Pacific Investment Management Company ("PIMCO") as the fund's
sub-adviser. PIMCO analyzes U.S. economic and market conditions, as well as
other factors, to decide on a portfolio duration and to allocate fund assets to
bonds of different credit qualities, maturities, types and coupon interest
rates. PIMCO seeks bonds that it believes to be relatively undervalued and
selects bonds based on various factors, including economic forecasts,
anticipated interest rate levels and expected prepayment rates on the mortgages
supporting mortgage-backed bonds. PIMCO selects specific bonds by analyzing
their relative value and risk characteristics.

PRINCIPAL RISKS:

An investment in the fund is not guaranteed; investors may lose money by
investing in the fund.

More information about these and other risks of an investment in the fund is
provided below in "More About Risks and Investment Strategies" under the
following headings:

o Interest Rate Risk

o Prepayment Risk

o Credit Risk

o Foreign Securities Risk

o Leverage Risk

o Derivatives Risk

INFORMATION ON THE FUND'S RECENT INVESTMENT STRATEGIES AND HOLDINGS CAN BE FOUND
IN ITS CURRENT ANNUAL/SEMI-ANNUAL REPORTS (SEE BACK COVER FOR INFORMATION ON
ORDERING THESE REPORTS).

8
<PAGE>

Mitchell Hutchins Strategic Fixed Income Portfolio
- -------------------------------------------------------

PERFORMANCE

RISK/RETURN BAR CHART AND TABLE:

The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.

The bar chart shows how the fund's performance has varied from year to year. The
bar chart shows Class H shares, which were the only class outstanding during the
periods shown.

The table that follows the bar chart shows the average annual returns over
several time periods compared to the return of a broad-based market index.

The fund's past performance does not necessarily indicate how the fund will
perform in the future. This is especially true for periods prior to September
21, 1995, when PIMCO assumed portfolio management responsibility from Mitchell
Hutchins.

STRATEGIC FIXED INCOME PORTFOLIO -- TOTAL RETURN ON CLASS H SHARES

The chart below contains the following plot points:

1989 0
1990 7.58%
1991 15.17%
1992 6.76%
1993 11.66%
1994 (5.34%)
1995 18.51%
1996 3.79%
1997 11.00%
1998 8.62%

Best quarter during years shown: 2nd quarter, 1995 - 6.20%
Worst quarter during years shown: 1st quarter, 1994 - (4.11)%

AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1998

CLASS CLASS H LEHMAN BROTHERS
(INCEPTION DATE) 7/05/89 MORTGAGE BOND INDEX
---------------- ------- -------------------
One Year 8.62% 6.96%
Five Years 7.02% 7.58%
Life of Class 8.28% 8.45%*

* Return is for the period 7/31/89 to 12/31/98, annualized.

9
<PAGE>

Mitchell Hutchins Strategic Income Portfolio
- -------------------------------------------------

STRATEGIC INCOME PORTFOLIO

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

FUND OBJECTIVES:

Primarily, high level of current income; secondarily, capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES:

The fund strategically allocates investments among three bond market sectors:

o U.S. government and investment grade bonds;

o U.S. high yield bonds (sometimes called "junk bonds"), including preferred
stock and bonds that are convertible into common stock; and

o Foreign and emerging market bonds.

Each of these sectors generally reacts in different ways or at different times
to changes in interest rates or to particular economic events. This means that,
when one sector underperforms the market as a whole, another sector may
outperform the market.

The fund normally invests in each of these three sectors. However, the fund's
investment adviser, Mitchell Hutchins Asset Management Inc., tries to take
advantage of changes in the relative performance of different sectors by
allocating a larger percentage of the fund's assets to those sectors that it
believes are undervalued. Selections of specific securities are based on market
outlook, investment research, geographic analysis and forecasts of interest
rates and currency exchange rates. The fund sometimes uses forward currency
contracts to hedge against foreign currency risk.

PRINCIPAL RISKS:

An investment in the fund is not guaranteed; investors may lose money by
investing in the fund.

The fund is subject to sector allocation risk, in that Mitchell Hutchins may not
be successful in choosing the best allocation among market sectors. The fund is
subject to credit risk, in that the issuers of its securities may not make
principal or interest payments when due. This risk is greater for the fund's
non-investment grade bonds, which also may have greater price volatility than
higher quality bonds and be more difficult to sell during market downturns. The
fund also is subject to interest rate risk, which means that the value of its
investments generally will fall when interest rates rise. The value of the
fund's foreign investments may fall due to adverse political, social and
economic developments abroad. This risk is greater for the fund's investments in
emerging market issuers. Because the fund is non-diversified, it can invest more
of its assets in a single issuer than a diversified fund can. As a result,
changes in the market value of a single issuer can have a greater effect on the
fund's performance and share price than if the fund held a smaller position.

More information about these and other risks of an investment in the fund is
provided below in "More About Risks and Investment Strategies" under the
following headings:

o Sector Allocation Risk

o Credit Risk

o Interest Rate Risk

o Foreign Securities Risk

o Emerging Markets Risk

o Non-Diversified Status Risk

o Equity Risk

o Prepayment Risk

o Derivatives Risk

INFORMATION ON THE FUND'S RECENT INVESTMENT STRATEGIES AND HOLDINGS CAN BE FOUND
IN ITS CURRENT ANNUAL/SEMI-ANNUAL REPORTS (SEE BACK COVER FOR INFORMATION ON
ORDERING THESE REPORTS).

Strategic Income Portfolio commenced operations on September 28, 1998. As a
result, the fund does not have performance information of at least one calendar
year to include in a bar chart or table reflecting average annual returns.

10
<PAGE>

Mitchell Hutchins Global Income Portfolio
- -------------------------------------------------

GLOBAL INCOME PORTFOLIO

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

FUND OBJECTIVES:

Primarily, high current income; secondarily, capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES:

The fund invests primarily in high quality bonds of governmental and private
issuers in the U.S. and developed foreign countries. These high quality bonds
are rated in one of the two highest rating categories or are of comparable
quality. The fund also invests, to a lesser extent, in lower quality bonds,
including bonds of issuers in emerging markets. These may include bonds that
have very low credit ratings, but that Mitchell Hutchins Asset Management Inc.,
the fund's investment adviser, believes provide a return that is high enough to
justify the additional risk. Some of the fund's bonds may be backed by
mortgages.

Mitchell Hutchins normally invests a portion of the fund's assets in bonds of
U.S. government and private issuers, and allocates the balance of the fund's
portfolio among bonds of issuers in different foreign countries. Mitchell
Hutchins determines the allocation to different geographic areas, countries and
industries based upon its assessment of fundamental economic strengths, credit
quality and currency and interest rate trends. Mitchell Hutchins uses forward
currency contracts to increase or decrease the fund's exposure to various
foreign currencies.

PRINCIPAL RISKS:

An investment in the fund is not guaranteed; investors may lose money by
investing in the fund.

The fund is subject to sector allocation risk, in that Mitchell Hutchins may not
be successful in choosing the best allocation between U.S. and foreign issuers.
The fund is subject to interest rate risk, which means that the value of its
investments generally will fall when interest rates rise. The value of the
fund's foreign investments also may fall due to adverse political, social and
economic developments abroad. These risks are greater for the fund's investments
in emerging market issuers. The fund also is subject to credit risk, in that the
issuers of its securities may not make principal or interest payments when due.
This risk is greater for the fund's non-investment grade bonds, which also may
have greater price volatility than higher quality bonds and be more difficult to
sell during market downturns. Because the fund is non-diversified, it can invest
more of its assets in a single issuer than a diversified fund can. As a result,
changes in the market value of a single issuer can have a greater effect on the
fund's performance and share price than if the fund held a smaller position.

More information about these and other risks of an investment in the fund is
provided below in "More About Risks and Investment Strategies" under the
following headings:

o Sector Allocation Risk

o Interest Rate Risk

o Foreign Securities Risk

o Emerging Markets Risk

o Credit Risk

o Non-Diversified Status Risk

o Sovereign Risk

o Prepayment Risk

o Derivatives Risk

INFORMATION ON THE FUND'S RECENT INVESTMENT STRATEGIES AND HOLDINGS CAN BE FOUND
IN THE CURRENT ANNUAL/SEMI-ANNUAL REPORTS (SEE BACK COVER FOR INFORMATION ON
ORDERING SUCH REPORTS).

11
<PAGE>

Mitchell Hutchins Global Income Portfolio
- -------------------------------------------------

PERFORMANCE

RISK/RETURN BAR CHART AND TABLE:

The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.

The bar chart shows how the fund's performance has varied from year to year. The
bar chart shows Class H shares, which were the only class outstanding during the
periods shown.

The table that follows the bar chart shows the average annual returns over
several time periods compared to the return of a broad-based market index.

The fund's past performance does not necessarily indicate how the fund will
perform in the future.

GLOBAL INCOME PORTFOLIO -- TOTAL RETURN ON CLASS H SHARES

The chart below contains the following plot points:

1989 6.80%
1990 14.92%
1991 10.30%
1992 1.29%
1993 16.65%
1994 (5.56%)
1995 13.58%
1996 6.62%
1997 3.50%
1998 9.69%

Best quarter during years shown: 2nd quarter, 1990 - 5.77%
Worst quarter during years shown: 1st quarter, 1989 - (4.59)%

AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1998

SALOMON BROTHERS
CLASS CLASS H WORLD GOVERNMENT
(INCEPTION DATE) 5/01/88 BOND INDEX
---------------- ------- ----------
One Year 9.69% 15.31%
Five Years 5.40% 7.85%
Ten Years 7.22% 8.96%
Life of Class 7.77% 8.82%*

* Return is for the period 5/31/88 to 12/31/98, annualized.

12
<PAGE>

Mitchell Hutchins High Income Portfolio
- -------------------------------------------------

HIGH INCOME PORTFOLIO

INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

FUND OBJECTIVE:

High income.

PRINCIPAL INVESTMENT STRATEGIES:

The fund invests primarily in a diversified range of high yield U.S. and foreign
corporate bonds (sometimes called "junk bonds"). The fund also invests, to a
lesser extent, in other types of bonds, preferred stocks and bonds that are
convertible into common stock.

The fund's investment adviser, Mitchell Hutchins Asset Management Inc., uses a
three-step investment process to find the best relative values in the bond
markets in which the fund invests: industry selection, company selection and
security selection.

