PAINEWEBBER LIFE
MILESTONES
FOR LIFE'S IMPORTANT
MOMENTS AND THE MEANS
TO AFFORD THEM
[ PHOTOS ]
ANNUAL REPORT
DECEMBER 31, 1994
<PAGE>
Dear Contract Owner:
We are pleased to present the December 31, 1994 Annual Report for
Milestones, offered exclusively through PaineWebber. This report contains
important information about the PaineWebber Life Variable Annuity Account and
PaineWebber Series Trust, including financial statements for the year ended
December 31, 1994.
INVESTMENT OVERVIEW--DOMESTIC
During the year ended December 31, 1994, the United States economy exhibited
strong economic growth. In a series of monetary tightenings that began early in
1994, the Federal Reserve Board raised the Federal Funds rate, the rate banks
charge each other for overnight borrowing, six times in 1994 for a total
increase of 250 basis points. These increases, which were implemented to
moderate economic expansion and forestall inflation, triggered stock and bond
market volatility throughout most of the year. The Federal Reserve tightened
another 50 basis points on February 1, 1995, increasing the Federal Funds rate
to 6.0%.
Productivity gains in the workplace and a reduced Federal budget deficit
contributed to the low inflation and steady growth which characterized the
economy during the year ended December 31, 1994. Unemployment continued to
decline, and retail sales remained brisk, sparked by strengthened consumer
confidence and an upward trend in personal income. However, side effects of
higher interest rates, including a decline in single family housing starts,
crept into economic data during the latter half of the year. Investors feared
that higher interest rates would dampen corporate earnings, and the stock and
bond markets reacted to each Federal Funds rate increase. However, corporate
earnings continually surprised Wall Street, and higher before-tax operating
earnings helped fuel a stock market rally during July and August.
INVESTMENT OVERVIEW--GLOBAL
The Federal Reserve's credit tightening policy is gradually extending around
the world. In the last several months, Australia, New Zealand, the United
Kingdom, Sweden and Finland also raised their short-term interest rates. In many
instances, long-term yields have also risen and the differences in short- and
long-term interest rates have declined, causing yield curves to flatten. Central
bankers around the world appear to be acting diligently in their guard against
prospective inflation. The Federal Reserve, in particular, has taken proactive
measures to pre-empt a crisis in the value of the dollar, a major source of
inflation pressure. Moreover, government budget deficits are falling worldwide.
Lower deficits translate into reduced pressure on bond yields as governments
reduce their borrowing demands.
While the United States is in a mature phase of its economic recovery,
Europe lags several years behind. The European region appears to be entering a
major cyclical expansion, fueled by powerful demographic trends and continued
low inflation across the region. Among developing markets, we continue to be
optimistic about Latin America's progress. In Eastern Europe, Poland completed
its Brady Bond deal and continued to focus on economic and structural reform.
MONEY MARKET PORTFOLIO
During the year ended December 31, 1994, the Portfolio benefitted from
increases in the Federal Funds rate. In response to rising interest rate market
conditions, the Portfolio reduced its average weighted maturity during the
period, from 53 days as of December 31, 1993 to 38 days as of December 31, 1994.
A shorter average weighted maturity enables the Portfolio to have more cash
available to invest as rates trend upward.
<PAGE>
The Portfolio's money market instruments' seven-day average yield was 5.15%
as of December 31, 1994. According to Donoghue's Money Fund Report, the
seven-day average yield for taxable money market funds was 5.25% for the seven
days ended December 28, 1994.
As inflation remains a concern of the Federal Reserve, a strong possibility
of further credit tightening exists. The Portfolio will continue to maintain its
strategy of a reduced average weighted maturity in order to benefit from
anticipated interest rate increases, while selectively purchasing longer-term
investments which strive to enhance the Portfolio's yield. The Portfolio's
investment decisions continue to be dominated by credit quality and liquidity.
The Portfolio's net assets totalled $25.0 million as of December 31, 1994,
and were comprised of 77.6% commercial paper, 11.8% United States government and
agency obligations, 3.9% bank notes, 3.9% certificates of deposit (Yankee
Dollar) and 2.8% bankers acceptances.
GROWTH PORTFOLIO
During the year ended December 31, 1994, the Portfolio underperformed
relative to the Standard & Poor's 500 Index, which returned 1.3% in 1994. Three
factors impacted the Portfolio's return: a stock market made volatile by
repeated Federal Funds rate increases, the continuing popularity of cyclical
stocks relative to growth stocks, and the Portfolio's position in companies
involved in the "Information Highway." While we cannot predict the course of the
equity market, we believe that an investor shift into growth stocks is imminent,
and that the "Information Highway" represents compelling long-term value.
During the year, the Portfolio increased its position in the specialty
retailing sector (9.9% of net assets as of December 31, 1994), focusing on
companies which have an industry niche or other significant competitive
advantage. The Portfolio also increased its holdings in the fertilizer industry
(1.7%), particularly in Potash Corporation of Saskatchewan Inc. (1.3%) and The
Scotts Company (0.4%). As a major supplier, the Potash Corporation of
Saskatchewan Inc. has the ability to take advantage of firming pricing trends in
the potash industry. The Scotts Company is currently enjoying increasing
recognition of its brand name within the industry.
Net assets of the portfolio totalled $39.1 million as of December 31, 1994.
As of that date, investments consisted of approximately 95.5% common stocks,
0.2% preferred stocks, 8.9% long-term U.S. government obligations and cash
equivalents and 1.0% long-term debt securities.
GLOBAL GROWTH PORTFOLIO
The Portfolio's performance during the year ended December 31, 1994 was
adversely affected by a rising interest rate environment which caused setbacks
involving a price/earnings contraction. Generally, higher interest rates tend to
slow corporate growth, causing earnings to decline. A sharp correction in
emerging markets also negatively impacted performance during this period, as the
Portfolio has made a significant long-term commitment to this sector.
The Portfolio's strategy remains predicated on the view that the world
economy has entered a self-sustaining cyclical expansion. This expansion will
possibly be one of the most powerful in history. The reasons include: continued
low inflation, powerful demographic trends, the fall of Communism, new
technologies and free trade. The Portfolio is organized around the following
themes: basic industries, gold and other mining stocks, technology (electronic
and bio-technology), infrastructure and middle class expansion. We believe these
themes are the logical beneficiaries of the upcoming cyclical expansion.
<PAGE>
Looking ahead to 1995, we believe South Africa, which has only recently been
opened to previously politically wary investors, offers significant upside. We
are also optimistic about Latin America's prospects, and are particularly
enthusiastic about Brazil. In the mature markets, we believe that price/earnings
compression will remain a problem and, therefore, we are focusing on high growth
and restructuring opportunities. We remain virtually uninvested in Japan as we
believe it is overvalued.
Net assets of the Portfolio totalled $40.5 million as of December 31, 1994.
The Portfolio's investments consisted of 98.4% preferred and common stocks,
rights and warrants and 1.5% short-term obligations and cash equivalents. By
region, approximately 35.5% of the Portfolio was invested in North America,
25.0% in Europe, 18.8% in Latin America, 10.3% in South Africa and 9.0% in Asia.
GLOBAL INCOME PORTFOLIO
After five years of appreciation due to benevolent credit conditions,
international fixed income markets experienced a prolonged and pervasive
sell-off from overextended levels during the year ended December 31, 1994. As a
result, the Portfolio's return for the year was negative.
In anticipation of the rise in global bond yields, the Portfolio had placed
over 19.7% of its assets in short-term obligations and cash equivalents before
the market sell-off in February 1994. The Portfolio's strategy in Europe was to
keep its average maturity short and target high current yields. Intermediate
Spanish securities were heavily weighted because a relatively slack Spanish
economy suggested little potential monetary tightening. We also invested in
intermediate British bonds, a market where we believed the very steep yield
curve offered protection against prospective short-term interest rate increases.
Most of the Portfolio's holdings denominated in foreign currency were hedged
against currency risk. This strategy can help reduce the Portfolio's volatility
and therefore may prevent sharp swings in its daily net asset value.
Because of tightening credit conditions worldwide, steps were taken later in
the Portfolio's fiscal year to upgrade the credit quality and liquidity of the
Portfolio's holdings. For example, most positions in Eurobonds and Yankee bonds
of emerging market debt issuers were sold. These holdings were replaced with
United States Treasury securities (12.2% of net assets), which we believe
offered better value relative to risk. Collectively these steps helped to
mitigate pressure from the international bond market decline on the Portfolio's
performance.
Under tightening credit conditions, we did not believe it was prudent to
manage the Portfolio aggressively for income, and we have been conservative. As
a result, the Portfolio's dividend was low for the year. However, with central
bankers diligently tackling rising inflation and government deficits likely to
be lower, prospects for earning higher yields have improved significantly.
Looking ahead to 1995, the Portfolio is positioned to take advantage of these
higher yields. We will continue to follow a conservative investment approach,
with an emphasis on superior credit quality.
Net assets of the Portfolio totalled $52.7 million as of December 31, 1994.
The Portfolio's investments were comprised of approximately 13.7% short-term
debt securities, 80.3% long-term debt securities, 1.9% indexed securities, 0.8%
repurchase agreements and 3.3% cash and cash equivalents.
GOVERNMENT PORTFOLIO
During the year ended December 31, 1994, fixed income market participants
witnessed six Federal Reserve Board increases in the Federal Funds rate
equalling 250 basis points. Clearly, the Federal Reserve Board was looking to
subdue future inflationary pressures in the face of a recovering economy posting
GDP growth in excess of 4%. The increases, combined with volatility throughout
fixed income markets worldwide, resulted in a decrease in fixed income security
prices across all sectors and maturities from three to thirty years.
<PAGE>
Given the economic environment and tighter monetary policy of 1994, the
Portfolio maintained a defensive posture during the year, with emphasis on
higher yielding securities vis-a-vis United States Treasuries. As of December
31, 1994, 26.5% of net assets were invested in international government and
Supra-National issues including the Alberta Province of Canada and the African
Development Bank. A significant portion of the Portfolio (approximately 42.1% of
net assets) was invested in United States government agency securities. Mortgage
pass-through securities of Freddie Mac and Ginnie Mae constituted 16.4% of the
Portfolio, with the resulting 14.5% of net assets held in United States
Treasuries.
Looking ahead to 1995, we will maintain a conservative investment approach.
We will continue to emphasize securities in the government agency and
mortgage-backed sectors that offer attractive yields and risk/reward profiles
versus United States Treasuries.
Net assets of the Portfolio totalled $17.0 million as of December 31, 1994.
The Portfolio's investments consisted of 26.5% international/government agency
obligations, 67.1% long-term U.S. government and agency obligations and 6.4%
cash and cash equivalents.
ASSET ALLOCATION PORTFOLIO
As of December 31, 1994, net assets of the Portfolio totalled $23.3 million.
The Portfolio's asset allocation on this date was 47.5% equities and 52.6%
bonds.
The rising interest rate environment caused the Portfolio to underperform
during the year ended December 31, 1994. As short- and long-term interest rates
rose and the fixed income market declined, the value of the Portfolio's bonds
decreased. The Portfolio's equity securities (47.5% of net assets as of December
31, 1994) were adversely affected by investor fears about higher inflation and
rising interest rates.
As of December 31, 1994, the weighted average maturity of the Portfolio's
fixed income portion was 5.6 years. While we believe that long-term interest
rates will eventually move downward, the near-term interest rate outlook is
uncertain at best, as the Federal Reserve Board seems biased towards further
increases. With respect to the equity portion, we will continue to monitor
equity securities that we believe have sound fundamentals, but have fallen out
of investor favor for the short term. We remain committed to investing in stocks
combining good growth prospects and attractive valuations, which should
outperform cyclical stocks in a slowing economy and provide solid long-term
performance.
At the beginning of the year, the Portfolio's asset allocation was weighted
towards equities. After the year-long deterioration in bond prices, we have
begun shifting the allocation to favor bonds, as we believe that bonds will
rebound once the current cycle of Federal Reserve credit tightening has run its
course. We believe this will occur sometime early in 1995. The Portfolio's bond
component will be increased in a gradual and defensive manner until the interest
rate uncertainty clears.
DIVIDEND GROWTH PORTFOLIO
During the year ended December 31, 1994, the Portfolio's overall performance
was adversely affected by the rising interest rate environment and the ensuing
volatility and instability in the stock market. In addition, the Federal Reserve
Board's interest rate increases diverted investors' attention from companies
reporting increased earnings and dividend growth--stocks which the Portfolio's
investment strategy favors.
G. K. Joshi assumed portfolio management responsibility for the Dividend
Growth Portfolio in May 1994. Mr. Joshi is the Managing Director of Equity
Investments and Chief Investment Officer of
<PAGE>
Core Value Equity at Mitchell Hutchins Institutional Investors Inc. (MHII), the
Portfolio's sub-adviser, a wholly owned subsidiary of Mitchell Hutchins Asset
Management Inc. Core Value Equity is a strategy of equity management for private
accounts at MHII.
Several changes have been made to the Portfolio's holdings during the year
ended December 31, 1994. Portfolio purchases during the period included Procter
& Gamble Company (0.7% of net assets), Hewlett-Packard Company (0.5%) and
Caterpillar Inc. (0.9%). The Portfolio either added or increased positions in
several sectors because of their earnings potential and growth expectations in
the next six to eighteen months, including industrial and electronic products
(10.5%), drugs and medical products (6%) and oil and gas (4.4%). We have
increased the diversification of the Portfolio, adding several new sectors such
as software (1.8%) and biotechnology (0.7%). In addition, the number of stocks
in the Portfolio has been increased from 49 as of December 31, 1993 to
approximately 122 as of December 31, 1994. Going forward, the Portfolio
manager's philosophy will emphasize a disciplined approach to stock selection in
order to seek superior long-term equity performance.
As of December 31, 1994, the Portfolio's net assets totalled $12.9 million.
The Portfolio's investments consisted of 85.1% equities, 0.7% corporate bonds
and 14.2% cash and cash equivalents.
AGGRESSIVE GROWTH PORTFOLIO
After starting off with much enthusiasm following a strong previous year,
1994 closed to find the broad equity market pulling out a slightly positive
return, as evidenced by the S&P 500 Index return of 1.3%. The bond market, as
illustrated by the Lehman Brothers Government/Corporate Bond Index, had a return
of -3.6%, posting its poorest performance in over 60 years. 1994 was a difficult
year for growth stocks, particulary small-cap issues. The strong, growing
economy led to the outperformance of lower quality, cyclical stocks relative to
growth companies. Second, the dramatic rise in interest rates, designed by the
Federal Reserve to slow down economic growth and curb inflation worries, had a
significant impact on stocks, particularly those companies with higher growth
rates and mid- to small capitalizations. Thus, the Portfolio, which is comprised
of mid- to smaller cap issues, posted a negative total return for the year.
As of December 31, 1994, the Portfolio was positioned with 23% in
technology, including Tandem Computers (1.9% of net assets) and Compaq Computer
(1.9%). The technology companies within the Portfolio did well during the fourth
quarter as their unit growth continued to propel strong earnings. In addition,
29% of the portfolio was in producers/manufacturing companies such as the Potash
Corporation of Saskatchewan Inc. (1.8%), and Lyondell Petrochemical (1.3%).
Consumer non-durables including Coca-Cola Enterprises (1.6%) and Archer Daniels
Midland (1.7%) comprised another strategic weighting. The rest of the Portfolio
was broadly diversified across various sectors.
Despite the difficult year, Nicholas Appelgate Capital Management, the
Portfolio's sub-adviser, continues to find companies growing their businesses
today, filling specific growth niches which do not require a strong economy to
increase their earnings streams. The valuations of the companies in the
Portfolio are particularly attractive, as the Portfolio currently offers a
stronger earnings growth rate than the S&P 500 Index while at price/earnings
levels slightly below that of the S&P 500.
As of December 31, 1994, net assets of the Portfolio totalled $13.6 million.
The Portfolio was 94.7% invested in common stocks and 5.3% invested in cash and
cash equivalents.
<PAGE>
BALANCED PORTFOLIO
The last quarter of 1994 concludes a year for equities marked by economic
transition and weak financial markets. While the broad equity market indices
ended roughly flat for the year, this masked a notable deterioration in breadth
as a significant portion of NYSE and NASDAQ issues moved downward. In the equity
markets, select financial and retail issues were weak, while the technology and
healthcare sectors provided support. Fixed income markets witnessed depressed
bond prices throughout the year as a result of the Federal Reserve Board's
monetary tightening policy.
Provident Investment Counsel ("Provident"), the Portfolio's sub-adviser,
focuses on companies with superior sales and earnings growth, above average
margins, and strong balance sheets. Provident continues to believe that the
stage is being set for a return to sustainable outperformance by leading growth
companies. The price/earnings ratio of the Portfolio remains at a slight premium
to the S&P 500. The current calculations of the companies in the Portfolio are
near the low end of their historical range and have traded there for a
significant period of time. Furthermore, in our opinion, the operating outlook
for these companies remains strong, while a peaking of earnings for cyclical and
economically sensitive issues seems inevitable.
In the bond market, increasing interest rates throughout the year produced
some of the worst total return numbers in its history. The Portfolio's
fixed-income component continues to be defensively positioned. Provident will
concentrate on maximizing the coupon return in the Portfolio by judiciously
moving cash balances to favorable portions of the yield curve. As we enter 1995
with optimism, we look forward to reporting improved results.
Net assets of the Portfolio as of December 31, 1994 totalled $12.0 million.
The Portfolio's net assets consisted of 63.7% common stocks, 30.1% fixed income
and 6.2% cash and cash equivalents.
FIXED INCOME PORTFOLIO
During the year ended December 31, 1994, the Portfolio's performance was
adversely affected by the steep rise in interest rates. Wolf, Webb, Burk &
Campbell, Inc., the Portfolio's sub-adviser, diversified the Portfolio as a
defensive measure. In addition, the sub-adviser sought to take advantage of the
extreme market volatility by varying the duration of the Portfolio in line with
their market outlook. In retrospect, the Portfolio assumed an aggressive market
posture too early in the year, underestimating the full force of the bearish
psychology that was unleashed in the first half of the year. Consequently,
performance lagged somewhat earlier in 1994 but improved considerably in the
second half of the year.
Looking ahead to 1995, it is not clear that interest rates have risen enough
to promote a slowing of economic growth. Even though long-term interest rates
have stabilized and even rallied over the past two months, and the yield curve
has flattened dramatically, there is still little fundamental evidence to
suggest that interest rate pressures will be easing imminently. Consequently,
the Portfolio enters the new year in a relatively defensive position. It is
expected that volatility will remain high, creating short-term trading
opportunities. However, until proven otherwise, it must be assumed that the bear
market for bonds which began in October, 1993 has not yet run its course.
As of December 31, 1994, net assets totalled $7.6 million, and consisted of
48.4% U.S. government and agency obligations, 8.8% agency mortgage-backed
securities (all were 15 year agency pass-throughs), 21.7% high quality corporate
bonds (including Yankee bonds), 5.1% Federally sponsored agency obligations and
16.0% cash and cash equivalents.
<PAGE>
Thank you for your continuing support. As always, we welcome any comments or
questions you may have.
Sincerely,
<TABLE>
<S> <C>
/s/ Dennis Hess /s/ Frank P.L. Minard
DENNIS HESS FRANK P.L. MINARD
Chairman and Chief Executive Officer, Chairman,
PaineWebber Life Insurance Company Mitchell Hutchins Asset Management Inc.
</TABLE>
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<TABLE><CAPTION>
GROWTH PORTFOLIO
Comparison of Change in Value of $10,000 Investment
in the Portfolio and the S & P 500 Stock Index
[CHART]
05/04/87 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
S & P 500.......... $10,000 $8,770 $10,216 $13,444 $13,025 $16,976 $18,268 $20,101 $20,374
FUND............... $10,000 $8,848 $10,484 $14,514 $13,331 $18,944 $20,044 $23,981 $21,186
</TABLE>
THE AVERAGE ANNUAL TOTAL RETURN FOR THE TWELVE MONTHS ENDED 12/31/94, FIVE YEARS
ENDED 12/31/94 AND COMMENCEMENT OF OPERATIONS THROUGH 12/31/94 WAS (11.65)%,
7.86% AND 10.30%, RESPECTIVELY.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PERFORMANCE RELATES TO THE PORTFOLIO AND DOES NOT REFLECT SEPARATE ACCOUNT
CHANGES APPLICABLE TO VARIABLE ANNUITY CONTRACTS.
RETURN ON INVESTMENT BASED ON DIVIDENDS PAID - YEARLY.
SOURCE: TOWERS DATA CORP. AND PAINEWEBBER INC.
<PAGE>
<TABLE><CAPTION>
GLOBAL GROWTH PORTFOLIO
Comparison of Change in Value of $10,000 Investment in the
portfolio and the Morgan Stanley Capital World International Index
[CHART]
05/04/87 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MORGAN STANLEY CAP.... $10,000 $8,991 $11,144 $13,060 $10,903 $12,971 $12,366 $15,227 $16,077
FUND.................. $10,000 $8,457 $10,625 $12,663 $13,617 $14,288 $13,209 $18,497 $16,295
</TABLE>
THE AVERAGE ANNUAL TOTAL RETURN FOR THE TWELVE MONTHS ENDED 12/31/94, FIVE YEARS
ENDED 12/31/94 AND COMMENCEMENT OF OPERATIONS THROUGH 12/31/94 WAS (11.94)%,
8.93%, AND 6.58%, RESPECTIVELY.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PERFORMANCE RELATES TO THE PORTFOLIO AND DOES NOT REFLECT SEPARATE ACCOUNT
CHANGES APPLICABLE TO VARIABLE ANNUITY CONTRACTS.
RETURN ON INVESTMENT BASED ON DIVIDENDS PAID - YEARLY.
SOURCE: TOWERS DATA CORP. AND PAINEWEBBER INC.
<PAGE>
<TABLE><CAPTION>
GLOBAL INCOME PORTFOLIO
Comparison of Change in Value of $10,000 Investment in the
Portfolio and the Salomon Brothers World Government Bond Index
[CHART]
05/01/88 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SALOMON BROS WORLD. $10,000 $10,271 $10,715 $11,999 $13,896 $14,665 $16,611 $17,000
FUND........ $10,000 $10,670 $11,396 $13,096 $14,450 $14,636 $17,312 $15,195
</TABLE>
THE AVERAGE ANNUAL TOTAL RETURN FOR THE TWELVE MONTHS ENDED 12/31/94, FIVE YEARS
ENDED 12/31/94 AND COMMENCEMENT OF OPERATIONS THROUGH 12/31/94 WAS (5.56)%,
8.94% AND 7.78%, RESPECTIVELY.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PERFORMANCE RELATES TO THE PORTFOLIO AND DOES NOT REFLECT SEPARATE ACCOUNT
CHANGES APPLICABLE TO VARIABLE ANNUITY CONTRACTS.
