<PAGE>
MITCHELL HUTCHINS SERIES TRUST--GLOBAL EQUITY PORTFOLIO ANNUAL REPORT
PERFORMANCE AT A GLANCE
- --------------------------------------------------------------------------------
Comparison of the change of a $10,000 investment in Mitchell Hutchins Series
Trust--Global Equity Portfolio (Class H) and the Morgan Stanley Capital
International (MSCI) World Index, for the ten-year period from December 31, 1989
through December 31, 1999
[GRAPH]
<TABLE>
<CAPTION>
Global Equity
Portfolio (H) MSCI World
------------ ----------
<S> <C> <C>
Dec-89 $10,000 $10,000
Jan-90 $10,000 $9,531
Feb-90 $9,851 $9,119
Mar-90 $9,983 $8,566
Apr-90 $9,904 $8,440
May-90 $10,621 $9,326
Jun-90 $11,032 $9,257
Jul-90 $11,417 $9,338
Aug-90 $10,910 $8,462
Sep-90 $10,455 $7,566
Oct-90 $10,866 $8,270
Nov-90 $10,744 $8,131
Dec-90 $10,756 $8,299
Jan-91 $10,838 $8,599
Feb-91 $11,122 $9,392
Mar-91 $10,920 $9,112
Apr-91 $10,939 $9,180
May-91 $11,039 $9,386
Jun-91 $10,728 $8,804
Jul-91 $10,930 $9,217
Aug-91 $10,802 $9,185
Sep-91 $11,076 $9,422
Oct-91 $11,241 $9,572
Nov-91 $10,811 $9,152
Dec-91 $11,292 $9,816
Jan-92 $11,376 $9,631
Feb-92 $11,469 $9,462
Mar-92 $10,805 $9,013
Apr-92 $10,786 $9,136
May-92 $11,366 $9,497
Jun-92 $11,029 $9,176
Jul-92 $10,608 $9,196
Aug-92 $10,524 $9,416
Sep-92 $10,318 $9,327
Oct-92 $10,149 $9,071
Nov-92 $10,299 $9,231
Dec-92 $10,443 $9,303
Jan-93 $10,386 $9,331
Feb-93 $10,509 $9,549
Mar-93 $10,951 $10,100
Apr-93 $11,200 $10,566
May-93 $11,586 $10,807
Jun-93 $11,567 $10,714
Jul-93 $12,084 $10,931
Aug-93 $12,800 $11,430
Sep-93 $12,433 $11,216
Oct-93 $13,496 $11,522
Nov-93 $13,506 $10,868
Dec-93 $14,623 $11,397
Jan-94 $15,014 $12,146
Feb-94 $14,398 $11,986
Mar-94 $13,246 $11,467
Apr-94 $12,890 $11,819
May-94 $12,900 $11,846
Jun-94 $12,128 $11,810
Jul-94 $12,616 $12,032
Aug-94 $13,896 $12,392
Sep-94 $13,818 $12,064
Oct-94 $13,945 $12,404
Nov-94 $12,958 $11,863
Dec-94 $12,883 $11,975
Jan-95 $11,961 $11,791
Feb-95 $11,754 $11,960
Mar-95 $11,826 $12,534
Apr-95 $11,826 $12,968
May-95 $11,847 $13,075
Jun-95 $12,179 $13,069
Jul-95 $12,738 $13,720
Aug-95 $12,313 $13,411
Sep-95 $12,469 $13,799
Oct-95 $12,065 $13,578
Nov-95 $12,168 $14,046
Dec-95 $12,427 $14,454
Jan-96 $12,655 $14,712
Feb-96 $12,759 $14,799
Mar-96 $13,069 $15,042
Apr-96 $13,504 $15,392
May-96 $13,515 $15,403
Jun-96 $13,556 $15,479
Jul-96 $12,872 $14,929
Aug-96 $13,214 $15,098
Sep-96 $13,763 $15,685
Oct-96 $13,722 $15,792
Nov-96 $14,333 $16,673
Dec-96 $14,308 $16,403
Jan-97 $14,392 $16,598
Feb-97 $14,465 $16,786
Mar-97 $14,288 $16,450
Apr-97 $14,308 $16,984
May-97 $15,246 $18,029
Jun-97 $16,048 $18,925
Jul-97 $16,724 $19,794
Aug-97 $15,600 $18,466
Sep-97 $16,412 $19,466
Oct-97 $15,037 $18,439
Nov-97 $15,089 $18,761
Dec-97 $15,333 $18,986
Jan-98 $15,553 $19,512
Feb-98 $16,780 $20,829
Mar-98 $17,829 $21,706
Apr-98 $18,343 $21,915
May-98 $18,311 $21,636
Jun-98 $17,965 $22,147
Jul-98 $18,039 $22,107
Aug-98 $14,882 $19,156
Sep-98 $14,557 $19,491
Oct-98 $15,731 $21,249
Nov-98 $16,518 $22,509
Dec-98 $17,402 $23,605
Jan-99 $17,630 $24,120
Feb-99 $17,212 $23,476
Mar-99 $17,440 $24,450
Apr-99 $18,112 $25,411
May-99 $17,542 $24,479
Jun-99 $18,150 $25,617
Jul-99 $18,390 $25,537
Aug-99 $18,150 $25,489
Sep-99 $17,742 $25,239
Oct-99 $18,251 $26,546
Nov-99 $19,027 $27,290
Dec-99 $20,617 $29,495
</TABLE>
- --------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN (%), PERIODS ENDED 12/31/99
- --------------------------------------------------------
<TABLE>
<CAPTION>
6 Months 1 Year 5 Years 10 Years Inception*
<S> <C> <C> <C> <C> <C>
Class H 13.59 18.47 9.86 7.50 7.92
Class I N/A N/A N/A N/A 12.74
MSCI World Index 15.32 25.34 20.25 11.96 12.55
</TABLE>
* Inception: since commencement of issuance on May 4, 1989 for Class H shares
and August 5, 1999 for Class I shares. Index performance is shown as of
inception of oldest share class.
The investment return and the principal value of an investment in the
Portfolio will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Returns for periods of less than
one year are not annualized.
Past performance is no guarantee of future performance. Figures assume
reinvestment of all dividends and capital gains distributions, if any, at net
asset value on the payable dates and do not include sales charges. In
addition, for the fiscal year ended 1999, the Portfolio's adviser voluntarily
waived payment of certain fees (including the distribution fee payable by
Class I shares). Absent this waiver, performance would have been lower.
Performance relates to the Portfolio and does not reflect separate account
charges applicable to variable annuity contracts.
- --------------------------------------------------------------------------------
[Sidenote]
The graph depicts the performance of Mitchell Hutchins Series Trust--Global
Equity Portfolio (Class H) and the MSCI World Index. Fees and expenses of
Class I shares are higher than those of Class H shares and the performance of
Class I shares will differ from the performance of Class H shares. It is
important to note the Global Equity Portfolio is a professionally managed mutual
fund while the Index is not available for investment and is unmanaged. The
comparison is shown for illustrative purposes only.
1
<PAGE>
ANNUAL REPORT
Dear Contract Owner, February 15, 2000
We are pleased to present you with the annual report for the Mitchell Hutchins
Series Trust--Global Equity Portfolio (the "Portfolio") for the fiscal year
ended December 31, 1999.