Mitchell Hutchins allocates the fund's assets among industry groups by analyzing
economic factors, industry dynamics and yield spreads to determine which
industries provide the most attractive investment opportunities. Mitchell
Hutchins selects companies within these industries by using a proprietary
financial forecasting model and by performing fundamental credit analysis based
on cash flows and other factors. Finally, Mitchell Hutchins chooses from among
the types of securities offered by these companies to select those that appear
to offer the best relative values. All aspects of this process rely on Mitchell
Hutchins' economic, credit, quantitative and market research.

PRINCIPAL RISKS:

An investment in the fund is not guaranteed; investors may lose money by
investing in the fund.

The fund invests a large portion of its assets in high yield or "junk" bonds and
so is subject to high credit risk -- the risk that the issuers of these bonds
will not make principal or interest payments when due. These bonds also may have
greater price volatility than higher quality bonds and be more difficult to sell
during market downturns. The fund also is subject to interest rate risk, which
means that the value of its investments generally will fall when interest rates
rise.

More information about these and other risks of an investment in the fund is
provided below in "More About Risks and Investment Strategies" under the
following headings:

o Credit Risk

o Interest Rate Risk

o Foreign Securities Risk

o Emerging Markets Risk

o Equity Risk

INFORMATION ON THE FUND'S RECENT INVESTMENT STRATEGIES AND HOLDINGS CAN BE FOUND
IN ITS CURRENT ANNUAL/SEMI-ANNUAL REPORTS (SEE BACK COVER FOR INFORMATION ON
ORDERING THESE REPORTS).

High Income Portfolio commenced operations on September 28, 1998. As a result,
the fund does not have performance information of at least one calendar year to
include in a bar chart or table reflecting average annual returns.

13
<PAGE>
Mitchell Hutchins Balanced Portfolio
- -------------------------------------------------
BALANCED PORTFOLIO

INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

FUND OBJECTIVE:

High total return with low volatility.

PRINCIPAL INVESTMENT STRATEGIES:

The fund allocates its investments among three investment sectors:

o stocks
o bonds
o cash (money market instruments)

The fund normally has investments in each sector but it always keeps at least
25% of its total assets in a combination of bonds and cash. This is intended to
limit changes in the value of fund shares compared to funds that invest solely
in stocks.

The fund's bonds are primarily investment grade, but it may invest, to a lesser
extent, in lower quality bonds. Any of the fund's investments may be issued by
U.S. or foreign issuers, but they must be denominated in U.S. dollars and traded
in U.S. markets. The fund may use futures contracts and other derivatives to
adjust its exposure to different asset classes and to manage the "duration" of
its bond investments. "Duration" is a measure of the fund's exposure to interest
rate risk.

Mitchell Hutchins Asset Management Inc., the fund's investment adviser, believes
investors tend to reach a consensus as to the likely effect of changes in key
economic variables (for example, interest rates, profits and inflation) on each
investment sector. Mitchell Hutchins also believes that prices of securities in
each sector tend to move toward a level that reflects that consensus, but that
this takes time. By using fundamental valuation techniques, Mitchell Hutchins
attempts to adjust the allocation of the fund's assets among sectors before
prices fully reflect the consensus view.

Mitchell Hutchins uses the following process to select individual securities for
each sector:

o STOCKS. Mitchell Hutchins uses its own Factor Valuation Model to identify
companies that appear undervalued. The model ranks companies based on "value"
factors, such as dividends, cash flows, earnings and book values, as well as
on "growth" factors, such as earnings momentum and industry performance
forecasts. Mitchell Hutchins then applies fundamental analysis to select
specific stocks from among those identified by the model.

o BONDS. Mitchell Hutchins selects bonds based on its analysis of their
maturity and risk structures (comparing yields on U.S. Treasury bonds to
yields on riskier types of bonds).

As of December 31, 1998, the fund's portfolio assets were allocated 69% to
stocks, 19% to bonds and 12% to cash.

PRINCIPAL RISKS:

An investment in the fund is not guaranteed; investors may lose money by
investing in the fund.

Mitchell Hutchins may not be successful in choosing the best allocation among
the three investment sectors. Because it invests in both stocks and bonds, the
fund is subject to both equity risk and interest rate risk. Equities, such as
common stocks, generally fluctuate in price more than other investments. The
fund could lose all of its investment in a company's stock. Interest rate risk
means that the value of the fund's bonds generally will fall when interest rates
rise.

More information about these and other risks of an investment in the fund is
provided below in "More About Risks and Investment Strategies" under the
following headings:

o Sector Allocation Risk
o Equity Risk
o Interest Rate Risk
o Credit Risk
o Foreign Securities Risk
o Derivatives Risk

INFORMATION ON THE FUND'S RECENT INVESTMENT STRATEGIES AND HOLDINGS CAN BE FOUND
IN ITS CURRENT ANNUAL/SEMI-ANNUAL REPORTS (SEE BACK COVER FOR INFORMATION ON
ORDERING THESE REPORTS).

14
<PAGE>
Mitchell Hutchins Balanced Portfolio
- -------------------------------------------------

PERFORMANCE

RISK/RETURN BAR CHART AND TABLE:

The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.

The bar chart shows how the fund's performance has varied from year to year. The
bar chart shows Class H shares, which were the only class outstanding during the
periods shown.

The table that follows the bar chart shows the average annual returns over
several time periods compared to a broad-based market index.

The fund's past performance does not necessarily indicate how the fund will
perform in the future.

BALANCED PORTFOLIO -- TOTAL RETURN ON CLASS H SHARES

The chart below contains the following plot points:

1989 11.10%
1990 2.63%
1991 18.73%
1992 5.18%
1993 15.76%
1994 (9.59%)
1995 23.27%
1996 16.82%
1997 24.86%
1998 16.81%

Best quarter during years shown: 4th quarter, 1998 - 14.29%
Worst quarter during years shown: 3rd quarter, 1998 - (8.46)%

AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1998

CLASS CLASS H S&P 500 COMPOSITE
(INCEPTION DATE) 6/01/88 STOCK PRICE INDEX
---------------- ------- -----------------
One Year 16.81% 28.58%
Five Years 13.69% 24.06%
Ten Years 11.62% 19.21%
Life of Class 11.86% 18.60%*
----------------------
* Return is for the period 6/30/88 to 12/31/98,
annualized.

15
<PAGE>

Mitchell Hutchins Growth and Income Portfolio
- ------------------------------------------------------

GROWTH AND INCOME PORTFOLIO

INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

FUND OBJECTIVE:

Current income and capital growth.

PRINCIPAL INVESTMENT STRATEGIES:

The fund invests primarily in dividend-paying stocks of companies that its
investment adviser, Mitchell Hutchins Asset Management Inc., believes have
potential for rapid earnings growth.

The fund also invests, to a lesser extent, in bonds when Mitchell Hutchins
believes those investments offer opportunities for capital appreciation because
interest rates may fall or credit factors or ratings affecting particular
issuers may improve. The fund may invest in securities of foreign issuers that
are denominated in U.S. dollars and traded in U.S.
markets.

In selecting stocks for the fund, Mitchell Hutchins uses its own Factor
Valuation Model to identify companies that appear undervalued. The model ranks
companies based on "value" factors such as dividends, cash flows, earnings and
book values, as well as on "growth" factors, such as earnings momentum and
industry performance forecasts. Mitchell Hutchins then applies fundamental
analysis to select specific stocks from among those identified by the model.

PRINCIPAL RISKS:

An investment in the fund is not guaranteed; investors may lose money by
investing in the fund.

Equities, such as common stocks, generally fluctuate in price more than other
investments. The fund could lose all of its investment in a company's stock. The
fund is subject, to a lesser extent, to interest rate risk, which means that the
value of the fund's bond investments generally will fall when interest rates
rise.

More information about these and other risks of an investment in the fund is
provided below in "More About Risks and Investment Strategies" under the
following headings:

o Equity Risk

o Interest Rate Risk

o Credit Risk

o Foreign Securities Risk

INFORMATION ON THE FUND'S RECENT INVESTMENT STRATEGIES AND HOLDINGS CAN BE FOUND
IN ITS CURRENT ANNUAL/SEMI-ANNUAL REPORTS (SEE BACK COVER FOR INFORMATION ON
ORDERING THESE REPORTS).

16
<PAGE>

Mitchell Hutchins Growth and Income Portfolio
- ------------------------------------------------------

PERFORMANCE

RISK/RETURN BAR CHART AND TABLE:

The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.

The bar chart shows how the fund's performance has varied from year to year. The
bar chart shows Class H shares because they have the longer performance history.

The table that follows the bar chart shows the average annual returns over
several time periods compared to a broad-based market index.

The fund's past performance does not necessarily indicate how the fund will
perform in the future.

GROWTH AND INCOME PORTFOLIO -- TOTAL RETURN ON CLASS H SHARES

The chart below contains the following plot points:

1989 0
1990 0
1991 0
1992 0
1993 (2.26%)
1994 (6.18%
1995 30.52%
1996 22.12%
1997 32.45%
1998 16.32%

Best quarter during years shown: 4th quarter, 1998 - 19.73%
Worst quarter during years shown: 3rd quarter, 1998 - (14.91)%

AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1998

CLASS CLASS H S&P 500 COMPOSITE
(INCEPTION DATE) 1/02/92 STOCK PRICE INDEX
---------------- ------- -----------------
One Year 16.32% 28.58%
Five Years 18.17% 24.06%
Life of Class 12.84% 20.09%*
- ----------------
* Return is for the period 1/31/92 to 12/31/98, annualized.

17
<PAGE>

Mitchell Hutchins Tactical Allocation Portfolio
- ----------------------------------------------------

TACTICAL ALLOCATION PORTFOLIO

INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

FUND OBJECTIVE:

Total return, consisting of long-term capital appreciation and current income.

PRINCIPAL INVESTMENT STRATEGIES:

The fund allocates its assets between

o a stock portion that is designed to track the performance of the S&P 500
Composite Stock Price Index and

o a fixed income portion that consists of either five-year U.S. Treasury
notes or U.S. Treasury bills with remaining maturities of 30 days.

Mitchell Hutchins Asset Management Inc., the fund's investment adviser,
reallocates the fund's assets in accordance with the recommendations of its own
Tactical Allocation Model on the first business day of each month.