RETURN ON INVESTMENT BASED ON DIVIDENDS PAID - YEARLY.
SOURCE: TOWERS DATA CORP. AND PAINEWEBBER INC.
<PAGE>
<TABLE><CAPTION>
GOVERNMENT PORTFOLIO
Comparison of Change in Value of $10,000 Investment in the
Portfolio and Lehman Brothers Mortgage Bond Index
[CHART]
07/05/89 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
LEHMAN BROS. MTGE.... $10,000 $10,573 $11,706 $13,546 $14,490 $15,481 $15,232
FUND................. $10,000 $10,269 $11,046 $12,718 $13,580 $15,163 $14,414
</TABLE>
THE AVERAGE ANNUAL TOTAL RETURN FOR THE TWELVE MONTHS ENDED 12/31/94, FIVE YEARS
ENDED 12/31/94 AND COMMENCEMENT OF OPERATIONS THROUGH 12/31/94 WAS (5.34)%,
6.92% AND 6.80%, RESPECTIVELY.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PERFORMANCE RELATES TO THE PORTFOLIO AND DOES NOT REFLECT SEPARATE ACCOUNT
CHANGES APPLICABLE TO VARIABLE ANNUITY CONTRACTS.
RETURN ON INVESTMENT BASED ON DIVIDENDS PAID - YEARLY.
SOURCE: TOWERS DATA CORP. AND PAINEWEBBER INC.
<PAGE>
<TABLE><CAPTION>
ASSET ALLOCATION PORTFOLIO
Comparison of Change in Value of $10,000 Investment in the
Portfolio and the S & P 500 Stock Index
[CHART]
06/01/88 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S & P 500........... $10,000 $10,885 $14,323 $13,877 $18,087 $19,463 $21,416 $21,707
FUND................ $10,000 $10,539 $11,709 $12,017 $14,273 $15,012 $17,379 $14,669
</TABLE>
THE AVERAGE ANNUAL TOTAL RETURN FOR THE TWELVE MONTHS ENDED 12/31/94, FIVE YEARS
ENDED 12/31/94 AND COMMENCEMENT OF OPERATIONS THROUGH 12/31/94 WAS (9.59)%,
6.05% AND 7.10% RESPECTIVELY.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PERFORMANCE RELATES TO THE PORTFOLIO AND DOES NOT REFLECT SEPARATE ACCOUNT
CHANGES APPLICABLE TO VARIABLE ANNUITY CONTRACTS.
RETURN ON INVESTMENT BASED ON DIVIDENDS PAID - YEARLY.
SOURCE: TOWERS DATA CORP. AND PAINEWEBBER INC.
<PAGE>
DIVIDEND GROWTH PORTFOLIO
Comparison of Change in Value of $10,000 Investment in the
Portfolio and the S & P 500 Stock Index
[CHART]
01/02/92 12/31/92 12/31/93 12/31/94
-------- -------- -------- --------
S & P 500........... $10,000 $10,761 $11,841 $12,001
FUND................ $10,000 $10,337 $10,103 $8,521
THE AVERAGE ANNUAL TOTAL RETURN FOR THE TWELVE MONTHS ENDED 12/31/94 AND
COMMENCEMENT OF OPERATIONS THROUGH 12/31/94 WAS (6.18)% AND (1.77)%,
RESPECTIVELY.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PERFORMANCE RELATES TO THE PORTFOLIO AND DOES NOT REFLECT SEPARATE ACCOUNT
CHANGES APPLICABLE TO VARIABLE ANNUITY CONTRACTS.
RETURN ON INVESTMENT BASED ON DIVIDENDS PAID - YEARLY.
SOURCE: TOWERS DATA CORP. AND PAINEWEBBER INC.
<PAGE>
AGGRESSIVE GROWTH PORTFOLIO
Comparison of Change in Value of $10,000 Investment in the
Portfolio and the S & P 500 Stock Index
[CHART]
11/02/93 12/31/93 12/31/94
-------- -------- --------
S & P 500........... $10,000 $10,037 $10,173
FUND................ $10,000 $9,963 $9,675
THE AVERAGE ANNUAL TOTAL RETURN FOR THE TWELVE MONTHS ENDED 12/31/94 AND
COMMENCEMENT OF OPERATIONS THROUGH 12/31/94 WAS (2.90)% AND (2.80)%,
RESPECTIVELY.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PERFORMANCE RELATES TO THE PORTFOLIO AND DOES NOT REFLECT SEPARATE ACCOUNT
CHANGES APPLICABLE TO VARIABLE ANNUITY CONTRACTS.
RETURN ON INVESTMENT BASED ON DIVIDENDS PAID - YEARLY.
SOURCE: TOWERS DATA CORP. AND PAINEWEBBER INC.
<PAGE>
BALANCED PORTFOLIO
Comparison of Change in Value of $10,000 Investment in the
Portfolio and the S & P 500 Stock Index
[CHART]
11/02/93 12/31/93 12/31/94
-------- -------- --------
S & P 500............ $10,000 $10,037 $10,173
FUND................. $10,000 $9,903 $10,060
THE AVERAGE ANNUAL TOTAL RETURN FOR THE TWELVE MONTHS ENDED 12/31/94 AND
COMMENCEMENT OF OPERATIONS THROUGH 12/31/94 WAS (3.31)% AND (3.66)%,
RESPECTIVELY.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PERFORMANCE RELATES TO THE PORTFOLIO AND DOES NOT REFLECT SEPARATE ACCOUNT
CHANGES APPLICABLE TO VARIABLE ANNUITY CONTRACTS.
RETURN ON INVESTMENT BASED ON DIVIDENDS PAID - YEARLY.
SOURCE: TOWERS DATA CORP. AND PAINEWEBBER INC.
<PAGE>
FIXED INCOME PORTFOLIO
Comparison of Change in Value of $10,000 Investment in the
Portfolio and the Lehman Brothers Government bond Index
[CHART]
11/08/93 12/31/93 12/31/94
-------- -------- --------
LEHMAN GOV'T BOND....... $10,000 $9,929 $9,593
FUND.................... $10,000 $9,938 $8,996
THE AVERAGE ANNUAL TOTAL RETURN FOR THE TWELVE MONTHS ENDED 12/31/94 AND
COMMENCEMENT OF OPERATIONS THROUGH 12/31/94 WAS (6.56)% AND (8.71)%,
RESPECTIVELY.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PERFORMANCE RELATES TO THE PORTFOLIO AND DOES NOT REFLECT SEPARATE ACCOUNT
CHANGES APPLICABLE TO VARIABLE ANNUITY CONTRACTS.
RETURN ON INVESTMENT BASED ON DIVIDENDS PAID - YEARLY.
SOURCE: TOWERS DATA CORP. AND PAINEWEBBER INC.
<PAGE>
THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY
<PAGE>
PaineWebber Life Variable Annuity Account
- --------------------------------------------------------------------------------
Statement of Net Assets
December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY
MARKET GOVERNMENT
COMBINED DIVISION DIVISION
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Investments at net asset value:
PaineWebber Series Trust Money Market Portfolio,
7,980,840 shares at $1.00 per share
(cost--$7,980,840).................................... $ 7,980,840 $ 7,980,840 $ --
PaineWebber Series Trust Government Portfolio, 346,064
shares at
$10.34 per share (cost--$4,015,364)................... 3,578,298 -- 3,578,298
PaineWebber Series Trust Fixed Income Portfolio,
876,487 shares at $8.71 per share
(cost--$8,079,191).................................. 7,634,194 -- --
PaineWebber Series Trust Global Income Portfolio,
1,461,546 shares at $10.88 per share
(cost--$17,059,993)................................. 15,901,619 -- --
PaineWebber Series Trust Balanced Portfolio, 1,272,399
shares at $9.47 per share (cost--$12,435,628)....... 12,049,608 -- --
PaineWebber Series Trust Asset Allocation Portfolio,
607,126 shares at $9.54 per share (cost--$7,031,761). 5,791,984 -- --
PaineWebber Series Trust Dividend Growth Portfolio,
360,785 shares at $9.16 per share
(cost--$3,458,344).................................. 3,304,791 -- --
PaineWebber Series Trust Growth Portfolio, 900,638
shares at $14.56 per share (cost--$15,348,642)...... 13,113,289 -- --
PaineWebber Series Trust Aggressive Growth Portfolio,
1,408,926 shares at $9.65 per share
(cost--$13,961,681)................................. 13,596,122 -- --
PaineWebber Series Trust Global Growth Portfolio,
1,595,025 shares at $12.44 per share
(cost--$22,841,749)................................. 19,842,112 -- --
------------- ------------- -------------
TOTAL INVESTMENTS (COST--$112,213,193)............. 102,792,857 7,980,840 3,578,298
Dividends receivable.................................. 3,882,700 32,086 329,549
Receivable from (payable to) PaineWebber Life
Insurance Company................................... 36,063 1,790 163
------------- ------------- -------------
TOTAL NET ASSETS................................... $106,711,620 $ 8,014,716 $ 3,908,010
------------- ------------- -------------
------------- ------------- -------------
NET ASSETS REPRESENTED BY:
</TABLE>
<TABLE><CAPTION>
Currently payable annuity contracts
- ------------------------------------------------------
<S> <C>
Global Income Division............................................................... $ 4,737
Asset Allocation Division............................................................ 2,286
Growth Division...................................................................... 4,534
Global Growth Division............................................................... 14,192
-------------
25,749
</TABLE>
<TABLE>
<CAPTION>
Contracts in accumulation period
- -------------------------------------------------
UNITS VALUE
-------------- --------------
Contracts sold subject to early withdrawal
charges
- -------------------------------------------------
<S> <C> <C> <C>
Money Market Division............................ 729,488 $10.20 7,440,622
Government Division.............................. 365,568 9.27 3,388,745
Fixed Income Division............................ 788,821 8.83 6,966,201
Global Income Division........................... 1,567,185 9.61 15,058,825
Balanced Division................................ 1,091,748 9.40 10,259,341
Asset Allocation Division........................ 646,381 9.18 5,931,965
Dividend Growth Division......................... 308,172 9.29 2,862,278
Growth Division.................................. 1,561,429 8.72 13,616,611
Aggressive Growth Division....................... 1,292,366 9.50 12,273,838
Global Growth Division........................... 1,903,060 10.19 19,398,829
<CAPTION>
--------------
97,197,255
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIXED GLOBAL ASSET DIVIDEND AGGRESSIVE GLOBAL
INCOME INCOME BALANCED ALLOCATION GROWTH GROWTH GROWTH GROWTH
DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION
- ------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
--
$ $ -- $ -- $ -- $ -- $ -- $ -- $ --
-- -- -- -- -- -- -- --
7,634,194 -- -- -- -- -- -- --
-- 15,901,619 -- -- -- -- -- --
-- -- 12,049,608 -- -- -- -- --
-- -- -- 5,791,984 -- -- -- --
-- -- -- -- 3,304,791 -- -- --
-- -- -- -- -- 13,113,289 -- --
-- -- -- -- -- -- 13,596,122 --
-- -- -- -- -- -- -- 19,842,112
- ------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
7,634,194 15,901,619 12,049,608 5,791,984 3,304,791 13,113,289 13,596,122 19,842,112
220,084 272,044 105,106 744,213 35,577 987,855 7,556 1,148,630
(616) 3,690 4,889 1,179 433 598 8,828 15,109
- ------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 7,853,662 $16,177,353 $12,159,603 $6,537,376 $3,340,801 $14,101,742 $13,612,506 $21,005,851
- ------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
- ------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
UNITS VALUE
------------- -------------
<S> <C> <C> <C>
Contracts sold not subject to early withdrawal
charges
- ---------------------------------------------------
Money Market Division.............................. 56,433 10.17 574,094
Government Division................................ 56,044 9.27 519,265
Fixed Income Division.............................. 100,691 8.81 887,461
Global Income Division............................. 117,924 9.44 1,113,791
Balanced Division.................................. 202,593 9.38 1,900,262
Asset Allocation Division.......................... 65,539 9.20 603,125
Dividend Growth Division........................... 50,211 9.53 478,523
Growth Division.................................... 55,628 8.64 480,597
Aggressive Growth Division......................... 141,235 9.48 1,338,668
Global Growth Division............................. 171,114 9.31 1,592,830
-------------
9,488,616
-------------
$ 106,711,620
-------------
-------------
</TABLE>
See accompanying notes.
<PAGE>
PaineWebber Life Variable Annuity Account
- --------------------------------------------------------------------------------
Statement of Operations
Year ended December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY
MARKET GOVERNMENT
COMBINED DIVISION DIVISION
---------------- ---------------- ----------------
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends............................... $ 1,350,006 $179,414 $ 295,308
Capital gains distributions............. 2,875,787 -- 34,241
Expenses (Note 2):
Administrative charges.................. (67,630) (25,901) (1,293)
Mortality, distribution and expense risk
and enhanced death benefit fees....... (1,226,405) (76,719) (42,179)
---------------- ---------------- ----------------
NET INVESTMENT INCOME (LOSS)........ 2,931,758 76,794 286,077
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 4)
Net realized loss on investments........ (355,956) -- (24,543)
Net unrealized depreciation of
investment............................. (9,008,878) -- (416,230)
---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS.. $ (6,433,076) $ 76,794 $ (154,696)
---------------- ---------------- ----------------
---------------- ---------------- ----------------
</TABLE>
See accompanying notes.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIXED GLOBAL ASSET DIVIDEND AGGRESSIVE GLOBAL
INCOME INCOME BALANCED ALLOCATION GROWTH GROWTH GROWTH GROWTH
DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION
- --------- --------- --------- ----------- --------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 225,030 $ 297,880 $ 111,181 $ 178,804 $ 35,577 $ 7,327 $ 13,040 $ 6,445
-- -- -- 575,720 -- 1,117,196 -- 1,148,630
(2,971) (4,206) (4,258) (3,813) (595) (7,795) (6,719) (10,079)
(78,855) (222,720) (133,726) (73,110) (35,987) (158,988) (152,090) (252,031)
- --------- --------- --------- ----------- --------- ----------- ---------- -----------
143,204 70,954 (26,803) 677,601 (1,005) 957,740 (145,769) 892,965
(26,731) (146,507) (12,254) (22,616) (4,897) (45,093) (19,887) (53,428)
(443,886) (870,107) (381,258) (1,163,839) (145,968) (2,207,272) (369,861) (3,010,457)
- --------- --------- --------- ----------- --------- ----------- ---------- -----------
$(327,413) $(945,660) $(420,315) $ (508,854) $(151,870) $(1,294,625) $ (535,517) $(2,170,920)
- --------- --------- --------- ----------- --------- ----------- ---------- -----------
- --------- --------- --------- ----------- --------- ----------- ---------- -----------
</TABLE>
<PAGE>
PaineWebber Life Variable Annuity Account
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
Period from September 1, 1993 to December 31, 1993 and the
Year ended December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY
MARKET GOVERNMENT
COMBINED DIVISION DIVISION
------------- ------------- -------------
<S> <C> <C> <C>
NET ASSETS AT SEPTEMBER 1, 1993...................... $ -- $ -- $ --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income............................... 628,944 514 19,889
Net realized gain on investments.................... 353 -- --
Net unrealized appreciation (depreciation) of
investments....................................... (411,458) -- (20,836)
------------- ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. 217,839 514 (947)
Changes from principal transactions:
Purchase payments................................... 19,308,321 1,374,252 352,092
Contract distributions and terminations............. (54,750) (900) --
Transfer payments from (to) other divisions......... -- (158,101) (26,596)
------------- ------------- -------------
INCREASE IN NET ASSETS DERIVED FROM PRINCIPAL
TRANSACTIONS.................................... 19,253,571 1,215,251 325,496
------------- ------------- -------------
TOTAL INCREASE AND NET ASSETS AT DECEMBER 31,
1993............................................ 19,471,410 1,215,765 324,549
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss)........................ 2,931,758 76,794 286,077
Net realized loss on investments.................... (355,956) -- (24,543)
Net unrealized depreciation of investments.......... (9,008,878) -- (416,230)
------------- ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. (6,433,076) 76,794 (154,696)
Changes from principal transactions:
Purchase payments................................... 98,757,595 16,778,326 3,384,732
Contract distributions and terminations............. (5,110,803) (1,438,329) (168,128)
Transfer payments (to) from other divisions......... -- (8,617,840) 521,553
Annuity payments.................................... (2,543) -- --
Actuarial adjustment in reserves for currently
payable annuity contracts......................... 29,037 -- --
------------- ------------- -------------
INCREASE IN NET ASSETS DERIVED FROM PRINCIPAL
TRANSACTIONS.................................... 93,673,286 6,722,157 3,738,157
------------- ------------- -------------
TOTAL INCREASE.................................. 87,240,210 6,798,951 3,583,461
------------- ------------- -------------
NET ASSETS AT DECEMBER 31, 1994................. $106,711,620 $ 8,014,716 $ 3,908,010
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See accompanying notes.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIXED GLOBAL ASSET DIVIDEND AGGRESSIVE GLOBAL
INCOME INCOME BALANCED ALLOCATION GROWTH GROWTH GROWTH GROWTH
DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
1,234 309,863 1,022 84,409 10,153 57,075 1,310 143,475
-- -- -- 332 -- 21 -- --
(1,111) (288,267) (4,762) (75,938) (7,585) (28,081) 4,302 10,820
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
123 21,596 (3,740) 8,803 2,568 29,015 5,612 154,295
1,428,115 3,581,783 2,183,207 834,974 680,858 1,786,472 2,952,654 4,133,914
(2,781) (7,168) (2,750) (21,290) -- (3,611) (12,573) (3,677)
57,090 29,635 87,762 (23,480) -- -- (129,287) 162,977
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
1,482,424 3,604,250 2,268,219 790,204 680,858 1,782,861 2,810,794 4,293,214
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
1,482,547 3,625,846 2,264,479 799,007 683,426 1,811,876 2,816,406 4,447,509
143,204 70,954 (26,803) 677,601 (1,005) 957,740 (145,769) 892,965
(26,731) (146,507) (12,254) (22,616) (4,897) (45,093) (19,887) (53,428)
(443,886) (870,107) (381,258) (1,163,839) (145,968) (2,207,272) (369,861) (3,010,457)
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
(327,413) (945,660) (420,315) (508,854) (151,870) (1,294,625) (535,517) (2,170,920)
6,411,815 14,370,056 9,126,818 5,837,235 2,692,033 12,316,174 10,684,571 17,155,835
(357,801) (745,020) (532,742) (294,074) (85,135) (519,241) (469,774) (500,559)
644,514 (132,456) 1,721,363 701,539 202,347 1,782,719 1,116,820 2,059,441
-- (460) -- (224) -- (452) -- (1,407)
-- 5,047 -- 2,747 -- 5,291 -- 15,952
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
6,698,528 13,497,167 10,315,439 6,247,223 2,809,245 13,584,491 11,331,617 18,729,262
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
6,371,115 12,551,507 9,895,124 5,738,369 2,657,375 12,289,866 10,796,100 16,558,342
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
$7,853,662 $16,177,353 $12,159,603 $ 6,537,376 $ 3,340,801 $14,101,742 $13,612,506 $21,005,851
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
</TABLE>
<PAGE>
PaineWebber Life Variable Annuity Account
- --------------------------------------------------------------------------------
Notes to Financial Statements
December 31, 1994
- --------------------------------------------------------------------------------
1. INVESTMENT AND ACCOUNTING POLICIES
PaineWebber Life Variable Annuity Account was organized by PaineWebber Life
Insurance Company (the Company) in accordance with the provisions of California
Insurance laws and is a part of the total operations of the Company. The assets
and liabilities of the PaineWebber Life Variable Annuity Account are clearly
identified and distinguished from the other assets and liabilities of the
Company. The PaineWebber Life Variable Annuity Account invests solely in
specified portfolios of PaineWebber Series Trust, an open-end management
investment company under the Investment Company Act of 1940, as directed by
eligible contract owners. All series of shares are diversified except Global
Income Portfolio. Investments are stated at the closing net asset values per
share on December 31, 1994.
The average cost method is used to determine realized gains and losses.
Dividends are taken into income on an accrual basis as of the ex-dividend date.
Currently payable annuity contract reserves are computed according to the
Individual Annuity Valuation 1983 Table using an assumed interest rate of 4.0%.
If the amount paid to the contractholder is less than originally estimated,
charges paid for mortality and expense risks are reimbursed to the Company. If
additional amounts are required, the Company reimburses the PaineWebber Life
Variable Annuity Account.
2. EXPENSES
The Company is compensated for mortality, distribution and expense risks and
enhanced death benefits by a charge equivalent to an annual rate of 1.60% of the
asset value of each contract sold subject to early withdrawal charges and 1.77%
of the asset value of each contract sold not subject to early withdrawal
charges. These charges amounted to $1,226,405 in 1994.
An annual contract administration charge of $30 is deducted on the first
valuation date on or after each contract anniversary prior to the annuity date.
A transfer charge of $10 will be imposed on each transfer between divisions
(portfolios) of the account in excess of twelve in any one policy year. However,
the Company has waived this charge until further notice. A withdrawal
transaction charge of the lesser of $25 or 2% of the amount withdrawn will be
imposed on each withdrawal in excess of two per policy year. Total
administrative charges amounted to $67,630 in 1994.
Contracts sold subject to early withdrawal charges are assessed a charge equal
to 5% of the amount withdrawn for purchase payments made within a five year
period following the date the payment was received.
3. FEDERAL INCOME TAXES
Operations of the PaineWebber Life Variable Annuity Account forms a part of the
operations of the Company which is taxed as a life insurance company under the
Internal Revenue Code. Under current law, no federal income taxes are payable
with respect to the operations of PaineWebber Life Variable Annuity Account.
