PAINEWEBBER LIFE
MILESTONES-SM-
For life's important
moments and the means
to afford them
Semiannual Report
June 30, 1996
<PAGE>
Dear Contract Owner,
We are pleased to present the Semiannual Report for Milestones, offered
exclusively through PaineWebber. This report contains important information
about the PaineWebber Series Trust, including financial statements for the six
months ended June 30, 1996. As you know, the PaineWebber Life Variable Annuity
account holds shares of the PaineWebber Series Trust to fund the Milestones
Variable Annuity.
INVESTMENT OVERVIEW--DOMESTIC
By the end of 1995, most investors were convinced that the Federal Reserve
Board had achieved a "soft landing" for the economy, which led to a general
consensus that the Fed would act again to cut short-term interest rates.
Sentiment changed in early March, however, in response to government reports
showing higher-than-expected economic growth; there was a sharp drop in bond
prices which caused volatility in the stock market. Despite this volatility, the
stock market, as measured by the Standard & Poor's 500 Index, advanced 10.09%
through June 30, 1996. Several factors helped move stocks higher, including an
overall positive environment for corporate earnings and profit growth as well as
strong cash flows into equity mutual funds.
After exceptional performance during most of 1995, the first half of the
year was difficult for fixed income investors. Accelerating economic growth,
reflected in strong employment, retail sales and investment spending numbers, as
well as a surprisingly robust housing sector, combined to change market
expectations from the Fed easing to the Fed tightening. The 30-year U.S.
Treasury bond, a benchmark of bond market performance, was yielding 5.95% on
December 29, 1995 and 6.87% on June 28, 1996. When bond yields increase, bond
prices decrease. Meanwhile, the Federal Reserve's Open Market Committee decided
to keep monetary policy unchanged at the March, May and July 1996 meetings. The
Fed's decision to hold rates steady suggested that officials did not foresee a
recession or accelerating inflation.
INVESTMENT OVERVIEW--GLOBAL
World bond markets produced mixed returns during the six-month period, but
the stronger dollar eroded favorable returns in many markets. The Salomon
Brothers World Government Bond Index (currency hedged) was up 1.71% for the
period, while the unhedged Index declined 1.48%. European governments continued
to progress toward the goal of monetary union ("EMU"). While we cannot say with
certainty that monetary union will be achieved by the target date of January 1,
1999, the probability of its occurrence continues to grow. Efforts toward EMU
create a positive environment for European bonds because of the strict inflation
and fiscal targets which its members must achieve.
After taking a back seat to the U.S. stock market during 1995, overseas
markets rose during the first half of the year, with many markets outperforming
the U.S. Notable performers included France, Hong Kong, Mexico, and the
Netherlands. Valuations of global stocks are attractive, particularly in Europe.
Many of these companies have begun to restructure their operations, similar to
U.S. companies several years ago. In addition, inflation is tame on the
Continent, with the possibility of lower rates in several European markets.
While European markets generally performed well, Asian markets, with the
exception of Hong Kong, reacted to fears of higher U.S. interest rates and
tended to be weak during the period.
MONEY MARKET PORTFOLIO
During the first half of 1996, short-term interest rates began to decrease
in the six-month to one-year sector, steepening the short end of the yield
curve. The discounted 30-day commercial paper rate also decreased to
approximately 5.35% on June 30, 1996. It now appears that the Federal Reserve
Board will not raise rates until after the 1996 presidential election. In
anticipation of a stable to lower
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interest rate environment, the Portfolio's weighted average maturity was
increased during the period. The Portfolio will maintain its current position
until further economic data is released.
For the seven days ended June 30, 1996, the Portfolio's current yield was
4.29%. On June 30, 1996, the Portfolio's weighted average maturity was 67 days.
Although we are interested in maintaining higher yields, we will not do so by
sacrificing the Portfolio's emphasis on security, quality and liquidity.
GROWTH PORTFOLIO
During the first half of 1996, the Portfolio continued to gain ground as
investors broadened their interest toward growth stocks. It has been our
contention that the equity markets have been driven by demand for stocks coming
from several sources, but in particular, from unprecedented inflows into equity
funds from 401(k) plans and other retirement sources. We expect this trend to
continue, providing continuing demand for stocks over time.