The Tactical Allocation Model attempts to track the performance of the S&P 500
Index in periods of strong market performance. The Model attempts to take a more
defensive posture by reallocating assets to bonds or cash when the Model signals
a potential bear market, prolonged downturn in stock prices or significant loss
in value. The Model can recommend stock allocations of 100%, 75%, 50%, 25% or
0%.

If the Tactical Allocation Model recommends a stock allocation of less than
100%, the Model also recommends a fixed income allocation for the remainder of
the fund's assets. The Model uses a bond risk premium determination to decide
whether to recommend five-year U.S.
Treasury notes or 30-day U.S. Treasury bills.

When the Tactical Allocation Model recommends a fixed income allocation of more
than 50%, the fund must invest in other high quality bonds or money market
instruments to the extent needed to limit the fund's investments in U.S.
Treasury obligations to no more than 55% of its assets. This limit is imposed by
Internal Revenue Code diversification requirements for segregated assets
accounts used to fund variable annuity or variable life contracts.

As of December 31, 1998, the fund's portfolio assets were allocated 100% to
stocks and 0% to bonds.

PRINCIPAL RISKS:

An investment in the fund is not guaranteed; investors may lose money by
investing in the fund.

The fund is subject to sector allocation risk, in that the Tactical Allocation
Model may not correctly predict the appropriate times to shift the fund's assets
from one type of investment to another. Equities, such as common stocks,
generally fluctuate in price more than other investments. The fund could lose
all of its investment in a company's stock. To the extent the fund invests in
bonds, it is subject to interest rate risk, which means that the value of these
investments generally will fall when interest rates rise.

More information about these and other risks of an investment in the fund is
provided below in "More About Risks and Investment Strategies" under the
following headings:

o Sector Allocation Risk

o Equity Risk

o Interest Rate Risk

INFORMATION ON THE FUND'S RECENT INVESTMENT STRATEGIES AND HOLDINGS CAN BE FOUND
IN ITS CURRENT ANNUAL/SEMI-ANNUAL REPORTS (SEE BACK COVER FOR INFORMATION ON
ORDERING THESE REPORTS).

Tactical Allocation Portfolio commenced operations on September 28, 1998. As a
result, the fund does not have performance information of at least one calendar
year to include in a bar chart or table reflecting average annual returns.

18
<PAGE>

Mitchell Hutchins Growth Portfolio
- -------------------------------------------------

GROWTH PORTFOLIO

INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

Mitchell Hutchins Growth Portfolio
- -------------------------------------------------

FUND OBJECTIVE:

Long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES:

The fund invests primarily in stocks of companies that Mitchell Hutchins Asset
Management Inc., its adviser, believes have substantial potential for capital
growth. The fund may invest in companies of any size.

The fund also invests, to a lesser extent, in other securities, including bonds.
The fund may invest in securities of foreign issuers that are denominated in
U.S. dollars and traded in U.S. markets.

In selecting stocks for the fund, Mitchell Hutchins combines a "bottom up"
stock-by-stock approach with a modified, growth-oriented version of its own
Factor Valuation Model to identify companies that appear to have potential for
above-average growth in earnings, cash flow and/or book value. The model ranks
companies based on "growth" factors such as earnings momentum, stock price
movement, economic sensitivity and industry performance forecasts. Mitchell
Hutchins then applies fundamental analysis to select specific stocks from among
those identified by the model.

This flexibility allows the fund to invest more of its assets in companies that
Mitchell Hutchins believes have greater earnings growth potential, regardless of
their market capitalizations. When investing in smaller companies, Mitchell
Hutchins places more emphasis on the trading volume of the company's stock.

PRINCIPAL RISKS:

An investment in the fund is not guaranteed; investors may lose money by
investing in the fund.

Equities, such as common stocks, generally fluctuate in price more than other
investments. The fund could lose all of its investment in a company's stock.

More information about these and other risks of an investment in the fund is
provided below in "More About Risks and Investment Strategies" under the
following headings:

o Equity Risk

o Foreign Securities Risk

INFORMATION ON THE FUND'S RECENT INVESTMENT STRATEGIES AND HOLDINGS CAN BE FOUND
IN ITS CURRENT ANNUAL/SEMI-ANNUAL REPORTS (SEE BACK COVER FOR INFORMATION ON
ORDERING THESE REPORTS).

19
<PAGE>

Mitchell Hutchins Growth Portfolio
- -------------------------------------------------

PERFORMANCE

RISK/RETURN BAR CHART AND TABLE:

The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.

The bar chart shows how the fund's performance has varied from year to year. The
bar chart shows Class H shares, which were the only class outstanding during the
periods shown.

The table that follows the bar chart shows the average annual returns over
several time periods compared to a broad-based market index.

The fund's past performance does not necessarily indicate how the fund will
perform in the future.

GROWTH PORTFOLIO -- TOTAL RETURN ON CLASS H SHARES

The chart below contains the following plot points:

1989 38.44%
1990 (8.15%)
1991 42.10%
1992 5.83%
1993 19.61%
1994 (11.65%)
1995 32.50%
1996 18.70%
1997 15.41%
1998 30.59%

Best quarter during years shown: 3rd quarter, 1989 - 22.67%
Worst quarter during years shown: 3rd quarter, 1990 - (16.09)%

AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1998

CLASS CLASS H S&P 500 COMPOSITE
(INCEPTION DATE) 5/04/87 STOCK PRICE INDEX
---------------- ------- -----------------
One Year 30.59% 28.58%
Five Years 15.93% 24.06%
Ten Years 14.93% 19.21%
Life of Class 15.46% 16.50%*
- ------------
* Return is for the period 5/31/87 to 12/31/98, annualized.

20
<PAGE>

Mitchell Hutchins Aggressive Growth Portfolio
- ------------------------------------------------------

AGGRESSIVE GROWTH PORTFOLIO

INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

FUND OBJECTIVE:

Maximizing long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES:

The fund invests primarily in common stocks of U.S. companies that its
sub-adviser, Nicholas-Applegate Capital Management, expects to grow faster than
the average rate of companies in the S&P 500 Composite Stock Price Index.

The fund invests, to a lesser extent, in preferred stocks, convertible
securities and investment grade bonds. The fund may invest in securities of
foreign issuers that are denominated in U.S. dollars and traded in U.S. markets.

The fund invests in companies that are diversified over a cross-section of
industries. The fund's investments may include growth companies, cyclical
companies or companies that Nicholas-Applegate believes to be undergoing a basic
change in operations or markets that would result in a significant improvement
in earnings. The fund may invest in companies of any size, including small
capitalization companies.

In selecting investments for the fund, Nicholas-Applegate uses a proprietary
investment methodology to identify companies with attractive earnings and growth
potential and to evaluate their investment prospects.

PRINCIPAL RISKS:

An investment in the fund is not guaranteed; investors may lose money by
investing in the fund.

Equities, such as common stocks, generally fluctuate in price more than other
investments. The fund could lose all of its investment in a company's stock.
This risk is greater for the common stocks of smaller companies because they are
more vulnerable to adverse business or economic developments and may have more
limited resources. The fund is subject, to a lesser extent, to interest rate
risk, which means that the value of the fund's bond investments generally will
fall when interest rates rise.

More information about these and other risks of an investment in the fund is
provided below in "More About Risks and Investment Strategies" under the
following headings:

o Equity Risk

o Small Cap Companies Risk

o Interest Rate Risk

o Foreign Securities Risk

o Credit Risk

INFORMATION ON THE FUND'S RECENT INVESTMENT STRATEGIES AND HOLDINGS CAN BE FOUND
IN ITS CURRENT ANNUAL/SEMI-ANNUAL REPORTS (SEE BACK COVER FOR INFORMATION ON
ORDERING THESE REPORTS).

21
<PAGE>

Mitchell Hutchins Aggressive Growth Portfolio
- ------------------------------------------------------

PERFORMANCE

RISK/RETURN BAR CHART AND TABLE:

The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.

The bar chart shows how the fund's performance has varied from year to year. The
bar chart shows Class H shares, which were the only class outstanding during the
periods shown.

The table that follows the bar chart shows the average annual returns over
several time periods compared to a broad-based market index.

The fund's past performance does not necessarily indicate how the fund will
perform in the future.

AGGRESSIVE GROWTH PORTFOLIO -- TOTAL RETURN ON CLASS H SHARES

The chart below contains the following plot points:

1989 0
1990 0
1991 0
1992 0
1993 0
1994 (2.90%)
1995 21.04%
1996 25.23%
1997 20.76%
1998 15.30%

Best quarter during years shown: 4th quarter, 1998 - 23.31%
Worst quarter during years shown: 3rd quarter, 1998 - (20.75)%

AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1998

CLASS CLASS H S&P 500 COMPOSITE
(INCEPTION DATE) 11/02/93 STOCK PRICE INDEX
---------------- -------- -----------------
One Year 15.30% 28.58%
Five Years 15.43% 24.06%
Life of Class 14.82% 23.92%*
------------
* Return is for the period 11/30/93 to 12/31/98, annualized.

22
<PAGE>

Mitchell Hutchins Small Cap Portfolio
- -------------------------------------------------

SMALL CAP PORTFOLIO

INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

FUND OBJECTIVE:

Long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES:

The fund invests primarily in stocks of small capitalization ("small cap")
companies, which are defined as companies that have market capitalizations of up
to $1 billion.

The fund may invest, to a lesser extent, in stocks of larger companies,
preferred stocks, and bonds, including convertible securities. The fund may
invest in bonds when its investment adviser, Mitchell Hutchins Asset Management
Inc., believes those investments offer opportunities for capital appreciation
because interest rates may fall or credit factors or ratings affecting
particular issuers may improve. The fund may invest in securities of foreign
issuers that are denominated in U.S. dollars and traded in U.S.
markets.

PRINCIPAL RISKS:

An investment in the fund is not guaranteed; investors may lose money by
investing in the fund.

More information about these and other risks of an investment in the fund is
provided below in "More About Risks and Investment Strategies" under the
following headings:

o Small Cap Companies Risk

o Equity Risk

o Foreign Securities Risk

o Interest Rate Risk

o Credit Risk

INFORMATION ON THE FUND'S RECENT INVESTMENT STRATEGIES AND HOLDINGS CAN BE FOUND
IN ITS CURRENT ANNUAL/SEMI-ANNUAL REPORTS (SEE BACK COVER FOR INFORMATION ON
ORDERING THESE REPORTS).