<PAGE>
PaineWebber Life Variable Annuity Account
- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
December 31, 1994
- --------------------------------------------------------------------------------
4. PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
-------------------------------------- --------------------------------------
<S> <C> <C> <C> <C>
PURCHASES SALES PURCHASES SALES
----------------- ----------------- ----------------- -----------------
Portfolio:
Money Market.... $ 15,899,666 $ 9,133,295 $ 1,214,469 $--
Government...... 4,371,432 656,851 325,348 22
Fixed Income.... 7,338,995 714,448 1,481,375 --
Global Income... 15,823,091 2,218,561 3,601,991 22
Balanced........ 10,680,140 498,837 2,266,579 --
Asset
Allocation....... 6,638,099 373,793 821,148 31,409
Dividend
Growth........... 3,010,575 227,758 680,490 65
Growth.......... 14,746,301 1,134,296 1,785,159 3,450
Aggressive
Growth........... 12,046,789 873,741 2,808,601 80
Global Growth... 19,479,978 875,645 4,290,865 22
----------------- ----------------- ----------------- -----------------
$ 110,035,066 $16,707,225 $19,276,025 $35,070
----------------- ----------------- ----------------- -----------------
</TABLE>
5. SUMMARY OF CHANGES FROM UNIT TRANSACTIONS
Transactions in units were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
-------------------------------------- --------------------------------------
PURCHASED REDEEMED PURCHASED REDEEMED
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
CONTRACTS SOLD
SUBJECT TO EARLY
WITHDRAWAL
CHARGE
Division:
Money Market.... 1,972,868 1,345,459 102,878 799
Government...... 401,999 58,883 23,736 1,284
Fixed Income.... 837,699 188,712 142,899 3,065
Global Income... 1,578,700 323,231 312,413 697
Balanced........ 988,190 85,212 192,203 3,433
Asset
Allocation....... 629,776 48,389 68,428 3,434
Dividend
Growth........... 273,190 26,410 61,392 --
Growth.......... 1,650,367 246,582 158,002 358
Aggressive
Growth........... 1,159,849 108,333 268,295 27,445
Global Growth... 1,740,093 153,753 318,268 1,548
----------------- ----------------- ----------------- -----------------
11,232,731 2,584,964 1,648,514 42,063
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
</TABLE>
<PAGE>
PaineWebber Life Variable Annuity Account
- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
-------------------------------------- --------------------------------------
PURCHASED REDEEMED PURCHASED REDEEMED
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
CONTRACTS SOLD
NOT SUBJECT TO
EARLY WITHDRAWAL
CHARGE
Division:
Money Market.... 209,584 172,458 34,396 15,089
Government...... 56,564 10,680 11,538 1,378
Fixed Income.... 136,677 50,540 14,828 274
Global Income... 101,415 23,688 40,206 9
Balanced........ 186,832 24,775 40,536 --
Asset
Allocation....... 57,878 4,844 13,527 1,022
Dividend
Growth........... 50,832 7,003 6,382 --
Growth.......... 61,681 29,156 23,112 9
Aggressive
Growth........... 126,078 27,412 43,364 795
Global Growth... 133,084 28,628 66,667 9
<CAPTION>
----------------- ----------------- ----------------- -----------------
1,120,625 379,184 294,556 18,585
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
</TABLE>
6. NET ASSETS
Net assets at December 31, 1994 consisted of the following:
<TABLE>
<CAPTION>
MONEY FIXED GLOBAL
MARKET GOVERNMENT INCOME INCOME BALANCED
COMBINED DIVISION DIVISION DIVISION DIVISION DIVISION
------------ ---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Unit transactions......... $112,740,237 $7,980,727 $4,053,807 $8,160,663 $16,976,200 $12,570,325
Accumulated net investment
income.................... 3,391,719 33,989 291,269 137,996 359,527 (24,702)
Net unrealized
depreciation of
investments.............. (9,420,336) -- (437,066 ) (444,997) (1,158,374) (386,020)
------------ ---------- ---------- ---------- ----------- -----------
$106,711,620 $8,014,716 $3,908,010 $7,853,662 $16,177,353 $12,159,603
------------ ---------- ---------- ---------- ----------- -----------
------------ ---------- ---------- ---------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
ASSET DIVIDEND AGGRESSIVE GLOBAL
ALLOCATION GROWTH GROWTH GROWTH GROWTH
DIVISION DIVISION DIVISION DIVISION DIVISION
----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Unit transactions.............. $ 7,048,729 $3,485,436 $15,356,091 $14,116,281 $22,991,978
Accumulated net investment
income....................... 728,424 8,918 981,004 (138,216) 1,013,510
Net unrealized depreciation of
investments.................. (1,239,777) (153,553) (2,235,353) (365,559) (2,999,637)
----------- ---------- ----------- ----------- -----------
$ 6,537,376 $3,340,801 $14,101,742 $13,612,506 $21,005,851
----------- ---------- ----------- ----------- -----------
----------- ---------- ----------- ----------- -----------
</TABLE>
<PAGE>
Report of Independent Auditors
The Board of Directors
PaineWebber Life Insurance Company
We have audited the accompanying statement of net assets of PaineWebber Life
Variable Annuity Account (comprising, respectively, the Money Market,
Government, Fixed Income, Global Income, Balanced, Asset Allocation, Dividend
Growth, Growth, Aggressive Growth and Global Growth Divisions) as of December
31, 1994, the related statements of operations and changes in net assets for the
year then ended, and the related statement of changes in net assets for the
period from September 1, 1993 (inception date) to December 31, 1993. These
financial statements are the responsibility of the Account's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1994, by correspondence with
the transfer agent. 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 referred to above present fairly,
in all material respects, the financial position of each of the respective
divisions constituting the PaineWebber Life Variable Annuity Account at December
31, 1994, and the results of their operations and the changes in their net
assets for the periods indicated in the first paragraph, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Des Moines, Iowa
January 27, 1995
<PAGE>
THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1994
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- -------------------- -------------- -----------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--11.78%
$ 500 Federal Home Loan Bank................... 09/14/95 6.870% $ 475,573
1,500 Federal National Mortgage Association.... 01/05/95 to 06/15/95 5.170 to 5.800 1,487,508
1,000 U.S. Treasury Bills...................... 02/09/95 to 05/25/95 3.500 to 5.810 986,484
-----------
Total U.S. Government and Agency Obligations
(cost--$2,949,565).................................. 2,949,565
-----------
BANKERS ACCEPTANCE (YANKEE)--2.78%
700 Dai Ichi Kangyo Bank N.Y., Ltd
(cost--$697,403)......................... 01/23/95 6.070 697,403
-----------
BANK NOTE (DOMESTIC)--3.99%
1,000 NationsBank, Texas (cost--$1,000,000).... 01/04/95 6.000 1,000,000
-----------
CERTIFICATE OF DEPOSIT (YANKEE)--3.99%
1,000 Sanwa Bank, Ltd. (cost--$999,992)........ 01/03/95 5.830 999,992
-----------
COMMERCIAL PAPER--77.64%
ASSET BACKED--4.57%
355 Delaware Funding Corp. .................. 04/26/95 6.450 347,686
800 New Center Asset Trust................... 01/20/95 6.050 797,446
-----------
1,145,132
-----------
AUTO--TRUCK--5.17%
800 BMW U.S. Capital Corp.................... 01/19/95 6.070 797,572
500 Ford Motor Credit Corp................... 01/23/95 5.900 498,197
-----------
1,295,769
-----------
BANKING--2.40%
600 Nordbanken North America Inc............. 01/03/95 5.500 599,817
-----------
BROKER--DEALER--9.53%
600 Goldman Sachs Group, LP.................. 03/13/95 5.220 593,823
800 Merrill Lynch & Co., Inc................. 01/05/95 6.000 799,467
1,000 Morgan Stanley Group Inc................. 01/17/95 to 03/09/95 5.400 to 6.250 993,907
-----------
2,387,197
-----------
BUSINESS SERVICES--6.50%
800 PHH Corp................................. 01/10/95 6.050 798,790
830 Xerox Credit Corp........................ 01/06/95 5.970 829,312
-----------
1,628,102
-----------
DRUGS & HEALTHCARE--5.30%
530 Eli Lilly & Co........................... 01/11/95 6.000 529,117
800 Warner-Lambert Co. ...................... 01/17/95 5.820 797,931
-----------
1,327,048
-----------
ELECTRONICS--3.19%
800 Hewlett Packard Co....................... 01/19/95 5.850 797,660
-----------
FINANCE--CONDUIT--3.19%
800 Commerzbank US Finance, Inc.............. 01/03/95 5.850 799,740
-----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO--(CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- -------------------- -------------- -----------
<S> <C> <C> <C>
COMMERCIAL PAPER--(CONCLUDED)
FINANCE--CONSUMER--5.17%
$ 700 Household Finance Corp................... 01/12/95 6.000% $ 698,716
600 Transamerica Finance Corp................ 03/01/95 5.080 595,005
-----------
1,293,721
-----------
FINANCE--DIVERSIFIED--3.59%
900 Associates Corp. of North America........ 01/13/95 6.070 898,179
-----------
FINANCE--EQUIPMENT--0.63%
159 AT&T Capital Corp........................ 01/26/95 5.820 158,357
-----------
FINANCE--INDEPENDENT--1.91%
479 National Rural Utilities Cooperative
Finance Corp............................. 01/17/95 6.000 477,723
-----------
FINANCE--RETAIL--3.18%
800 American Express Credit Corp............. 01/26/95 5.875 796,736
-----------
FOOD & BEVERAGE--6.33%
790 McDonald's Corp. ........................ 01/17/95 5.900 787,928
800 Phillip Morris Companies, Inc............ 01/30/95 5.850 796,230
-----------
1,584,158
-----------
GENERAL TRADE--2.37%
600 Mitsubishi International Corp............ 03/06/95 6.220 593,365
-----------
INSURANCE--PROPERTY/CASUALTY--4.90%
700 AIG Funding Corp. ....................... 06/26/95 6.550 677,584
554 USAA Capital Corp........................ 02/21/95 5.950 549,330
-----------
1,226,914
-----------
OIL EQUIPMENT & SERVICES--3.18%
800 Colonial Pipeline Co..................... 01/31/95 5.970 796,020
-----------
PAPER & FOREST PRODUCTS--3.18%
800 Kimberly Clark Corp...................... 01/23/95 5.850 797,140
-----------
UTILITY--ELECTRIC--3.35%
840 Central+South West Corp.................. 01/09/95 6.050 838,871
-----------
Total Commercial Paper (cost--$19,441,649)........... 19,441,649
-----------
Total Investments (cost--$25,088,609)--100.18%....... 25,088,609
Liabilities in excess of other assets--(0.18)%....... (46,415)
-----------
Net Assets (applicable to 25,057,450 shares of
beneficial interest equivalent to $1.00 per
share)--100.00%..................................... $25,042,194
-----------
-----------
</TABLE>
Weighted average maturity--38 days
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ----------
<S> <C>
COMMON STOCKS--95.52%
APPAREL & FOOTWEAR--1.28%
36,000 Authentic Fitness Corporation*......................................... $ 499,500
----------
BANKING--2.46%
16,690 KeyCorp................................................................ 417,250
30,000 Synovus Financial Corp................................................. 543,750
----------
961,000
----------
BEVERAGES & BOTTLING--3.54%
12,000 The Coca-Cola Company.................................................. 618,000
30,000 Dr. Pepper/Seven-Up Companies, Inc.*................................... 768,750
----------
1,386,750
----------
BIOTECHNOLOGY--1.03%
5,000 Chiron Corporation*.................................................... 401,875
----------
BROADCASTING/CABLE TV--6.79%
15,000 British Sky Broadcasting Group, PLC*................................... 360,000
15,000 Comcast Corporation, Class A........................................... 230,625
31,500 Comcast Corporation, Class A Special................................... 494,156
20,000 International CableTel, Incorporated *................................. 555,000
20,000 Tele-Communications, Inc., Class A *................................... 435,000
1,600 Viacom Inc., Class A*.................................................. 66,600
12,700 Viacom Inc., Class B *................................................. 515,938
----------
2,657,319
----------
CELLULAR & PAGING COMMUNICATIONS--2.43%
30,000 Mobile Telecommunications Technologies Corp.*.......................... 585,000
12,500 Rogers Cantel Mobile Communications Inc., Class B*..................... 364,453
----------
949,453
----------
COMPUTER SOFTWARE--1.10%
75,000 Excalibur Technologies Corporation*.................................... 431,250
----------
CONGLOMERATES--2.08%
70,000 Noel Group, Inc.*...................................................... 385,000
15,000 PEC Israel Economic Corporation*....................................... 427,500
----------
812,500
----------
CONSTRUCTION & ENGINEERING--0.59%
15,000 Empresas ICA Sociedad Controladora, S.A. de C.V........................ 232,500
----------
CONTAINERS & PACKAGING--1.07%
11,500 Sealed Air Corporation*................................................ 416,875
----------
COSMETICS & TOILETRIES--0.90%
19,560 Maybelline, Inc........................................................ 352,080
----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO--(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ----------
<S> <C>
COMMON STOCKS--(CONTINUED)
DRUGS & MEDICAL PRODUCTS--9.83%
7,564 Advanced Therapeutic Systems* (1)...................................... $ 207,065
12,000 Elan Corporation, PLC ADR *............................................ 427,500
15,000 Forest Laboratories, Inc. *............................................ 699,375
21,500 Scherer R.P. Corporation*.............................................. 975,563
18,000 Teva Pharmaceutical Industries Ltd., ADR............................... 435,375
30,000 VISX, Incorporated*.................................................... 315,000
30,000 Watson Pharmaceuticals, Inc.*.......................................... 787,500
----------
3,847,378
----------
ELECTRONICS & INSTRUMENTATION--1.71%
40,000 Lattice Semiconductor Corporation*..................................... 670,000
----------
FERTILIZERS--1.71%
15,000 Potash Corporation of Saskatchewan Inc................................. 510,000
10,000 The Scotts Company, Class A*........................................... 158,750
----------
668,750
----------
FINANCIAL SERVICES--4.93%
39,375 Countrywide Credit Industries, Inc..................................... 511,875
9,000 Federal Home Loan Mortgage Corporation................................. 454,500
8,000 Federal National Mortgage Association.................................. 583,000
8,000 First Data Corporation................................................. 379,000
----------
1,928,375
----------
FOREST PRODUCTS--0.42%
25,000 Universal Forest Products Inc.......................................... 162,500
----------
HEALTH CARE--6.98%
25,000 Humana Inc............................................................. 565,625
40,000 North American Vaccine Inc.*........................................... 335,000
30,000 Pediatric Services of America, Inc.*................................... 435,000
800,000 Quality Care Systems, Inc.............................................. 224,000
60,000 TDX Corporation* (2)................................................... 67,500
15,000 United HealthCare Corporation*......................................... 676,875
10,350 U.S. Healthcare, Inc................................................... 426,938
----------
2,730,938
----------
HOTEL, MOTEL OR LODGING--1.08%
16,000 Hospitality Franchise Systems, Inc.*................................... 424,000
----------
HOUSEHOLD & CONSUMER PRODUCTS--7.29%
12,280 Belding Heminway Inc................................................... 98,240
16,000 Duracell International Inc............................................. 694,000
50,000 The Forschner Group, Inc.*............................................. 625,000
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO--(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ----------
<S> <C>
COMMON STOCKS--(CONTINUED)
HOUSEHOLD & CONSUMER PRODUCTS--(CONCLUDED)
20,000 Luxottica Group S.p.A. ADR............................................. $ 682,500
15,000 Sunbeam-Oster Company, Inc............................................. 386,250
20,000 Syratech Corporation*.................................................. 367,500
----------
2,853,490
----------
INSURANCE--0.92%
27,500 PennCorp Financial Group, Inc.......................................... 360,938
----------
LEISURE & ENTERTAINMENT--4.93%
20,000 International Game Technology.......................................... 310,000
45,000 Norwood Promotional Products, Inc.*.................................... 528,750
60,000 Savoy Pictures Entertainment, Inc.*.................................... 390,000
20,000 Time Warner Inc........................................................ 702,500
----------
1,931,250
----------
LEISURE: GAMING--1.98%
25,000 Mirage Resorts, Incorporated*.......................................... 512,500
1,600 National Gaming Corp. ................................................. 19,200
20,000 Rio Hotel & Casino, Inc.*.............................................. 242,500
----------
774,200
----------
MEDICAL EQUIPMENT--1.27%
18,000 Sunrise Medical Inc.*.................................................. 497,250
----------
METALS & MINING--1.69%
25,000 Madeco S.A. ADR........................................................ 662,500
----------
OIL & GAS--1.23%
48,293 Garnet Resources Corporation*.......................................... 162,989
25,000 Louis Dreyfus Natural Gas Corp.*....................................... 318,750
----------
481,739
----------
OIL SERVICES--0.48%
10,000 Camco International Inc. .............................................. 188,750
----------
PRINTING & PUBLISHING--0.40%
10,000 The News Corporation Limited, ADR...................................... 156,250
----------
SPECIALTY RETAIL--9.89%
20,000 General Nutrition Companies, Inc.*..................................... 580,000
12,000 The Home Depot, Inc.................................................... 552,000
38,500 Rawlings Sporting Goods Company, Inc.*................................. 543,813
110,000 The Right Start, Inc.*(2).............................................. 233,750
36,000 Staples, Inc.*......................................................... 891,000
15,000 Toys 'R' Us, Inc.*..................................................... 457,500
20,000 Viking Office Products, Inc.*.......................................... 612,500
----------
3,870,563
----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO--(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ----------
<S> <C>
COMMON STOCKS--(CONCLUDED)
STEEL--1.18%
40,000 Northwestern Steel and Wire Company*................................... $ 250,000
20,000 Olympic Steel, Inc.*................................................... 210,000
----------
460,000
----------
TELECOMMUNICATIONS--1.34%
30,000 Cable and Wireless plc, ADR............................................ 525,000
----------
TELECOMMUNICATIONS--EQUIPMENT--4.86%
20,000 ANTEC Corporation*..................................................... 367,500
30,000 Belden, Inc.*.......................................................... 667,500
15,000 Motorola, Inc.......................................................... 868,125
----------
1,903,125
----------
TELECOMMUNICATIONS--SERVICES--4.18%
17,500 AT & T Corp............................................................ 879,375
11,000 MFS Communications Company, Inc.*...................................... 360,250
15,000 TeleWest Communications, PLC, ADR*..................................... 397,500
----------
1,637,125
----------
TELEPHONE COMPANIES--1.46%
5,000 Telefonica de Argentina, S.A., ADR..................................... 265,000
7,500 Telefonos de Mexico, S.A. de C.V., ADR................................. 307,500
----------
572,500
----------
TRANSPORTATION--2.49%
8,000 Conrail Inc............................................................ 404,000
13,000 Johnstown America Industries, Inc.*.................................... 212,875
15,000 Railtex Inc.*.......................................................... 356,250
----------
973,125
----------
Total Common Stocks (cost--$31,356,605)............................................ 37,380,848
----------
PREFERRED STOCKS--0.18%
PRINTING & PUBLISHING--0.18%
5,000 The News Corporation Limited (cost--$83,177)........................... 69,375
----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO--(CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- -------------------- -------------- -----------
<S> <C> <C> <C>
LONG-TERM DEBT SECURITIES--1.00%
$ 540 IntelCom Group, Inc. (cost--$540,000)............... 09/17/98 8.000% $ 389,709
-----------
U.S. GOVERNMENT OBLIGATIONS--8.90%
3,500 U.S. Treasury Bills (cost--$3,484,343).............. 01/26/95 to 03/09/95 5.130 to 5.340 3,484,343
-----------
REPURCHASE AGREEMENT--1.74%
685 Repurchase agreement dated 12/30/94 with State
Street Bank & Trust Co., collateralized by $715,672
U.S. Treasury Notes, 4.250%, due 11/30/95 proceeds:
$685,392 (cost--$685,000)........................ 01/03/95 5.150 685,000
-----------
Total Investments (cost--$36,149,125)--107.34%................. 42,009,275
Liabilities in excess of other assets--(7.34%)................. (2,874,279)
-----------
Net Assets (applicable to 2,688,484 shares of beneficial
interest equivalent to $14.56 per share)--100.00%............. $39,134,996
-----------
-----------
</TABLE>
- ------------
* Non-income producing security.
ADS American Depository Shares.
ADR American Depository Receipts.
(1) Warrants attached.
(2) Investment in Affiliated Company--See notes to financial statements.