MARKET REVIEW
- --------------------------------------------------------------------------------
[ICON] All of the major U.S. equity indexes gained during the fiscal year but
none more than the NASDAQ Composite, which, propelled by technology stocks,
rocketed up 85.59%. The Dow Jones Industrial Average (Dow) and Standard and
Poor's 500 Index (S&P 500) saw strong gains of 27.29% and 21.03%,
respectively. Throughout the fiscal year, a relatively small number of stocks
led the charge, and market breadth fell to a three-year low. In ever-greater
numbers, investors chased technology stocks, where earnings growth and
positive earnings surprises have been strong.
The international markets showed strong gains for the full year 1999,
returning 25.34% as measured by the MSCI World Index. The euro's slide during
1999 from U.S. $1.18 in its first day of trading on January 4 to U.S. $1.0068 at
the close of the year paved the way for an export-led economic recovery. Europe
experienced a great deal of restructuring at the corporate level, which led to
strong earnings growth. Better earnings and an improved economic outlook led to
full-year European market performance of nearly 30% in local terms, although
U.S. dollar returns were only 16% due to the depreciating euro.
The Nikkei Index gained 36.79% (in yen terms) last year. Japan performed well
in the fourth quarter, but not at the same pace of the first three quarters as
positive economic news flow slowed. Foreigners were the biggest buyers of
Japanese stocks in 1999, powering the market up 61.77% as measured by the MSCI
Japan Index. Drivers of the foreign capital inflows were improving domestic
economic data and the absence of monetary tightening by the Bank of Japan. The
yen continued to strengthen, supported by foreign equity purchases.
Higher commodity prices, lower interest rates and accelerating global growth
provided strong economic support for the recovery of the emerging markets.
Rebounding from crisis and recession more quickly than anticipated, the emerging
markets gained 66.41% for the year as measured by the MSCI Emerging Markets Free
Index. In local currency terms, Brazil soared 152%, Mexico gained 80%, South
Korea gained 83%, Singapore gained 78% and Hong Kong increased 69%.
MARKET OUTLOOK
- --------------------------------------------------------------------------------
Earnings momentum in the technology sector is likely to continue in 2000. High
valuations, however, leave little room for disappointment, and 1999's success
will make for difficult earnings comparisons in 2000. This could make careful
stock selection more important than ever. The stock market could fare reasonably
well in 2000, given expected corporate earnings growth of 10-12%. This positive
scenario assumes that the market can absorb an interest-rate increase of limited
magnitude.
After a year of forming a more solid foundation, international economic
growth appears poised to enter a strengthening phase. We expect economic
activity in
2
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--GLOBAL EQUITY PORTFOLIO ANNUAL REPORT
Europe to expand this year, helped by a revival in Germany, Europe's largest
economy. Germany is heavily dependent on export-oriented industrial production
and should benefit from the global economic expansion and the currently
depressed level of the euro, which makes German goods more affordable to other
nations. Consumer confidence readings are at record highs as more jobs are being
created, and the inflationary picture remains benign.
We believe Europe is well positioned for fairly strong equity performance
aided by a strengthening euro (which itself should benefit from the region's
economic strength) and increased investor interest following last year's 30%
return. "New era" companies in the telecommunications and information technology
industries continue to perform very well and offer attractive secular growth
potential.
Japan continues to show marginal economic growth. As of December 31, 1999,
the Organisation for Economic Co-operation and Development's (OECD) lead
indicator for Japan was up by over 7% year-over-year--the strongest rate of
growth seen since 1988, albeit off very low levels. Positive events in the
Japanese market include a turnaround in the labor market, improvements in
operating profits due to corporate restructuring, and increasing business
confidence. On the negative side, consumption remains weak in spite of the
improving labor market, and government spending is expected to be lower this
year.
Emerging market economies should continue to benefit from the global
expansion and rising commodity prices. Asian economies are expected to continue
to benefit from U.S. expansion, gains in Japan and ongoing corporate
restructuring. In Brazil and Argentina, we see signs of a positive economic
recovery after a recessionary 1999. We are conservative in our outlook for
emerging markets' equity performance in light of the very strong rise in 1999.
PORTFOLIO REVIEW
- --------------------------------------------------------------------------------
PERFORMANCE ATTRIBUTION
Performance for the full year 1999 lagged the MSCI World Index. During the year
performance was constrained by the U.S. equity portion of the Portfolio. The
U.S. portion is managed in a style with a value bias, which lagged throughout
the year as large-cap growth stocks continued to hold investor attention.
Security selection generally helped performance for the year, while currency,
mainly the Japanese yen, had a negative impact on performance.
The Portfolio's allocation to Europe helped performance. Merger and
acquisition activity in the region doubled from 1998 levels, setting a record
and impacting several companies in the Portfolio. Emerging markets exposure
added marginally to performance, mainly in the fourth quarter, when stocks
purchased in the beginning of the year performed strongly.
3
<PAGE>
ANNUAL REPORT
TOP FIVE COUNTRIES*
<TABLE>
<CAPTION>
12/31/99 6/30/99 12/31/98
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
United States 34.7% United States 40.8% United States 41.4%
Japan 11.2 United Kingdom 12.1 United Kingdom 13.1
Netherlands 9.5 Netherlands 5.9 Netherlands 6.7
France 9.1 Sweden 5.1 Sweden 5.7
United Kingdom 9.1 France 5.0 Italy 4.1
- ---------------------------------------------------------------------------------------
Total 81.8 Total 68.9 Total 69.7
</TABLE>
The largest contributors for the year were Ericsson (1.8%), Philips Electronics
(1.8%), Nokia (1.4%) and WPP Group (0.6%).* Philips is an electronic technology
company experiencing strong growth in its semiconductor businesses and
benefiting from corporate restructuring. WPP Group is an advertising company
benefiting from strong advertising growth in Europe and the United States.
TOP TEN STOCKS*
<TABLE>
<CAPTION>
12/31/99 6/30/99
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fujitsu 2.0% Philips Electronics N.V. 2.1%
Kon KPN N.V. 1.9 Ericsson LM B Shares 1.6
Koninklijke Electronics N.V. 1.8 Cookson Group PLC 1.5
Ericsson LM B Shares 1.8 Telecom Italia SPA 1.5
Cap Gemini 1.6 Australia & New Zealand
Vnu N.V. 1.5 Banking Group Ltd. 1.4
Getronics N.V. 1.5 Hoechst AG 1.4
Alcatel 1.4 Diageo PLC 1.3
Nokia OYJ "A" Shares 1.4 United News & Media PLC 1.3
Yamada Denki Co. 1.4 Merita PLC 1.2
- ------------------------------------------ Svenska Handelsbanken Series A 1.2
Total 16.3 ------------------------------------------
Total 14.5
</TABLE>
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
The largest move made in the Portfolio during 1999 was the entry into select
Japanese equities. For many years we had very limited exposure to securities in
the Japanese market while it underperformed other developed markets. In 1999,
however, some companies began to restructure and expected returns began to
improve. As we monitored valuation levels, we identified several stocks that
were attractively priced.
* Weightings represent percentages of portfolio assets as of December 31, 1999.
The Portfolio is actively managed and its composition will vary over time.
4
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--GLOBAL EQUITY PORTFOLIO ANNUAL REPORT
ASSET ALLOCATION*
<TABLE>
<CAPTION>
12/31/99 6/30/99 12/31/98
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. 34.7 40.8 41.4
International 65.3 59.2 58.6
- ---------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
<CAPTION>
PORTFOLIO CHARACTERISTICS*
12/31/99 6/30/99
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Net Assets ($mm) $13.4 $15.6
Number of Securities 167 168
Stocks 98.6% 97.7%
Cash 1.4% 2.3%
- ---------------------------------------------------------------------------------------
</TABLE>
As of December 31, 1999, the portfolio remained underweight U.S. equities at 35%
relative to its typical weight of 40%, and overweight foreign equities at 65%
relative to a typical weight of 60%. Non-U.S. stocks are currently favored based
on the perceived relative strength of the recovery in Europe and the UK, as well
as the potential for a rebound in Japan. This allocation contributed positively
to performance as non-U.S. equities (as measured by the MSCI), outperformed U.S.
equities (as measured by the S&P 500) during November and December.