An ongoing industry trend in the current economic environment has been
consolidation. Specifically, one company acquires another and the end result is
a larger company, which can produce economies of scale and improve profit
margins. Examples of this have occurred within several different sectors in
which the Portfolio invests. HFS (3.0% of Portfolio assets on June 30, 1996), is
the largest franchisor of popularly priced hotel rooms. Its franchisees own and
operate Days Inn, Howard Johnson, Ramada and Super 8 motels. The company
aggressively expanded beyond its traditional motel franchise business with the
acquisition of three real estate brokerage firms--Century 21, ERA and Coldwell
Banker. HFS is also participating in negotiations to acquire Avis Rent-A-Car. In
the medical providers sector, Phycor (2.3%) is acquiring physician practice
organizations in several specialities and then consolidating their record
keeping and administrative functions.
We continue to believe that the "Information Highway" is one of the
strongest worldwide secular growth areas. We are particularly interested in
competitive access providers, those companies that bypass local telephone
companies to provide both long distance and soon-to-be local phone service as
well as special services to office buildings utilizing "networks" of optical
fiber. Examples include MFS Communications (1.4%), Teleport Communications Group
(0.6%), Brooks Fiber Properties (0.4%) and Intelcom Group (2.2%).
Over long periods of time, stock prices reflect earnings growth. Therefore,
to achieve higher returns in a period of slow economic growth, the Portfolio is
pursuing investments in companies with above-average earnings growth potential.
Net assets of the Portfolio totalled $44.5 million as of June 30, 1996. As
of that date, investments consisted of approximately 90.6% common stocks, 0.9%
preferred stocks, 2.2% convertible bonds and 6.3% short-term U.S. government
obligations and cash equivalents.
GLOBAL GROWTH PORTFOLIO
As we mentioned in our last report, 1995 will be remembered for the strong
performance of the U.S. stock market, which outdistanced most overseas markets.
While the U.S. enjoyed a record stock market ride, the rest of the world's
markets positioned themselves for a recovery. Although the bull market in the
U.S. continued during the first half of the year, global stock markets rose as
well, with European shares performing particularly well.
Overseas, the Portfolio manager, Ralph Layman of GE Investment Management
Incorporated ("GEIM"), the Portfolio's sub-adviser, continues to be attracted to
Europe. The European managers GEIM has visited have started to restructure their
operations, a process begun in the U.S. several years ago. Also, inflation is
tame on the Continent, with the possibility of lower rates in several markets.
In Asia, recent weakness has given GEIM the opportunity to add some new names to
the Portfolio. They continue to like the region for its relatively high growth
rates and reasonable valuations.
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Equity markets, particularly the U.S., have been driven by low interest
rates, sustained economic growth and strong flows into equity mutual funds.
GEIM's investment process, which targets growth stocks at a reasonable price,
was out of favor during most of the six-month period. GEIM tends to look for
companies which have value overlooked by the market and a catalyst to unlock
that value over a 3-5 year time horizon. These stocks occasionally suffer due to
disappointments, and the market may overlook their potential during strong
bull-market runs. Money across the globe has been chasing stocks that have risen
the most (momentum stocks) and are the most liquid, not necessarily those
offering the best value. GEIM believes its investment process is sound, and will
continue to invest in companies that have good value characteristics relative to
their growth rate.
As of June 30, 1996, net assets of the Portfolio totalled $26.8 million.
Investments consisted of approximately 99.4% preferred and common stocks and
0.6% short-term obligations and cash equivalents. By region, approximately 44.3%
of the Portfolio was invested in Europe, 27.1% in North America, and 20.7% in
Asia.
GLOBAL INCOME PORTFOLIO
We wrote in last December's Annual Report that relative values appeared
better in European, Australian and Canadian government bonds than in U.S.
Treasuries or Japanese government bonds. During the six months ended June 30,
1996, these markets generally rose, while U.S. Treasuries and Japanese
government bonds depreciated. However, the stronger dollar eroded favorable
returns in many foreign markets.
During the six months ended June 30, 1996, the Portfolio's currency hedging
strategy mitigated the impact of currency losses on the Portfolio's non-dollar
holdings. In addition, the Portfolio generally maintained a low duration during
the period--usually under 3 years--as well as a significant cash position. While
this duration strategy dampened the impact of the strong appreciation in the
bond markets at the end of 1995, it also helped to protect the Portfolio's net
asset value when markets sold-off in February 1996.
During the six months, we left the Portfolio's broad market allocations
unchanged. We maintained approximately 36.8% of the Portfolio's net assets in
Europe, but moved holdings among countries on several occasions. For instance,
we shifted assets from Spanish bonds to Italian bonds to capture the
appreciation of the lira against other European currencies. We took profits in
Dutch bonds to take advantage of attractive yields in Denmark. We continue to
hold approximately 42.3% of the Portfolio's assets in the U.S., primarily in
two-year maturity Treasury bonds as a protective strategy, although lately we
have begun to extend these maturities.