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- ----------
<S> <C>
COMMON STOCKS--85.29%
ARGENTINA--2.21%
INFRASTRUCTURE--2.21%
350,298 Comercial Del Plata.................................................. $ 893,215
----------
BRAZIL--5.43%
ELECTRIC UTILITY--2.11%
2,420,000 Electrobras.......................................................... 855,296
----------
FOOD--0.73%
20,100,000 Ceval Alimentos...................................................... 296,986
----------
PAPER--0.95%
30,000 Aracruz Celulose ADR................................................. 382,500
----------
TELEPHONE COMPANIES--1.35%
12,628,012 Telebras............................................................. 544,826
12,564 Telebras Pro Rata.................................................... 542
----------
545,368
----------
TOBACCO--0.29%
14,400 Souza Cruz Reg'd..................................................... 119,149
----------
Total Brazil Common Stocks........................................................... 2,199,299
----------
CANADA--7.42%
MINING--6.72%
20,000 Brascan Limited...................................................... 290,501
10,000 Cameco Corp.......................................................... 221,886
95,000 Echo Bay Mines....................................................... 1,009,375
60,000 Horsham Corp......................................................... 765,000
20,000 Placer Dome Inc...................................................... 435,000
----------
2,721,762
----------
TECHNOLOGY--0.70%
80,000 Battery Technologies*................................................ 285,000
----------
Total Canada Common Stocks........................................................... 3,006,762
----------
FINLAND--0.46%
CAPITAL GOODS--0.46%
62,786 Tampella AB OY*...................................................... 185,550
----------
FRANCE--3.37%
CONSTRUCTION--1.06%
7,000 Legris Industries*................................................... 430,537
----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO--(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- ----------
<S> <C>
COMMON STOCKS--(CONTINUED)
FRANCE COMMON STOCKS--(CONCLUDED)
INDUSTRIAL HOLDINGS--0.38%
6,000 Dynaction*........................................................... $ 152,893
----------
INFRASTRUCTURE--0.90%
8,000 Technip SA/Compagnie Francaise....................................... 365,325
----------
LEISURE--1.03%
5,000 Club Mediterranee.................................................... 418,461
----------
Total France Common Stocks........................................................... 1,367,216
----------
GERMANY--2.38%
AUTO--2.38%
3,500 Volkswagenwerk AG.................................................... 962,153
----------
HONG KONG--6.75%
AEROSPACE--1.21%
3,886,200 China Aerospace Int'l Holding*....................................... 492,210
----------
INFRASTRUCTURE--4.09%
2,000,000 Hopewell Holdings.................................................... 1,654,281
----------
RETAILING--1.45%
900,000 Dickson Concept International, Ltd................................... 587,399
----------
Total Hong Kong Common Stocks........................................................ 2,733,890
----------
LUXEMBOURG--1.77%
MINING--1.77%
30,000 Minorco ADR.......................................................... 716,250
----------
MALAYSIA--2.26%
MINING--2.26%
500,000 Malaysia Mining Berhad............................................... 916,389
----------
MEXICO--1.01%
TELEPHONE COMPANIES--1.01%
10,000 Telefonos de Mexico, S.A. de C.V., ADR............................... 410,000
----------
NORWAY--2.63%
MACHINERY & ENGINEERING--1.17%
10,500 Kvaerner "B" Free.................................................... 475,021
----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO--(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- ----------
<S> <C>
COMMON STOCKS--(CONTINUED)
NORWAY COMMON STOCKS--(CONCLUDED)
OIL SERVICE--1.46%
50,000 Aker A/S "B" Free.................................................... $ 591,374
----------
Total Norway Common Stocks........................................................... 1,066,395
----------
POLAND--0.54%
CONSTRUCTION--0.54%
35,000 Mostostal Export Bearer.............................................. 216,865
----------
SOUTH AFRICA--10.14%
CONSTRUCTION--0.88%
19,200 Barlow Ltd........................................................... 170,923
7,000 Murray & Roberts Holdings Ltd........................................ 187,377
----------
358,300
----------
INVESTMENT COMPANY--1.33%
12,000 ASA Limited.......................................................... 538,500
----------
MINING--5.85%
20,000 Driefontein Consolidated Ltd......................................... 306,974
20,000 Free State Consolidated Gold Mines................................... 302,063
120,000 Gencor Ltd........................................................... 430,255
20,000 Kloof Gold Mining Ltd., ADR.......................................... 297,151
30,000 Randfontein Estates Goldmine......................................... 342,584
600,000 South African Iron & Steel/Iscor..................................... 689,587
----------
2,368,614
----------
PETROLEUM--1.23%
60,000 Sasol Ltd............................................................ 497,299
----------
TOBACCO--0.85%
50,000 Rembrandt Group Ltd.................................................. 343,811
----------
Total South Africa Common Stocks..................................................... 4,106,524
----------
SWEDEN--1.97%
APPLIANCES--1.25%
10,000 Electrolux Ab "B" Free............................................... 507,363
----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO--(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- ----------
<S> <C>
COMMON STOCKS--(CONTINUED)
SWEDEN COMMON STOCKS--(CONCLUDED)
MINING--0.72%
20,000 Trelleborg Ab "B" Free*.............................................. $ 292,037
----------
Total Sweden Common Stocks........................................................... 799,400
----------
SWITZERLAND--3.35%
CEMENT--1.87%
1,000 Holderbank........................................................... 757,066
----------
PHARMACEUTICAL--1.48%
1,000 Ciba Geigy........................................................... 598,167
----------
Total Switzerland Common Stocks...................................................... 1,355,233
----------
TURKEY--1.50%
BANKING--0.41%
138,180 Akbank............................................................... 37,491
1,456,400 Yapi Kredi Bank(1)................................................... 126,071
----------
163,562
----------
MACHINERY--1.09%
301,040 Koc Holdings......................................................... 221,696
284,240 Koc Yatirim.......................................................... 220,341
----------
442,037
----------
Total Turkey Common Stocks........................................................... 605,599
----------
UNITED KINGDOM--5.15%
CAPITAL GOODS--1.09%
100,000 Weir Group........................................................... 441,259
----------
HOLDING COMPANY--2.35%
400,000 Lonrho Ord........................................................... 951,368
----------
MINING--0.60%
50,000 Antofagasta Holdings................................................. 242,536
----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO--(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- ----------
<S> <C>
COMMON STOCKS--(CONTINUED)
UNITED KINGDOM COMMON STOCKS--(CONCLUDED)
PHARMACEUTICAL--1.11%
175,000 Medeva............................................................... $ 449,083
----------
Total United Kingdom Common Stocks................................................... 2,084,246
----------
UNITED STATES--26.95%
BIOTECHNOLOGY--4.53%
5,000 Amgen Inc.*.......................................................... 295,000
10,000 Biogen Inc.*......................................................... 417,500
6,000 Chiron Corporation*.................................................. 482,250
20,000 Genzyme.............................................................. 630,000
2,700 Genzyme Tissue Repair Corp........................................... 10,125
----------
1,834,875
----------
COMPUTER SYSTEMS--0.62%
45,500 Maxtor Corporation................................................... 250,250
----------
DATACOMMUNICATIONS--2.87%
35,000 Digital Equipment Corp.*............................................. 1,163,750
----------
ELECTRONICS & INSTRUMENTATION--10.67%
25,000 Analog Devices, Inc. *............................................... 878,125
64,000 National Semiconductor Corp.*........................................ 1,248,000
10,000 R F Monolithics Inc.................................................. 111,250
5,000 Texas Instruments Inc................................................ 374,375
40,000 Westinghouse Electric................................................ 490,000
104,700 Zenith Electronics Corp.*............................................ 1,217,138
----------
4,318,888
----------
FOODS--0.91%
32,000 Wholesome & Hearty Foods, Inc.*...................................... 368,000
----------
MACHINERY--1.75%
30,000 Cincinnati Milacron.................................................. 708,750
----------
MINING--2.09%
40,000 Battle Mountain Gold Co.............................................. 440,000
40,000 Hecla Mining Co.*.................................................... 405,000
----------
845,000
----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO--(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- ----------
<S> <C>
COMMON STOCKS--(CONCLUDED)
UNITED STATES COMMON STOCKS--(CONCLUDED)
OIL & GAS DRILLING--3.51%
30,000 Baker Hughes......................................................... $ 547,500
120,000 Global Marine Inc.*.................................................. 435,000
92,400 Parker Drilling*..................................................... 438,900
----------
1,421,400
----------
Total United States Common Stocks.................................................... 10,910,913
----------
Total Common Stocks (cost--$35,707,897).............................................. 34,535,899
----------
PREFERRED STOCKS--13.11%
BRAZIL--11.18%
BANKING--3.40%
60,366,658 Banco Bradesco....................................................... 513,759
12,000,000 Banco de Brasil Reg'd NV............................................. 236,879
800,000 Investimentos Itau................................................... 472,813
540,000 Itaubanco Reg'd...................................................... 151,283
----------
1,374,734
----------
BEVERAGE--0.60%
735,000 Brahma............................................................... 242,263
----------
CONSUMER DURABLES--0.25%
140,000,000 Forjas Taurus........................................................ 99,291
----------
FOOD--0.52%
100,000,000 Perdigao Comercio.................................................... 210,402
----------
MACHINERY--1.05%
1,050,000 Brasmotor Reg'd...................................................... 425,709
----------
MINING--1.89%
4,000,000 Vale Do Rio Doce Reg'd............................................... 765,957
----------
OIL--1.79%
5,733,333 Petrobras Reg'd...................................................... 725,070
----------
PAPER--0.14%
122,860 Melpaper............................................................. 58,090
----------
RETAILING--0.15%
2,040,000 Lojas Americanas Reg'd............................................... 60,284
----------
STEEL--1.39%
4,000,000 Acesita Cia Acos Espec Itab.......................................... 340,426
300,000 Metalurg Gerdau...................................................... 19,504
300,000 Sider Tubarao........................................................ 201,773
----------
561,703
----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO--(CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- ----------
<S> <C>
PREFERRED STOCKS--(CONCLUDED)
BRAZIL PREFERRED STOCKS--(CONCLUDED)
TELEPHONE COMPANIES--0.00%
850 Telebras Reg'd....................................................... $ 38
2,863 Telebras Reg'd Pro Rata.............................................. 128
----------
166
----------
Total Brazil Preferred Stocks........................................................ 4,523,669
----------
GERMANY--1.77%
AUTO--1.77%
1,650 Porsche AG Non-Voting................................................ 718,178
----------
SOUTH AFRICA--0.16%
PETROLEUM--0.16%
8,000 Sasol Ltd. Convertible Shares........................................ 64,833
----------
Total Preferred Stocks (cost--$5,090,740)............................................ 5,306,680
----------
STOCK RIGHTS--0.04%
TURKEY--0.04%
BANKING--0.04%
63,250 Akbank Non-Trade Certificates (cost--$14,618)........................ 17,161
----------
WARRANTS--0.03%
HONG KONG--0.03%
AEROSPACE--0.03%
943,920 China Aerospace Int'l Holding, expiring 12/31/95 (cost--$204,313).... 13,175
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
- --------- -------- --------------
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--6.15%
$2,500... U.S. Treasury Bills (cost--$2,490,490)............... 01/26/95 4.800 to 5.120% 2,490,490
-----------
REPURCHASE AGREEMENT--3.10%
1,255 Repurchase Agreement dated 12/30/94 with Brown
Brothers
Harriman & Co., collateralized by $1,277,513 U.S.
Treasury Notes, 4.125% due 07/31/95; proceeds:
$1,255,758
(cost--$1,255,000).................................. 01/03/95 5.438 1,255,000
-----------
Total Investments (cost--$44,763,058)--107.72%................... 43,618,405
Liabilities in excess of other assets--(7.72%)................... (3,125,304)
-----------
Net Assets (applicable to 3,254,346 shares of beneficial interest
equivalent to $12.44 per share)--100.00%........................ $40,493,101
-----------
-----------
</TABLE>
- ------------
<TABLE>
<S> <C>
* Non-income producing security.
ADR American Depository Receipts.
(1) Non-trading Promissory Notes received as dividend which will be exchanged into ordinary
shares approximately 5 months after ex-date, 09/07/94.
</TABLE>
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000)* DATES RATES VALUE
- ------------- --------------------- ---------------- -----------
<S> <C> <C> <C>
LONG-TERM DEBT SECURITIES--80.34%
AUSTRALIA--7.81%
1,617 New South Wales Treasury Corp.
Exchangeable** ................... 12/01/01 12.000% $ 1,354,092
1,150 New South Wales Treasury Corp.
Exchangeable...................... 07/01/99 11.500 930,810
2,230 Queensland Treasury Corp. Global
Issue............................. 08/15/01 to 05/15/03 10.500 to 12.000 1,832,174
-----------
4,117,076
-----------
CANADA--6.63%
1,264 Government of Canada.............. 06/01/08 to 06/01/21 9.750 to 10.000 953,704
1,939 Ontario Hydro Global Bonds........ 04/11/07 to 04/11/11 10.030 to 10.460@ 374,085
US$ 1,250 Petro Canada...................... 10/15/01 8.600 1,255,420
1,000 Province of British Columbia...... 08/29/01 10.150 741,187
1,190 Province of British Columbia
Residual Bonds.................... 01/09/12 9.000 to 9.061@ 171,194
-----------
3,495,590
-----------
DENMARK--6.99%
22,577 Government of Denmark............. 11/15/96 to 05/15/03 8.000 to 9.000 3,683,637
-----------
FINLAND--4.18%
10,000 Republic of Finland Housing
Bond.............................. 03/15/02 10.750 2,203,269
-----------
FRANCE--4.85%
13,600 Government of France.............. 04/25/03 to 10/25/19 8.500 2,553,739
-----------
GERMANY--7.48%
6,190 Federal Republic of Germany....... 01/22/96 to 01/04/24 6.250 to 8.875 3,939,252
-----------
IRELAND--4.43%
1,500 Republic of Ireland............... 07/15/01 9.000 2,334,235
-----------
NEW ZEALAND--2.60%
1,540 Government of New Zealand......... 07/15/97 10.000 999,386
540 International Bank for
Reconstruction and
Development(1)................... 07/25/97 12.500 368,582
-----------
1,367,968
-----------
SPAIN--7.68%
518,740 Government of Spain............... 04/15/96 to 03/25/00 11.850 to 13.450 4,043,873
-----------
UNITED KINGDOM--7.80%
1,000 Government of United Kingdom
Exchequer. ...................... 05/15/96 13.250 1,677,216
1,413 United Kingdom Gilt............... 07/14/00 to 06/10/03 8.000 to 13.000 2,432,850
-----------
4,110,066
-----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL INCOME PORTFOLIO--(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000)* DATES RATES VALUE
- ------------- --------------------- ---------------- -----------
<S> <C> <C> <C>
LONG-TERM DEBT SECURITIES--(CONCLUDED)
UNITED STATES--19.89%
1,250 Chase Manhattan Corp.............. 12/01/97 7.500% $ 1,216,988
2,000 Clorox Corporation................ 07/15/01 8.800 2,053,266
1,000 General Motors Acceptance Corp. 07/15/96 8.625 1,005,045
MTN...............................
6,250 U.S. Treasury Notes............... 12/31/96 to 11/30/99 7.500 to 7.750 6,204,773
-----------
10,480,072
-----------
Total Long-Term Debt Securities
(cost--$43,339,028)............................... 42,328,777
-----------
SHORT-TERM DEBT SECURITIES--13.72%
AUSTRALIA--1.48%
1,000 General Electric Capital Corp. 05/22/95 10.750 777,188
Yankee............................
-----------
UNITED STATES--12.24%
6,500 U.S. Treasury Bills............... 01/26/95 to 03/09/95 5.130 to 5.340@ 6,446,845
-----------
Total Short-Term Debt Securities
(cost--$7,228,114)................................ 7,224,033
-----------
INDEXED SECURITY--1.88%
JAPAN--1.88%
US$ 1,000 Rabobank Nederland Japanese Yen
Linked CD (cost--$1,000,000)..... 02/02/95 15.400(2) 994,487
-----------
REPURCHASE AGREEMENT--0.81%
430 Repurchase Agreement dated
12/30/94 with Brown Brothers
Harriman & Co., collateralized by
$437,646 U.S. Treasury Notes,
4.250% due 07/31/95; proceeds:
$430,260 (cost--$430,000)........ 01/03/95 5.438 430,000
-----------
Total Investments (cost--$51,997,142)--96.75%..... 50,977,297
Other assets in excess of liabilities--3.25%...... 1,711,149
-----------
Net Assets (applicable to 4,843,478 shares of
beneficial interest equivalent to $10.88 per
share)--100.00%.................................. $52,688,446
-----------
-----------
</TABLE>
- ------------
Note: The Portfolio of Investments is listed by the security issuer's country of
origin.
* In local currency unless otherwise indicated.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
@ Yield to maturity for zero coupon bonds.
MTN Medium term note.
(1) "Supranational" security denominated in New Zealand Dollars.
(2) The coupon is indexed to the Japanese 10-year swap rate of 3.50% or lower
and the JY/US exchange rate of 114.50 or greater, otherwise 0%.
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL INCOME PORTFOLIO--(CONCLUDED)
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT TO IN EXCHANGE MATURITY APPRECIATION
DELIVER FOR DATES (DEPRECIATION)
------------- -------------- --------------------- --------------
<S> <C> <C> <C> <C>
Australian Dollars.................. 1,257,599 U.S.$ 927,353 02/03/95 $(47,012)
Belgian Francs...................... 44,000,000 U.S.$1,417,091 01/27/95 to 01/03/96 25,678
Belgian Francs...................... 61,500,000 U.S.$1,931,411 02/21/95 (2,011)
British Pounds...................... 785,000 U.S.$1,285,202 01/30/95 57,205
British Pounds...................... 1,000,000 U.S.$1,635,900 01/31/95 71,514
Canadian Dollars.................... 2,236,000 U.S.$1,636,393 02/21/95 41,923
Danish Kronas....................... 4,500,650 U.S.$ 763,858 01/23/95 24,580
Finnish Markkas..................... 10,000,000 U.S.$2,155,172 02/07/95 44,256
Greek Drachmas...................... 831,103,673 U.S.$3,439,458 01/26/95 to 02/24/95 28,642
Irish Punts......................... 1,489,216 U.S.$2,318,709 03/20/95 12,786
Spanish Pesetas..................... 530,506,266 U.S.$4,167,369 01/27/95 to 02/21/95 147,175
Spanish Pesetas..................... 90,631,181 U.S.$ 720,610 01/26/95 33,339
Spanish Pesetas..................... 267,910,500 U.S.$2,080,131 01/17/95 46,945
Spanish Pesetas..................... 156,952,000 U.S.$1,202,701 01/03/95 10,485
U.S. Dollars........................ 853,149 ESB112,687,378 01/03/95 2,860
U.S. Dollars........................ 690,478 Bfr 22,000,000 01/27/95 480
-------
$498,845
-------
-------
</TABLE>
CURRENCY TYPE ABBREVIATIONS:
ESB--Spanish Peseta
Bfr--Belgian Franc
INVESTMENTS BY TYPE OF ISSUER
PERCENTAGE OF NET
ASSETS
-----------------------
LONG-TERM SHORT-TERM
--------- ----------
Government and other public issuers................... 69.14% 12.24%
Financial institutions................................ 1.91 1.48
Banks................................................. 3.01 1.88
Repurchase agreement.................................. -- 0.81
Other................................................. 6.28 --
--------- -----
80.34% 16.41%
--------- -----
--------- -----
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- -------------------- -------------- -----------
<S> <C> <C> <C>
INTERNATIONAL GOVERNMENT AND AGENCY OBLIGATIONS--26.54%
AFRICAN DEV BK--8.54%
$ 1,500 .......................................... 12/15/01 7.750% $ 1,453,680
-----------
ALBERTA PROV CDA--9.19%
1,500 .......................................... 04/01/00 9.250 1,563,765
-----------
EXPORT CEV CORP--8.81%
1,500 .......................................... 08/10/99 8.125 1,499,115
-----------
Total International Government and Agency Obligations
(cost--$4,700,565)................................... 4,516,560
-----------
LONG-TERM U.S. GOVERNMENT AND AGENCY OBLIGATIONS--67.06%
FEDERAL FARM CREDIT BANK BONDS--9.01%
1,500 .......................................... 10/01/99 8.650 1,533,750
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION CERTIFICATES--2.15%
115 .......................................... 11/15/18 8.000 110,262
260 .......................................... 07/01/21 to 03/01/22 8.500 255,646
-----------
365,908
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION NOTES--19.29%
1,000 .......................................... 07/10/02 7.300 929,061
1,000 .......................................... 03/10/99 7.500 973,036
500 .......................................... 04/10/02 7.900 480,227
500 .......................................... 07/10/01 8.875 499,616
400 .......................................... 02/10/00 9.300 401,244
-----------
3,283,184
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION CERTIFICATES--14.22%
1,420 .......................................... 01/15/17 to 11/15/20 9.000 1,432,203
957 .......................................... 05/15/18 to 07/15/24 9.500 988,081
-----------
2,420,284
-----------
GUARANTEED TRADE TRUST--2.66%
479 .......................................... 06/26/06 7.390 452,668
-----------
PRIVATE EXPORT FUNDING CORPORATION--5.95%
1,000 .......................................... 07/31/01 8.400 1,012,931
-----------
STUDENT LOAN MARKETING ASSOCIATION CERTIFICATES--8.01%
1,500 .......................................... 08/01/12 7.300 1,363,682
-----------
UNITED STATES TREASURY NOTES--5.77%
1,000 .......................................... 05/15/02 7.500 981,392
-----------
Total Long-Term U.S. Government and Agency Obligations
(cost--$11,912,415)................................. 11,413,799
-----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GOVERNMENT PORTFOLIO--(CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- -------------------- -------------- -----------
<S> <C> <C> <C>
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--]11.12%
FEDERAL NATIONAL MORTGAGE ASSOCIATION NOTES--2.36%
$ 400 .......................................... 03/10/95 8.850% $ 401,899
-----------
U.S. TREASURY BILLS--8.76%
1,500 .......................................... 01/26/95 to 03/09/95 5.130 to 5.340 1,491,468
-----------
Total Short-Term U.S. Government Obligations
(cost--$1,899,749)................................... 1,893,367
-----------
REPURCHASE AGREEMENT--3.03%
515 Repurchase Agreement dated 12/30/94 with
State Street Bank & Trust Co.,
collateralized by $538,060 U.S. Treasury
Notes, 4.25% due 11/30/95 proceeds:
$515,295 (cost--$515,000)................ 01/03/95 5.150 515,000
-----------
Total Investments (cost--$19,027,729)--107.75%........ 18,338,726
Liabilities in excess of other assets--(7.75)%........ (1,318,751)
-----------
Net Assets (applicable to 1,646,241 shares of
beneficial interest equivalent to $10.34 per
share)--100.00%..................................... $17,019,975
-----------
-----------
</TABLE>
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSET ALLOCATION PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<S> <C>
COMMON STOCKS--47.45%
AUTO & TRUCKS--2.45%
12,600 Cummins Engine Company, Inc. ......................................... $ 570,150
-----------
BEVERAGES & BOTTLING--2.38%
15,300 Pepsico, Inc. ........................................................ 554,625
-----------
BROADCASTING/CABLE TV--1.98%
46,000 Home Shopping Network, Inc.*.......................................... 460,000
-----------
BUILDING & BUILDING MATERIALS--1.91%
48,000 Payless Cashways, Inc.*............................................... 444,000
-----------
CONGLOMERATES--1.46%
10,000 Allied-Signal Inc. ................................................... 340,000
-----------
DRUGS & MEDICAL PRODUCTS--1.77%
17,000 Teva Pharmaceutical Industries Ltd., ADS.............................. 411,187
-----------
ELECTRONICS & INSTRUMENTATION--2.22%
8,100 Intel Corporation..................................................... 517,388
-----------
FINANCIAL SERVICES--2.02%
17,500 Ceridian Corporation*................................................. 470,313
-----------
FERTILIZERS--3.51%
10,000 Potash Corporation of Saskatchewan Inc. .............................. 340,000
30,000 The Scotts Company, Class A*.......................................... 476,250
-----------
816,250
-----------
HEALTHCARE--1.95%
11,000 U.S. Healthcare, Inc. ................................................ 453,750
-----------
HOUSEHOLD & CONSUMER PRODUCTS--2.07%
7,600 Colgate--Palmolive Company............................................ 481,650
-----------
INSURANCE--1.81%
7,500 MBIA Inc. ............................................................ 420,937
-----------
MEDICAL EQUIPMENT--2.14%
18,000 Sunrise Medical Inc.*................................................. 497,250
-----------
OIL & GAS--1.64%
14,000 Repsol, S.A. ......................................................... 381,500
-----------
PAPER & PAPER PRODUCTS--1.99%
24,000 Albany International Corp., Class A................................... 462,000
-----------
SPECIALTY CHEMICALS--2.68%
14,400 IMC Global Inc. ...................................................... 622,800
-----------
SPECIALTY RETAIL--2.23%
25,000 Arbor Drugs, Inc. .................................................... 518,750
-----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSET ALLOCATION PORTFOLIO--(CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<S> <C>
COMMON STOCKS--(CONCLUDED)
TELECOMMUNICATIONS--EQUIPMENT--3.12%
17,000 Belden, Inc.*......................................................... $ 378,250
6,000 Motorola, Inc. ....................................................... 347,250
-----------
725,500
-----------
TELEPHONE COMPANIES--1.23%
7,000 Telefonos de Mexico, S.A. de C.V., ADS................................ 287,000
-----------
TIRES & RUBBER--2.23%
22,000 Cooper Tire and Rubber Company........................................ 519,750
-----------
TRANSPORTATION--4.66%
11,000 Burlington Northern Inc. ............................................. 529,375
11,000 Conrail Inc. ......................................................... 555,331
-----------
1,084,706
-----------
11,039,506
Total Common Stocks (cost--$11,367,545)...........................................