Media companies added during the past year included Vnu (1.5%), Aegis Group
(0.8%), News Corp (0.6%) and Fuji Television (0.5%). Other stocks held in this
sector include Carlton (0.6%) and United News and Media (1.3%). The Internet is
changing the dynamics of the media industry. Content is becoming more valuable
as the number of different platforms into the home market increases, and we
believe that well-positioned media companies will be able to post good earnings
growth. Advertising-related media companies will benefit from strong global
economies and competition in newly de-regulated industries, such as
telecommunications, as well as from fierce competition in the Internet sector
where participants need to advertise to build brand recognition.
CURRENT STRATEGY AND OUTLOOK
- --------------------------------------------------------------------------------
Current international portfolio strategy is to continue to own companies with
attractive growth profiles, strong fundamentals, and attractive valuation
levels. The current themes in the international portion of the portfolio include
readjustment of financials, telecommunications, media, and IT services.
The Portfolio is currently underweighted in telecommunications relative to
the MSCI World Index, although we have become more positive on the telecom
industry as deregulation and liberalization have spurred new products, services
and market opportunities. Mobile telephony is rapidly growing as traditional
fixed-line voice
* Weightings represent percentages of portfolio assets as of December 31, 1999,
unless indicated otherwise. The Fund's portfolio is actively managed and its
composition will vary over time.
5
<PAGE>
ANNUAL REPORT
traffic migrates to mobile networks. The next generation of service will require
massive hardware and software upgrades to mobile networks. This provides
excellent growth prospects for telecom equipment providers such as Ericsson and
Nokia, which the Portfolio continues to hold. Both of these companies are direct
beneficiaries of growth in mobile traffic, but in our opinion operate in a less
competitive environment.
Recent additions to telecommunications holdings include KPN (1.9%), KPNQwest
(0.5%), United Pan-Europe Communications (0.4%), and Mannesmann (0.5%), which
recently was acquired by Vodafone (0.4%). Because of the current strength in
this industry we are selectively looking to continue to add to our exposure.
We expect the information technology (IT) services industry to experience
significant growth in the years to come and we intend to maintain the
Portfolio's exposure to the sector. As companies develop Internet and e-commerce
strategies they will turn to IT service providers for assistance. The IT sector
also will benefit from continued growth in outsourcing and from the
consolidation occurring in the sector. We entered this industry near the end of
the fiscal year, after IT stocks had underperformed due to perceived Y2K risks.
We expect IT spending to accelerate as many companies have delayed projects
until 2000 owing to Y2K concerns.
We continue to watch Japan very closely, looking for companies whose
restructuring will allow them to perform well even in a weak economy.
<TABLE>
<CAPTION>
TOP FIVE SECTORS*
As of 12/31/99 % As of 6/30/99 %
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Technology 17.1 Consumer Cyclical 26.7
Consumer Cyclical 16.3 Financial Services 20.8
Financial Services 15.9 Utilities 11.2
Utilities 10.5 Capital Goods 8.5
Capital Goods 5.8 Consumer Noncyclical 8.0
- ---------------------------------------------------------------------------------------
Total 65.6 Total 75.2
</TABLE>
Our ultimate objective in managing your investments is to help you
successfully meet your financial goals. We thank you for your continued support
and welcome any comments or questions you may have.
/s/ Margo Alexander /s/ Brian M. Storms
MARGO ALEXANDER BRIAN M. STORMS
Chairman and President and
Chief Executive Officer Chief Operating Officer
Mitchell Hutchins Mitchell Hutchins
Asset Management Inc. Asset Management Inc.
* Weightings represent percentages of portfolio assets as of December 31, 1999,
unless indicated otherwise. The Fund's portfolio is actively managed and its
composition will vary over time.
6
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--GLOBAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ----------
<S> <C>
COMMON STOCKS--98.56%
AUSTRALIA--3.02%
BANKS--1.77%
15,425 Australia & New Zealand Banking
Group Ltd. .......................................... $ 112,212
8,134 National Australia Bank, Ltd. ......................... 124,421
----------
236,633
----------
MEDIA--1.25%
2,000 The News Corporation Limited ADR ...................... 76,500
12,000 Publishing & Broadcasting Ltd ......................... 91,621
----------
168,121
----------
Total Australia Common Stocks .................................... 404,754
----------
AUSTRIA--1.29%
BANKS--0.61%
1,454 Bank of Austria AG .................................... 82,023
----------
ENERGY SOURCES--0.68%
938 OMV AG ................................................ 91,182
----------
Total Austria Common Stocks ...................................... 173,205
----------
CANADA--0.77%
BANKS--0.77%
2,336 Royal Bank of Canada .................................. 102,761
----------
DENMARK--0.67%
FOOD & HOUSEHOLD PRODUCTS--0.67%
2,295 Danisco A/S ........................................... 89,453
----------
FINLAND--3.20%
BANKS--1.04%
23,748 Merita OYJ "A" Shares PLC ............................. 139,707
----------
ELECTRICAL & ELECTRONICS--1.39%
1,027 Nokia OYJ "A" Shares .................................. 186,219
----------
FOREST PRODUCTS, PAPER--0.77%
2,554 UPM-Kymmene OY ........................................ 102,911
----------
Total Finland Common Stocks ...................................... 428,837
----------
FRANCE --9.09%
AEROSPACE & MILITARY TECHNOLOGY--1.16%
2,856 Lagardere S.C.A. ...................................... 155,357
----------
BUILDING MATERIALS & COMPONENTS--0.82%
946 Lafarge ............................................... 110,161
----------
CHEMICALS--0.65%
3,830 Rhodia ................................................ 86,577
----------
COMPUTER-BUSINESS SERVICES--1.55%
820 Cap Gemini ............................................ 208,159
----------
DRUGS & MEDICINE--1.36%
3,136 Aventis S.A. .......................................... 181,949
----------
FRANCE--(CONCLUDED)
ENERGY SOURCES--1.27%
1,278 Total S.A. (Class B) .................................. $ 170,580
----------
HEALTH & PERSONAL CARE--0.25%
588 Rhone Poulenc S.A.* ................................... 34,177
----------
INSURANCE--0.62%
600 AXA UAP ............................................... 83,650
----------
WIRELESS TELECOMMUNICATIONS--1.41%
820 Alcatel ............................................... 188,334
----------
Total France Common Stocks ....................................... 1,218,944
----------
GERMANY--2.23%
BANKS--0.82%
1,300 Deutsche Bank Ag ...................................... 109,806
----------
DIVERSIFIED INDUSTRIALS--0.94%
990 Siemens Ag Npv Regd ................................... 125,956
----------
MACHINERY & ENGINEERING SERVICES--0.47%
260 Mannesmann Ag ......................................... 62,728
----------
Total Germany Common Stocks ...................................... 298,490
----------
GREECE--0.70%
WIRELESS TELECOMMUNICATIONS--0.70%
7,939 Hellenic Telecommunications ADR ....................... 93,283
----------
IRELAND--0.68%
BANKS--0.68%
11,388 Bank of Ireland ....................................... 90,630
----------
ISRAEL--1.40%
ELECTRICAL & ELECTRONICS--0.56%
2,350 ECI Telecommunications Ltd.(1) ........................ 74,319
----------
ELECTRICAL EQUIPMENT--0.84%
1,460 Orbotech Ltd.* ........................................ 113,150
