<PAGE>
MITCHELL HUTCHINS SERIES TRUST--HIGH GRADE FIXED INCOME PORTFOLIO
SEMIANNUAL REPORT
August 15, 2000
Dear Contract Owner,
We are pleased to present you with the semiannual report for Mitchell Hutchins
Series Trust--High Grade Fixed Income Portfolio (the "Portfolio") for the
six-month period ended June 30, 2000.
MARKET REVIEW
[GRAPHIC]
During the first half of 2000, the Federal Reserve (the "Fed") raised the
Federal Funds rate by one percent in response to booming economic conditions.
Rising interest rates created difficult conditions for all sectors of the fixed
income market. U.S. Treasurys fared the best, gaining 4.97% as measured by the
Lehman Brothers Government Bond Index. The broad market, as measured by the
Lehman Brothers Aggregate Bond Index, gained 3.99% for the period. Corporate
bonds, mortgage-backed securities and high-yield bonds partially recovered at
period-end. The high-yield sector lost 0.84% as measured by the CS First Boston
High Yield Bond Index.
In mid-January the U.S. Treasury announced final plans to buy back Treasury debt
in response to a fiscal year surplus of around $200 billion. The size of the
buyback--about $30 billion in calendar 2000--surprised many market participants.
What's more, Treasury officials indicated that they intend to reduce the supply
of 30-year bonds and make the 10-year Treasury note the new long-maturity
bellwether. The resulting surge in demand for 30-year bonds caused a drastic
yield inversion in which 10-year notes yielded more than 30-year bonds.
The market illiquidity created by this yield-curve inversion plagued the
spread sectors. Trading volume stayed low, and investors tried to shed
"spread-sector" overweightings while displaying a marked preference for
higher credit quality. ("Spread sectors" include high-yield bonds,
investment-grade corporate bonds, and mortgage-backed bonds, yields of which
are gauged by their relationship, or spread, to U.S. Treasurys.) Credit
quality became the overriding concern, and higher-rated debt generally
outperformed lower-rated debt.
Bearish market sentiment seemed to ease toward the end of the period, as
evidence of a slowing economy mounted. Investors saw this as a sign that the
Federal Reserve might be approaching the end of the current cycle of interest
rate increases.
OUTLOOK
The Fed did not raise rates at its June 28 meeting, though it remains concerned
with inflation. The economy seems to be slowing, though it's not clear if the
slowdown will be enough to prevent another interest rate increase. We believe
future rate hikes will affect equities more than bonds, and though we expect the
economy to slow, we don't think it will slip into recession. In such an
environment, we think the spread sectors have a good chance of recovery.
1
<PAGE>
SEMIANNUAL REPORT
PORTFOLIO REVIEW
AVERAGE ANNUAL TOTAL RETURNS, PERIOD ENDED 6/30/00
<TABLE>
<CAPTION>
6 Months 1 Year 5 Years Inception*
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
High Grade Fixed Income Portfolio 2.16% 1.47% 4.14% 2.72%
LB Gov't Bond Index 4.97 5.01 6.20 5.64
--------------------------------------------------------------------------------
</TABLE>
* Inception: since commencement of issuance on November 8, 1993.
The investment return and the principal value of an investment 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.
Performance relates to the Portfolio and does not reflect separate account
charges applicable to variable annuity contracts.
PORTFOLIO HIGHLIGHTS
The Portfolio trailed its benchmark for the period. Corporate bonds, the
Portfolio's largest exposure, performed poorly for five of the six months ended
June 30, 2000. Although corporate bonds did make significant gains in June, the
improvement did not completely offset the losses of the first five months.
Mortgages and agencies also performed rather poorly until June. During the
period we slightly reduced the Portfolio's mortgage exposure and raised its
allocations to corporates, Treasurys and agencies.