Small Cap Portfolio commenced operations on September 28, 1998. As a result, the
fund does not have performance information of at least one calendar year to
include in a bar chart or table reflecting average annual returns

23
<PAGE>

Mitchell Hutchins Global Growth Portfolio
- -------------------------------------------------

GLOBAL GROWTH PORTFOLIO

INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

FUND OBJECTIVE:

Long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES:

The fund invests primarily in stocks of companies in the United States and in
foreign countries that are represented in the MSCI Europe, Australia and Far
East Index. The EAFE Index reflects stocks in most developed countries outside
North America. The fund also invests, to a lesser extent, in stocks of issuers
in other countries, including emerging markets, and in U.S. and foreign bonds.

The fund's investment adviser, Mitchell Hutchins Asset Management Inc.,
allocates the fund's assets between U.S. and foreign markets based on how it
expects U.S. stock markets to perform in comparison to stock markets in certain
of the EAFE countries. Mitchell Hutchins may increase the allocation of the
fund's assets to either the U.S. or foreign markets if it believes that one of
those markets has a greater potential for high returns, relative to the risk of
loss. Mitchell Hutchins may use futures and forward currency contracts to adjust
the fund's exposure to either the U.S. or foreign markets.

Mitchell Hutchins manages the fund's U.S. investments using its own Factor
Valuation Model to identify companies that appear undervalued. The model ranks
companies based on "value" factors, such as dividends, cash flows, earnings and
book values, as well as on "growth" factors, such as earnings momentum and
industry performance forecasts. Mitchell Hutchins then applies fundamental
analysis to select specific stocks from among those identified by the model.

Mitchell Hutchins has appointed Invista Capital Management LLC as the
sub-adviser for the fund's foreign investments. Invista selects foreign stocks
for the fund through a qualitative analysis of the fundamental business
prospects of industries and of individual companies and by making a quantitative
assessment of the relative risks presented by the countries in which those
companies operate.

PRINCIPAL RISKS:

An investment in the fund is not guaranteed; investors may lose money by
investing in the fund.

Mitchell Hutchins may not be successful in choosing the best allocation between
U.S. and foreign investments. Equities, such as common stocks, generally
fluctuate in price more than other investments. The fund could lose all of its
investment in a company's stock. The value of the fund's foreign investments may
fall due to adverse political, social and economic developments abroad. These
risks are greater for the fund's investments in emerging market issuers. The
fund is subject, to a lesser extent, to interest rate risk, which means that the
value of the fund's bond investments generally will fall when interest rates
rise.

More information about these and other risks of an investment in the fund is
provided below in "More About Risks and Investment Strategies" under the
following headings:

o Sector Allocation Risk

o Equity Risk

o Foreign Securities Risk

o Emerging Markets Risk

o Interest Rate Risk

o Credit Risk

o Derivatives Risk

INFORMATION ON THE FUND'S RECENT INVESTMENT STRATEGIES AND HOLDINGS CAN BE FOUND
IN THE CURRENT ANNUAL/SEMI-ANNUAL REPORTS (SEE BACK COVER FOR INFORMATION ON
ORDERING SUCH REPORTS).

24
<PAGE>

Mitchell Hutchins Global Growth Portfolio
- -------------------------------------------------

PERFORMANCE

RISK/RETURN BAR CHART AND TABLE:

The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.

The bar chart shows how the fund's performance has varied from year to year. The
bar chart shows Class H shares, which were the only class outstanding during the
periods shown.

The table that follows the bar chart shows the average annual returns over
several time periods compared to a broad-based market index.

The fund's past performance does not indicate how the fund will perform in the
future. This may be particularly true for the period prior to November 2, 1998,
which is the date on which Mitchell Hutchins and Invista assumed day-to-day
management of the fund's assets. Prior to that date, another sub-adviser was
responsible for managing all the fund's assets.

GLOBAL GROWTH PORTFOLIO -- TOTAL RETURN ON CLASS H SHARES

The chart below contains the following plot points:

1989 19.18%
1990 7.53%
1991 4.93%
1992 (7.55%)
1993 40.02%
1994 (11.94%)
1995 (3.54%)
1996 15.14%
1997 7.16%
1998 13.50%

Best quarter during years shown: 4th quarter, 1998 - 19.55%
Worst quarter during years shown: 3rd quarter, 1998 - (18.97)%

AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1998

CLASS CLASS H MSCI WORLD
(INCEPTION DATE) 05/04/87 INDEX
---------------- -------- -----
One Year 13.50% 24.80%
Five Years 3.54% 16.19%
Ten Years 7.26% 11.21%
Life of Class 7.06% 10.62%*

* Return is for the period 5/31/87 to 12/31/98, annualized.

25
<PAGE>
Mitchell Hutchins Series Trust
- -------------------------------------

MORE ABOUT RISKS AND INVESTMENT STRATEGIES

PRINCIPAL RISKS

The main risks of investing in the funds are described below. Not all of these
risks apply to each fund. You can find a list of the main risks that apply to a
particular fund by looking under the "Investment Objective, Strategies and
Risks" heading for that fund.

Other risks of investing in a fund, along with further details about some of the
risks described below, are discussed in the funds' Statement of Additional
Information ("SAI"). Information on how you can obtain the SAI is on the back
cover of this prospectus.

CREDIT RISK. Credit risk is the risk that the issuer of a bond will not make
principal or interest payments when they are due. Even if an issuer does not
default on a payment, a bond's value may decline if the market believes that the
issuer has become less able, or less willing, to make payments on time. Even
high quality bonds are subject to some credit risk. However, credit risk is
greater for lower quality bonds. Bonds that are not investment grade involve
high credit risk and are considered speculative. Some of these low quality bonds
may be in default when purchased by a fund. Low quality bonds may fluctuate in
value more than higher quality bonds and may be more difficult to sell during
market downturns at the time and price a fund desires.

DERIVATIVES RISK. The value of "derivatives" - so-called because their value
"derives" from the value of an underlying asset, reference rate or index - may
rise or fall more rapidly than other investments. For some derivatives, it is
possible for a fund to lose more than the amount it invested in the derivative.
Options, futures contracts and forward currency contracts are examples of
derivatives. If a fund uses derivatives to adjust or "hedge" the overall risk of
its portfolio, it is possible that the hedge will not succeed. This may happen
for various reasons, including unexpected changes in the value of the
derivatives that are not matched by opposite changes in the value of the rest of
the fund's portfolio.

EMERGING MARKETS RISK. Securities of issuers located in emerging market
countries are subject to all of the risks of other foreign securities (see
below). However, the level of those risks often is higher due to the fact that
political, legal and economic systems in emerging market countries may be less
fully developed and less stable than those in developed countries. Emerging
market securities also may be subject to additional risks, such as lower
liquidity and larger changes in value.

EQUITY RISK. The prices of common stocks and other equity securities generally
fluctuate more than those of other investments. They reflect changes in the
issuing company's financial condition and changes in the overall market. A fund
may lose a substantial part, or even all, of its investment in a company's
stock.

FOREIGN SECURITIES RISK. Foreign securities involve risks that normally are not
associated with securities of U.S. issuers. These include risks relating to
political, social and economic developments abroad and differences between U.S.
and foreign regulatory requirements and market practices. When securities are
denominated in foreign currencies, they also are subject to the risk that the
value of the foreign currency will fall in relation to the U.S. dollar. Currency
exchange rates can be volatile and can be affected by, among other factors, the
general economics of a country, the actions of the U.S. and foreign governments
or central banks, the imposition of currency controls, and speculation.

INTEREST RATE RISK. The value of bonds can be expected to fall when interest
rates rise and to rise when interest rates fall. Interest rate risk is the risk
that interest rates will rise, so that the value of a fund's investments in
bonds will fall. Because interest rate risk is the primary risk presented by
U.S. government and other very high quality bonds, changes in interest rates may
actually have a greater effect on the value of those bonds than on lower quality
bonds.

LEVERAGE RISK. Leverage involves increasing the total assets in which a fund can
invest beyond the level of its net assets. Because leverage increases the amount
of a fund's assets, it can magnify the effect on the fund of changes in market
values. As a result, while leverage can increase a fund's income and potential
for gain, it also can increase expenses and the risk of loss. Strategic Fixed
Income Portfolio, which uses leverage by investing in when-issued and delayed
delivery bonds, attempts to limit the potential magnifying effect of the
leverage by managing its portfolio duration.

NON-DIVERSIFIED STATUS RISK. A non-diversified fund is not subject to certain
limitations on its ability to invest more than 5% of its total assets in
securities of a single issuer. When a fund holds a large position in the
securities of one issuer, changes in the financial condition or in the market's
assessment of that issuer may cause larger changes in the fund's total return
and in the price of its shares than if the fund held only a smaller position.

PREPAYMENT RISK. Payments on bonds that are backed by mortgage loans or similar
assets may be received earlier or later than expected due to changes in the rate

26
<PAGE>

Mitchell Hutchins Series Trust
- -------------------------------------
at which the underlying loans are prepaid. Faster prepayments often happen when
market interest rates are falling. As a result, a fund may need to reinvest
these early payments at those lower interest rates, thus reducing its income.
Conversely, when interest rates rise, prepayments may happen more slowly,
causing the underlying loans to be outstanding for a longer time. This can cause
the market value of the security to fall because the market may view its
interest rate to be too low for a longer term investment.

SECTOR ALLOCATION RISK. Mitchell Hutchins may not be successful in choosing the
best allocation among market sectors. A fund that allocates its assets among
market sectors is more dependent on Mitchell Hutchins' ability to successfully
assess the relative values in each sector than are funds that do not do so.

The Mitchell Hutchins Tactical Allocation Model may not correctly predict the
times to shift Tactical Allocation Portfolio's assets from one type of
investment to another.

SMALL CAP COMPANIES RISK. Securities of small cap companies generally involve
greater risk than securities of larger companies because small cap companies may
be more vulnerable to adverse business or economic developments. Small cap
companies also may have limited product lines, markets or financial resources,
and may be dependent on a relatively small management group. Securities of small
cap companies may be less liquid and more volatile than securities of larger
companies or the market averages in general. 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.