We maintain roughly 18.4% of the Portfolio's assets in a combination of
Canadian, Australian and New Zealand bonds. As Canadian yields narrowed to U.S.
yields, we reallocated some of the Fund's assets into Australian bonds where
yield premiums over U.S. Treasuries are more attractive. We continue to believe
Australian bonds represent an attractive alternative to U.S. bonds. The newly
elected government in Australia has promised to reduce the Federal deficit--a
move which would also help to reduce the country's chronic current account
deficit. A reduction of the "twin deficits" would be positive for the currency
and bond markets. As Australia is a primary exporter to Asian Pacific countries,
its current account and currency should also benefit from any acceleration in
Japanese growth during the next twelve months.
Net assets of the Portfolio totalled $29.3 million as of June 30, 1996. The
Portfolio's investments consisted of approximately 73.1% long-term debt
securities, 23.8% short-term debt securities and 3.1% repurchase agreements and
cash equivalents. By region, approximately 49.0% of the portfolio was invested
in North America, 36.8% in Europe and 14.2% in Australia and New Zealand.
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STRATEGIC FIXED INCOME PORTFOLIO
As yields moved higher from year-end levels, the bond market continued to be
negatively impacted by stronger-than-expected economic data during the first
half of 1996. Employment growth, strong consumer and capital spending, and a
robust housing sector have combined to create an economy that is growing at a
faster-than-expected rate. This has prompted fears that the Federal Reserve
Board will feel compelled to tighten credit, perhaps as early as this August.
While the Portfolio outperformed its benchmark, the Lehman Brothers
Government/Corporate Bond Index, the impact of rising interest rates caused
negative absolute returns.
During the period, mortgage securities outperformed Treasury instruments, as
market volatility and prepayments speeds declined. The extra yield associated
with mortgage bonds can be thought of as compensation for volatility and
prepayment risk. The Portfolio benefitted from specific holdings such as certain
CMOs and adjustable rate mortgages (ARMs), which added to relative returns.
Other holdings that helped performance were U.S. Treasury 10- and 30-year bond
futures, which added incremental yield over actual bonds due to effective
investment of the cash equivalents which back the futures contracts. During the
first quarter, currency-hedged allocations to the German bond market
substantially outperformed all U.S. sectors.
In May, Pacific Investment Management Company ("PIMCO"), the Portfolio's
sub-adviser, reaffirmed its secular forecast of 5-7% for long-term interest
rates. Given that 30-year Treasury rates now exceed the 7% level, PIMCO is very
optimistic about the prospects for rate declines. While growth has clearly risen
during the first part of 1996, they remain confident that the U.S. economy will
grow less quickly than market expectations. This, together with a very benign
inflation outlook, creates a backdrop for attractive returns for the latter part
of the year. As a result, PIMCO will continue to position the Portfolio with a
longer average maturity than the benchmark index.
Security selection will remain concentrated in the mortgage sector, with
ARMs and Z-tranche CMOs the areas where PIMCO sees the most relative value.
Continued declines in market volatility should allow significant outperformance
of Treasuries given mortgage yield advantages. When PIMCO invests in Treasuries,
it will be through Treasury bond futures contracts, due to their additional
yield as a result of investing the cash equivalents which backs these contracts.
Net assets of the Portfolio totalled $12.1 million as of June 30, 1996.
BALANCED PORTFOLIO
As of June 30, 1996, the Portfolio's asset allocation was 58.4% common
stocks, 1.5% preferred stocks, 23.7% U.S. long-term government and agency
obligations, 10.7% long-term debt securities and 5.7% cash and cash equivalents.
The Portfolio employs a disciplined, model-based approach to calculate
expected returns for U.S. stocks, bonds and cash. Based on consensus
expectations for key economic variables such as interest rates, profit growth
and inflation--as well as fundamental valuation techniques--the Portfolio seeks
to determine whether the expected return from stocks is sufficient to offset the
additional risk when compared to bonds and "risk-free" cash investments.
Portfolio assets are repositioned based on the model, with a minimum of 25% of
net assets in bonds (including cash equivalents) at all times.