<TABLE>
<CAPTION>
SECTOR ALLOCATION* 6/30/00 12/31/99
--------------------------------------------------------------------------------
<S> <C> <C>
Corporates 51.3% 53.1%
Mortgages 31.7 40.3
Treasurys 5.9 4.7
Agencies 11.1 9.8
Liabilities in excess of other assets 0.0 -7.9
--------------------------------------------------------------------------------
Total 100.0 100.0
<CAPTION>
PORTFOLIO CHARACTERISTICS* 6/30/00 12/31/99
--------------------------------------------------------------------------------
<S> <C> <C>
Weighted Average Duration 4.41 yrs 4.94 yrs
Weighted Average Life 10.2 yrs 10.18 yrs
Average Quality Aa1/AA+ Aa1/AA+
Net Assets ($mm) $2.95 $4.57
--------------------------------------------------------------------------------
</TABLE>
* Weightings represent percentages of net assets as of the dates indicated. The
Portfolio is actively managed and its composition will vary over time.
2
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--HIGH GRADE FIXED INCOME PORTFOLIO
SEMIANNUAL REPORT
GOING FORWARD
There is a degree of uncertainty over what is a risk-free benchmark in an era of
reduced Treasury supply. This basic valuation issue may cause increased spread
volatility and wider-than-normal fair value spreads in the future. Despite
recent setbacks, we still find mortgages and agencies attractive. Rising
interest rates have lessened the likelihood that borrowers will prepay or
refinance their mortgages. We intend to continue overweighting spread sectors,
believing in their long-term potential.
With most of the Fed tightening out of the way, we think the corporate market is
positioned to rally. As volatility in the equity market appears to have
stabilized, investors are becoming more comfortable with credit risk. The
technical situation also seems favorable. Recent investor surveys have revealed
that many investors are neutral to underweighted spread sectors. Cash positions
are large and as markets stabilize, investors may be inclined to reinvest in the
corporate market to enhance yield and generate total return.
Our ultimate objective in managing your investments is to help you successfully
meet your financial goals. We thank you for your continued support and welcome
any comments or questions you may have.
Sincerely,
/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.
This letter is intended to assist shareholders in understanding how the
Portfolio performed during the six-month period ended June 30, 2000, and
reflects our views at the time of its writing. Of course, these views may change
in response to changing circumstances.
3
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--HIGH GRADE FIXED INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- --------------- ----------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--5.92%
$144 U.S. Treasury Bonds (cost--$175,473) ........................... 02/15/21 to 08/15/21 7.875 to 8.125% $ 174,665
----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION CERTIFICATES--12.20%
250 GNMA ........................................................... 01/15/24 7.000 243,215
113 GNMA ........................................................... 11/15/17 8.500 116,667
----------
Total Government National Mortgage Association Certificates (cost--$353,755) 359,882
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION CERTIFICATES--10.56%
39 FNMA ........................................................... 12/01/08 6.000 36,725
140 FNMA ........................................................... 08/15/04 6.500 137,285
85 FNMA ........................................................... 04/01/09 7.000 83,100
54 FNMA ........................................................... 09/01/11 8.000 54,510
----------
Total Federal National Mortgage Association Certificates (cost--$314,769) . 311,620
----------
COLLATERALIZED MORTGAGE OBLIGATIONS--8.78%
18 FDIC REMIC Trust, Series 1996-C1, Class 1A ..................... 05/25/26 6.750 17,981
137 LB Commercial Conduit Mortgage Trust, Series 1998-C4, Class A1-A 08/15/06 5.870 130,189