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
- --------- -------------------- --------------
<S> <C> <C> <C>
LONG-TERM U.S. GOVERNMENT OBLIGATIONS--52.62%
$ 8,200 U.S. Treasury Notes.................... 08/31/99 6.875% 7,895,050
4,425 U.S. Treasury Notes.................... 05/15/02 7.500 4,343,408
-----------
12,238,458
-----------
Total Long-Term U.S. Government Obligations
(cost--$12,527,682)...............................
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--10.70%
2,500 U.S. Treasury Bills
(cost--$2,489,788).................... 01/26/95 to 03/09/95 3.700 to 5.340 2,489,788
-----------
REPURCHASE AGREEMENT--1.93%
450 Repurchase Agreement dated 12/30/94
with State Street Bank & Trust Co.,
collateralized by $470,149 U.S.
Treasury notes, 4.250% due 11/30/95
proceeds: $450,257 (cost--$450,000).... 01/03/95 5.150 450,000
-----------
Total Investments (cost--$26,835,015)--112.70%..... 26,217.752
Liabilities in excess of other assets--(12.70%).... (2,954,566)
-----------
Net Assets (applicable to 2,437,321 shares of
beneficial interest equivalent to $9.54 per
share)--100.00%.................................. $23,263,186
-----------
-----------
</TABLE>
- ------------
* Non-income producing security.
ADS American Depository Shares.
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIVIDEND GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<S> <C>
COMMON STOCKS--85.14%
AEROSPACE--2.09%
2,900 Loral Corporation....................................................... $ 109,838
3,600 Martin Marietta Corporation............................................. 159,750
-----------
269,588
-----------
BANKING--4.65%
3,300 Central Fidelity Banks, Inc. ........................................... 80,025
5,200 Comerica Inc.(1)........................................................ 126,750
800 First Empire State Corporation.......................................... 108,800
7,500 Marshall and Ilsley Corporation......................................... 142,500
3,100 Nationsbank Corp........................................................ 139,888
-----------
597,963
-----------
BEVERAGES & BOTTLING--0.56%
2,000 Pepsico, Inc............................................................ 72,500
-----------
BIOTECHNOLOGY--0.69%
1,500 Amgen Inc.*............................................................. 88,500
-----------
CHEMICAL--1.91%
2,600 Borden Chemicals & Plastics LTD......................................... 59,800
9,800 Methanex Corporation.................................................... 127,400
3,100 RPM Inc................................................................. 58,125
-----------
245,325
-----------
COMPUTER--6.95%
2,900 Adaptec Inc. ........................................................... 68,513
4,400 Bay Network Inc. ....................................................... 129,800
2,000 Cisco Systems Inc. ..................................................... 70,250
2,600 Computer Associates International Inc. ................................. 126,100
1,300 Digital Equipment Corp.(1) ............................................. 43,225
8,000 EMC Corp. .............................................................. 173,000
1,800 Exabyte Corp. .......................................................... 38,475
2,600 International Business Machines Corporation............................. 191,100
1,000 Legent Corp. ........................................................... 28,750
1,000 Softkey International Inc. ............................................. 25,500
-----------
894,713
-----------
CONGLOMERATES--1.16%
1,100 General Electric Company................................................ 56,100
1,500 Proctor & Gamble Co. ................................................... 93,000
-----------
149,100
-----------
CONGLOMERATES-DIVERSIFIED--0.56%
9,200 Laidlaw Inc. Class B.................................................... 72,450
-----------
CONSTRUCTION & ENGINEERING--2.02%
3,600 Fleetwood Enterprises Inc. ............................................. 67,500
1,800 Fluor Corporation(1).................................................... 77,625
4,200 Louisiana Pacific Corporation........................................... 114,450
-----------
259,575
-----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIVIDEND GROWTH PORTFOLIO--(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<S> <C>
COMMON STOCKS--(CONTINUED)
DRUGS & MEDICAL PRODUCTS--6.04%
2,500 Abbott Laboratories..................................................... $ 81,563
1,800 American Home Products Corp. ........................................... 112,950
1,400 Bristol Myers Squibb Co.(1) ............................................ 81,025
4,000 Johnson & Johnson....................................................... 219,000
1,200 Lilly Eli & Co.(1) ..................................................... 78,750
1,600 Merck & Co., Inc. ...................................................... 61,000
3,300 Mylan Labs Inc. ........................................................ 89,100
700 Pfizer Inc. ............................................................ 54,075
-----------
777,463
-----------
ELECTRONICS & INSTRUMENTATION--4.55%
2,300 Concord EFS Inc. ....................................................... 57,500
600 Hewlett-Packard Company................................................. 59,925
800 KLA Instrs Corp.(1) .................................................... 39,200
2,300 Lam Research Corp. ..................................................... 85,675
2,200 Raytheon Company(1)..................................................... 140,525
3,900 Reynolds & Reynolds Co. ................................................ 97,500
8,600 Westinghouse Electric Corporation(1).................................... 105,350
-----------
585,675
-----------
ENVIRONMENTAL SERVICES--2.27%
2,300 Molten Metal Technology Inc. ........................................... 37,375
9,700 WMX Technologies Inc. .................................................. 254,625
-----------
292,000
-----------
FERTILIZERS--0.96%
3,600 Potash Corporation of Saskatchewan Inc. ................................ 122,400
-----------
FINANCIAL SERVICES--1.46%
700 Beneficial Corp.(1) .................................................... 27,300
1,700 Federal National Mortgage Association................................... 123,888
900 Paychex Inc. ........................................................... 36,450
-----------
187,638
-----------
FOODS--2.24%
1,050 Archer Daniels Midland Co. ............................................. 21,656
1,400 Campbell Soup Co. ...................................................... 61,775
5,600 ConAgra, Inc. .......................................................... 175,000
1,200 Sara Lee Corporation(1)................................................. 30,300
-----------
288,731
-----------
FOREST PRODUCTS--1.08%
2,400 Champion Intl Corp. .................................................... 87,600
10,000 Repap Enterprises Inc. ................................................. 51,250
-----------
138,850
-----------
HEALTHCARE--2.40%
1,500 Becton Dickinson & Co. ................................................. 72,000
6,300 National Medical Enterprises Inc.(1) ................................... 88,988
3,600 U.S. Healthcare, Inc. .................................................. 148,500
-----------
309,488
-----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIVIDEND GROWTH PORTFOLIO--(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<S> <C>
COMMON STOCKS--(CONTINUED)
HOUSEHOLD & CONSUMER PRODUCTS--1.80%
1,200 Lancaster Colony Corporation(1)......................................... $ 35,250
8,400 Rite Aid Corp.(1) ...................................................... 196,350
-----------
231,600
-----------
INDUSTRIAL & ELECTRONIC PRODUCTS--10.54%
1,100 AMP Incorporated(1)..................................................... 80,025
100 Baldor Electric Co.(1) ................................................. 2,700
13,000 Donaldson Inc.(1) ...................................................... 312,000
1,300 Dover Corporation(1).................................................... 67,113
1,900 Emerson Electric Co.(1)................................................. 118,750
3,800 Federal Signal Corporation.............................................. 77,425
600 Foster Wheeler Corporation(1)........................................... 17,850
2,500 General Dynamics Corporation............................................ 108,750
1,800 General Instruments Corporation......................................... 54,000
2,800 Inland Steel Industries(1).............................................. 98,350
875 Molex Inc. ............................................................. 30,188
2,400 Nucor Corporation....................................................... 133,200
2,600 Pentair Inc.(1) ........................................................ 109,850
7,350 Worthington Industries, Inc. ........................................... 147,000
-----------
1,357,201
-----------
INSURANCE--5.20%
2,900 AFLAC Incorporated...................................................... 92,800
1,600 American International Group............................................ 156,800
2,800 Equitable of Iowa Companies............................................. 79,100
2,500 Progressive Corporation................................................. 87,500
4,300 Providian Corp. ........................................................ 132,763
2,700 St. Paul Cos. Inc. ..................................................... 120,825
-----------
669,788
-----------
LEISURE & ENTERTAINMENT--0.12%
1,000 International Game Technology........................................... 15,500
-----------
MACHINERY--MACHINE TOOLS--2.03%
2,200 Caterpillar Inc. ....................................................... 121,275
1,100 Illinois Tool Works Inc. ............................................... 48,125
1,600 W.W. Grainger, Inc.(1) ................................................. 92,400
-----------
261,800
-----------
MEDICAL EQUIPMENT--0.35%
800 Medtronic, Inc.(1)...................................................... 44,500
-----------
OFFICE EQUIPMENT--0.45%
1,400 Diebold, Incorporated................................................... 57,575
-----------
OIL & GAS--4.40%
1,200 Amoco Corp. ............................................................ 70,950
700 Atlantic Richfield Company.............................................. 71,225
2,800 Chevron Corporation(1).................................................. 124,950
4,000 Duke Power Co. ......................................................... 152,500
200 Exxon Corp. ............................................................ 12,150
1,600 Mobil Corp.(1) ......................................................... 134,800
-----------
566,575
-----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIVIDEND GROWTH PORTFOLIO--(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<S> <C>
COMMON STOCKS--(CONTINUED)
PAPER--0.43%
800 Scott Paper Co. ........................................................ $ 55,301
-----------
PRINTING & PUBLISHING--2.22%
4,800 Banta Coporation........................................................ 145,200
2,500 Gannett Company Inc. ................................................... 133,125
200 Pulitzer Publishing Co. ................................................ 8,025
-----------
286,350
-----------
RETAIL--0.92%
2,800 American Stores Co.(1) ................................................. 75,250
1,100 Mercantile Stores Inc. ................................................. 43,450
-----------
118,700
-----------
RETAIL FOOD CHAINS--1.27%
4,200 Albertson's, Inc........................................................ 121,800
5,000 Brunos Inc.............................................................. 41,875
-----------
163,675
-----------
SOFTWARE--1.84%
1,200 BMC Software Inc. ...................................................... 68,250
3,900 Cadence Design Systems Inc.(1) ......................................... 80,438
2,800 Symantec Corp. ......................................................... 49,000
900 Synopsys Inc. .......................................................... 39,375
-----------
237,063
-----------
SPECIALTY CHEMICALS--1.81%
1,500 Hanna M.A. Co. ......................................................... 35,625
4,900 Lubrizol Corporation.................................................... 165,988
1,500 Praxair Inc. ........................................................... 30,750
-----------
232,363
-----------
SPECIALTY RETAIL--5.63%
500 Calloway Inc. .......................................................... 16,563
2,700 Dayton Hudson Corporation............................................... 191,025
1,700 Leggett & Platt Inc. ................................................... 59,500
2,000 Limited Inc. ........................................................... 36,250
1,800 Loctite Corporation..................................................... 83,700
3,600 Nordstrom Inc. ......................................................... 151,200
2,400 The Pep Boys--Manny, Moe & Jack(1)...................................... 74,400
2,200 The Sherwin-Williams Company(1)......................................... 72,875
2,100 United States Shoe Corporation.......................................... 39,375
-----------
724,888
-----------
TELECOMMUNICATIONS--SERVICES--1.01%
1,600 DSC Communications Corp. ............................................... 57,400
1,300 Tellabs Inc. ........................................................... 72,475
-----------
129,875
-----------
TELEPHONE COMPANIES--1.55%
4,100 Century Telephone Enterprises Incorporated 120,950
1,700 Telephone & Data Systems Inc. .......................................... 78,413
-----------
199,363
-----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIVIDEND GROWTH PORTFOLIO--(CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<S> <C>
COMMON STOCKS--(CONCLUDED)
TOBACCO--1.98%
1,300 American Brands Inc.(1) ................................................ $ 48,378
3,600 Philip Morris Companies, Inc............................................ 207,000
-----------
255,378
-----------
Total Common Stocks (cost--$11,159,075)............................................. 10,959,454
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
- -------- --------------------- ----------------
<S> <C> <C> <C>
CORPORATE BOND--0.74%
$ 100 Developers Diversified Realty
Corporation
(cost--$100,000).................... 08/15/99 7.000% 95,000
-----------
U.S. GOVERNMENT OBLIGATIONS--15.38%
2,000 U.S. Treasury Bills
(cost--$1,980,123)................... 03/09/95 5.340 1,980,123
-----------
REPURCHASE AGREEMENT--0.27%
35 Repurchase agreement dated 12/30/94
with State Street Bank & Trust Co.,
collateralized by $36,567 U.S.
Treasury Notes, 4.250%, due
11/30/95; proceeds: $35,020
(cost--$35,000)...................... 01/03/95 5.150 35,000
-----------
Total Investments
(cost--$13,274,198)--101.53%.................. 13,069,577
Liabilities in excess of other
assets--(1.53%)............................... (197,987)
-----------
Net Assets (applicable to 1,405,740 shares of
beneficial interest equivalent to $9.16 per
share)--100.00%............................... $12,871,590
-----------
-----------
</TABLE>
- ------------
* Non-income producing security
ADS American Depository Shares
(1) Rights Attached
<TABLE>
<CAPTION>
WRITTEN OPTIONS OPEN--(See Options Note to Financial Statements)
NUMBER OF EXPIRATION EXERICSE UNREALIZED
OPTIONS UNDERLYING CONTRACT DATE PRICE GAIN
--------- ------------------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
Call:............................. 3 Lilly Eli & Company Jan 95 $ 70 $103
</TABLE>
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ----------
<S> <C>
COMMON STOCKS--94.70%
AEROSPACE--4.78%
5,400 Litton Industries Inc. ................................................ $ 199,800
4,400 Martin Marietta Corporation (New)...................................... 195,250
1,800 McDonnell Douglas Corporation.......................................... 255,600
----------
650,650
----------
AUTOMOTIVE EQUIPMENT--0.73%
3,500 Breed Technologies Inc. ............................................... 99,311
----------
BANKING--1.52%
5,000 First Union Corporation................................................ 206,875
----------
BROADCASTING--3.40%
2,700 Capital Cities ABC Inc. ............................................... 230,175
1,600 Lin Broadcasting Corporation........................................... 213,600
800 Lin Television Corporation*............................................ 18,200
----------
461,975
----------
BEVERAGES & BOTTLING--1.64%
12,500 The Coca-Cola Company.................................................. 223,437
----------
COMPUTER--11.57%
2,700 Apple Computer......................................................... 106,650
6,500 Compaq Computer Corporation*........................................... 256,750
5,300 Computer Associates International Inc. ................................ 257,050
5,200 Compuware Corporation*................................................. 187,200
3,400 International Business Machines........................................ 249,900
5,750 Micron Technology Inc. ................................................ 253,719
15,300 Tandem Computers Inc.*................................................. 262,013
----------
1,573,282
----------
CHEMICALS--5.75%
4,100 Eastman Chemicals Company.............................................. 207,050
3,800 FMC Corporation*....................................................... 219,450
6,600 Lyondell Petrochemical Company......................................... 170,775
3,600 Olin Corporation....................................................... 185,400
----------
782,675
----------
EMPLOYMENT SERVICES--1.86%
9,000 Manpower Inc. ......................................................... 253,125
----------
ENTERTAINMENT--2.95%
9,300 Brunswick Corporation.................................................. 175,537
6,800 Callaway Golf Company.................................................. 225,250
----------
400,787
----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGGRESSIVE GROWTH PORTFOLIO--(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ----------
<S> <C>
COMMON STOCKS--(CONTINUED)
FINANCIAL SERVICES--2.27%
3,900 BanPonce Corporation................................................... $ 109,687
5,800 Chase Manhattan Corporation............................................ 199,375
----------
309,062
----------
FOOD--1.45%
6,500 IBP Inc. .............................................................. 196,625
----------
HEALTHCARE--6.32%
4,100 Genentech Inc.*........................................................ 186,038
7,000 Healthcare Compare Corporation*........................................ 238,875
4,600 United HealthCare Corporation*......................................... 207,575
5,500 U.S. Healthcare, Inc.*................................................. 226,875
----------
859,363
----------
HOTELS--0.82%
11,600 Host Marrriot.......................................................... 110,896
----------
HOUSEHOLD & CONSUMER PRODUCTS--1.65%
5,000 Premark International.................................................. 223,750
----------
INDUSTRIAL & ELECTRONIC PRODUCTS--8.31%
5,300 Linear Technology Corporation.......................................... 262,350
14,100 Stone Container Corporation*........................................... 243,225
6,700 Sun Microsystems Inc.*................................................. 237,850
6,000 Union Electric Company................................................. 212,250
5,000 Varian Associates Inc. ................................................ 175,000
----------
1,130,675
----------
MACHINERY--2.79%
5,200 Briggs & Stratton Corporation.......................................... 170,300
3,800 Caterpillar Inc. ...................................................... 209,475
----------
379,775
----------
METALS & MINING--18.87%
7,300 ASARCO................................................................. 208,050
8,100 Alcan Aluminum Ltd. ................................................... 205,537
6,000 Alumax Inc.*........................................................... 170,250
2,600 Aluminum Company of America............................................ 225,225
22,000 Amdahl*................................................................ 242,000
3,800 Amgen*................................................................. 224,200
10,900 Archer Daniels Midland Company......................................... 224,812
7,400 Boise Cascade Corporation.............................................. 197,950
5,500 Magna International Inc. .............................................. 211,063
3,600 Phelps Dodge Corporation............................................... 222,750
7,000 Potash Corporation of Saskatchewan Inc. ............................... 238,000
4,000 Reynolds Metals Company................................................ 196,000
----------
2,565,837
----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGGRESSIVE GROWTH PORTFOLIO--(CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ----------
<S> <C>
COMMON STOCKS--(CONCLUDED)
OIL & GAS--1.42%
9,800 Panhandle Eastern Corporation.......................................... $ 193,550
----------
PAPER PRODUCTS--3.55%
3,300 Scott Paper Company.................................................... 228,113
6,500 Westvaco Corporation................................................... 255,125
----------
483,238
----------
RETAIL--2.85%
4,200 J.C. Penney Inc. ...................................................... 187,425
8,300 Kroger Company*........................................................ 200,238
----------
387,663
----------
RETAIL FOOD CHAINS--1.90%
8,100 Safeway Inc.*.......................................................... 258,188
----------
SPECIALTY CHEMICALS--1.53%
7,100 Union Carbide Corporation.............................................. 208,563
----------
TEXTILES--1.37%
6,600 Wellman Inc. .......................................................... 186,450
----------
TOBACCO--1.56%
3,700 Philip Morris Companies Inc. .......................................... 212,750
----------
TOYS--1.44%
7,800 Mattel Inc. ........................................................... 195,975
----------
TRANSPORTATION--2.40%
3,000 Federal Express*....................................................... 180,750
5,500 Pittston Services Group................................................ 145,750
----------
326,500
----------
Total Common Stocks (cost--$12,527,906)............................................ 12,880,977
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATE RATE
- --------- -------- --------------
<S> <C> <C> <C>
COMMERCIAL PAPER--5.04%
FOOD PROCESSING--5.04%
$ 685 Cargill Inc. (cost--$684,789)................... 01/03/95 5.550% 684,789
-----------
Total Investments (cost--$13,212,695)--99.74%............... 13,565,766
Other assets in excess of liabilities--0.26%................ 34,688
-----------
Net Assets (applicable to 1,408,926 shares of beneficial
interest equivalent to $9.65 per share)--100.00%........... $13,600,454
-----------
-----------
</TABLE>
- ------------
* Non income producing security
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<S> <C>
COMMON STOCKS--63.68%
BROADCASTING/CABLE TV 2.76%
3,900 Capital Cities ABC Inc................................................ $ 332,475
-----------
CELLULAR & PAGING--2.33%
5,100 Ericsson L M Tel Co., ADR............................................. 281,138
-----------
COMPUTER SERVICES--3.74%
2,450 Automatic Data Processing............................................. 143,325
3,900 Compaq Computer Corporation........................................... 154,050
3,000 Computer Sciences Corporation......................................... 153,000
-----------
450,375
-----------
COMPUTER SOFTWARE--6.08%
1,100 Compuware Corporation................................................. 39,600
6,200 Microsoft Corporation*................................................ 378,975
7,100 Oracle Systems Corporation*........................................... 313,288
-----------
731,863
-----------
CREDIT & FINANCE--2.05%
1,900 Dean Witter Discover & Co............................................. 64,363
7,800 MBNA Corporation...................................................... 182,325
-----------
246,688
-----------
EMPLOYMENT SERVICES--0.51%
2,200 Manpower Inc.......................................................... 61,875
-----------
FINANCIAL SERVICES--6.13%
1,700 Federal Home Loan Mortgage Corporation................................ 85,850
2,800 Federal National Mortgage Association................................. 204,050
4,150 First Data Corporation................................................ 196,606
1,100 First Financial Management Corporation................................ 67,788
3,000 First USA Inc......................................................... 98,625
2,700 GFC Financial Corporation............................................. 85,725
-----------
738,644
-----------
HEALTHCARE MAINTENANCE ORGANIZATION--7.34%
1,300 Cardinal Health Inc................................................... 60,287
4,700 Humana Inc............................................................ 106,338
7,600 United HealthCare Corporation*........................................ 342,950
9,100 U.S. Healthcare, Inc.................................................. 375,375
-----------
884,950
-----------
HOUSEHOLD & CONSUMER PRODUCTS--2.00%
2,400 Gillette Company...................................................... 179,400
2,400 Sunbeam Oster Inc..................................................... 61,800
-----------
241,200
-----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO--(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<S> <C>
COMMON STOCKS--(CONTINUED)
HOTEL--0.77%
3,500 Hospitality Franchise Systems......................................... $ 92,750
-----------
INDUSTRIAL & ELECTRONIC PRODUCTS--9.21%
1,200 Analog Devices Inc.................................................... 42,150
3,500 Applied Materials Inc.*............................................... 147,875
2,200 Hewlett Packard Company............................................... 219,725
9,600 Motorola Inc.......................................................... 555,600
4,000 Sensormatic Electronics Corporation................................... 144,000
-----------
1,109,350
-----------
INSURANCE--1.23%
500 American International Group Inc...................................... 49,000
3,000 MGIC Investment Corporation........................................... 99,375
-----------
148,375
-----------
LESIURE--0.28%
1,600 Carnival Cruise Lines Inc............................................. 34,000
-----------
LESIURE: GAMING--0.03%
350 National Gaming Corporation........................................... 4,200
-----------
MEDICAL EQUIPMENT--0.83%
1,800 Medtronic Inc......................................................... 100,125
-----------
MOTORCYCLES--0.40%
1,700 Harley Davidson Inc................................................... 47,600
-----------
NETWORKING--0.92%
2,375 Cabletron Systems Inc................................................. 110,437
-----------
OIL & GAS--1.98%
7,800 Enron Corporation..................................................... 237,900
-----------
OFFICE EQUIPMENT--0.42%
800 Alco Standard......................................................... 50,200
-----------
REAL ESTATE INVESTMENT TRUST--0.75%
3,000 Equity Residential Properties......................................... 90,000
-----------
RETAIL--1.05%
1,600 Kohls Corporation..................................................... 63,600
2,000 Talbots Inc........................................................... 62,500
-----------
126,100
-----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO--(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<S> <C>
COMMON STOCKS--(CONCLUDED)
SECURITY SERVICES--0.44%
2,000 Pittston Services Group............................................... $ 53,000
-----------
SPECIALTY RETAIL--9.25%
4,500 Autozone Inc.*........................................................ 109,125
9,150 The Home Depot, Inc................................................... 420,900
3,300 Lowes Cos Inc......................................................... 114,675
6,500 Office Depot Inc...................................................... 156,000
3,500 Toys 'R' Us, Inc.*.................................................... 106,750
9,700 Wal-Mart Stores....................................................... 206,125
-----------
1,113,575
-----------
TELECOMMUNICATIONS--2.73%
4,700 Airtouch Communications............................................... 136,887
2,000 ALC Communications Corporation........................................ 62,250
1,400 General Instrument Corporation........................................ 42,000
4,600 Hong Kong Telecommunications, ADR..................................... 87,975
-----------
329,112
-----------
WASTE DISPOSAL--0.45%
1,900 Browning-Ferris Industries Inc........................................ 53,912
-----------
Total Common Stocks (cost--$7,339,051)............................................ 7,669,844
-----------
</TABLE>
<TABLE><CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATE RATE
- --------- ---------------------- --------------
<S> <C> <C> <C>
CORPORATE BONDS--5.59%
Financial Services--4.77%
$ 575 Associates Corporation
of North America.............. 01/10/95 5.880% 575,000
-----------
Transportation--0.82%
100 Penske Truck Leasing Co.... 11/01/99 8.250 98,519
-----------
Total Corporate Bonds (cost--$674,850) 673,519
-----------
U.S GOVERNMENT OBLIGATIONS--24.47%
400 U.S. Treasury Bonds........ 02/15/20 8.500 421,124
2,625 U.S. Treasury Notes........ 05/15/96 to 11/15/01 5.625 to 7.500 2,525,738
-----------
Total U.S Government Obligations
(cost--$3,077,041)................ $2,946,862
-----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO--(CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATE RATE VALUE
- --------- -------------------- -------------- -----------
<S> <C> <C> <C>
REPURCHASE AGREEMENT--4.77%
$ 575 Repurchase Agreement dated 12/30/94 with
State Street Bank & Trust Co.,
collateralized by $600,746 U.S.