SOVEREIGN RISK. Investments in foreign government bonds involve special risks
because the investors may have limited legal recourse in the event of default.
Political conditions, especially a country's willingness to meet the terms of
its debt obligations, can be of considerable significance.

ADDITIONAL RISKS

YEAR 2000 RISK. The funds could be adversely affected by problems relating to
the inability of computer systems used by Mitchell Hutchins and the funds' other
service providers to recognize the year 2000. While year 2000-related computer
problems could have a negative effect on the funds, Mitchell Hutchins is working
to avoid these problems with respect to its own computer systems and to obtain
assurances from service providers that they are taking similar steps.

Similarly, the companies in which the funds invest and trading systems used by
the funds could be adversely affected by this issue. The ability of a company or
trading system to respond successfully to the issue requires both technological
sophistication and diligence, and there can be no assurance that any steps taken
will be sufficient to avoid an adverse impact on the funds. This risk may be
greater with respect to trading systems in foreign countries and, in particular,
in emerging market countries.

ADDITIONAL INVESTMENT STRATEGIES

DEFENSIVE POSITIONS; CASH RESERVES. In order to protect itself from adverse
market conditions, a fund may take a defensive position that is different from
its normal investment strategy. This means that the fund may temporarily invest
a larger-than-normal part, or even all, of its assets in cash or money market
instruments. Since these investments provide relatively low income, a defensive
position may not be consistent with achieving a fund's investment objective.

Strategic Income Portfolio, Global Income Portfolio and Balanced Portfolio each
may invest in money market instruments on an unlimited basis as part of its
ordinary investment strategy. Money Market Portfolio invests exclusively in
money market instruments. Each of the other funds may invest up to 35% of its
total assets in cash or money market instruments as a cash reserve for liquidity
or other purposes.

PORTFOLIO TURNOVER. Each fund may engage in frequent trading (high portfolio
turnover) to achieve its investment objective. Frequent trading may result in a
high portfolio turnover rate and higher fund expenses due to transaction costs.

27
<PAGE>
Mitchell Hutchins Series Trust
- -------------------------------------

INVESTING IN THE FUNDS

PURCHASES, REDEMPTIONS AND EXCHANGES

Shares of the funds are sold only to insurance company separate accounts that
fund benefits under variable annuity or variable life insurance contracts. These
separate accounts are the shareholders of the funds - not the individual
contract owners. However, the separate accounts may pass through voting rights
to the contract owners.

The funds offer both Class H and Class I shares to insurance company separate
accounts:

o Class H shares are sold and redeemed at net asset value and do not pay any
12b-1 fees.

o Class I shares also are sold and redeemed at net asset value. However, under
a rule 12b-1 plan adopted by each fund, Class I shares pay an annual
distribution fee of 0.25% of average net assets. The funds pay this fee to
insurance companies for the sale of Class I shares and for services that the
insurance company provides to contract owners. Because these 12b-1 fees are
paid out of a fund's assets on an ongoing basis, over time they will increase
the cost of a contract owner's investment and may cost more than paying other
types of sales charges.

An insurance company separate account may exchange shares of one fund for shares
of the same class in another Mitchell Hutchins Series Trust fund at their
relative net asset values per share, provided that the separate account invests
in both funds. A particular insurance company separate account may not invest in
all Mitchell Hutchins Series Trust funds or classes of fund shares.

The funds and Mitchell Hutchins (for Class I shares) reserve the right to reject
any purchase order and to suspend the offering of a fund's shares for a period
of time.

PRICING AND VALUATION

Insurance company separate accounts buy, sell or exchange fund shares at their
net asset values. Each fund calculates net asset value separately for each class
as of the close of trading on the New York Stock Exchange (generally, 4:00 p.m.,
Eastern time). The NYSE normally is not open, and the funds do not price their
shares, on national holidays and on Good Friday. If trading on the NYSE is
halted for the day before 4:00 p.m., Eastern time, the funds' net asset value
per share will be calculated as of the time trading was halted.

MONEY MARKET PORTFOLIO'S net asset value per share is expected to be $1.00 per
share, although this value is not guaranteed. Money Market Portfolio values its
securities at their amortized cost. This method uses a constant amortization to
maturity of the difference between the cost of the instrument to the fund and
the amount due at maturity.

OTHER FUNDS. Each other fund calculates its net asset value based on the current
market value for its portfolio securities. The funds normally obtain market
values for their securities from independent pricing services that use reported
last sales prices, current market quotations or valuations from computerized
"matrix" systems that derive values based on comparable securities. If a market
value is not available from an independent pricing source for a particular
security, that security is valued at a fair value determined by or under the
direction of the funds' board of trustees. The funds normally use the amortized
cost method to value bonds that will mature in 60 days or less.

Judgment plays a greater role in valuing thinly traded securities, including
many lower-rated bonds, because there is less reliable, objective data
available.

The funds calculate the U.S. dollar value of investments that are denominated in
foreign currencies daily, based on current exchange rates. A fund may own
securities, including some securities that trade primarily in foreign markets,
that trade on weekends or other days on which a fund does not calculate net
asset value. If a fund concludes that a material change in the value of a
foreign security has occurred after the close of trading in the principal
foreign market but before the close of the NYSE, the fund may use fair value
methods to reflect those changes. This policy is intended to assure that the
fund's net asset value fairly reflects security values as of the time of
pricing.

28
<PAGE>

Mitchell Hutchins Series Trust
- -------------------------------------
MANAGEMENT

INVESTMENT ADVISERS

Mitchell Hutchins Asset Management Inc. is the investment adviser and
administrator of each fund. Mitchell Hutchins is located at 1285 Avenue of the
Americas, New York, New York 10019, and is a wholly owned asset management
subsidiary of PaineWebber Incorporated, which is wholly owned by Paine Webber
Group Inc., a publicly owned financial services holding company. On March 31,
1999, Mitchell Hutchins was adviser or sub-adviser to 33 investment companies
with 75 separate funds and aggregate assets of approximately $48.3 billion.

Pacific Investment Management Company is the sub-adviser for Strategic Fixed
Income Portfolio. It is located at 840 Newport Center Drive, Suite 360, Newport
Beach, California 92660. On December 31, 1998, PIMCO had approximately $158
billion in assets under management and was the adviser or sub-adviser of 19
investment companies with 55 portfolios and aggregate net assets of
approximately $39.5 billion.

Nicholas-Applegate Capital Management is the sub-adviser for Aggressive Growth
Portfolio. It is located at 600 West Broadway, 29th Floor, San Diego, California
92101. On March 31, 1999, Nicholas-Applegate had approximately $32.3 billion in
assets under management and was the adviser or sub-adviser of 60 investment
companies with 111 portfolios and aggregate net assets of approximately $5.1
billion.

Invista Capital Management, LLC is the sub-adviser for Global Growth Portfolio's
foreign investments. It is located at 1800 Hub Tower, 699 Walnut, Des Moines,
Iowa 50309. As of December 31, 1998, Invista managed approximately $31.0 billion
in client assets.

The funds have received an exemptive order from the SEC to permit the board to
appoint and replace sub-advisers and to amend sub-advisory contracts without
obtaining shareholder approval. A fund's shareholders must approve this policy
before the board may implement it. As of April 30, 1999, only the shareholders
of Global Growth Portfolio have done so.

ADVISORY FEES

The funds paid advisory fees to Mitchell Hutchins for the most recent fiscal
year at the following annual contract rates based on average daily net assets.

Money Market Portfolio 0.50%
High Grade Fixed Income Portfolio 0.50%
Strategic Fixed Income Portfolio 0.50%
Strategic Income Portfolio 0.75%
Global Income Portfolio 0.75%
High Income Portfolio 0.50%
Balanced Portfolio 0.75%
Growth and Income Portfolio 0.70%
Tactical Allocation Portfolio 0.50%
Growth Portfolio 0.75%
Aggressive Growth Portfolio 0.80%
Small Cap Portfolio 1.00%
Global Growth Portfolio 0.75%

29
<PAGE>
Mitchell Hutchins Series Trust
- -------------------------------------
PORTFOLIO MANAGERS.

Unless otherwise noted, all portfolio managers are employees of Mitchell
Hutchins. Most of these individuals serve as portfolio managers for more than
one fund. Information about their positions with Mitchell Hutchins and their
business experience follows this section. All relevant information about
portfolio managers who are employees of a sub-adviser is provided in this
section.

HIGH GRADE FIXED INCOME PORTFOLIO. Dennis L. McCauley is primarily responsible
for the day-to-day management of the fund's portfolio. Nirmal Singh and James
Keegan assist Mr. McCauley in managing the fund's portfolio. Messrs. McCauley
and Singh have held their management responsibilities for the fund since July
1995. Mr. Keegan assumed his management responsibilities for the fund in April
1996.

STRATEGIC FIXED INCOME PORTFOLIO. William C. Powers, a PIMCO Managing Director,
is primarily responsible for the day-to-day management of the fund's portfolio.
Mr. Powers has been a senior member of the fixed income portfolio management
group of PIMCO since 1991 and assumed his management responsibilities for the
fund in September 1996.

STRATEGIC INCOME PORTFOLIO. Dennis L. McCauley is the fund's allocation manager.
Nirmal Singh and James Keegan share responsibility as sector managers for the
day-to-day management of the fund's U.S. government and investment grade
securities. Thomas J. Libassi is the sector manager responsible for the
day-to-day management of the fund's U.S. high yield, high risk securities.
Stuart Waugh is the sector manager responsible for the day-to-day management of
the fund's foreign and emerging market bonds.

Messrs. McCauley, Singh, Keegan, Libassi and Waugh have held their day-to-day
management responsibilities for the fund since its inception.

GLOBAL INCOME PORTFOLIO. Stuart Waugh and William King are primarily responsible
for the day-to-day management of the fund's portfolio. Mr. Waugh has been
involved with the fund since its inception, first as an analyst and as portfolio
manager since 1993. Mr. King assumed his present management responsibilities for
the fund in 1997.

HIGH INCOME PORTFOLIO. Thomas J. Libassi is responsible for the day-to-day
management of the fund's portfolio. Mr. Libassi has held his management
responsibilities for the fund since its inception.