----------
Total Israel Common Stocks ....................................... 187,469
----------
ITALY--0.64%
WIRELESS TELECOMMUNICATIONS--0.64%
14,069 Telecom Italia SPA .................................... 85,743
----------
JAPAN--11.19%
BANKS--1.00%
11,000 Sanwa Bank ............................................ 133,826
----------
BEVERAGES & TOBACCO--0.23%
4 Japan Tobacco Inc ..................................... 30,616
----------
COMPUTER HARDWARE--1.07%
6,000 NEC Corp. ............................................. 142,997
----------
DATA PROCESSING & REPRODUCTION--1.24%
4,200 Canon Inc. ............................................ 166,898
----------
7
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--GLOBAL EQUITY PORTFOLIO
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ----------
<S> <C>
COMMON STOCKS--(CONTINUED)
JAPAN--(CONCLUDED)
DRUGS & MEDICINE--0.66%
3,000 Taisho Pharmaceutical Co. ............................. $ 88,089
----------
ELECTRONIC COMPONENTS--2.04%
6,000 Fujitsu ............................................... 273,662
----------
FINANCIAL SERVICES--0.56%
600 Takefuji Corp. ........................................ 75,110
----------
HEALTH & PERSONAL CARE--1.72%
2,500 Takeda Chemical Industries ............................ 123,568
4,000 Terumo Corp ........................................... 106,881
----------
230,449
----------
MEDIA--0.51%
5 Fuji Television Network Inc ........................... 68,513
----------
MERCHANDISING--1.38%
1,700 Yamada Denki Co. ...................................... 184,692
----------
MOTOR VEHICLES--0.78%
2,000 Honda Motor Co. ....................................... 74,386
9,000 Mitsubishi Motor ...................................... 30,743
----------
105,129
----------
Total Japan Common Stocks ........................................ 1,499,981
----------
KOREA--1.73%
BANKS--0.74%
1,770 Housing and Commercial Bank ........................... 56,116
3,920 Shinhan Bank .......................................... 42,463
----------
98,579
----------
WIRELESS TELECOMMUNICATIONS--0.99%
1,779 Korea Telecom ......................................... 132,980
----------
Total Korea Common Stocks ........................................ 231,559
----------
MEXICO--0.25%
MULTI-INDUSTRY--0.25%
2,048 Desc S.A. De C.V. ..................................... 34,304
----------
NETHERLANDS--9.52%
APPLIANCE & HOUSEHOLD DURABLES--1.82%
1,791 Koninklijke Philips Electronics N.V. .................. 243,562
----------
BANKS--1.02%
2,270 Internationale Nederlander
Groep N.V. .......................................... 137,064
----------
BUSINESS & PUBLIC SERVICES--0.44%
5,777 Vedior N.V. CVA ....................................... 59,358
----------
CABLE--0.38%
400 United Pan Europe
Communications N.V. ................................. 51,173
----------
NETHERLANDS--(CONCLUDED)
COMPUTER-BUSINESS SERVICES--1.46%
2,450 Getronics NV .......................................... $ 195,466
----------
FOREST PRODUCTS, PAPER--0.51%
4,577 Buhrmann N.V. ......................................... 68,929
----------
PUBLISHING--1.47%
3,740 Vnu N.V. .............................................. 196,588
----------
WIRELESS TELECOMMUNICATIONS--2.42%
2,604 Kon KPN N.V. .......................................... 254,182
1,097 Kpnqwest B V .......................................... 69,934
----------
324,116
----------
Total Netherlands Common Stocks .................................. 1,276,256
----------
NEW ZEALAND--1.07%
WIRELESS TELECOMMUNICATIONS--1.07%
30,419 Telecom Corp. of New Zealand Ltd.(1) .................. 143,045
----------
NORWAY--0.98%
MULTI-INDUSTRY--0.66%
5,177 Orkla ASA ............................................. 89,220
----------
OIL SERVICES--0.32%
2,400 Petroleum Geo Svs ..................................... 42,860
----------
Total Norway Common Stocks ....................................... 132,080
----------
PORTUGAL--0.62%
RAILROADS--0.62%
10,785 Brisa Auto Estrada .................................... 82,786
----------
SWEDEN--4.66%
BANKS--0.81%
4,600 Nordbanken Holding .................................... 26,181
6,532 Svenska Handelsbanken Series A ........................ 82,139
----------
108,320
----------
BEVERAGES & TOBACCO--0.81%
31,227 Swedish Match AB ...................................... 108,996
----------
FINANCIAL SERVICES--0.98%
9,310 Investor AB ........................................... 131,296
----------
INDUSTRIAL PARTS--0.23%
1,023 Autoliv, Inc. ......................................... 29,936
----------
MULTI-INDUSTRY--0.08%
1,200 Trelleborg AB ......................................... 10,789
----------
WIRELESS TELECOMMUNICATIONS--1.75%
3,651 Ericsson LM B Shares .................................. 234,704
----------
Total Sweden Common Stocks 624,041
----------
8
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--GLOBAL EQUITY PORTFOLIO
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ----------
<S> <C>
COMMON STOCKS--(CONTINUED)
SWITZERLAND--2.55%
BANKS--1.02%
506 UBS AG ................................................ $ 136,645
----------
CHEMICALS--0.75%
212 Clariant .............................................. 101,054
----------
HEALTH & PERSONAL CARE--0.78%
71 Novartis AG ........................................... 104,250
----------
Total Switzerland Common Stocks .................................. 341,949
----------
UNITED KINGDOM--9.06%
BEVERAGES & TOBACCO--0.94%
15,863 Diageo PLC ............................................ 126,580
----------
BROADCASTING & PUBLISHING--1.26%
13,415 United News & Media PLC ............................... 169,129
----------
BUSINESS & PUBLIC SERVICES--0.61%
5,188 WPP Group PLC ......................................... 81,288
----------
FINANCIAL SERVICES--1.30%
15,009 Amvescap PLC .......................................... 174,557
----------
FOOD & HOUSEHOLD PRODUCTS--0.67%
9,415 Reckitt & Colman PLC .................................. 89,119
----------
HEALTH & PERSONAL CARE--0.48%
1,529 Astrazeneca PLC ....................................... 64,689
----------
INSURANCE--0.82%
14,700 Royal & Sun Alliance .................................. 110,176
----------
LEISURE & TOURISM--0.63%
8,721 Carlton Communications PLC ............................ 84,945
----------
MEDIA--0.79%
28,940 Aegis Group ........................................... 105,180
----------
MULTI-INDUSTRY--1.11%
9,551 Charter PLC ........................................... 40,883
26,815 Cookson Group PLC ..................................... 108,286
----------
149,169
----------
WIRELESS TELECOMMUNICATIONS--0.45%
12,000 Vodafone Group ........................................ 59,816
----------
Total United Kingdom Common Stocks ............................... 1,214,648
----------
UNITED STATES--33.24%
AIRLINES--0.22%
604 Delta Air Lines, Inc. ................................. 30,087
----------
ALCOHOL--0.13%
241 Anheuser-Busch Companies, Inc. ........................ 17,081
----------
APPAREL, TEXTILES--0.10%
583 Tommy Hilfiger Corp.* ................................. 13,591
----------
UNITED STATES--(CONTINUED)
BANKS--1.53%
1,528 The Chase Manhattan Corp. ............................. $ 118,706
1,528 Mellon Financial Corp. ................................ 52,048
833 Wells Fargo and Co. ................................... 33,684
----------
204,438
----------
CHEMICALS--0.24%
244 Dow Chemical Co. ...................................... 32,605
----------
COMPUTER HARDWARE--1.35%
965 Cisco Systems, Inc.* .................................. 103,376
1,528 Dell Computer Corp.* .................................. 77,928
----------
181,304
----------
COMPUTER SOFTWARE--2.99%
402 BMC Software, Inc.* ................................... 32,135
764 Compuware Corp.* ...................................... 28,459
789 International Business Machines ....................... 85,212