Treasury Notes, 4.250%, due
11/30/95; proceeds: $575,329
(cost--$575,000)...................... 01/03/95 5.150% $ 575,000
-----------
Total Investments (cost--$11,665,942)--98.51%... 11,865,225
Other assets in excess of liabilities--1.49%.... 179,928
-----------
Net Assets (applicable to 1,272,399 shares of
beneficial interest equivalent to $9.47 per
share)--100.00%............................... $12,045,153
-----------
-----------
</TABLE>
- -----------------
* Non-Income producing security
ADR American Depository Receipts
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- -------------------- -------------- ----------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS--48.35%
$ 550 U.S. Treasury Bonds....................... 02/15/23 7.125% $ 500,155
200 U.S. Treasury Lincs....................... 08/15/09 6.000 159,856
1,600 U.S. Treasury Notes....................... 12/31/95 to 02/15/03 4.250 to 7.500 1,517,123
200 Federal Home Loan Bank Notes.............. 02/10/97 4.217@ 192,750
775 Federal Home Loan Bank Notes.............. 09/27/96 to 09/09/02 5.740 to 7.050 733,263
350 Federal Home Loan Mortgage Corporation.... 03/07/01 to 01/12/09 6.350 to 6.630 307,369
300 Federal National Mortgage Association..... 04/10/97 to 01/13/04 6.400 to 7.000 282,830
----------
Total U.S. Government and Agency Obligations
(cost--$3,939,817).................................... 3,693,346
----------
AGENCY MORTGAGE BACKED SECURITIES--8.79%
93 Federal National Mortgage Association Pool
125268.................................... 12/01/08 6.000 83,063
472 Federal National Mortgage Association Pool
270640.................................... 07/01/09 7.500 451,459
146 Federal National Mortgage Association Pool
279537.................................... 04/01/09 7.000 136,792
----------
Total Agency Mortgage Backed Securities
(cost--$705,791)..................................... 671,314
----------
CORPORATE BONDS--20.12%
FINANCIAL SERVICES--10.34%
250 Associates Corporation of North America... 11/01/97 to 06/15/00 6.000 to 7.750 237,231
200 Cit Group Holdings Inc.................... 09/30/97 7.000 194,208
150 Republic New York Corporation............. 10/15/08 5.875 116,774
250 Society Bank.............................. 04/25/97 6.500 241,555
----------
789,768
----------
INSURANCE--3.67%
200 American General Corporation.............. 10/15/99 7.700 194,692
100 AON Corp.................................. 01/15/04 6.300 85,480
----------
280,172
----------
TELECOMMUNICATIONS--1.13%
100 Southern New England Telecommunication.... 12/15/03 6.125 86,154
----------
UTILITIES--ELECTRIC, GAS & WATER--4.98%
300 Consolidated Edison Co.................... 04/01/98 6.250 282,638
100 Louisville Gas & Electric Co.............. 06/01/96 5.625 97,419
----------
380,057
----------
Total Corporate Bonds (cost--$1,613,890).............. 1,536,151
----------
FEDERALLY SPONSORED AGENCY OBLIGATIONS--5.09%
400 Student Loan Marketing Association
(cost--$399,444).......................... 10/04/96 to 07/21/97 6.000 to 6.050 388,898
----------
YANKEE BONDS--1.62%
FINANCIAL SERVICES--1.62%
150 Toronto Dominion Bank of Ontario
(cost--$135,194).......................... 08/15/08 6.500 123,965
----------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FIXED INCOME PORTFOLIO--(CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATE RATE VALUE
- --------- -------------------- -------------- ----------
REPURCHASE AGREEMENT--18.79%
<S> <C> <C> <C>
$ 1,435 Repurchase Agreement dated 12/30/94 with
State Street Bank & Trust Co.,
collateralized by $1,499,253 U.S.
Treasury Notes, 4.250%, due 11/30/95;
proceeds: $1,435,821 (cost--$1,435,000).. 01/03/95 5.150% $1,435,000
----------
Total Investments (cost--$8,229,136)--102.76%..... 7,848,674
Liabilities in excess of other assets--(2.76%).... (210,682)
----------
Net Assets (applicable to 876,487 shares of
beneficial interest equivalent to $8.71 per
share)--100.00%.................................. $7,637,992
----------
----------
</TABLE>
- ------------
@ Adjustable rate security
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY GLOBAL
MARKET GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Investments, at value (cost--$25,088,609; $35,464,125;
$43,508,058; $51,567,142; $18,512,729; $26,385,015;
$13,239,198; $13,212,695; $11,090,942 and
$6,794,136, respectively)........................... $25,088,609 $41,324,275 $42,363,405
Repurchase agreements, at value (cost--$0; $685,000;
$1,255,000; $430,000; $515,000; $450,000; $35,000;
$0; $575,000; $1,435,000, respectively)............. -- 685,000 1,255,000
----------- ----------- -----------
25,088,609 42,009,275 43,618,405
Cash.................................................. 952 662 --
Cash denominated in foreign currencies, at value...... -- -- 198,286
Receivable for investments sold....................... -- -- 942,812
Receivable for shares of beneficial interest sold..... 122,546 259,698 261,702
Unrealized appreciation on forward foreign currency
contracts............................................ -- -- --
Dividends and interest receivable..................... 11,159 44,575 25,470
Receivable for foreign taxes withheld................. -- -- 18,852
Deferred organizational expenses and other assets..... 1,421 3,197 2,894
----------- ----------- -----------
Total assets...................................... 25,224,687 42,317,407 45,068,421
----------- ----------- -----------
LIABILITIES
Payable for investments purchased..................... -- -- 1,526,114
Payable for shares of beneficial interest
repurchased.......................................... 35,194 120,073 1,936
Unrealized depreciation on forward foreign currency
contracts............................................ -- -- --
Payable to affiliates................................. 11,509 26,824 27,111
Payable to custodian.................................. -- -- 568,643
Dividends payable to shareholders..................... 109,073 2,997,683 2,355,256
Outstanding options written, at value (premium
received-- $291).................................... -- -- --
Accrued expenses and other liabilities................ 26,717 37,831 96,260
----------- ----------- -----------
Total liabilities................................. 182,493 3,182,411 4,575,320
----------- ----------- -----------
NET ASSETS
Beneficial interest shares of $0.001 par value
outstanding-- 25,057,450; 2,688,484; 3,254,346;
4,843,478; 1,646,241; 2,437,321; 1,405,740;
1,408,926; 1,272,399 and 876,487,
respectively (unlimited amount authorized).......... 25,056,994 33,277,887 41,846,915
Accumulated undistributed (overdistributed) net
investment income (loss)............................ 2,067 (2,891) --
Accumulated net realized losses from investments,
other assets, liabilities, options and forward
contracts denominated in foreign currencies......... (16,867) (150) (207,248)
Net unrealized appreciation/depreciation of
investments, other assets, liabilities, options and
forward contracts denominated in foreign
currencies.......................................... -- 5,860,150 (1,146,566)
----------- ----------- -----------
Net assets........................................ $25,042,194 $39,134,996 $40,493,101
----------- ----------- -----------
----------- ----------- -----------
Net asset value, offering and redemption price per
share............................................... $1.00 $14.56 $12.44
----- ------ ------
----- ------ ------
</TABLE>
See accompanying notes to financial statements
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL ASSET DIVIDEND AGGRESSIVE FIXED
INCOME GOVERNMENT ALLOCATION GROWTH GROWTH BALANCED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------- ----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
$50,547,297 $17,823,726 $25,767,752 $13,034,577 $13,565,766 $11,290,225 $6,413,674
430,000 515,000 450,000 35,000 -- 575,000 1,435,000
- ----------- ----------- ----------- ----------- ----------- ----------- ----------
50,977,297 18,338,726 26,217,752 13,069,577 13,565,766 11,865,225 7,848,674
2,895 863 1,111 287 1,003 3,452 1,468
1,382,989 -- -- -- -- -- --
1,063,903 -- -- 134,800 182,468 27,388 215,721
107,405 -- 29,169 32,869 92,731 214,206 --
547,868 -- -- -- -- -- --
1,613,148 346,417 263,220 21,765 16,563 70,879 105,554
33,953 -- -- -- -- -- --
2,153 2,596 1,022 20,536 569 465 252
- ----------- ----------- ----------- ----------- ----------- ----------- ----------
55,731,611 18,688,602 26,512,274 13,279,834 13,859,100 12,181,615 8,171,669
- ----------- ----------- ----------- ----------- ----------- ----------- ----------
1,668,040 -- -- 191,794 217,546 -- 287,769
338,949 52,447 176,293 33,868 -- -- --
49,023 -- -- -- -- -- --
34,671 7,951 16,946 7,015 8,872 7,381 3,038
-- -- -- -- -- -- --
911,656 1,570,233 3,021,779 140,023 7,960 105,107 220,085
-- -- -- 188 -- -- --
40,826 37,996 34,070 35,356 24,268 23,974 22,785
- ----------- ----------- ----------- ----------- ----------- ----------- ----------
3,043,165 1,668,627 3,249,088 408,244 258,646 136,462 533,677
- ----------- ----------- ----------- ----------- ----------- ----------- ----------
54,869,168 17,714,310 24,102,977 13,647,429 13,981,579 12,447,892 8,105,932
(457,624) (5,184) (2,383) (2,220) (5,786) (6,054) (5,924)
(1,188,288) (148) (220,145) (569,101) (728,410) (595,968) (81,554)
(534,810) (689,003) (617,263) (204,518) 353,071 199,283 (380,462)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------
$52,688,446 $17,019,975 $23,263,186 $12,871,590 $13,600,454 $12,045,153 $7,637,992
- ----------- ----------- ----------- ----------- ----------- ----------- ----------
- ----------- ----------- ----------- ----------- ----------- ----------- ----------
$10.88 $10.34 $9.54 $9.16 $9.65 $9.47 $8.71
------ ------ ----- ----- ----- ----- -----
------ ------ ----- ----- ----- ----- -----
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Operations
For the Year Ended December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY GLOBAL
MARKET GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
--------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest (net of foreign withholding taxes)............. $ 915,674 $ 156,464 $ 69,142
Dividends (net of foreign withholding taxes)............ -- 335,908 533,492
--------- ----------- -----------
915,674 492,372 602,634
--------- ----------- -----------
EXPENSES:
Investment advisory and administration.................. 103,238 355,689 332,624
Legal and audit......................................... 30,573 41,227 56,885
Custody and accounting.................................. 29,454 41,879 205,213
Reports and notices to shareholders..................... 11,254 26,192 42,749
Trustees' fees and expenses............................. 2,875 2,875 2,875
Transfer agency fees and expenses....................... 1,500 1,500 1,500
Amortization of organizational expenses................. -- -- --
Other expenses.......................................... 2,735 3,666 16,311
--------- ----------- -----------
181,629 473,028 658,157
--------- ----------- -----------
Net investment income (loss)............................ 734,045 19,344 (55,523)
--------- ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENT
ACTIVITIES:
Net realized gains (losses) from investment
transactions.......................................... (15,083) 2,975,347 4,058,510
Net realized losses from foreign currency
transactions.......................................... -- -- (2,376,224)
Net change in unrealized appreciation/depreciation of:
Investments........................................... -- (9,049,293) (7,325,051)
Other assets, liabilities, options and forward
contracts denominated in foreign currencies......... -- (101,917)
--------- ----------- -----------
Net realized and unrealized losses from investment
activities............................................ (15,083) (6,073,946) (5,744,682)
--------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations............................................ $ 718,962 $(6,054,602) $(5,800,205)
--------- ----------- -----------
--------- ----------- -----------
</TABLE>
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL ASSET DIVIDEND AGGRESSIVE
INCOME GOVERNMENT ALLOCATION GROWTH GROWTH BALANCED FIXED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------- ----------- ----------- ----------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
$ 5,313,317 $ 1,592,958 $ 765,551 $ 47,032 $ 31,175 $ 184,098 $ 293,561
-- -- 283,760 275,715 133,457 53,067 --
- ----------- ----------- ----------- ----------- ---------- --------- ------------
5,313,317 1,592,958 1,049,311 322,747 164,632 237,165 293,561
- ----------- ----------- ----------- ----------- ---------- --------- ------------
473,755 105,843 236,113 93,915 79,623 63,634 23,797
40,741 29,381 33,488 23,216 23,240 24,043 22,595
160,260 29,687 31,858 38,195 36,961 27,071 13,639
44,445 11,766 18,306 9,447 8,477 6,295 6,965
2,875 2,875 2,875 2,875 2,875 2,875 2,875
1,500 1,500 1,500 1,500 1,500 1,500 1,500
-- 4,687 -- 10,585 -- -- --
15,486 2,013 1,542 1,745 5,141 6,627 3,037
- ----------- ----------- ----------- ----------- ---------- --------- ------------
739,062 187,752 325,682 181,478 157,817 132,045 74,408
- ----------- ----------- ----------- ----------- ---------- --------- ------------
4,574,255 1,405,206 723,629 141,269 6,815 105,120 219,153
- ----------- ----------- ----------- ----------- ---------- --------- ------------
(1,051,761) 163,750 2,076,190 213,925 (728,410) (595,968) (81,553)
(3,269,773) -- -- -- -- -- --
(4,218,170) (2,805,179) (5,970,967) (1,235,102) 348,478 203,706 (379,175)
(77,672) -- -- -- -- -- --
- ----------- ----------- ----------- ----------- ---------- --------- ------------
(8,617,376) (2,641,429) (3,894,777) (1,021,177) (379,932) (392,262) (460,728)
- ----------- ----------- ----------- ----------- ---------- --------- ------------
$(4,043,121) $(1,236,223) $(3,171,148) $ (879,908) $ (373,117) $(287,142) $ (241,575)
- ----------- ----------- ----------- ----------- ---------- --------- ------------
- ----------- ----------- ----------- ----------- ---------- --------- ------------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
--------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income................................... $ 734,045 $ 380,871
Net realized losses from investment transactions........ (15,083) (1,784)
----------------- -----------------
Net increase in net assets resulting from operations.... 718,962 379,087
----------------- -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................... (734,045) (380,871)
----------------- -----------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares.................... 36,901,166 15,657,313
Cost of shares repurchased.............................. (27,969,522) (19,970,218)
Proceeds from dividends reinvested...................... 658,122 399,587
----------------- -----------------
Net increase (decrease) in net assets derived from
beneficial interest transactions...................... 9,589,766 (3,913,318)
----------------- -----------------
Net increase (decrease) in net assets................... 9,574,683 (3,915,102)
NET ASSETS:
Beginning of period..................................... 15,467,511 19,382,613
----------------- -----------------
End of period (including undistributed net investment
income of $2,067 for the year ended December 31,
1994)................................................. $25,042,194 $15,467,511
----------------- -----------------
----------------- -----------------
</TABLE>
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
--------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income (loss)............................ $ 19,344 $ (1,468)
Net realized gains from investment transactions......... 2,975,347 3,559,330
Net change in unrealized appreciation/depreciation of
investments............................................ (9,049,293) 5,521,004
----------------- -----------------
Net increase (decrease) in net assets resulting from
operations............................................. (6,054,602) 9,078,866
----------------- -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................... (22,235) --
Net realized gains from investment transactions......... (3,714,713) (1,983,159)
----------------- -----------------
(3,736,948) (1,983,159)
----------------- -----------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares.................... 21,466,135 14,181,379
Cost of shares repurchased.............................. (26,957,944) (16,370,033)
Proceeds from dividends reinvested...................... 2,722,424 309,915
----------------- -----------------
Net decrease in net assets derived from beneficial
interest transactions.................................. (2,769,385) (1,878,739)
----------------- -----------------
Net increase (decrease) in net assets................... (12,560,935) 5,216,968
NET ASSETS:
Beginning of period..................................... 51,695,931 46,478,963
----------------- -----------------
End of period........................................... $ 39,134,996 $ 51,695,931
----------------- -----------------
----------------- -----------------
</TABLE>
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL GROWTH PORTFOLIO
--------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income (loss)............................ $ (55,523) $ 102,169
Net realized gains from investment transactions......... 4,058,510 5,150,010
Net realized losses from foreign currency
transactions......................................... (2,376,224) (11,530)
Net change in unrealized appreciation/depreciation from:
Investment transactions.............................. (7,325,051) 4,928,486
Other assets, liabilities and forward contracts
denominated in foreign currencies.................. (101,917) (352,170)
----------------- -----------------
Net increase (decrease) in net assets resulting from
operations........................................... (5,800,205) 9,816,965
----------------- -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................... (18,320) (8,928)
Net realized gains from investment transactions......... (2,355,256) (1,443,575)
----------------- -----------------
(2,373,576) (1,452,503)
----------------- -----------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares.................... 22,436,105 13,100,735
Cost of shares repurchased.............................. (13,265,659) (5,036,087)
Proceeds from dividends reinvested...................... 1,461,895 112,664
----------------- -----------------
Net increase in net assets derived from beneficial
interest transactions................................. 10,632,341 8,177,312
----------------- -----------------
Net increase in net assets.............................. 2,458,560 16,541,774
NET ASSETS:
Beginning of period..................................... 38,034,541 21,492,767
----------------- -----------------
End of period (including undistributed net investment
income of $168,739 for the year ended December 31,
1993)................................................. $40,493,101 $38,034,541
----------------- -----------------
----------------- -----------------
</TABLE>
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL INCOME PORTFOLIO
--------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income................................... $ 4,574,255 $ 5,175,860
Net realized gains (losses) from investment
transactions.......................................... (1,051,761) 1,133,050
Net realized gains (losses) from foreign currency
transactions.......................................... (3,269,773) 303,627
Net change in unrealized appreciation/depreciation from:
Investment transactions.............................. (4,218,170) 4,219,466
Other assets, liabilities and forward contracts
denominated in foreign currencies.................. (77,672) (190,102)
----------------- -----------------
Net increase (decrease) in net assets resulting from
operations............................................ (4,043,121) 10,641,901
----------------- -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM/IN:
Net investment income................................... (1,029,860) (5,175,860)
Excess of net investment income......................... -- (855,915)
Net realized gains from investment transactions......... -- (1,133,050)
Excess of net realized gains from investment
transactions.......................................... -- (179)
----------------- -----------------
(1,029,860) (7,165,004)
----------------- -----------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares.................... 16,258,202 8,109,161
Cost of shares repurchased.............................. (30,366,903) (13,755,643)
Proceeds from dividends reinvested...................... 7,259,738 3,608,084
----------------- -----------------
Net decrease in net assets derived from beneficial
interest transactions................................. (6,848,963) (2,038,398)
----------------- -----------------
Net increase (decrease) in net assets................... (11,921,944) 1,438,499
NET ASSETS:
Beginning of period..................................... 64,610,390 63,171,891
----------------- -----------------
End of period (including undistributed net investment
income of $1,059,090 for the year ended December 31,
1993)................................................. $ 52,688,446 $ 64,610,390
----------------- -----------------
----------------- -----------------
</TABLE>
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GOVERNMENT PORTFOLIO
--------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income................................... $ 1,405,206 $ 1,625,195
Net realized gains from investment transactions......... 163,750 241,557
Net change in unrealized appreciation/depreciation of
investments........................................... (2,805,179) 1,130,381
----------------- -----------------
Net increase (decrease) in net assets resulting from
operations............................................ (1,236,223) 2,997,133
----------------- -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM/IN:
Net investment income................................... (1,407,083) (1,625,195)
Excess of net investment income......................... -- (3,869)
Net realized gains from investment transactions......... (163,150) (241,557)
Excess of net realized gains from investment
transactions.......................................... -- (507)
----------------- -----------------
(1,570,233) (1,871,128)
----------------- -----------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares.................... 8,119,615 4,219,338
Cost of shares repurchased.............................. (12,517,855) (8,797,449)
Proceeds from dividends reinvested...................... 1,871,128 1,702,473
----------------- -----------------
Net decrease in net assets derived from beneficial
interest transactions................................. (2,527,112) (2,875,638)
----------------- -----------------
Net decrease in net assets.............................. (5,333,568) (1,749,633)
NET ASSETS:
Beginning of period..................................... 22,353,543 24,103,176
----------------- -----------------
End of period........................................... $ 17,019,975 $ 22,353,543
----------------- -----------------
----------------- -----------------
</TABLE>
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSET ALLOCATION PORTFOLIO
--------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income................................... $ 723,629 $ 914,234
Net realized gains from investment transactions......... 2,076,190 3,505,261
Net change in unrealized appreciation/depreciation of
investments........................................... (5,970,967) 1,327,937
----------------- -----------------
Net increase (decrease) in net assets resulting from
operations............................................ (3,171,148) 5,747,432
----------------- -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM/IN:
Net investment income................................... (726,012) (912,090)
Excess of net investment income......................... -- (2,150)
Net realized gains from investment transactions......... (2,382,107) (3,250,132)
----------------- -----------------
(3,108,119) (4,164,372)
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares.................... 7,251,661 3,165,733
Cost of shares repurchased.............................. (15,327,061) (11,112,299)
Proceeds from dividends reinvested...................... 4,250,712 1,147,823
----------------- -----------------
Net decrease in net assets derived from beneficial
interest transactions................................. (3,824,688) (6,798,743)
----------------- -----------------
Net decrease in net assets.............................. (10,103,955) (5,215,683)
NET ASSETS:
Beginning of period..................................... 33,367,141 38,582,824
----------------- -----------------
End of period (including undistributed net investment
income of $15,472 for the year ended December 31,
1993)................................................. $23,263,186 $33,367,141
----------------- -----------------
----------------- -----------------
</TABLE>
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVIDEND GROWTH PORTFOLIO
--------------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income................................... $ 141,269 $ 270,737
Net realized gains (losses) from investment
transactions.......................................... 213,925 (641,029)
Net change in unrealized appreciation/depreciation of
investments........................................... (1,235,102) (187,703)
----------------- -----------------
Net decrease in net assets resulting from operations.... (879,908) (557,995)
----------------- -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM/IN:
Net investment income................................... (140,023) (270,737)
Excess of net investment income......................... -- (424)
----------------- -----------------
(140,023) (271,161)
----------------- -----------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares.................... 5,138,623 4,927,225
Cost of shares repurchased.............................. (7,799,194) (8,006,012)
Proceeds from dividends reinvested...................... 271,161 151,538
----------------- -----------------
Net decrease in net assets derived from beneficial
interest transactions................................. (2,389,410) (2,927,249)
----------------- -----------------
Net decrease in net assets.............................. (3,409,341) (3,756,405)
NET ASSETS:
Beginning of period..................................... 16,280,931 20,037,336
----------------- -----------------
End of period........................................... $12,871,590 $16,280,931
----------------- -----------------
----------------- -----------------
</TABLE>
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO
------------------------------------------
FOR THE PERIOD
FOR THE YEAR NOVEMBER 2, 1993+
ENDED TO
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- ---------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income................................ $ 6,815 $ 4,023
Net realized losses from investment transactions..... (728,410) --
Net change in unrealized appreciation/depreciation of
investments........................................ 348,478 4,593
----------------- --------
Net increase (decrease) in net assets resulting from
operations......................................... (373,117) 8,616
----------------- --------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................ (13,041) (3,584)
----------------- --------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares................. 12,037,722 2,808,601
Cost of shares repurchased........................... (873,740) (80)
Proceeds from dividends reinvested................... 9,067 --
----------------- --------
Net increase in net assets derived from beneficial
interest transactions.............................. 11,173,049 2,808,521
----------------- --------
Net increase in net assets........................... 10,786,891 2,813,553
NET ASSETS:
Beginning of period.................................. 2,813,563 10
----------------- --------
End of period (including undistributed net investment
income of $439 for the year ended December 31,
1993).............................................. $13,600,454 $ 2,813,563
----------------- --------
----------------- --------
</TABLE>
- ------------
+ Commencement of operations.