112 Morgan Stanley Capital I, Series 1997-WF1, Class A1 + .......... 10/15/06 6.830 110,824
----------
Total Collateralized Mortgage Obligations (cost--$268,230) ................ 258,994
----------
CORPORATE BONDS--51.32%
AIRLINES--3.41%
55 Continental Airlines ++ ........................................ 05/01/10 7.918 54,823
45 Northwest Airlines ++ .......................................... 10/01/19 8.072 45,683
----------
100,506
----------
ENERGY--0.51%
15 Dynegy Holdings Incorporated ................................... 03/15/05 8.125 15,179
----------
FINANCIAL SERVICES--9.17%
50 Associates Corporation North America ........................... 11/01/08 6.250 44,823
45 CIT Group Incorporated ......................................... 03/15/03 7.375 44,412
75 Commercial Credit Group Incorporated ........................... 01/01/08 6.250 68,380
55 Ford Motor Credit Company ...................................... 04/28/03 6.125 52,947
60 Heller Financial Incorporated .................................. 06/15/05 8.000 59,809
----------
270,371
----------
INSURANCE--4.43%
75 American Re Corporation ........................................ 12/15/26 7.450 68,609
65 Loews Corporation .............................................. 12/15/06 6.750 62,154
----------
130,763
----------
</TABLE>
4
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--HIGH GRADE FIXED INCOME PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- --------------- ----------
<S> <C> <C> <C> <C>
CORPORATE BONDS--(CONTINUED)
MEDIA--4.77%
$ 95 News America Holdings Incorporated ............................. 10/17/96 8.250% $ 84,664
55 Time Warner Incorporated ....................................... 08/15/04 7.975 56,001
----------
140,665
----------
OIL INTEGRATED--1.62%
50 Conoco Incorporated ............................................ 04/15/04 5.900 47,629
----------
REAL ESTATE--3.34%
20 EOP Operating LP ............................................... 03/15/06 8.375 20,205
80 First Industrial LP ............................................ 05/15/27 7.150 78,288
----------
98,493
----------
SECURITIES & ASSET MANAGEMENT--8.89%
50 Lehman Brothers Holdings Incorporated .......................... 04/01/04 6.625 47,726
135 Merrill Lynch & Company Incorporated ........................... 02/12/03 to 02/17/09 6.000 125,242
95 Morgan Stanley Group Incorporated .............................. 01/20/04 5.625 89,181
----------
262,149
----------
TELECOMMUNICATIONS--6.73%
100 AT&T Corporation ............................................... 03/15/09 6.000 89,164
65 US West Capital Funding Incorporated ........................... 07/15/08 6.375 58,815
50 WorldCom Incorporated .......................................... 05/15/06 8.000 50,553
----------
198,532
----------
TOBACCO--1.48%
50 Phillip Morris Companies Incorporated .......................... 01/15/27 7.750 43,670
----------
YANKEE--6.97%
100 Household International Netherlands B V ........................ 12/01/03 6.200 96,245
100 Imperial Tobacco Overseas B V .................................. 04/01/09 7.125 88,945
20 Republic of Trinidad & Tobago .................................. 10/01/09 9.875 20,500
----------
205,690
----------
Total Corporate Bonds (cost--$1,619,656) .................................. 1,513,647
----------
SHORT-TERM U.S. AGENCY OBLIGATIONS--11.08%
327 Federal Farm Credit Bank Discount Note (cost--$326,881) ........ 07/03/00 6.570@ 326,881
----------
Total Investments (cost--$3,058,764)--99.86% .............................. 2,945,689
Other assets in excess of liabilities--0.14% .............................. 4,051
----------
Net Assets--100.00% ....................................................... $2,949,740
==========
</TABLE>
--------------------------
@ Interest rate shown is the discount rate at date of purchase.
+ Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
++ Enhanced equipment trust certificates.
FDIC Federal Deposit Insurance Corporation.