1,338 Microsoft Corp.* ...................................... 156,211
3,104 Unisys Corp.* ......................................... 99,134
----------
401,151
----------
CONSTRUCTION--0.21%
1,126 Centex Corp. .......................................... 27,798
----------
CONSTRUCTION, REAL PROPERTY--0.18%
885 Lafarge Corp. ADR ..................................... 24,448
----------
CONSUMER DURABLES--0.51%
682 Maytag Corp. .......................................... 32,736
557 Whirlpool Corp. ....................................... 36,240
----------
68,976
----------
DEFENSE & AEROSPACE--0.45%
587 General Dynamics Corp. ................................ 30,964
573 TRW, Inc. ............................................. 29,760
----------
60,724
----------
DIVERSIFIED RETAIL--1.00%
1,287 Dayton Hudson Corp. ................................... 94,514
568 Wal Mart Stores, Inc. ................................. 39,263
----------
133,777
----------
DRUGS & MEDICINE--1.21%
539 Biogen Inc.* .......................................... 45,546
1,287 Schering-Plough Corp. ................................. 54,295
754 Warner Lambert Co. .................................... 61,781
----------
161,622
----------
ELECTRIC UTILITIES--0.16%
1,046 Energy East Corp. ..................................... 21,770
----------
9
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--GLOBAL EQUITY PORTFOLIO
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ----------
<S> <C>
COMMON STOCKS--(CONTINUED)
UNITED STATES--(CONTINUED)
ELECTRICAL EQUIPMENT--0.99%
1,207 Honeywell, Inc. ....................................... $ 69,629
425 Motorola, Inc. ........................................ 62,581
----------
132,210
----------
ENERGY RESERVES & PRODUCTION--1.99%
362 Atlantic Richfield Co. ................................ 31,313
1,630 Exxon Mobil Corp. ..................................... 131,317
1,368 Royal Dutch Petroleum Co. ADR ......................... 82,679
785 Tosco Corp. ........................................... 21,342
----------
266,651
----------
ENTERTAINMENT--0.22%
483 Viacom, Inc., Class B* ................................ 29,191
----------
FINANCIAL SERVICES--0.66%
404 Marsh & McLennan Cos., Inc. ........................... 38,658
1,112 MBNA Corp. ............................................ 30,302
219 Providian Finanical Corp. ............................. 19,942
----------
88,902
----------
FOOD RETAIL--0.16%
1,126 Kroger Co.* ........................................... 21,253
----------
FOREST PRODUCTS, PAPER--1.25%
1,002 Champion International Corp. .......................... 62,061
644 Georgia-Pacific Corp. ................................. 32,683
1,010 Weyerhaeuser Co. ...................................... 72,531
----------
167,275
----------
GAS UTILITY--0.49%
1,046 Columbia Energy Group ................................. 66,160
----------
INDUSTRIAL PARTS--1.27%
563 American Standard Companies Inc.* ..................... 25,828
1,207 Ingersoll Rand Co. .................................... 66,460
321 SPX Corp.* ............................................ 25,941
804 United Technologies Corp. ............................. 52,260
----------
170,489
----------
INDUSTRIAL SERVICES & SUPPLIES--0.21%
564 Hertz Corp. ........................................... 28,271
----------
INFORMATION & COMPUTER SERVICES--0.23%
724 Valassis Communications Inc.* ......................... 30,589
----------
INSTRUMENTS-SCIENTIFIC--0.55%
1,931 Mettler-Toledo International Inc.* .................... 73,740
----------
LEISURE--0.10%
678 Hasbro, Inc. .......................................... 12,924
----------
UNITED STATES--(CONTINUED)
LIFE INSURANCE--1.26%
885 American General Corp. ................................ $ 67,149
1,704 Lincoln National Corp. ................................ 68,160
1,046 Protective Life Corp. ................................. 33,276
----------
168,585
----------
LONG DISTANCE & PHONE COMPANIES--2.67%
1,327 AT&T Corp. ............................................ 67,345
1,167 BellSouth Corp. ....................................... 54,630
965 Centurytel, Inc. ...................................... 45,717
804 GTE Corp. ............................................. 56,732
1,328 MCI WorldCom, Inc.* ................................... 70,441
1,287 SBC Communications, Inc. .............................. 62,741
----------
357,606
----------
MEDIA--0.41%
1,078 Comcast Corp., Class A ................................ 54,506
----------
MEDICAL PRODUCTS--0.75%
1,046 St. Jude Medical, Inc.* ............................... 32,099
1,770 Tyco International Ltd. ............................... 68,809
----------
100,908
----------
MINING & METALS--0.54%
867 Alcoa, Inc. ........................................... 71,961
----------
MOTOR VEHICLES--1.40%
965 Borg Warner Automotive, Inc. .......................... 39,082
561 Delphi Automotive Systems Corp. ....................... 8,836
885 Ford Motor Co. ........................................ 47,292
804 General Motors Corp. .................................. 58,441
1,046 Lear Corp.* ........................................... 33,472
----------
187,123
----------
OIL REFINING--0.51%
1,416 Coastal Corp. ......................................... 50,179
724 USX-Marathon Group .................................... 17,874
----------
68,053
----------
OTHER INSURANCE--1.24%
845 AMBAC Financial Group Inc. ............................ 44,099
698 American International Group, Inc. .................... 75,471
1,368 Travelers Property Casualty Corp. ..................... 46,854
----------
166,424
----------
PUBLISHING--0.74%
1,059 Knight Ridder, Inc. ................................... 63,010
734 New York Times Co., Class A ........................... 36,058
----------
99,068
----------
10
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--GLOBAL EQUITY PORTFOLIO
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -----------
<S> <C>
COMMON STOCKS--(CONCLUDED)
UNITED STATES--(CONTINUED)
RESTAURANTS--0.19%
1,046 Brinker International Inc.* ........................... $ 25,104
-----------
SECURITIES & ASSET MANAGEMENT--0.89%
1,164 Axa Financial Inc. .................................... 39,431
563 Morgan Stanley Dean Witter & Co. ...................... 80,368
-----------
119,799
-----------
SEMICONDUCTOR--3.07%
1,207 Applied Materials, Inc.* .............................. 152,912
1,458 Atmel Corp.* .......................................... 43,102
580 Intel Corp. ........................................... 47,741
724 JDS Uniphase Corp.* ................................... 116,791
974 Vitesse Semiconductor Corp.* .......................... 51,074
-----------
411,620
-----------
UNITED STATES--(CONCLUDED)
SPECIALTY RETAIL--1.17%
842 Circuit City Stores, Inc. ............................. $ 37,943
1,609 Federated Department Stores, Inc.* .................... 81,355
800 Staples, Inc.* ........................................ 16,600
443 Zale Corp.* ........................................... 21,430
-----------
157,328
-----------
Total United States Common Stocks ................................ 4,455,112
-----------
Total Common Stocks (cost--$10,679,935) .......................... 13,209,330
-----------
<CAPTION>
PRINCIPAL
AMOUNT
(000) MATURITY DATE INTEREST RATE VALUE
- ------------ -------------------- ----------------- -----------
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATION--1.48%
$200 United States Treasury Bills++(cost--$198,880) ....... 02/10/00 5.080% $ 198,880
-----------
Total Investments (cost--$10,878,815)--100.04% .................. 13,408,210
Liabilities in excess of other assets--(0.04)% .................. (5,819)
-----------
Net Assets--100.00% ............................................. $13,402,391
-----------
-----------
</TABLE>
- ------------------
* Non-income producing security.