BALANCED PORTFOLIO. T. Kirkham Barneby is responsible for the asset allocation
decisions for the fund. Mark A. Tincher is primarily responsible for the
day-to-day management of the fund's equity portion. Dennis L. McCauley is
primarily responsible for the day-to-day management of the fund's fixed income
portion. Mr. Singh and Susan Ryan assist Mr. McCauley in managing the fund's
fixed income investments.

Messrs. Barneby, McCauley, Singh and Tincher and Ms. Ryan have held their
management responsibilities for the fund since August 1995.

GROWTH AND INCOME PORTFOLIO. Mark A. Tincher is primarily responsible for the
day-to-day management of the fund. Mr. Tincher has held his management
responsibilities for the fund since April 1995.

TACTICAL ALLOCATION PORTFOLIO. T. Kirkham Barneby is responsible for the fund's
asset allocation decisions and the day-to-day management of its portfolio. Mr.
Barneby has held his management responsibilities for the fund since its
inception.

GROWTH PORTFOLIO. Ellen R. Harris has been primarily responsible for the
day-to-day management of the fund's portfolio since its inception.

AGGRESSIVE GROWTH PORTFOLIO. The Systems Driven Internal Research team at
Nicholas-Applegate, which is primarily responsible for the day-to-day management
of Aggressive Growth Portfolio, has been under the supervision of portfolio
manager John Kane for the past five years. Mr. Kane has been the lead portfolio
manager for the team since he joined the firm in 1994. The team has held its
management responsibilities for the fund since its inception.

SMALL CAP PORTFOLIO. Donald R. Jones is primarily responsible for the day-to-day
management of the fund. He has held his management responsibilities for the fund
since its inception.

GLOBAL GROWTH PORTFOLIO. T. Kirkham Barneby is responsible for allocating the
fund's assets between U.S. investments and foreign investments. Mark A. Tincher
is primarily responsible for the day-to-day management of the fund's U.S.
investments.

Scott D. Opsal is primarily responsible for the day-to-day management of Global
Growth Portfolio's foreign investments. Mr. Opsal is an executive vice president
and chief investment officer of Invista, where he has been employed since 1986.

Messrs. Barneby, Tincher and Opsal assumed their management responsibilities for
the fund on November 2, 1998.

30
<PAGE>
Mitchell Hutchins Series Trust
- -------------------------------------
* * *

Ms. Ryan is responsible for the day-to-day management of Money Market Portfolio
and management of the cash portion of all the other funds except Aggressive
Growth, Strategic Fixed Income and Global Growth Portfolios. She has held her
Money Market Portfolio responsibilities since its inception.

Other members of Mitchell Hutchins' fixed income and equity investments groups
provide input on market outlook, interest rate forecasts, investment research
and other considerations pertaining to each fund's investments.

POSITIONS WITH MITCHELL HUTCHINS AND BUSINESS EXPERIENCE OF MITCHELL HUTCHINS
EMPLOYEES.

T. KIRKHAM BARNEBY is a managing director and chief investment officer -
quantitative investments of Mitchell Hutchins. He rejoined Mitchell Hutchins in
1994, after being with Vantage Global Management for one year. During the eight
years that Mr. Barneby was previously with Mitchell Hutchins, he was a senior
vice president responsible for quantitative management and asset allocation
models.

ELLEN R. HARRIS is a managing director of Mitchell Hutchins and has been with
Mitchell Hutchins since 1983.

DONALD R. JONES has been a first vice president of Mitchell Hutchins since
February 1996. Prior to joining Mitchell Hutchins, he was a vice president in
the Asset Management Group of First Fidelity Bancorporation, which he joined in
1983.

JAMES F. KEEGAN is a senior vice president of Mitchell Hutchins. Prior to
joining Mitchell Hutchins in March 1996, Mr. Keegan was a director with Merrion
Group, L.P. From 1987 to 1994, he was a vice president of global investment
management of Bankers Trust Company.

WILLIAM KING joined Mitchell Hutchins in November 1995. Prior to 1995, he was at
IBM Corporation, where he was responsible for the management of IBM Pension
Fund's global bond portfolio. Mr. King is a Chartered Financial Analyst.

THOMAS J. LIBASSI is a senior vice president of Mitchell Hutchins. Prior to May
1994, Mr. Libassi was a vice president of Keystone Custodian Funds Inc. with
fund management responsibility for approximately $900 million in assets
primarily invested in high yield, high risk bonds.

DENNIS L. MCCAULEY is a managing director and chief investment officer - fixed
income of Mitchell Hutchins responsible for overseeing all active fixed income
investments, including domestic and global taxable and tax-exempt mutual funds.
Prior to joining Mitchell Hutchins in 1994, Mr. McCauley worked for IBM
Corporation, where he was director of fixed income investments. He was
responsible for developing and managing investment strategy for all fixed income
and cash management investments of IBM's pension fund and self-insured medical
funds. Mr. McCauley also served as vice president of IBM Credit Corporation's
mutual funds and as a member of the Retirement Fund Investment Committee.

SUSAN RYAN is a senior vice president of Mitchell Hutchins and has been with
Mitchell Hutchins since 1982.

NIRMAL SINGH is a senior vice president of Mitchell Hutchins. Prior to joining
Mitchell Hutchins in 1993, Mr. Singh was with Merrill Lynch Asset Management,
Inc., where he was a member of the fund management team.

MARK A. TINCHER is a managing director and chief investment officer of equities
(stocks) of Mitchell Hutchins. Prior to joining Mitchell Hutchins in March 1995,
Mr. Tincher worked for Chase Manhattan Private Bank, where he was vice
president. He directed the U.S. funds management and equity research area and
oversaw the management of all Chase equity funds.

STUART WAUGH is a managing director of Mitchell Hutchins responsible for global
fixed income investments and currency trading. He has been with Mitchell
Hutchins since 1983.
Mr. Waugh is a Chartered Financial Analyst.

31
<PAGE>

Mitchell Hutchins Series Trust
- -------------------------------------

DIVIDENDS AND TAXES

DIVIDENDS

Dividends are paid in additional shares of the relevant fund unless the
shareholder requests otherwise.

Money Market Portfolio declares dividends daily and pays them monthly; it does
not expect to realize gains. The other funds normally declare and pay dividends
and distribute any gains annually.

Class I shares have higher expenses because of their distribution fees and thus
are expected to have lower dividends than Class H shares.

TAXES

Fund shares are offered only to insurance company separate accounts that fund
certain variable annuity or variable life contracts. These accounts generally
are not subject to tax on dividends from the funds or when fund shares are
exchanged or redeemed. See the applicable contract prospectus for a discussion
of the federal income tax status of

o the insurance company separate accounts that purchase and hold shares of
the funds and

o the holders of contracts funded through those separate accounts.

Each fund must satisfy certain diversification requirements imposed by the
Internal Revenue Code on segregated assets accounts used to fund variable
annuity or variable life contracts. Failure of a fund to do so would result in
taxation of the insurance company issuing the variable annuity or variable life
contracts and treatment of the contract holders other than as described in the
contract prospectus.

See the SAI for a a more detailed discussion. Prospective shareholders are urged
to consult their tax advisers.

32
<PAGE>

Mitchell Hutchins Series Trust
- -------------------------------------

FINANCIAL HIGHLIGHTS

The following financial highlights tables are intended to help you understand
the funds' financial performance for the past 5 years. Shorter periods are shown
for funds that have existed for less than 5 years. Certain information reflects
financial results for a single fund share. In the tables, "total investment
return" represents the rate that an investor would have earned (or lost) on an
investment in a fund, assuming reinvestment of all dividends. This information
has been audited by Ernst & Young LLP, independent auditors, whose report, along
with the funds' financial statements, are included in the funds' Annual Report
to Shareholders. The Annual Report may be obtained without charge by calling
1-800-986-0088.

Please note that no Class I shares were outstanding during the periods shown.
The information shown below for Class H shares should not be considered
indicative of the results the Class I shares would have achieved had they been
outstanding during these periods because Class I shares have higher expenses.

The information in these tables pertains only to the funds and does not reflect
charges related to the insurance company separate accounts that invest in the
funds. See the appropriate variable annuity contract or variable life contract
prospectus for information concerning these charges.

33
<PAGE>

Mitchell Hutchins Money Market Portfolio
- -------------------------------------------------

<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
- ----------------------------------------------------------------------------------------------------
CLASS H
--------------------------------------------------------

FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---- ---- ---- ---- ----
Net investment income............... 0.04 0.04 0.04 0.05 0.03
---- ---- ---- ---- ----
Dividends from net investment
income............................ (0.04) (0.04) (0.04) (0.05) (0.03)
------ ------ ------ ------ ------
Net asset value, end of year........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
===== ==== ==== ==== ====
Total investment return(1).......... 4.51% 4.53% 4.32% 5.22% 3.43%
===== ==== ==== ==== ====
Ratios/Supplemental data:
Net assets, end of year (000's)..... $ 9,582 $ 8,906 $ 12,287 $ 21,974 $ 25,042

Expenses to average net assets...... 1.15% 1.22% 1.17% 0.79% 0.88%
Net investment income to
average net assets................ 4.42% 4.43% 4.27% 5.23% 3.56%
- -------------------
</TABLE>

(1)Total investment return is calculated assuming a $1,000 investment on the
first day of each year 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 year reported. The figures do not include additional contract level
charges; results would be lower if such charges were included.