During the six months ended June 30, 1996, the stock market experienced
significant volatility, reflecting conflicting views that the economy was headed
for either a soft landing or more vigorous growth. Interest rates moved up, in
anticipation of the Fed increasing short-term rates, and the bond market
weakened. Our analysis suggests that the deterioration in bond prices was
overdone and that the fixed income market has become more attractive. As a
result, the Portfolio's assets were reallocated during the six-month period, to
align with our longer-term, neutral weighting of 60% equities, 40% fixed income.
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In the near term, we expect to maintain the Portfolio's neutral asset
allocation. An overweighting in stocks would require further reductions in
short-term interest rates and inflation, and/or an improved outlook for
corporate earnings. An underweighting in stocks would be caused by a more
restrictive monetary policy, rising inflation and/or the deterioration in the
outlook for earnings growth that would be characteristic of an economic forecast
calling for a recession in 1997. Even if the economy continues to perform
moderately well, the outlook for earnings could deteriorate if an increasing
percentage of gross sales revenues goes for wage payment, as price competition
precludes corporations from passing along higher wages. At the current time,
none of these events appear particularly likely.
An overweighting in bonds would require further reductions in inflationary
expectations and/or further easing by the Fed. Overweighting in bonds would also
obviously arise from a recessionary economic environment. Underweighting in
bonds would be called for if the economic strength evidenced in the second
quarter were to continue, generating fears of accelerating inflation.
As of June 30, 1996, net assets of the Portfolio totalled $33.7 million.
GROWTH AND INCOME PORTFOLIO
Expectations have changed dramatically since the start of 1996, as the
economy began to show signs of strength in contrast to the previously expected
weakness. As a result, some earnings estimates, especially in technology and
capital goods, are rapidly deteriorating. Given this environment, we have sought
greater diversification within the Portfolio. In particular, we view mid- to
smaller-cap issues attractive due to modest valuations relative to large-caps,
as well as more rapid growth prospects. Within this sector we're finding select
technology companies, as well as certain consumer cyclicals like auto
parts-related industries, attractive.
Going forward, we expect to maintain the Portfolio's weightings in
financials, healthcare and technology. The financial sector has recently lagged
the overall market due to recent bond market difficulties. However, we continue
to overweight select regional banks and insurance companies based on relatively
low valuations, potential industry consolidation and a belief that interest
rates will moderate toward year end. Technology stocks may experience near-term
volatility; thus we have taken a cautious stance and intend to focus on larger,
more liquid companies.
Looking ahead, stock market performance will reflect both interest rate
movements and earnings revisions. The recent rise in interest rates is expected
to dampen economic growth. As a result, the potential for changes in earnings
expectations should play a more significant role in valuation. In an environment
of moderate economic expectations, the opportunity for selective positive
earnings surprises remains. We remain confident that our investment process will
continue to uncover advantageous investment opportunities.
As of June 30, 1996, the Portfolio's net assets totalled $16.3 million. The
Portfolio's investments consisted of 90.7% equities, 2.8% corporate bonds and
6.5% cash and cash equivalents.
AGGRESSIVE GROWTH PORTFOLIO
So far this year, investors have been focusing their attention on solid
earnings growth, with growth companies outperforming value companies. Some of
the top performing sectors during the first two quarters included retail, based
on continued strong sales; utilities, which had a strong June as the broad
market weakened; and consumer non-durables. Technology stocks also did well
despite a difficult June, but have recently come under price pressure. Some of
the bottom performing sectors included consumer durables and raw materials--both
sectors were affected by rising interest rates and inflation uncertainty.
Nicholas-Applegate Capital Management, the Portfolio's sub-adviser, focuses
on identifying dynamic growth companies managing change and growing their
earnings and businesses today, not just the typical growers of the past. Their
investment approach systematically evaluates 4,000 domestic
5
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companies based upon their earnings growth, sustainability of earnings growth
and strong relative price strength, in order to identify attractive growth
issues. As a result, at the end of June, the Portfolio continued to have a
significant technology weighting. Several semi-conductor companies were sold,
however, and several software issues were purchased based upon their strong
earnings growth. Other areas with growth opportunities are healthcare services
and consumer services. The Portfolio remained close to fully invested during the
six-month period.
Net assets of the Portfolio totalled $19.9 million as of June 30, 1996. The
Portfolio was 98.3% invested in common stocks and 1.7% invested in cash and cash
equivalents.