++ Entire principal amount pledged as collateral for futures transactions.
ADR American Depositary Receipt
(1) Security, or a portion thereof, was on loan at December 31, 1999.
FUTURES CONTRACTS
<TABLE>
<CAPTION>
NUMBER OF IN EXPIRATION UNREALIZED
CONTRACTS CONTRACTS TO RECEIVE EXCHANGE FOR DATE APPRECIATION
- ------------- ----------------------------------------------------- -------------- ------------ --------------
<S> <C> <C> <C> <C>
3 S&P Mini (United States) ............................ $66,072 March 2000 $8,138
------
------
</TABLE>
See accompanying notes to financial statements
11
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--GLOBAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost--$10,878,815) .......................................................................... $ 13,408,210
Investment of cash collateral received for securities loaned, at value (cost--$146,150) ............................ 146,150
Cash (including cash denominated in foreign currencies at value with a cost of $112,051) ........................... 112,654
Dividends receivable ............................................................................................... 7,904
Futures variation margin receivable ................................................................................ 518
Other assets ....................................................................................................... 16,964
------------
Total assets ....................................................................................................... 13,692,400
------------
LIABILITIES
Collateral for securities loaned ................................................................................... 146,150
Payable for investments purchased .................................................................................. 58,705
Payable to affiliates .............................................................................................. 8,311
Accrued expenses and other liabilities ............................................................................. 76,843
------------
Total liabilities .................................................................................................. 290,009
------------
NET ASSETS
Beneficial interest shares of $0.001 par value ..................................................................... 9,630,811
Undistributed net investment income ................................................................................ 69,489
Accumulated net realized gains from investments and foreign currency transactions .................................. 1,164,609
Net unrealized appreciation of investments and other assets and liabilities denominated in foreign currencies ...... 2,537,482
------------
Net assets ......................................................................................................... $ 13,402,391
------------
------------
CLASS H
Net assets ......................................................................................................... $ 13,015,164
------------
Shares outstanding ................................................................................................. 803,105
------------
Net asset value, offering price and redemption value per share ..................................................... $16.21
------
------
CLASS I
Net assets ......................................................................................................... $ 387,227
------------
Shares outstanding ................................................................................................. 23,906
------------
Net asset value, offering price and redemption value per share ..................................................... $16.20
------
------
</TABLE>
See accompanying notes to financial statements
12
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--GLOBAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE
YEAR ENDED
DECEMBER 31, 1999
-----------------
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $30,145) .................................................. $ 293,254
Interest ................................................................................................. 12,658
-----------
305,912
-----------
EXPENSES:
Investment advisory and administration ................................................................... 115,797
Distribution fees--Class I ............................................................................... 107
Legal and audit .......................................................................................... 65,029
Reports and notices to shareholders ...................................................................... 46,507
Custody and accounting ................................................................................... 40,530
Trustees' fees ........................................................................................... 7,500
Transfer agency fees and related service expenses ........................................................ 2,375
Other expenses ........................................................................................... 8,565
-----------
286,410
Less: Fee waivers and reimbursements from investment adviser ............................................. (179)
-----------
Net expenses ............................................................................................. 286,231
-----------
Net investment income .................................................................................... 19,681
-----------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized gains (losses) from:
Investments .......................................................................................... 1,265,626
Futures transactions ................................................................................. 29,112
Foreign currency transactions ........................................................................ (16,935)
Net change in unrealized appreciation/depreciation of:
Investments .......................................................................................... 1,023,050
Futures .............................................................................................. 8,138
Other assets, liabilities and forward contracts denominated in foreign currencies .................... (1,772)
-----------
NET REALIZED AND UNREALIZED GAINS FROM INVESTMENT ACTIVITIES ............................................. 2,307,219
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ..................................................... $ 2,326,900
-----------
-----------
</TABLE>
See accompanying notes to financial statements
13
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--GLOBAL EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS
ENDED DECEMBER 31,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income ............................................................................ $ 19,681 $ 93,169
Net realized gains (losses) from investments, futures and foreign currency transactions........... 1,277,803 3,342,686
Net change in unrealized appreciation/depreciation of investments, futures contracts,
other assets, liabilities and forward contracts denominated in foreign currencies............. 1,029,416 (723,801)
------------ ------------
Net increase in net assets resulting from operations ............................................. 2,326,900 2,712,054
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Class H ................................................................... (50,861) --
Net investment income--Class I ................................................................... (245) --
Net realized gains from investments--Class H ..................................................... (7,692) (3,316,652)
Net realized gains from investments--Class I ..................................................... (37) --
------------ ------------
(58,835) (3,316,652)
------------ ------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares ............................................................. 503,375 771,521
Cost of shares repurchased ....................................................................... (8,543,750) (5,734,280)
Proceeds from dividends reinvested ............................................................... 3,375,487 151,800
------------ ------------
Net decrease in net assets from beneficial interest transactions ................................. (4,664,888) (4,810,959)
------------ ------------
Net decrease in net assets ....................................................................... (2,396,823) (5,415,557)
NET ASSETS:
Beginning of year ................................................................................ 15,799,214 21,214,771
------------ ------------
End of year (including undistributed net investment income of $69,489 and $34,076, respectively).. $ 13,402,391 $ 15,799,214
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Mitchell Hutchins Series Trust--Global Equity Portfolio (the "Portfolio")
(formerly the Mitchell Hutchins Series Trust--Global Growth Portfolio) is a
diversified portfolio of Mitchell Hutchins Series Trust (the "Fund"), which is
organized under Massachusetts law by a Declaration of Trust dated November 21,
1986 and is registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund operates as a series company currently offering thirteen
portfolios. Shares of the Portfolio are offered to insurance company separate
accounts which fund certain variable contracts.
Currently, the Portfolio offers Class H and Class I shares. Each class
represents interests in the same assets of the Portfolio, and the classes are
identical except for differences in their distribution charges. Both classes
have equal voting privileges except that Class Ihas exclusive voting rights with
respect to its distribution plan. Class H has no distribution plan.
The Fund accounts separately for the assets, liabilities and operations for
each portfolio. Expenses directly attributable to each Portfolio are charged to
that Portfolio's operations, and expenses which are applicable to all Portfolios
are allocated among them on a pro rata basis.
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States requires the Fund's
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of significant accounting policies:
VALUATION OF INVESTMENTS--The Portfolio calculates its net asset value based
on the current market value for its portfolio securities. The Portfolio normally
obtains market values for its securities from independent pricing sources.
Independent pricing sources may use reported last sale prices, current market
quotations or valuations from computerized "matrix" systems that derive values
based on comparable securities. Securities traded in the over-the-counter
("OTC") market and listed on The Nasdaq Stock Market, Inc. ("Nasdaq") normally
are valued at the last sale price on Nasdaq prior to valuation. Other OTC
securities are valued at the last bid price available prior to valuation.