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED PORTFOLIO
------------------------------------------
FOR THE PERIOD
FOR THE YEAR NOVEMBER 2, 1993+
ENDED TO
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- ---------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income................................ $ 105,120 $ 2,669
Net realized losses from investment transactions..... (595,968) --
Net change in unrealized appreciation/depreciation of
investments........................................ 203,706 (4,406)
----------------- --------
Net decrease in net assets resulting from
operations......................................... (287,142) (1,737)
----------------- --------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................ (111,181) (2,662)
----------------- --------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares................. 10,671,404 2,266,562
Cost of shares repurchased........................... (498,837) --
Proceeds from dividends reinvested................... 8,736 --
----------------- --------
Net increase in net assets derived from beneficial
interest transactions.............................. 10,181,303 2,266,562
----------------- --------
Net increase in net assets........................... 9,782,980 2,262,163
NET ASSETS:
Beginning of period.................................. 2,262,173 10
----------------- --------
End of period (including undistributed net investment
income of $7 for the year ended December 31,
1993).............................................. $12,045,153 $ 2,262,173
----------------- --------
----------------- --------
</TABLE>
- ------------
+ Commencement of operations.
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIXED INCOME PORTFOLIO
------------------------------------------
FOR THE PERIOD
FOR THE YEAR NOVEMBER 8, 1993+
ENDED TO
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- ---------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income................................ $ 219,153 $ 2,236
Net realized losses from investment transactions..... (81,553) --
Net change in unrealized appreciation/depreciation of
investments........................................ (379,175) (1,289)
-------- --------
Net increase (decrease) in net assets resulting from
operations......................................... (241,575) 947
-------- --------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM/IN:
Net investment income................................ (225,030) (2,236)
Excess of net investment income...................... -- (47)
-------- --------
(225,030) (2,283)
-------- --------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares................. 7,331,767 1,481,375
Cost of shares repurchased........................... (714,447) --
Proceeds from dividends reinvested................... 7,228 --
-------- --------
Net increase in net assets derived from beneficial
interest transactions.............................. 6,624,548 1,481,375
-------- --------
Net increase in net assets........................... 6,157,943 1,480,039
NET ASSETS:
Beginning of period.................................. 1,480,049 10
-------- --------
End of period........................................ $ 7,637,992 $ 1,480,049
-------- --------
-------- --------
</TABLE>
- ------------
+ Commencement of operations.
See accompanying notes to financial statements
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Series Trust (the "Fund") is organized under Massachusetts law
by a Declaration of Trust dated November 21, 1986 and is registered with the
Securities and Exchange Commission ("SEC") under the Investment Company Act of
1940, as amended, as an open-end management investment company. The Trustees
have the authority to issue an unlimited number of shares of beneficial
interest, par value $0.001.
As of December 31, 1994, the Fund had ten series of shares available for
investment, each having its own investment objectives and policies: the Money
Market Portfolio, the Growth Portfolio, the Global Growth Portfolio, the Global
Income Portfolio, the Government Portfolio, the Asset Allocation Portfolio, the
Dividend Growth Portfolio, the Aggressive Growth Portfolio, the Balanced
Portfolio and the Fixed Income Portfolio (collectively referred to as the
"Portfolios").
All series of shares are diversified except Global Income Portfolio. Shares
of each series of the Fund are offered only to insurance company separate
accounts which fund certain variable contracts. Shares of each series of the
fund are offered to separate accounts of Paine Webber Life Insurance Company
("PaineWebber Life"). PaineWebber Life is a wholly-owned subsidiary of
PaineWebber Life Holdings Inc., which in turn is a wholly-owned subsidiary of
PaineWebber Group Inc.
Organizational Matters--The costs incurred by the Fund in connection with
its organization and registration of shares of each Portfolio have been deferred
and are being amortized using the straight-line method over the period of
benefit, not to exceed five years, beginning with the commencement of operations
of each Portfolio.
Valuation of Investments--Securities which are listed on U.S. and foreign
stock exchanges are valued at the last sale price on the day the securities are
being valued or, lacking any sales on such day, at the last available bid price.
In cases where securities are traded on more than one exchange, the securities
are generally valued on the exchange designated by Mitchell Hutchins Asset
Management Inc. ("Mitchell Hutchins"), a wholly owned subsidiary of PaineWebber
Incorporated ("PaineWebber"), as the primary market for the Growth Portfolio,
Global Growth Portfolio, Global Income Portfolio, Government Portfolio, Asset
Allocation Portfolio and Dividend Growth Portfolio. For the Aggressive Growth
Portfolio, Balanced Portfolio and Fixed Income Portfolio, the securities are
generally valued on the exchange designated by Nicholas-Applegate Capital
Management, Provident Investment Counsel, and Wolf, Webb, Burk & Campbell, Inc.
("Sub-Advisers"), the respective sub-advisers of the Portfolios, as the primary
market. Securities traded in the over-the-counter ("OTC") market and listed on
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") are valued at the last trade price on NASDAQ prior to the time of
valuation; other OTC securities are valued at the last bid price available in
the OTC market prior to the time of valuation. The Money Market Portfolio uses
the amortized cost method, which approximates market value, for valuing its
investments. For the other Portfolios the amortized cost method of valuation is
used with respect only to debt obligations with sixty days or less remaining to
maturity unless the Fund's board of trustees determines that this does not
represent fair value. Securities and assets for which market quotations are
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
- --------------------------------------------------------------------------------
not readily available are valued at fair value as determined in good faith by or
under the direction of the Fund's board of trustees.
The ability of the issuers of the debt securities held by the Portfolios to
meet their obligations may be affected by economic and political developments,
including those particular to a specific industry, country or region.
All investments quoted in foreign currencies are valued daily in U.S.
dollars on the basis of the foreign currency exchange rate prevailing at the
time such valuation is determined by the Fund's custodians. Foreign currency
exchange rates are generally determined prior to the close of the New York Stock
Exchange ("NYSE"). Occasionally, events affecting the value of foreign
investments and such exchange rates occur between the time at which they are
determined and the close of the NYSE, which will not be reflected in a
computation of the Portfolios' net asset value. If events materially affecting
the value of such investments or currency exchange rates occurred during such
time period, the securities are valued at their fair value as determined in good
faith by or under the direction of the Fund's board of trustees.
Investment Transactions and Investment Income--Investment transactions are
accounted for on the trade date. Realized gains and losses on sales of
investments and foreign security and foreign exchange transactions are
calculated using the identified cost basis. Dividend income and other
distributions are recorded on the ex-dividend date ("ex-date") (except for
certain dividends from foreign securities that are recorded as soon after the
ex-date as the respective Portfolio becomes aware of such dividends). Interest
income is recorded on an accrual basis. Discounts are accreted as adjustments to
interest income and the identified cost of investments.
Foreign Currency Translation--The books and records of the Global Growth
Portfolio and Global Income Portfolio are maintained in U.S. dollars as follows:
(1) the foreign currency market value of investment securities and other assets
and liabilities stated in foreign currencies are translated at the exchange
rates prevailing at the end of the period; and (2) purchases, sales, income and
expenses are translated at the rate of exchange prevailing on the respective
dates of such transactions. The resulting exchange gains and losses are included
in the Statement of Operations.
The Global Growth Portfolio and Global Income Portfolio do not generally
isolate the effect of fluctuations in foreign exchange rates from the effects of
fluctuations in the market price of investment securities. However, these
Portfolios do isolate the effect of fluctuations in foreign exchange rates when
determining the realized gain or loss upon the sale or maturity of foreign
currency-denominated debt obligations pursuant to federal income tax
regulations; such amount is categorized as foreign exchange gain or loss for
both financial reporting and income tax purposes.
Forward Foreign Currency Contracts--The Global Growth, Global Income and
Government Portfolios may enter into forward foreign currency exchange contracts
("forward contracts") in connection with planned purchases or sales of
securities to hedge the U.S. dollar value of portfolio securities denominated in
a particular currency. These portfolios may also engage in cross-hedging by
using forward contracts in one currency to hedge fluctuations in the value of
securities denominated in a
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
- --------------------------------------------------------------------------------
different currency if Mitchell Hutchins anticipates that there will be a
correlation between the two currencies. Forward contracts may also be used to
shift a Portfolio's exposure to foreign currency fluctuations from one country
to another.
These Portfolios have no specific limitation on the percentage of assets
which may be committed to such contracts; however, the value of all forward
contracts will not exceed the total market value of the Portfolio's total
assets. These Portfolios may enter into forward contracts or maintain a net
exposure to forward contracts only if (1) the consummation of the contracts
would not obligate the Portfolio to deliver an amount of foreign currency in
excess of the value of the positions being hedged by such contracts or (2) the
Portfolios maintain cash, U.S. government securities or liquid, high-grade debt
securities in a segregated account in an amount not less than the value of the
Portfolio's total assets committed to the consummation of the forward contracts
and not covered as provided in (1) above, as marked to market daily.
Risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts and from
unanticipated movements in the value of foreign currencies relative to the U.S.
dollar.
Fluctuations in the value of forward contracts are recorded for book
purposes as unrealized gains or losses by the Portfolios. Realized gains and
losses include net gains or losses recognized by the Portfolio on contracts
which have matured.
Option Writing--When the Portfolios write a call or a put option, an amount
equal to the premium received by the Portfolios is included in the Portfolios'
Statement of Assets and Liabilities as an asset and as an equivalent liability.
The amount of the liability is subsequently marked-to-market to reflect the
current market value of the option written. If an option which the Portfolios
have written either expires on its stipulated expiration date or the Portfolios
enter into a closing purchase transaction, the Portfolios realize a gain (or
loss if the cost of a closing purchase transaction exceeds the premium received
when the option was written) without regard to any unrealized gain or loss on
the underlying security, and the liability related to such option is
extinguished. If a call option which the Portfolios have written is exercised,
the Portfolios realize a capital gain or loss (long-term or short-term,
depending on the holding period of the underlying security) from the sale of the
underlying security and the proceeds from the sale are increased by the premium
originally received. If a put option which the Portfolios have written is
exercised, the amount of the premium originally received reduces the cost of the
security which the Portfolios purchase upon exercise of the option.
Repurchase Agreements--Each Portfolio's custodian takes possession of the
collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to ensure that the value,
including accrued interest, is at least equal to the repurchase price. In the
event of default of the obligation to repurchase, the Portfolios have the right
to liquidate the collateral and apply the proceeds in satisfaction of the
obligations. 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.
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
- --------------------------------------------------------------------------------
Each Portfolio occasionally participates in joint repurchase agreement
transactions with other Funds managed by Mitchell Hutchins. At December 31, 1994
the Asset Allocation, Dividend Growth, Government, Growth, Balanced and Fixed
Income Portfolios have a proportionate interest in a joint transaction
outstanding with State Street Bank & Trust Co. Also at December 31, 1994, the
Global Growth and Global Income Portfolios have a proportionate interest in a
joint transaction outstanding with Brown Brothers Harriman & Co.
Reverse Repurchase Agreements--Each Portfolio may enter into reverse
repurchase agreements with banks and broker-dealers up to an aggregate value of
not more than 5% of its total assets (10% of total assets for Global Income and
Balanced Portfolios). At December 31, 1994, the Portfolios had no reverse
repurchase agreements outstanding.
Federal Tax Status--Each of the Portfolios intends to distribute all of
their taxable income and to comply with the other requirements of the Internal
Revenue Code applicable to regulated investment companies. Accordingly, no
provision for federal income taxes is required.
Dividends and Distributions to Shareholders--Dividends and distributions to
shareholders are recorded on the ex-dividend date. The amount of dividends and
distributions are determined in accordance with federal income tax regulations
which may differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.
INVESTMENT ADVISER AND ADMINISTRATOR
The Fund's board of trustees has approved an investment advisory and
administration contract ("Advisory Contract") with Mitchell Hutchins, under
which Mitchell Hutchins serves as investment
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
- --------------------------------------------------------------------------------
adviser and administrator of the Fund and each Portfolio. Mitchell Hutchins
receives compensation from the Fund, computed daily and payable monthly, as
follows:
ANNUAL RATE
-----------
Money Market Portfolio......................................... 0.50%
Growth Portfolio............................................... 0.75
Global Growth Portfolio........................................ 0.75
Global Income Portfolio........................................ 0.75
Government Portfolio........................................... 0.50
Asset Allocation Portfolio..................................... 0.75
Dividend Growth Portfolio...................................... 0.70
Aggressive Growth Portfolio.................................... 0.80
Balanced Portfolio............................................. 0.75
Fixed Income Portfolio......................................... 0.50
Under separate contracts with each Sub-Adviser Mitchell Hutchins (not the
Portfolios) pays the Sub-Advisers a fee, computed daily and paid monthly, at an
annual rate of 0.50%, 0.45% and 0.30% of the fee paid to Mitchell Hutchins under
the Advisory Contracts for the Aggressive Growth Portfolio, the Balanced
Portfolio and the Fixed Income Portfolio, respectively.
During the year ended December 31, 1994, Growth Portfolio, Global Growth
Portfolio, Asset Allocation Portfolio, Balanced Portfolio and Dividend Growth
Portfolio paid $600, $1,137, $720, $103,159 and $1,817, respectively, in
brokerage commissions to PaineWebber for transactions executed on behalf of that
Portfolio.
TRANSACTION WITH AFFILIATED COMPANY
An affiliated company represents ownership of at least 5% of the voting
securities of the issuer during the period, as defined in the Investment Company
Act of 1940.
At December 31, 1994, the Growth Portfolio owned 110,000 shares of common
stock of The Right Start, Inc. with an original cost of $605,056 and a market
value of $233,750. Additionally, the Portfolio owned 60,000 shares of common
stock of TDX Corporation with an original cost of $307,500 and a market value of
$67,500 at December 31, 1994.
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
- --------------------------------------------------------------------------------
INVESTMENTS IN SECURITIES
For the year ended December 31, 1994, total aggregate purchases and sales of
portfolio securities, excluding short-term securities, were:
PURCHASES SALES
----------- -----------
Growth Portfolio................................ $12,247,880 $20,647,384
Global Growth Portfolio......................... 80,956,846 73,292,155
Global Income Portfolio......................... 48,251,536 54,118,475
Government Portfolio............................ 10,750,860 15,559,737
Asset Allocation Portfolio...................... 32,323,016 42,095,099
Dividend Growth Portfolio....................... 18,621,103 22,204,749
Aggressive Growth Portfolio..................... 19,416,251 8,398,566
Balanced Portfolio.............................. 12,454,294 2,641,404
Fixed Income Portfolio.......................... 7,527,447 1,470,307
At December 31, 1994, the components of net unrealized appreciation
(depreciation) of investments were as follows:
<TABLE>
<CAPTION>
NET
UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION DEPRECIATION (DEPRECIATION)
------------ ------------ --------------
<S> <C> <C> <C>
Growth Portfolio...................................... $ 6,024,243 $ (164,093) $ 5,860,150
Global Growth Portfolio............................... 2,296,199 (3,440,852) (1,144,653)
Global Income Portfolio............................... 439,133 (1,458,978) (1,019,845)
Government Portfolio.................................. 3,766 (692,769) (689,003)
Asset Allocation Portfolio............................ 383,944 (1,001,207) (617,263)
Dividend Growth Portfolio............................. 408,385 (613,006) (204,621)
Aggressive Growth Portfolio........................... 919,445 (566,374) 353,071
Balanced Portfolio.................................... 577,286 (378,003) 199,283
Fixed Income Portfolio................................ 831 (381,293) (380,462)
</TABLE>
For federal income tax purposes, the cost of securities owned at December
31, 1994 was substantially the same as the cost of securities for financial
statement purposes.
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX STATUS
At December 31, 1994, the following Portfolios had net capital loss
carryforwards available as reductions, to the extent provided in the
regulations, of any future net gains realized before the end of the fiscal years
indicated below:
<TABLE>
<CAPTION>
MONEY GLOBAL DIVIDEND AGGRESSIVE FIXED
MARKET INCOME GROWTH GROWTH BALANCED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
2001.......................... $ 1,784 -- $ 494,715 -- -- --
2002.......................... 15,083 $ 781,570 -- $ 680,022 $461,040 $ 30,573
--------- --------- --------- ---------- -------- ---------
$ 16,867 $ 781,570 $ 494,715 $ 680,022 $461,040 $ 30,573
--------- --------- --------- ---------- -------- ---------
--------- --------- --------- ---------- -------- ---------
</TABLE>
To the extent that such losses are used to offset future capital gains, it
is probable that the gains so offset will not be distributed.