34
<PAGE>

Mitchell Hutchins High Grade Fixed Income Portfolio
- -------------------------------------------------

<TABLE>
<CAPTION>
HIGH GRADE FIXED INCOME PORTFOLIO
- -----------------------------------------------------------------------------------------
CLASS H
----------------------------------------------------

FOR THE YEARS ENDED
DECEMBER 31,
----------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year. $ 9.29 $ 9.10 $ 9.49 $ 8.71 $ 9.61
---- ---- ---- ---- ----
Net investment income............ 0.56 0.55 0.50 0.56 0.26
Net realized and unrealized gains
(losses) from investments...... 0.07 0.19 (0.63) 0.79 (0.89)
----- ---- ------ ---- ------
Net increase (decrease) from
investment operations.......... 0.63 0.74 0.13 1.35 (0.63)
----- ---- ---- ---- ------
Dividends from net investment
income......................... (0.56) (0.55) (0.52) (0.57) (0.27)
Distributions from net realized
gains on investments........... (0.19) -- -- -- --
------
Total dividends and distributions.. (0.75) (0.55) (0.52) (0.57) (0.27)
------ ------ ------ ------ ------
Net asset value, end of year..... $ 9.17 $ 9.29 $ 9.10 $ 9.49 $ 8.71
==== ==== ==== ==== ====
Total investment return(1)....... 6.83% 8.13% 1.41% 15.44% (6.56)%
==== ==== ==== ===== ======
Ratios/Supplemental data:
Net assets, end of year (000's).. $6,770 $7,345 $7,902 $9,147 $7,638
Expenses to average net assets... 1.27% 1.43% 1.62% 1.01% 1.56%
Net investment income to
average net assets............. 5.39% 5.54% 5.04% 5.56% 4.61%
Portfolio turnover rate.......... 101% 95% 282% 136% 36%
- ---------------------------
</TABLE>

(1)Total investment return is calculated assuming a $1,000 investment on the
first day of each year reported, reinvestment of all dividends and other
distributions, if any, at net asset value on the payable dates and a sale at
net asset value on the last day of each year reported. The figures do not
include additional contract level charges; results would be lower if such
charges were included.

35
<PAGE>

Mitchell Hutchins Strategic Fixed Income Portfolio
- -------------------------------------------------

<TABLE>
<CAPTION>
STRATEGIC FIXED INCOME PORTFOLIO
- ----------------------------------------------------------------------------------------------
CLASS H
---------------------------------------------------------

FOR THE YEARS ENDED
DECEMBER 31,
---------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year. $ 10.64 $ 10.21 $ 10.61 $ 10.34 $ 11.93
------ ----- ----- ----- -----
Net investment income.............. 0.70 0.69 0.70 0.88 0.85
Net realized and unrealized gains
(losses) from investments, 0.21 0.44 (0.31) 1.03 (1.49)
futures and options.............. ----- ---- ------ ---- ------

Net increase (decrease) from
investment operations............ 0.91 1.13 0.39 1.91 (0.64)
----- ---- ---- ---- ------
Dividends from net investment
income........................... (0.68) (0.70) (0.70) (0.88) (0.85)
Distributions from net realized
gains from investments........... (0.09) -- (0.09) (0.76) (0.10)
------ ----- ------ ------ ------
Total dividends and distributions.. (0.77) (0.70) (0.79) (1.64) (0.95)
------- ------ ------ ------ ------
Net asset value, end of year....... $ 10.78 $ 10.64 $ 10.21 $ 10.61 $ 10.34
====== ===== ===== ===== =====
Total investment return(1)......... 8.62% 11.00% 3.79% 18.51% (5.34)%
==== ===== ==== ===== =====
Ratios/Supplemental data:
Net assets, end of year (000's).... $ 9,469 $ 9,891 $ 10,689 $ 13,741 $ 17,020

Expenses to average net assets..... 1.10%+ 1.00% 1.52% 0.99% 0.89%
Net investment income to
average net assets............... 5.88% 6.04% 5.88% 6.35% 6.64%
Portfolio turnover rate............ 245% 175% 317% 234% 54%
- -------------------
</TABLE>

+ Includes 0.14% of interest expense related to the reverse repurchase
agreements entered into during the year ended December 31, 1998.

36
<PAGE>

Mitchell Hutchins Strategic Income Portfolio
- -------------------------------------------------

<TABLE>
<CAPTION>
STRATEGIC INCOME PORTFOLIO
- --------------------------------------------------------------------------------------------------
CLASS H
-------------------
FOR THE PERIOD
SEPTEMBER 28,
1998+ THROUGH
DECEMBER 31, 1998
-----------------
<S> <C>
Net asset value, beginning of period....................................... $ 12.00
-------
Net investment income...................................................... 0.14
Net realized and unrealized gains (losses) from investments and foreign
currency.......................... 0.20
-----
Net increase from investment operations.................................... 0.34
-----
Dividends from net investment income....................................... (0.14)
Distributions from net realized gains from investments..................... (0.01)
-------
Total dividends and distributions.......................................... (0.15)
-------
Net asset value, end of period............................................. $ 12.19
======
Total investment return(1)................................................. 2.84%
=====
Ratios/Supplemental data:
Net assets, end of period (000's).......................................... $ 10,328
Expenses to average net assets............................................. 1.44%*
Net investment income to average net assets................................ 5.09%*
Portfolio turnover rate.................................................... 81%
- -------------------
</TABLE>

+ Commencement of operations

* Annualized

(1)Total investment return is calculated assuming a $1,000 investment on the
first day of the period reported, reinvestment of all dividends and other
distributions, if any, at net asset value on the payable dates and a sale at
net asset value on the last day of the period reported. The figures do not
include additional contract level charges; results would be lower if such
charges were included. Total investment return for the period has not been
annualized.

37
<PAGE>

Mitchell Hutchins Global Income Portfolio
- -------------------------------------------------

GLOBAL INCOME PORTFOLIO
- -----------------------------------------------------------------------------------------
CLASS H
-----------------------------------------------------------
FOR THE YEARS ENDED
DECEMBER 31,
-----------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year................... $ 10.81 $ 11.14 $ 11.20 $ 10.88 $ 11.72
----- ----- ----- ----- -----
Net investment income (loss) 0.69 0.75 0.87 (0.05) 0.97
Net realized and unrealized
gains (losses) from
investments and foreign 0.36 (0.36) (0.13) 1.52 (1.60)
currency.................. ----- ------ ------ ---- ------

Net increase (decrease) from
investment operations..... 1.05 0.39 0.74 1.47 (0.63)
----- ---- ---- ---- ------
Dividends from net
investment
income.................... (0.61) (0.71) (0.79) (1.15) (0.21)
Distributions from net
realized (0.18) (0.01) (0.01) -- --
gains from investments.... ------ ------ ------ ----- ---

Total dividends and
distributions............. (0.79) (0.72) (0.80) (1.15) (0.21)
------- ------ ------ ------ ------
Net asset value, end of year $ 11.07 $ 10.81 $ 11.14 $ 11.20 $ 10.88
===== ===== ===== ===== =====
Total investment return(1).. 9.69% 3.50% 6.62% 13.58% (5.56)%
==== ==== ==== ===== =====
Ratios/Supplemental data:
Net assets, end of year
(000's)..................... $ 14,702 $ 17,730 $ 24,436 $ 35,700 $ 52,688
Expenses to average net
assets.................... 1.68% 1.52% 1.56% 1.19% 1.17%
Net investment income to
average net assets........ 5.53% 6.34% 6.56% 7.21% 7.23%
Portfolio turnover rate..... 104% 142% 134% 160% 97%
- -------------------
</TABLE>

38
<PAGE>

Mitchell Hutchins High Income Portfolio
- -------------------------------------------------

HIGH INCOME PORTFOLIO
- --------------------------------------------------------------------------------

CLASS H
---------------
FOR THE PERIOD
SEPTEMBER 28,
1998+ THROUGH
DECEMBER 31,
1998
----
Net asset value, beginning of period........................... $ 12.00
-------
Net investment income.......................................... 0.20
Net realized and unrealized gain from investments.............. 0.42
-----
Net increase from investment operations........................ 0.62
----
Dividends from net investment income........................... (0.20)
Distributions from net realized gains from investments......... (0.02)
-------
Total dividends and distributions.............................. (0.22)
-------
Net asset value, end of period................................. $ 12.40
======
Total investment return(1)..................................... 5.16%
=======
Ratios/Supplemental data:
Net assets, end of period (000's).............................. $ 10,933
Expenses to average net assets................................. 1.20%*
Net investment income to average net assets.................... 7.04%*
Portfolio turnover rate........................................ 21%
- -------------------

+ Commencement of operations

* Annualized

39
<PAGE>

Mitchell Hutchins Balanced Portfolio
- -------------------------------------------------

<TABLE>
<CAPTION>
BALANCED PORTFOLIO*
- -----------------------------------------------------------------------------------------
CLASS H
-----------------------------------------------------------
FOR THE YEARS ENDED
DECEMBER 31,
-----------------------------------------------------------
1998 1997 1996* 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year................... $11.33 $ 10.95 $ 10.70 $ 9.54 $ 11.95
----- ----- ----- ---- -----
Net investment income....... 0.28 0.28 0.29 0.35 0.30
Net realized and unrealized
gains (losses) from 1.61 2.44 1.49 1.88 (1.44)
investments............... ----- ---- ---- ---- ------

Net increase (decrease) from
investment operations..... 1.89 2.72 1.78 2.23 (1.14)
----- ---- ---- ---- ------
Dividends from net
investment income......... (0.27) (0.28) (0.28) (0.35) (0.30)

Distributions from net
realized (1.41) (2.06) (1.25) (0.72) (0.97)
gains on investments...... ------- ------ ------ ------ ------

Total dividends and (1.68) (2.34) (1.53) (1.07) (1.27)
distributions............. ------- ------ ------ ------ ------

Net asset value, end of year $ 11.54 $ 11.33 $ 10.95 $ 10.70 $ 9.54
====== ===== ===== ===== ====
Total investment return(1).. 16.81% 24.86% 16.82% 23.27% (9.59)%
===== ===== ===== ===== =====
Ratios/Supplemental data:
Net assets, end of year
(000's)..................... $ 28,549 $ 28,211 $ 29,224 $ 23,413 $ 23,263
Expenses to average net
assets.................... 0.97% 1.19% 1.24% 1.09% 1.03%
Net investment income to
average net assets........ 2.08% 2.06% 2.29% 2.88% 2.30%
Portfolio turnover rate..... 177% 169% 235% 171% 112%
- -------------------
</TABLE>

* Prior to the close of business on January 26, 1996, Balanced Portfolio was
known as Asset Allocation Portfolio.

(1)Total investment return is calculated assuming a $1,000 investment on the
first day of each year reported, reinvestment of all dividends and other
distributions at net asset value on the payable dates and a sale at net asset
value on the last day of each year reported. The figures do not include
additional contract level charges; results would be lower if such charges
were included.