Securities which are listed on U.S. and foreign stock exchanges normally are
valued at the last sale price on the day the securities are valued or, lacking
any sales on such day, at the last available bid price. In cases where
securities are traded on more than one exchange, the securities are valued on
the exchange designated as the primary market by Mitchell Hutchins Asset
Management Inc. ("Mitchell Hutchins"), a wholly owned asset management
subsidiary of PaineWebber Incorporated ("PaineWebber") and investment adviser
and administrator of the Portfolio, or by the Portfolio's sub-advisor, Invista
Capital Management, Inc. ("Invista") (for foreign investments only). If a market
value is not available from an independent pricing source for a particular
security, that security is valued at fair value as determined in good faith by
or under the direction of the Fund's board of trustees (the "board"). The
amortized cost method of valuation, which approximates market value, generally
is used to value short-term debt instruments with sixty days or less remaining
to maturity, unless the board determines that this does not represent fair
value. All investments quoted in foreign currencies will be valued daily in U.S.
dollars on the basis of the foreign currency exchange rates prevailing at the
time such valuation is determined by the Portfolio's custodian.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Foreign currency exchange rates are generally determined prior to the close
of the New York Stock Exchange ("NYSE"). Occasionally, events affecting the
value of foreign investments and such exchange rates occur between the time at
which they are determined and the close of the NYSE, which will not be reflected
in the computation of the Portfolio's net asset value. If events materially
affecting the value of such securities or currency exchange rates occur during
such time periods, the securities will be valued at their fair value as
determined in good faith by or under the direction of the board.
REPURCHASE AGREEMENTS--The Portfolio's custodian takes possession of the
collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to ensure that the value,
including accrued interest, is at least equal to the repurchase price. In the
event of default of the obligation to repurchase, the Portfolio has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings. The Portfolio may participate in
joint repurchase agreement transactions with other funds managed by Mitchell
Hutchins.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME--Investment transactions are
recorded on the trade date. Realized gains and losses from investment
transactions and foreign exchange transactions are calculated using the
identified cost basis. Dividend income is recorded on the ex-dividend date
("ex-date") (except in the case of certain foreign dividends which are recorded
as soon after the ex-dividend date as using reasonable diligence, become aware
of such dividends).
Income, expenses (excluding class-specific expenses) and realized/unrealized
gains/losses are allocated proportionately to each class of shares based upon
the relative net asset value of outstanding shares (or the value of
dividend-eligible shares, as appropriate) of each class at the beginning of the
day (after adjusting for current capital share activity of the respective
classes). Class-specific expenses are charged directly to the applicable class
of shares.
FOREIGN CURRENCY TRANSLATIONS--The books and records of the Portfolio are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars as follows: (1) the foreign currency market value of investment
securities and other assets and liabilities stated in foreign currencies are
translated at the exchange rates prevailing at the end of the period; and (2)
purchases, sales, income and expenses are translated at the rate of exchange
prevailing on the respective dates of such transactions. The resulting exchange
gains and losses are included in the Statement of Operations.
Although the net assets and the market values of the Portfolio securities are
presented at the foreign exchange rates at the end of the period, the Portfolio
does not generally isolate the effects of fluctuations in foreign exchange rates
from the effects of fluctuations in the market prices of securities. However,
the Portfolio does isolate the effect of fluctuations in foreign exchange rates
when determining the realized gain or loss upon the sale or maturity of foreign
currency-denominated debt obligations pursuant to federal income tax
regulations. Certain foreign exchange gains and losses included in realized and
unrealized gains and losses are included in or are a reduction of ordinary
income for income tax reporting purposes. Net realized foreign currency gain
(loss) is treated as ordinary income for income tax reporting purposes.
Gains/losses from translating foreign currency-denominated assets (other than
investments) and liabilities at the year-end exchange rates are included in the
change in unrealized appreciation/depreciation of other assets and liabilities
denominated in foreign currencies.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to shareholders are
recorded on the ex-date. The amount of dividends and distributions is determined
in accordance with federal income tax regulations, which may differ from
generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification.
CONCENTRATION OF RISK
Investing in securities of foreign issuers and currency transactions may
involve certain considerations and risks not typically associated with
investments in the United States. These risks include revaluation of currencies,
adverse fluctuations in foreign currency values and possible adverse political,
social and economic developments, including those particular to a specific
industry, country or region, which could cause the securities and their markets
to be less liquid and prices more volatile than those of comparable U.S.
companies and U.S. government securities. These risks are greater with respect
to securities of issuers located in emerging market countries in which the
Portfolio is authorized to invest. The ability of the issuers of debt securities
held by the Portfolio to meet its obligations may be affected by economic and
political developments particular to a specific industry, country or region.
INVESTMENT ADVISER AND ADMINISTRATOR
The board has approved an investment advisory and administration contract
with Mitchell Hutchins, under which Mitchell Hutchins serves as investment
adviser and administrator of the Portfolio. In accordance with the Advisory
Contract, the Portfolio pays Mitchell Hutchins an investment advisory and
administration fee, which is computed daily and payable monthly, at an annual
rate of 0.75% of the Portfolio's average daily net assets.
Mitchell Hutchins has entered into a contract with Invista dated November 1,
1998 ("Invista Contract"), pursuant to which Invista serves as investment
sub-adviser for the international investments of the Portfolio. Mitchell
Hutchins allocates the Portfolio's investments between domestic and
international and is responsible for the day-to-day management of the
Portfolio's domestic investments. Under the Invista Contract, Mitchell Hutchins
(not the Portfolio) is obligated to pay Invista at the annual rate of 0.29% of
the proportion of the Portfolio's average daily net assets allocated to
international investments. Prior to November 1, 1998, GE Investment Management
Incorporated ("GEIM") served as investment sub-adviser for all the Portfolio's
assets pursuant to sub-advisory contracts with Mitchell Hutchins or Kidder,
Peabody Asset Management Inc ("KPAM"). At December 31, 1999, the Portfolio owed
Mitchell Hutchins $8,288 in investment advisory and administration fees.
Mitchell Hutchins waived a portion of its investment advisory and administration
fees in connection with the Fund's investment of cash collateral from securities
lending transactions in the Mitchell Hutchins Private Money Market Fund LLC. For
the year ended December 31, 1999, Mitchell Hutchins waived $72.
For the year ended December 31, 1999, the Portfolio paid $589 in brokerage
commissions to PaineWebber for transactions
executed on behalf of the Portfolio.
DISTRIBUTION PLAN
Class I shares are offered to insurance company separate accounts where the
related insurance companies receive payments for their services in connection
with the distribution of the Portfolio's Class I shares. Under the plan of
distribution, the Portfolio pays Mitchell Hutchins a monthly distribution fee at
the annual rate of 0.25% of the average
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
daily net assets of Class I shares. Mitchell Hutchins pays the entire
distribution fee to the insurance companies. For the period August 5, 1999
(commencement of issuance of Class I shares) to December 31, 1999, Mitchell
Hutchins and the insurance companies agreed to waive the $107 distribution fee.
SECURITIES LENDING
The Portfolio may lend securities up to 331/3% of its total assets to
qualified institutions. The loans are secured at all times by cash or U.S.
government securities in an amount at least equal to the market value of the
securities loaned, plus accrued interest and dividends, determined on a daily
basis and adjusted accordingly. The Portfolio will regain record ownership of
loaned securities to exercise certain beneficial rights; however, the Portfolio
may bear the risk of delay in recovery of, or even loss of rights in, the
securities loaned should the borrower fail financially. The Portfolio receives
compensation, which is included in interest income, for lending its securities
from interest earned on the cash or U.S. government securities held as
collateral, net of fee rebates paid to the borrower plus reasonable
administrative and custody fees. PaineWebber, the Portfolios' lending agent,
received $708 in compensation from the Portfolio for the year ended December 31,
1999. At December 31, 1999, the Portfolio owed PaineWebber $23 in security
lending fees.