HIGH GRADE FIXED INCOME PORTFOLIO
With strong economic fundamentals and a neutral-to-restrictive Federal
Reserve as backdrops, the bond market continued its price decline during the
first half of 1996. Latent fears of future inflation, based on above-trend
economic growth, pushed the yield on the 30-year Treasury bond up over 0.50% to
a high of 7.19% in mid-June. During the period, we repositioned the Portfolio in
a more defensive nature. Duration (interest rate sensitivity) was slightly
reduced and the Portfolio's mortgage-backed securities position was increased.
In our view, mortgages remain cheap on a relative value basis. In light of
historically tight corporate spreads, we have kept a neutral allocation to that
sector.
Moving forward, our view is that the economy will continue to expand, but
moderately. We forecast that inflation will remain subdued, creating a stable
environment for interest rates. Also, the over-extension of consumers would
suggest a slowing down in future spending. However, the near-term picture is not
so positive. Monetary tightening has become a question of when, not if. Current
economic fundamentals suggest higher rates. Based on this, market psychology
remains bearish in the short run. Therefore, due to these near-term bearish
fundamentals and technicals, we remain defensive. However, as we see evidence
confirming our longer-term outlook, we will lengthen duration to capture the
next downward trend in interest rates.
Net assets of the Portfolio as of June 30, 1996 totalled $9.0 million. The
Portfolio consisted
of 42.8% high-quality corporate bonds, 34.1% U.S. government and agency
obligations, 6.4% agency pass-through securities, 6.1% collateralized mortgage
obligations and 10.6% cash and cash equivalents.
The first half of 1996 was marked by volatility in most financial markets.
At times like these, remember the importance of working with your Investment
Executive to help you find investments that are consistent with your risk
tolerance and time horizon.
Our ultimate objective in managing your investments is to help you
successfully meet your financial goals. We thank you for your continued support,
and welcome any comments or questions you may have.
Sincerely,
/s/ Dennis Hess /s/ Margo Alexander
DENNIS HESS MARGO ALEXANDER
Chairman and Chief Executive Officer, President,
PaineWebber Life Insurance Company Mitchell Hutchins Asset Management Inc.
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PaineWebber Series Trust
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Portfolios of Investments
June 30, 1996 (unaudited)
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MONEY MARKET PORTFOLIO
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<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- --------------------- -------------- -----------
<C> <S> <C> <C> <C>
U.S. TREASURY & AGENCY OBLIGATIONS--1.35%
$ 200 Federal Home Loan Bank (cost--$200,000)... 07/02/97 6.060% $ 200,000
-----------
BANK NOTES--5.06%
DOMESTIC--5.06%
250 FCC National Bank......................... 04/17/97 5.640 249,791
500 Morgan Guaranty Trust Company............. 01/15/97 5.250 500,242
-----------
750,033
Total Bank Notes (cost--$750,033).....................
-----------
CERTIFICATES OF DEPOSIT--3.37%
YANKEE--3.37%
250 Bayerische Vereinsbank AG................. 04/29/97 5.800 250,000
250 Societe Generale.......................... 05/08/97 5.850 250,020
-----------
500,020
Total Certificates of Deposit (cost--$500,020)........
-----------
COMMERCIAL PAPER--81.25%
ASSET-BACKED--12.56%
700 Asset Securitization Cooperative
Corporation............................... 07/30/96 5.430 696,938
420 Delaware Funding Corporation.............. 07/25/96 5.290 418,519
500 Eiger Capital Corporation................. 07/12/96 5.310 499,189
250 Falcon Asset Securitization Corporation... 07/01/96 5.330 250,000
-----------
1,864,646
-----------
AUTO/TRUCK--6.72%
500 Daimler-Benz North America Corporation.... 07/29/96 5.270 497,951
500 Ford Motor Credit Corporation............. 07/05/96 5.300 499,706
-----------
997,657
-----------
BANKING--9.33%
1,000 ABN AMRO North America Finance
Incorporated.............................. 10/21/96 5.000 984,444
400 Bankers Trust New York Corporation FRN.... 02/14/97 5.480@ 400,000
-----------
1,384,444
-----------
BROKER/DEALER--9.44%
700 Nomura Holdings America Incorporated...... 07/01/96 5.550 700,000
700 Morgan Stanley Group Incorporated......... 07/01/96 5.600 700,000
-----------
1,400,000
-----------
BUSINESS SERVICES--3.36%
500 PHH Corporation........................... 07/23/96 5.350 498,365
-----------
CHEMICAL--3.37%
500 Air Products & Chemicals Incorporated..... 07/01/96 5.300 500,000
-----------
COMPUTER--4.71%
700 IBM Corporation........................... 07/15/96 5.350 698,544
-----------
CONSUMER PRODUCTS--3.88%
575 Rubbermaid Incorporated................... 07/02/96 5.300 574,915
-----------
DRUGS & HEALTH CARE--8.08%
700 American Home Products Incorporated....... 07/01/96 5.580 700,000
500 Sandoz Corporation........................ 07/11/96 5.270 499,268
-----------
1,199,268
-----------
ELECTRONICS--4.82%
715 Emerson Electric Company.................. 07/01/96 5.550 715,000
-----------
ENERGY--4.72%
700 Koch Industries, Incorporated............. 07/01/96 5.550 700,000
-----------
</TABLE>
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MONEY MARKET PORTFOLIO
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<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- --------------------- -------------- -----------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER--(CONCLUDED)
FINANCE-CONSUMER--2.18%
$ 325 Transamerica Finance Corporation.......... 07/22/96 5.370% $ 323,982
-----------
FINANCE-DIVERSIFIED--4.71%
700 Associates Corporation of North America... 07/16/96 5.340 698,442
-----------
FINANCE-INDEPENDENT--3.37%
500 National Rural Utilities Coop Finance
Corporation............................... 07/03/96 5.270 499,854
-----------
12,055,117
Total Commercial Paper (cost--$12,055,117)............