40
<PAGE>

Mitchell Hutchins Growth and Income Portfolio
- -------------------------------------------------

<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO
- ---------------------------------------------------------------------------------------------
CLASS H
--------------------------------------------------------
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year. $ 13.69 $ 12.27 $ 11.83 $ 9.16 $ 9.87
------- ------- ------- ------ ------
Net investment income ............. 0.07 0.10 0.06 0.10 0.10
Net realized and unrealized gains
(losses) from investments........ 2.16 3.88 2.53 2.70 (0.71)
----- ---- ---- ---- ------
Net increase (decrease) from
investment operations............ 2.23 3.98 2.59 2.80 (0.61)
----- ---- ---- ---- ------
Dividends from net investment
income........................... (0.07) (0.10) (0.06) (0.10) (0.10)
Distributions from net realized
gains from investments........... (1.04) (2.46) (2.09) (0.03) --
------- ------ ------ ------ ---
Total dividends and distributions.. (1.11) (2.56) (2.15) (0.13) (0.10)
------- ------ ------ ------ ------
Net asset value, end of year....... $ 14.81 $ 13.69 $ 12.27 $ 11.83 $ 9.16
===== ===== ===== ===== ====
Total investment return(1)......... 16.32% 32.45% 22.12% 30.52% (6.18)%
===== ===== ===== ===== =====
Ratios/Supplemental data:
Net assets, end of year (000's).... $ 24,497 $ 18,493 $14,520 $14,797 $12,872
Expenses to average net assets..... 1.04% 1.04% 1.58% 1.37% 1.35%
Net investment income to
average net assets............... 0.46% 0.71% 0.49% 0.94% 1.06%
Portfolio turnover rate............ 69% 92% 99% 134% 150%
- -------------------
</TABLE>

(1)Total investment return is calculated assuming a $1,000 investment on the
first day of each year 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 year reported. The figures do not
include additional contract level charges; results would be lower if such
charges were included.

41
<PAGE>

Mitchell Hutchins Tactical Allocation Portfolio
- -------------------------------------------------

TACTICAL ALLOCATION PORTFOLIO
- --------------------------------------------------------------------------------

CLASS H
---------------
FOR THE PERIOD
SEPTEMBER 28,
1998+ THROUGH
DECEMBER 31,
1998
Net asset value, beginning of period........................... $ 12.00
-------
Net investment income.......................................... 0.02
Net realized and unrealized gains from investments............. 2.99
----
Net increase from investment operations........................ 3.01
-----
Dividends from net investment income........................... (0.02)
Distributions from net realized gains from investments......... (0.08)
-------
Total dividends and distributions.............................. (0.10)
-------
Net asset value, end of period................................. $ 14.91
======
Total investment return(1)..................................... 24.98%
======
Ratios/Supplemental data:
Net assets, end of period (000's).............................. $ 22,494
Expenses to average net assets................................. 0.95%*
Net investment income to average net assets.................... 0.77%*
Portfolio turnover rate........................................ 6%
- -------------------

+ Commencement of operations

* Annualized

(1)Total investment return is calculated assuming a $1,000 investment on the
first day of the 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 the period reported. The figures do not
include additional contract level charges; results would be lower if such
charges were included. Total investment return for the period has not been
annualized.

42
<PAGE>

Mitchell Hutchins Growth Portfolio
- -------------------------------------------------

<TABLE>
<CAPTION>
GROWTH PORTFOLIO
- -------------------------------------------------------------------------------------------
CLASS H
------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year...................... $ 15.63 $ 17.48 $ 17.57 $ 14.56 $ 18.06
------- ------- ------- ------- -------
Net investment income (loss). (0.07) 0.03 (0.06) 0.04 0.01
Net realized and unrealized
gains (losses) from
investments.. 4.79 2.69 3.29 4.68 (2.13)
----- ---- ---- ---- ------
Net increase (decrease) from
investment operations...... 4.72 2.72 3.23 4.72 (2.12)
----- ---- ---- ---- ------
Dividends from net investment
income..................... -- (0.03) -- (0.08) (0.01)
Distributions from net
realized gains from
investments................ (2.32) (4.54) (3.32) (1.63) (1.37)
------- ------ ------ ------ ------
Total dividends and
distributions................ (2.32) (4.57) (3.32) (1.71) (1.38)
------- ------ ------ ------ ------
Net asset value, end of year. $ 18.03 $15.63 $17.48 $17.57 $14.56
====== ====== ====== ====== ======
Total investment return(1)... 30.59% 15.41% 18.70% 32.50% (11.65)%
===== ===== ===== ===== =======
Ratios/Supplemental data:
Net assets, end of year
(000's)...................... $36,830 $30,586 $36,357 42,784 39,135
Expenses to average net
assets..................... 1.05% 1.05% 1.14% 1.02% 1.00%
Net investment income (loss)
to average net assets...... (0.37)% 0.12% (0.29)% 0.23% 0.04%
Portfolio turnover rate...... 50% 89% 53% 41% 27%
- -------------------
</TABLE>

43
<PAGE>

Mitchell Hutchins Aggressive Growth Portfolio
- -------------------------------------------------

<TABLE>
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO
- -----------------------------------------------------------------------------------------------
CLASS H
-------------------------------------------------------
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.. $ 13.40 $13.09 $11.34 $9.65 $9.95
------ ------ ------ ----- -----
Net investment income (loss)........ (0.12) (0.09) (0.10) 0.03 0.01
Net realized and unrealized gains
(losses) from investments......... 2.15 2.78 2.93 2.00 (0.30)
----- ---- ---- ---- ------
Net increase (decrease) from
investment operations............. 2.03 2.69 2.83 2.03 (0.29)
----- ---- ---- ---- ------
Dividends from net investment income -- -- -- (0.02) (0.01)
Distributions from net realized gains
from investments.................. (1.79) (2.38) (1.08) (0.32) --
------- ------ ------ ------ --
Total dividends and distributions... (1.79) (2.38) (1.08) (0.34) (0.01)
------- ------ ------ ------ ------
Net asset value, end of year........ $ 13.64 $13.40 $13.09 $11.34 $9.65
====== ====== ====== ====== =====
Total investment return(1).......... 15.30% 20.76% 25.23% 21.04% (2.90)%
===== ===== ===== ===== =====
Ratios/Supplemental data:
Net assets, end of year (000's)..... $18,715 $19,076 $19,167 $17,660 $13,600
Expenses to average net assets...... 1.21% 1.18% 1.52% 1.29% 1.59%
Net investment income (loss) to
average net assets................ (0.70)% (0.59)% (0.74)% 0.23% 0.07%
Portfolio turnover rate............. 73% 89% 115% 119% 90%
- -------------------
</TABLE>

44
<PAGE>

Mitchell Hutchins Small Cap Portfolio
- -------------------------------------------------

SMALL CAP PORTFOLIO
- --------------------------------------------------------------------------------

CLASS H
---------------
FOR THE PERIOD
SEPTEMBER 28,
1998+ THROUGH
DECEMBER 31,
1998
----
Net asset value, beginning of period........................... $ 12.00
-------
Net investment loss............................................ (0.04)
Net realized and unrealized gains from investments............. 3.67
----
Net increase from investment operations........................ 3.63
-----
Distributions from net realized gains from investments......... (0.73)
-------
Net asset value, end of period................................. $ 14.90
======
Total investment return(1)..................................... 30.36%
======
Ratios/Supplemental data:
Net assets, end of period (000's).............................. $ 4,057
Expenses to average net assets................................. 1.94%*
Net investment loss to average net assets...................... (1.27)%*
Portfolio turnover rate........................................ 17%
- -------------------

+ Commencement of operations

* Annualized

45
<PAGE>

Mitchell Hutchins Global Growth Portfolio
- -------------------------------------------------

<TABLE>
<CAPTION>
GLOBAL GROWTH PORTFOLIO
- ---------------------------------------------------------------------------------------------------------
CLASS H
---------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.. $ 14.62 $13.74 $12.00 $12.44 $14.97
------ ------ ------ ------ ------
Net investment income (loss)........ 0.08 0.04 0.07 0.01 (0.03)
Net realized and unrealized gains
(losses) from investments and foreign
currency.......................... 1.92 0.94 1.75 (0.45) (1.76)
----- ---- ---- ------ ------
Net increase (decrease) from investment
operations........................ 2.00 0.98 1.82 (0.44) (1.79)
----- ---- ---- ------ ------
Dividends from net investment income. -- (0.04) (0.08) -- (0.01)

Distributions from net realized gains
from investments.................. (2.88) (0.06) -- -- (0.73)
------- ------ ----- ----- ------
Total dividends and distributions... (2.88) (0.10) (0.08) 0.00 (0.74)
------- ------ ------ ---- ------
Net asset value, end of year........ $ 13.74 $14.62 $13.74 $12.00 $12.44
====== ====== ====== ====== ======
Total investment return (1)......... 13.50% 7.16% 15.14% (3.54)% (11.94)%
===== ==== ===== ====== =======
Ratios/Supplemental data:
Net assets, end of year (000's)..... $15,799 $21,215 $25,701 $28,507 $40,493

Expenses to average net assets...... 1.33% 1.07% 1.10% 1.96% 1.48%
Net investment income (loss) to average
net assets........................ 0.46% 0.26% 0.46% 0.10% (0.13)%
Portfolio turnover rate............. 154% 81% 44% 157% 175%
- -------------------
</TABLE>

46
<PAGE>

If you want more information about the funds, the following documents are
available free upon request:

ANNUAL/SEMI-ANNUAL REPORTS:

Additional information about the funds' investments is available in the
funds' annual and semi-annual reports to shareholders. In the funds'
annual reports, you will find a discussion of the market conditions and
investment strategies that significantly affected the funds' performance
during the last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI) AND CONTRACT PROSPECTUS:

The SAI provides more detailed information about the funds and is
incorporated by reference into this prospectus. Investors are advised to
also read the applicable contract prospectus.

You may discuss your questions about the funds, obtain free copies of annual and
semi-annual reports and the SAI, or request other information, by contacting the
funds directly at 1-800-986-0088.

You may review and copy information about the funds, including annual and
semi-annual reports and the SAI, at the Public Reference Room of the Securities
and Exchange Commission. You can get text-only copies of reports and other
information about the funds:

o For a fee, by writing to or calling the SEC's Public Reference Room,
Washington, D.C. 20549-6009
Telephone: 1-800-SEC-0330

o Free, from the SEC's Internet website at: http://www.sec.gov

Mitchell Hutchins Series Trust
Investment Company Act File No. - 811-4919