At December 31, 1993, the cumulative effect of the permanent "book/tax"
reclassifications resulted in increases (decreases) to the components of net
assets as follows:
<TABLE>
<CAPTION>
ACCUMULATED ACCUMULATED
UNDISTRIBUTED UNDISTRIBUTED
NET NET REALIZED
INVESTMENT GAINS
INCOME (LOSSES) PAID-IN-CAPITAL
------------- ------------- ---------------
<S> <C> <C> <C>
Money Market Portfolio................................ 2,067 (1,611) (456)
Growth Portfolio...................................... (3,564) 13,160 (9,596)
Global Growth Portfolio............................... (156,407) 150,274 6,133
Global Income Portfolio............................... (1,791,336) 1,783,155 8,181
Government Portfolio.................................. 310 (47) (263)
Asset Allocation Portfolio............................ (15,472) 9,177 6,295
</TABLE>
For the year ended December 31, 1994, the reclassification arising from
permanent "book/tax" differences resulted in increases (decreases) to the
components of net assets as follows:
<TABLE>
<CAPTION>
ACCUMULATED ACCUMULATED
UNDISTRIBUTED UNDISTRIBUTED
NET NET REALIZED
INVESTMENT GAINS
INCOME (LOSSES) PAID-IN-CAPITAL
------------- ------------- ---------------
<S> <C> <C> <C>
Money Market Portfolio................................ -- -- --
Growth Portfolio...................................... -- -- --
Global Growth Portfolio............................... 61,511 489,636 (551,147)
Global Income Portfolio............................... (3,269,773) 3,269,773 --
Government Portfolio.................................. 2,520 -- (2,520)
Asset Allocation Portfolio............................ -- -- --
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Notes to Financial Statements--(continued)
- --------------------------------------------------------------------------------
WRITTEN OPTION ACTIVITY
Written option activity for the year ended December 31, 1994 for the
Dividend Growth Portfolio was as follows:
<TABLE>
<CAPTION>
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
--------- ---------
<S> <C> <C>
Options outstanding at December 31, 1993............................... -- --
Options written during the year ending December 31, 1994............... 103 $ 13,450
Options cancelled in closing purchase transactions..................... (41) (5,926 )
Options expired prior to exercise...................................... (19) (2,622 )
Options exercised...................................................... (40) (4,611 )
--- ---------
Options outstanding at December 31, 1994............................... 3 $ 291
--- ---------
--- ---------
</TABLE>
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Notes to Financial Statements--(concluded)
- --------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST
At December 31, 1994, there was an unlimited amount of $0.001 par value
shares of beneficial interest authorized. Transactions in shares of beneficial
interest for each of the Portfolios were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1994
-------------------------------------------------------------------------------------------------------------
MONEY GLOBAL GLOBAL ASSET DIVIDEND AGGRESSIVE
MARKET GROWTH GROWTH INCOME GOVERNMENT ALLOCATION GROWTH GROWTH BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ---------- --------- ---------- ---------- ---------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold... 36,901,166 1,273,859 1,580,027 1,420,486 706,654 634,690 545,528 1,214,882 1,094,747
Shares
redeemed..... (27,969,522) (1,605,950) (963,682) (2,707,108) (1,092,356) (1,350,041) (817,625) (89,600) (51,967)
Reinvestment
of
dividends.... 658,122 157,923 96,512 619,553 157,635 360,587 27,783 947 921
----------- ---------- --------- ---------- ---------- ---------- --------- ------------ ------------
Net increase
(decrease) in
shares
outstanding.. 9,589,766 (174,168) 712,857 (667,069) (228,067) (354,764) (244,314) 1,126,229 1,043,701
----------- ---------- --------- ---------- ---------- ---------- --------- ------------ ------------
----------- ---------- --------- ---------- ---------- ---------- --------- ------------ ------------
<CAPTION>
FIXED
INCOME
PORTFOLIO
------------
<S> <C>
Shares sold... 800,545
Shares
redeemed..... (78,881)
Reinvestment
of
dividends.... 788
------
Net increase
(decrease) in
shares
outstanding.. 722,452
------
------
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1993
---------------------------------------------------------------------------------------------------------------------
MONEY GLOBAL GLOBAL ASSET DIVIDEND AGGRESSIVE
MARKET GROWTH GROWTH INCOME GOVERNMENT ALLOCATION GROWTH GROWTH BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO(A) PORTFOLIO(A)
----------- --------- --------- ---------- ---------- ---------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shares
sold......... 15,657,313 858,280 972,474 650,897 348,821 257,377 497,674 282,705 228,698
Shares
redeemed..... (19,970,218) (980,456) (377,140) (1,118,465) (702,763) (882,410) (815,199) (8) --
Reinvestment
of
dividends... 399,587 19,879 9,656 323,159 146,135 98,695 14,784 -- --
----------- --------- --------- ---------- ---------- ---------- --------- ------ ------
Net increase
(decrease)
in shares
outstanding... (3,913,318) (102,297) 604,990 (144,409) (207,807) (526,338) (302,741) 282,697 228,698
----------- --------- --------- ---------- ---------- ---------- --------- ------ ------
----------- --------- --------- ---------- ---------- ---------- --------- ------ ------
<CAPTION>
FIXED
INCOME
PORTFOLIO(B)
------------
<S> <C>
Shares
sold......... 154,035
Shares
redeemed..... --
Reinvestment
of
dividends.... --
------
Net increase
(decrease)
in shares
outstanding.. 154,035
------
------
</TABLE>
- ------------
(A) For the period November 2, 1993 (commencement of operations) to December 31,
1993.
(B) For the period November 8, 1993 (commencement of operations) to December 31,
1993.
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
--------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------
Income from investment operations:
Net investment income.............................. 0.03 0.02 0.03 0.05 0.05
------- ------- ------- ------- ------
Total income from investment operations............. 0.03 0.02 0.03 0.05 0.05
------- ------- ------- ------- ------
Less dividends from net investment income........... (0.03) (0.02) (0.03) (0.05) (0.05)
------- ------- ------- ------- ------
Net asset value, end of period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------
------- ------- ------- ------- ------
Total return(1)..................................... 3.43% 2.45% 3.00% 5.00% 5.00%
------- ------- ------- ------- ------
------- ------- ------- ------- ------
Ratios/Supplemental Data:
Net assets, end of period (000's)................ $25,042 $15,468 $19,383 $20,249 $8,720
Expenses to average net assets*.................. 0.88% 0.86% 0.81% 1.00% 2.02%
Net investment income to average net
assets*........................................ 3.56% 2.43% 3.13% 4.92% 6.13%
</TABLE>
- ------------
(1) Total return is calculated assuming a $1,000 investment on the first day of
each period reported, reinvestment of all dividends and capital gain
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported.
* During certain periods presented above, Mitchell Hutchins agreed to
reimburse the Portfolio for all of its operating expenses and waived all
or a portion of its advisory fee. If such reimbursements and waivers had
not been made, the annualized ratio of expenses to average net assets
and the annualized ratio of net investment income to average net assets
would have been 2.04% and 6.11%, respectively, for the year ended
December 31, 1990.
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights--(continued)
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
---------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $ 18.06 $ 15.68 $ 14.92 $ 10.57 $ 11.66
------- ------- ------- ------- -------
Income from investment operations:
Net investment income........................... 0.01 -- 0.11 0.10 0.14
Net realized and unrealized gains (losses) from
investment transactions....................... (2.13) 3.08 0.76 4.35 (1.09)
------- ------- ------- ------- -------
Total income (loss) from investment operations..... (2.12) 3.08 0.87 4.45 (0.95)
------- ------- ------- ------- -------
Less dividends and distributions from:
Net investment income........................... (0.01) -- (0.11) (0.10) (0.14)
Net realized gains on investments............... (1.37) (0.70) -- -- --
------- ------- ------- ------- -------
Total dividends and distributions.................. (1.38) (0.70) (0.11) (0.10) (0.14)
------- ------- ------- ------- -------
Net asset value, end of period..................... $ 14.56 $ 18.06 $ 15.68 $ 14.92 $ 10.57
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Total return(1).................................... (11.65)% 19.61% 5.83% 42.10% (8.15)%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)............... $39,135 $51,696 $46,479 $37,470 $12,283
Expenses to average net assets*................. 1.00% 0.92% 0.94% 1.13% 1.85%
Net investment income to average net
assets*....................................... 0.04% 0.00% 0.78% 1.07% 1.90%
Portfolio turnover.............................. 27.35% 34.95% 29.36% 27.89% 35.20%
</TABLE>
- ------------
(1) Total return is calculated assuming a $1,000 investment on the first day of
each period reported, reinvestment of all dividends and capital gain
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported.
* During certain periods presented above, Mitchell Hutchins agreed to
reimburse the Portfolio for a portion of its operating expenses and waived
all or a portion of its advisory fee. If such reimbursements and waivers
had not been made, the annualized ratio of expenses to average net
assets and the annualized ratio of net investment income to average net
assets would have been 1.91% and 1.84%, respectively, for the year ended
December 31, 1990.
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights--(continued)
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
GLOBAL GROWTH PORTFOLIO
---------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $ 14.97 $ 11.10 $ 12.06 $ 11.76 $ 11.43
------- ------- ------- ------- -------
Income from investment operations:
Net investment income (loss).................... (0.03) 0.03 0.10 0.23 0.19
Net realized and unrealized gains (losses) from
investment transactions....................... (1.76) 4.42 (1.01) 0.35 0.67
------- ------- ------- ------- -------
Total income (loss) from investment operations..... (1.79) 4.45 (0.91) 0.58 0.86
------- ------- ------- ------- -------
Less dividends and distributions from:
Net investment income........................... (0.01) -- (0.05) (0.23) (0.19)
Net realized gains on investments............... (0.73) (0.58) -- (0.05) (0.34)
------- ------- ------- ------- -------
Total dividends and distributions.................. (0.74) (0.58) (0.05) (0.28) (0.53)
------- ------- ------- ------- -------
Net asset value, end of period..................... $ 12.44 $ 14.97 $ 11.10 $ 12.06 $ 11.76
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Total return(1).................................... (11.94)% 40.02% (7.55)% 4.93% 7.53%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)............... $40,493 $38,035 $21,493 $24,308 $16,149
Expenses to average net assets*................. 1.48% 1.40% 1.46% 1.53% 2.07%
Net investment income (loss) to average net
assets*....................................... (0.13)% 0.38% 0.82% 2.12% 3.29%
Portfolio turnover.............................. 175.34% 266.96% 127.06% 89.39% 119.65%
</TABLE>
- ------------
(1) Total return is calculated assuming a $1,000 investment on the first day of
each period reported, reinvestment of all dividends and capital gain
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported.
* During certain periods presented above, Mitchell Hutchins agreed to
reimburse the Portfolio for a portion of its operating expenses and
waived all or a portion of its advisory fee. If such reimbursements and
waivers had not been made, the annualized ratio of expenses to average
net assets and the annualized ratio of net investment income to average
net assets would have been 2.19% and 3.17%, respectively, for the year
ended December 31, 1990.
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights--(continued)
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
GLOBAL INCOME PORTFOLIO
---------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $ 11.72 $ 11.17 $ 11.65 $ 11.16 $ 10.19
------- ------- ------- ------- -------
Income from investment operations:
Net investment income........................... 0.97 0.96 0.80 0.75 0.52
Net realized and unrealized gains (losses) from
investment transactions....................... (1.60) 0.90 (0.65) 0.40 1.00
------- ------- ------- ------- -------
Total income from investment operations............ (0.63) 1.86 0.15 1.15 1.52
------- ------- ------- ------- -------
Less dividends and distributions from/in:
Net investment income........................... (0.21) (0.94) (0.56) (0.65) (0.52)
Excess of net investment income................. -- (0.16) -- -- --
Net realized gains on investments............... -- (0.21) (0.07) (0.01) (0.03)
------- ------- ------- ------- -------
Total dividends and distributions.................. (0.21) (1.31) (0.63) (0.66) (0.55)
------- ------- ------- ------- -------
Net asset value, end of period..................... $ 10.88 $ 11.72 $ 11.17 $ 11.65 $ 11.16
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Total return(1).................................... (5.56)% 16.65% 1.29% 10.30% 14.92%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)............... $52,688 $64,610 $63,172 $51,988 $30,778
Expenses to average net assets*................. 1.17% 0.98% 1.07% 1.20% 1.72%
Net investment income to average net
assets*....................................... 7.23% 7.47% 7.20% 7.59% 8.64%
Portfolio turnover.............................. 97.45% 68.60% 75.44% 14.29% 110.23%
</TABLE>
- ------------
(1) Total return is calculated assuming a $1,000 investment on the first day of
each period reported, reinvestment of all dividends and capital gain
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported.
* During certain periods presented above, Mitchell Hutchins agreed to
reimburse the Portfolio for a portion of its operating expenses and waived
all or a portion of its advisory fee. If such reimbursements and waivers
had not been made, the annualized ratio of expenses to average net
assets and the annualized ratio of net investment income to average net
assets would have been 1.75% and 8.61%, respectively, for the year ended
December 31, 1990.
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights--(continued)
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
GOVERNMENT PORTFOLIO
--------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................ $ 11.93 $ 11.58 $ 11.61 $ 10.49 $10.17
------- ------- ------- ------- ------
Income from investment operations:
Net investment income............................ 0.85 0.87 0.74 0.47 0.45
Net realized and unrealized gains (losses) from
investment
transactions................................... (1.49) 0.48 0.05 1.12 0.32
------- ------- ------- ------- ------
Total income (loss) from investment operations...... (0.64) 1.35 0.79 1.59 0.77
------- ------- ------- ------- ------
Less dividends and distributions from:
Net investment income............................ (0.85) (0.87) (0.74) (0.47) (0.45)
Net realized gains on investments................ (0.10) (0.13) (0.08) -- --
------- ------- ------- ------- ------
Total dividends and distributions................... (0.95) (1.00) (0.82) (0.47) (0.45)
------- ------- ------- ------- ------
Net asset value, end of period...................... $ 10.34 $ 11.93 $ 11.58 $ 11.61 $10.49
------- ------- ------- ------- ------
------- ------- ------- ------- ------
Total return(1)..................................... (5.34)% 11.66% 6.76% 15.17% 7.58%
------- ------- ------- ------- ------
------- ------- ------- ------- ------
Ratios/Supplemental Data:
Net assets, end of period (000's)................ $17,020 $22,354 $24,103 $15,690 $5,192
Expenses to average net assets*.................. 0.89% 0.79% 0.76% 1.25% 1.55%
Net investment income to average net assets*..... 6.64% 6.13% 6.59% 6.43% 6.80%
Portfolio turnover............................... 53.72% 7.93% 23.13% 1.39% 66.14%
</TABLE>
- ------------
(1) Total return is calculated assuming a $1,000 investment on the first day of
each period reported, reinvestment of all dividends and capital gain
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported.
* During certain periods presented above, Mitchell Hutchins agreed to
reimburse the Portfolio for a portion of its operating expenses and waived
all or a portion of its advisory fee. If such reimbursements and waivers
had not been made, the annualized ratio of expenses to average net assets
and the annualized ratio of net investment income to average net assets
would have been 1.28% and 6.40%, 3.14% and 5.20%, respectively, for the
years ended December 31, 1991 and 1990.
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights--(continued)
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
ASSET ALLOCATION PORTFOLIO
---------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $ 11.95 $ 11.63 $ 11.39 $ 9.99 $ 10.37
------- ------- ------- ------- -------
Income from investment operations:
Net investment income........................... 0.30 0.33 0.35 0.47 0.65
Net realized and unrealized gains (losses) from
investment transactions....................... (1.44) 1.48 0.24 1.40 (0.38)
------- ------- ------- ------- -------
Total income (loss) from investment operations..... (1.14) 1.81 0.59 1.87 0.27
------- ------- ------- ------- -------
Less dividends and distributions from:
Net investment income........................... (0.30) (0.33) (0.35) (0.47) (0.65)
Net realized gains on investments............... (0.97) (1.16) -- -- --
------- ------- ------- ------- -------
Total dividends and distributions.................. (1.27) (1.49) (0.35) (0.47) (0.65)
------- ------- ------- ------- -------
Net asset value, end of period..................... $ 9.54 $ 11.95 $ 11.63 $ 11.39 $ 9.99
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Total return(1).................................... (9.59)% 15.76% 5.18% 18.73% 2.63%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)............... $23,263 $33,367 $38,583 $33,327 $25,681
Expenses to average net assets*................. 1.03% 0.95% 0.93% 0.94% 1.48%
Net investment income to average net assets*.... 2.30% 2.27% 3.11% 4.64% 5.71%
Portfolio turnover.............................. 112.32% 60.36% 30.74% 100.84% 168.87%
</TABLE>
- ------------
(1) Total return is calculated assuming a $1,000 investment on the first day of
each period reported, reinvestment of all dividends and capital gains
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported.
* During certain periods presented above, Mitchell Hutchins agreed to
reimburse the Portfolio for a portion of its operating expenses and waived
all or a portion of its advisory fee. If such reimbursements and waivers
had not been made, the annualized ratio of expenses to average net assets
and the annualized ratio of net investment income to average net assets
would have been 1.50% and 5.69%, respectively, for the year ended
December 31, 1990.
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights--(continued)
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
DIVIDEND GROWTH PORTFOLIO
--------------------------------------------
FOR THE YEARS ENDED FOR THE PERIOD
DECEMBER 31, JANUARY 2, 1992+
----------------------- TO DECEMBER 31,
1994 1993 1992
------- ------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period...... $ 9.87 $ 10.26 $ 10.00
------- ------- ------
Income from investment operations:
Net investment income.................. 0.10 0.16 0.08
Net realized and unrealized gains
(losses) from investment
transactions......................... (0.71) (0.39) 0.26
------- ------- ------
Total income (loss) from investment
operations.............................. (0.61) (0.23) 0.34
------- ------- ------
Less dividends from net investment
income.................................. (0.10) (0.16) (0.08)
------- ------- ------
Net asset value, end of period............ $ 9.16 $ 9.87 $ 10.26
------- ------- ------
------- ------- ------
Total return(1)........................... (6.18)% (2.26)% 3.40%
------- ------- ------
------- ------- ------
Ratios/Supplemental Data:
Net assets, end of period (000's)...... $12,872 $16,281 $20,037
Expenses to average net assets......... 1.35% 1.12% 1.29%*
Net investment income to average net
assets............................... 1.06% 1.37% 1.21%*
Portfolio turnover..................... 149.68% 51.68% 13.74%
</TABLE>
- ------------
+ Commencement of operations.
(1) Total return is calculated assuming a $1,000 investment on the first day of
each period reported, reinvestment of all dividends and capital gain
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported. Total returns for
periods less than one year are not annualized.
* Annualized.
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights--(continued)
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO
-----------------------------------------
FOR THE YEAR FOR THE PERIOD
ENDED NOVEMBER 2, 1993+
DECEMBER 31, 1994 TO DECEMBER 31, 1993
----------------- --------------------
<S> <C> <C>
Net asset value, beginning of period............ $ 9.95 $10.00
------- -------
Income from investment operations:
Net investment income........................ 0.01 0.01
Net realized and unrealized losses from
investment transactions.................... (0.30) (0.05)
------- -------
Total losses from investment operations......... (0.29) (0.04)
------- -------
Less dividends from net investment income....... (0.01) (0.01)
------- -------
Net asset value, end of period.................. $ 9.65 $ 9.95
------- -------
------- -------
Total return(1)................................. (2.90)% (0.36)%
------- -------
------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)............ $13,600 $2,814
Expenses to average net assets**............. 1.59% 0.00%
Net investment income to average net
assets**................................... 0.07% 3.31%*
Portfolio turnover........................... 90.42% 0.00%
</TABLE>
- ------------
+ Commencement of operations.
(1) Total return is calculated assuming a $1,000 investment on the first day of
each period reported, reinvestment of all dividends and capital gain
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported. Total returns for
periods less than one year are not annualized.
** During the period ended December 31, 1993, Mitchell Hutchins agreed to
reimburse the Portfolio for all of its operating expenses and waived all or
a portion of its advisory fee. If such reimbursements and waivers had not
been made, the annualized ratio of expenses to average net assets and the
annualized ratio of net investment income (loss) to average net assets would
have been 12.28% and (8.97)%, respectively.
* Annualized.
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights--(continued)
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
BALANCED PORTFOLIO
----------------------------------------
FOR THE PERIOD
FOR THE YEAR NOVEMBER 2, 1993+
ENDED TO DECEMBER 31,
DECEMBER 31, 1994 1993
----------------- -------------------
<S> <C> <C>
Net asset value, beginning of period...... $ 9.89 $ 10.00
------ ------
Income from investment operations:
Net investment income.................. 0.09 0.01
Net realized and unrealized losses from
investment transactions.............. (0.42) (0.11)
------ ------
Total losses from investment operations... (0.33) (0.10)
------ ------
Less dividends from net investment
income.................................. (0.09) (0.01)
------ ------
Net asset value, end of period............ $ 9.47 $ 9.89
------ ------
------ ------
Total return(1)........................... (3.31)% (0.97)%
------ ------
------ ------
Ratios/Supplemental Data:
Net assets, end of period (000's)...... $12,045 $ 2,262
Expenses to average net assets**....... 1.56% 0.00%
Net investment income to average net
assets**............................. 1.24% 2.92%*
Portfolio turnover..................... 35.56% 0.00%
</TABLE>
- ------------
+ Commencement of operations.
(1) Total return is calculated assuming a $1,000 investment on the first day of
each period reported, reinvestment of all dividends and capital gain
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported. Total returns for
periods less than one year are not annualized.
** During the period ended December 31, 1993, Mitchell Hutchins agreed to
reimburse the Portfolio for all of its operating expenses and waived all or
a portion of its advisory fee. If such reimbursements and waivers had not
been made, the annualized ratio of expenses to average net assets and the
annualized ratio of net investment income (loss) to average net assets would
have been 15.95% and (13.03)%, respectively.
* Annualized.
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Hightlights--(concluded)
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
FIXED INCOME PORTFOLIO
----------------------------------------
FOR THE PERIOD
FOR THE YEAR NOVEMBER 8, 1993+
ENDED TO DECEMBER 31,
DECEMBER 31, 1994 1993
----------------- -------------------
<S> <C> <C>
Net asset value, beginning of period...... $ 9.61 $ 10.00
------ ------
Income from investment operations:
Net investment income.................. 0.26 0.02
Net realized and unrealized losses from
investment transactions.............. (0.89) (0.39)
------ ------
Total losses from investment operations... (0.63) (0.37)
------ ------
Less dividends from net investment
income.................................. (0.27) (0.02)
------ ------
Net asset value, end of period............ $ 8.71 $ 9.61
------ ------
------ ------
Total return(1)........................... (6.56)% (3.73)%
------ ------
------ ------
Ratios/Supplemental Data:
Net assets, end of period (000's)...... $ 7,638 $ 1,480
Expenses to average net assets**....... 1.56% 0.00%
Net investment income to average net
assets**............................. 4.61% 3.90%*
Portfolio turnover..................... 35.86% 0.00%
</TABLE>
- ------------
+ Commencement of operations.
(1) Total return is calculated assuming a $1,000 investment on the first day of
each period reported, reinvestment of all dividends and capital gain
distributions at net asset value on the payable date, and a sale at net
asset value on the last day of each period reported. Total returns for
periods less than one year are not annualized.
** During the period ended December 31, 1993, Mitchell Hutchins agreed to
reimburse the Portfolio for all of its operating expenses and waived all or
a portion of its advisory fee. If such reimbursements and waivers had not
been made, the annualized ratio of expenses to average net assets and the
annualized ratio of net investment income (loss) to average net assets would
have been 23.52% and (19.62)%, respectively.
* Annualized.
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Report of Ernst & Young LLP
Independent Auditors
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders
PAINEWEBBER SERIES TRUST
We have audited the accompanying statement of assets and liabilities,
including the portfolios of investments, of PaineWebber Series Trust
(comprising, respectively, the Money Market, Growth, Global Growth, Global
Income, Government, Asset Allocation, Dividend Growth, Aggressive Growth,
Balanced and Fixed Income Portfolios) (the "Fund") as of December 31, 1994 and
the related statement of operations for the year ended December 31, 1994, and,
the statements of changes in net assets 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 generally accepted auditing
standards. 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. Our procedures included confirmation of investments owned as of
December 31, 1994, by correspondence with the custodians 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
each of the respective portfolios constituting the Fund at December 31, 1994,
the results of their operations, the changes in their net assets and the
financial highlights for each of the indicated periods, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
February 9, 1995
<PAGE>
PaineWebber
we invest in relationships.
(C) 1994 PaineWebber Incorporated 4332 93/227-1114
811 0060 0295
<PAGE>
APPENDIX
Narrative Description of Graphic and Image Material
Pursuant to Regulation S-T Section 232.304
The paper format version of the Annual Report on Form N-30D contains
no graphic and image material with the exception that the cover of the report
bears several decorative photographs of objects suggestive of major personal
expenditures, including bills for hospitalization, college tuition, wedding
banquet catering services, personal income taxes and retirement.