For the year ended December 31, 1999, the Portfolio earned $2,053 in
compensation net of fees, rebates and expenses, from securities lending
transactions.
At December 31, 1999, the Portfolio's custodian held cash having an aggregate
value of $146,150 as collateral for portfolio securities loaned having a market
value of $143,192. The cash collateral was invested in the following money
market funds:
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- --------
<S> <C> <C>
22,960 Liquid Assets Portfolio ......................................................................... $ 22,960
102,529 Mitchell Hutchins Private Money Market Fund LLC ................................................. 102,529
20,661 Prime Portfolio ................................................................................. 20,661
--------
Total investments of cash collateral received for securities on loan (cost--$146,150) ........... $146,150
--------
--------
</TABLE>
BANK LINE OF CREDIT
The Portfolio may participate with other funds managed by Mitchell Hutchins
in a $200 million committed credit facility ("Facility") to be utilized for
temporary financing until the settlement of sales or purchases of portfolio
securities, the repurchase or redemption of shares of the Portfolio at the
request of the shareholders and other temporary or emergency purposes. In
connection therewith, the Portfolio has agreed to pay a commitment fee, pro
rata, based on the relative asset size of the funds in the Facility. Interest is
charged to the Portfolio at rates based on prevailing market rates in effect at
the time of borrowings. For the year ended December 31, 1999, the Portfolio did
not borrow under the Facility.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned at December 31,
1999 was substantially the same as the cost of securities for financial
statement purposes.
At December 31, 1999, the components of net unrealized appreciation of
investments were as follows:
<TABLE>
<S> <C>
Gross appreciation (investments having an excess of value over cost) ........... $3,058,403
Gross depreciation (investments having an excess of cost over value) ........... (529,008)
----------
Net unrealized appreciation of investment ...................................... $2,529,395
----------
----------
</TABLE>
For the year ended December 31, 1999, aggregate purchases and sales of
portfolio securities, excluding short-term securities, were $9,639,552 and
$17,954,660, respectively.
FEDERAL TAX STATUS
The Portfolio intends to distribute all of its taxable income and to comply
with the requirements of the Internal Revenue Code applicable to regulated
investment companies. Accordingly, no provision for federal income taxes is
required.
To reflect reclassifications arising from permanent "book/tax" differences
for the year ended December 31, 1999, the Portfolio's undistributed net
investment income was increased by $66,838, accumulated net realized
gains/losses from investments were decreased by $66,838.
SHARES OF BENEFICIAL INTEREST
There is an unlimited number of $0.001 par value shares of beneficial
interest authorized. Transactions in shares of beneficial interest for the
Portfolio were as follows:
<TABLE>
<CAPTION>
CLASS H CLASS I*
FOR THE PERIOD ENDED ---------------------- -------------------
DECEMBER 31, 1999 SHARES AMOUNT SHARES AMOUNT
-------- ----------- ------ --------
<S> <C> <C> <C> <C>
Shares sold ................................................. 9,331 $ 130,061 24,637 $373,314
Shares repurchased .......................................... (598,923) (8,532,202) (750) (11,548)
Dividends reinvested ........................................ 242,799 3,375,204 19 283
-------- ----------- ------ --------
Net increase (decrease) ..................................... (346,793) $(5,026,937) 23,906 $362,049
-------- ----------- ------ --------
-------- ----------- ------ --------
<CAPTION>
CLASS H
FOR THE YEAR ENDED ----------------------
DECEMBER 31, 1998 SHARES AMOUNT
-------- -----------
<S> <C> <C>
Shares sold ................................................. 48,194 $ 771,521
Shares repurchased .......................................... (359,204) (5,734,280)
Dividends reinvested ........................................ 10,312 151,800
-------- -----------
Net decrease ................................................ (300,698) $(4,810,959)
-------- -----------
-------- -----------
</TABLE>
* Class I shares commenced operations on August 5, 1999.
19
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--GLOBAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
CLASS H CLASS I
---------------------------------------------------- -----------------
FOR THE YEARS ENDED DECEMBER 31, FOR THE PERIOD
---------------------------------------------------- AUGUST 5, 1999+
THROUGH
1999 1998 1997 1996 1995 DECEMBER 31, 1999
------- ------- ------- ------- ------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................... $ 13.74 $ 14.62 $ 13.74 $ 12.00 $ 12.44 $ 14.43
------- ------- ------- ------- ------- -------
Net investment income (loss) ............................ (0.03) 0.08 0.04 0.07 0.01 0.01
Net realized and unrealized gains (losses) from
investments, futures and foreign currency transactions. 2.56 1.92 0.94 1.75 (0.45) 1.82
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations ...... 2.53 2.00 0.98 1.82 (0.44) 1.83
------- ------- ------- ------- ------- -------
Dividends from net investment income .................... (0.05) -- (0.04) (0.08) -- (0.05)
Distributions from net realized gains from investments .. (0.01) (2.88) (0.06) -- -- (0.01)
------- ------- ------- ------- ------- -------
Total dividends and other distributions ................. (0.06) (2.88) (0.10) (0.08) 0.00 (0.06)
------- ------- ------- ------- ------- -------
Net asset value, end of period .......................... $ 16.21 $ 13.74 $ 14.62 $ 13.74 $ 12.00 $ 16.20
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
Total investment return(1) .............................. 18.47% 13.50% 7.16% 15.14% (3.54)% 12.74%
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's) ....................... $13,015 $15,799 $21,215 $25,701 $28,507 $ 387
Expenses to average net assets, net of waivers(2) ....... 1.85% 1.33% 1.07% 1.10% 1.96% 2.00%*
Net investment income (loss) to average net assets,
net of waivers(3) ..................................... 0.13% 0.46% 0.26% 0.46% 0.10% (0.64)%*
Portfolio turnover rate ................................. 63% 154% 81% 44% 157% 63%
</TABLE>
- ----------------------
+ Commencement of issuance of shares.
* Annualized.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and 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 period. The figures do not include
additional contract level charges; results would be lower if such charges
were included. Total investment return for periods of less than one year has
not been annualized.
(2) During the period ended December 31, 1999 Mitchell Hutchins waived a portion
of its fees. The ratios excluding the waiver would have been 1.85% and 2.25%
for Class H and Class I, respectively.
(3) During the period ended December 31, 1999 Mitchell Hutchins waived a portion
of its fees. The ratios excluding the waiver would have been 0.13% and
(0.89)% for Class H and Class I, respectively.
20
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--GLOBAL EQUITY PORTFOLIO
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
Mitchell Hutchins Series Trust--Global Equity Portfolio
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Mitchell Hutchins Series
Trust--Global Equity Portfolio (the "Portfolio"), one of the Portfolios
constituting Mitchell Hutchins Series Trust (the "Fund") as of December 31,
1999, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods indicated therein.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of investments owned as of December 31, 1999 by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Mitchell Hutchins Series Trust--Global Equity Portfolio at December 31, 1999,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the periods indicated, in conformity with accounting
principles generally accepted in the United States.
/s/ Ernst & Young LLP
New York, New York
February 16, 2000
21
<PAGE>
ANNUAL REPORT
- --------------------------------------------------------------------------------
MITCHELL
HUTCHINS SERIES
TRUST
GLOBAL EQUITY
PORTFOLIO
DECEMBER 31, 1999
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All rights reserved.
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