REMIC Real Estate Mortgage Investment Conduit
See accompanying notes to financial statements
5
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--HIGH GRADE FIXED INCOME PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2000 (UNAUDITED)
<S> <C>
ASSETS
Investments, at value (cost--$3,058,764) .................................................................... $ 2,945,689
Cash ........................................................................................................ 696
Interest receivable ......................................................................................... 40,328
Other assets ................................................................................................ 952
-----------
Total assets ................................................................................................ 2,987,665
-----------
LIABILITIES
Payable to investment adviser and administrator ............................................................. 1,236
Accrued expenses and other liabilities ...................................................................... 36,689
-----------
Total liabilities ........................................................................................... 37,925
-----------
NET ASSETS
Beneficial interest shares of $0.001 par value outstanding--350,691 shares (unlimited amount authorized) .... 3,253,886
Undistributed net investment income ......................................................................... 90,005
Accumulated net realized loss from investments .............................................................. (281,076)
Net unrealized depreciation of investments .................................................................. (113,075)
----------
Net assets .................................................................................................. $ 2,949,740
===========
Net asset value, offering price and redemption value per share .............................................. $ 8.41
======
</TABLE>
See accompanying notes to financial statements
6
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--HIGH GRADE FIXED INCOME PORTFOLIO
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JUNE 30, 2000
(UNAUDITED)
INVESTMENT INCOME: --------------
<S> <C>
Interest ........................................................................................ $ 144,002
----------
EXPENSES:
Legal and audit ................................................................................. 19,918
Investment advisory and administration .......................................................... 9,965
Reports and notices to shareholders ............................................................. 14,491
Trustees' fees .................................................................................. 3,750
Custody and accounting fees ..................................................................... 2,230
Transfer agency fees and related service fees ................................................... 750
Other expenses .................................................................................. 2,879
----------
53,983
----------
Net investment income ........................................................................... 90,019
----------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized losses from investments ............................................................ (104,584)
Net change in unrealized depreciation of investments ............................................ 76,093
----------
NET REALIZED AND UNREALIZED LOSSES FROM INVESTMENTS ............................................. (28,491)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................................ $ 61,528
==========
</TABLE>
See accompanying notes to financial statements
7
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--HIGH GRADE FIXED INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31,
(UNAUDITED) 1999
FROM OPERATIONS: ------------- ------------
<S> <C> <C>
Net investment income ............................................................................. $ 90,019 $ 281,801
Net realized losses from investments .............................................................. (104,584) (173,758)
Net change in unrealized appreciation/depreciation of investments ................................. 76,093 (351,717)
----------- -----------
Net increase (decrease) in net assets resulting from operations ................................... 61,528 (243,674)
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ............................................................................. (284,457) --
----------- -----------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares .............................................................. 276,208 852,166
Cost of shares repurchased ........................................................................ (1,956,402) (3,365,762)
Proceeds from dividends reinvested ................................................................ 284,457 556,093
----------- -----------
Net decrease in net assets from beneficial interest transactions .................................. (1,395,737) (1,957,503)
----------- -----------
Net decrease in net assets ........................................................................ (1,618,666) (2,201,177)
NET ASSETS:
Beginning of period ............................................................................... 4,568,406 6,769,583
----------- -----------
End of period (including undistributed net investment income of $90,005 and $284,443, respectively) $ 2,949,740 $ 4,568,406
=========== ===========
</TABLE>
See accompanying notes to financial statements
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Mitchell Hutchins Series Trust--High Grade Fixed Income Portfolio (the
"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.
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; 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"), a wholly owned
subsidiary of Paine Webber Group Inc. ("PW Group") and investment adviser and
administrator of the Portfolio. 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.
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.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME--Investment transactions
are recorded on the trade date. Realized gains and losses from investment
transactions are calculated using the identified cost basis. Interest income
is recorded on an accrual basis. Premiums are amortized and discounts are
accreted as adjustments to interest income and the identified cost of
investments.
DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to
shareholders are recorded on the ex-dividend-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
The ability of the issuers of debt securities including mortgage- and
asset-backed securities held by the Portfolio to meet their obligations may be
affected by economic developments, including those particular to a specific
industry or region. Mortgage- and asset-backed securities may decrease in value
as a result of increases in interest rates and may benefit less than other
fixed-income securities from declining interest rates because of the risk of
prepayments.
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 paid monthly, at an annual rate
of 0.50% of the Portfolio's average daily net assets.
On July 12, 2000, PW Group and UBS AG ("UBS") announced that they had
entered into an agreement and plan of merger under which PW Group will merge
into a wholly owned subsidiary of UBS. If all required approvals are obtained
and the required conditions are satisfied, PW Group and UBS expect to complete
the transaction in the fourth quarter of 2000. UBS, with headquarters in Zurich,
Switzerland, is an internationally diversified organization with operations in
many areas of the financial services industry.
SECURITIES LENDING
The Portfolio may lend securities up to 33 1/3% of its total assets to
qualified institutions. The loans are secured at all times by cash or U.S.
government securities in an amount at least equal to the market value of the
securities loaned, plus accrued interest and dividends, determined on a daily
basis and adjusted accordingly. The 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. For the six months ended
June 30, 2000, there was no security lending activity by the Portfolio.
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 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
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 six months ended June 30, 2000, the Portfolio did not borrow under the
Facility.
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned at June 30,
2000 was substantially the same as the cost of securities for financial
statement purposes.
At June 30, 2000, the components of net unrealized depreciation of
investments were as follows:
<TABLE>
<S> <C>
Gross appreciation (investments having an excess of value over cost) .............. $ 13,191
Gross depreciation (investments having an excess of cost over value) .............. (126,266)
----------
Net unrealized depreciation of investments ........................................ $ (113,075)
==========
</TABLE>
For the six months ended June 30, 2000, total aggregate purchases and sales
of portfolio securities, excluding short-term securities, were $2,624,394 and
$4,483,313, 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.
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 were as
follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
------------- -----------------
<S> <C> <C>
Shares sold ....................................................................... 31,615 94,351
Shares redeemed ................................................................... (233,008) (375,933)
Reinvestment of dividends ......................................................... 34,396 60,656
-------- --------
Net decrease ...................................................................... (166,997) (220,926)
======== ========
</TABLE>
11
<PAGE>
MITCHELL HUTCHINS SERIES TRUST--HIGH GRADE FIXED INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, 2000 --------------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
------------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............... $ 8.82 $ 9.17 $ 9.29 $ 9.10 $ 9.49 $ 8.71
------- ------- ------- ------- ------- -------
Net investment income .............................. 0.30 0.54 0.56 0.55 0.50 0.56
Net realized and unrealized gains (losses)
from investments ................................. (0.12) (0.89) 0.07 0.19 (0.37) 0.79
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations . 0.18 (0.35) 0.63 0.74 0.13 1.35
------- ------- ------- ------- ------- -------
Dividends from net investment income ............... (0.59) -- (0.56) (0.55) (0.52) (0.57)
Distributions from net realized gains on investments -- -- (0.19) -- -- --
------- ------- ------- ------- ------- -------
Total dividends and distributions .................. (0.59) 0.00 (0.75) (0.55) (0.52) (0.57)
------- ------- ------- ------- ------- -------
Net asset value, end of period ..................... $ 8.41 $ 8.82 $ 9.17 $ 9.29 $ 9.10 $ 9.49
======= ======= ======= ======= ======= =======
Total investment return(1) ......................... 2.16% (3.82)% 6.83% 8.13% 1.41% 15.44%
======= ======= ======= ======= ======= =======
Ratios/Supplemental Data:
Net assets, end of period (000's) .................. $ 2,950 $ 4,568 $ 6,770 $ 7,345 $ 7,902 $ 9,147
Expenses to average net assets ..................... 2.71%* 1.91% 1.27% 1.43% 1.62% 1.01%
Net investment income to average net assets ........ 4.52%* 4.65% 5.39% 5.54% 5.04% 5.56%
Portfolio turnover rate ............................ 67% 166% 101% 95% 282% 136%
</TABLE>
--------------------
* Annualized.
(1) Total investment return is calculated assuming a $1,000 investment on
the first day of each period reported, reinvestment of all dividends and
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 reported. The
figures do not include additional contract level charges; results would be
lower if such charges were included. Total investment return for periods of
less than one year has not been annualized.
12
<PAGE>
SEMIANNUAL REPORT
MITCHELL
HUTCHINS SERIES
TRUST
HIGH GRADE
FIXED INCOME
PORTFOLIO
JUNE 30, 2000
-C-2000 PaineWebber Incorporated
All rights reserved
Member SIPC