-----------
SHORT-TERM CORPORATE OBLIGATIONS--10.21%
500 American General Finance Corporation...... 04/01/97 5.800 500,753
1,000 Norwest Corporation MTN................... 01/30/97 7.875 1,014,429
-----------
1,515,182
Total Short-Term Corporate Obligations
(cost--$1,515,182)...................................
-----------
15,020,352
Total Investments (cost--$15,020,352)--101.24%........
(184,044)
Liabilities in excess of other assets--(1.24)%........
-----------
$14,836,308
Net Assets--100.00%...................................
-----------
-----------
</TABLE>
- ------------
@ Variable rate security--maturity date reflects earlier of reset date or
maturity date. The interest rate shown is the current rate as of June 30,
1996 and resets periodically.
FRN Floating Rate Note
MTN Medium Term Note
Weighted average maturity--67 days
See accompanying notes to financial statements
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GROWTH PORTFOLIO
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<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--90.62%
AGRICULTURE, FOOD & BEVERAGE--1.32%
12,000 The Coca-Cola Company................................................. $ 586,500
-----------
APPAREL, RETAIL--1.29%
25,000 Loehmanns Incorporated*............................................... 575,000
-----------
BANKS--2.55%
5,000 The Bank of New York Company Incorporated............................. 256,250
10,000 CCB Financial Corporation............................................. 512,500
5,200 Chase Manhattan Corporation........................................... 367,250
-----------
1,136,000
-----------
CHEMICALS--2.34%
9,800 IMC Global Incorporated............................................... 368,725
20,000 Sealed Air Corporation*............................................... 672,500
-----------
1,041,225
-----------
COMPUTER HARDWARE--4.15%
6,500 3Com Corporation*..................................................... 297,375
12,000 Cisco Systems Incorporated*........................................... 679,500
20,000 EMC Corporation*...................................................... 372,500
2,000 Hewlett-Packard Company............................................... 199,250
5,000 Sun Microsystems Incorporated*........................................ 294,375
-----------
1,843,000
-----------
COMPUTER SOFTWARE--3.76%
40,000 Excalibur Technologies Corporation*................................... 900,000
10,000 Sterling Software Incorporated*....................................... 770,000
-----------
1,670,000
-----------
DEFENSE/AEROSPACE--0.78%
3,000 United Technologies Corporation....................................... 345,000
-----------
DRUGS & MEDICINE--5.80%
18,200 Columbia Laboratories Incorporated*................................... 270,725
7,000 Elan Corporation plc, ADS*............................................ 399,875
25,000 Entremed Incorporated*................................................ 375,000
5,000 Imagyn Medical Incorporated*.......................................... 55,000
5,000 R.P. Scherer Corporation*............................................. 226,875
18,000 Teva Pharmaceutical Industries Ltd., ADS.............................. 681,750
15,000 Watson Pharmaceuticals, Incorporated*................................. 568,125
-----------
2,577,350
-----------
ENTERTAINMENT--2.98%
20,000 Cinar Films Incorporated*............................................. 380,000
30,000 Savoy Pictures Entertainment, Incorporated*........................... 161,250
20,000 Time Warner Incorporated.............................................. 785,000
-----------
1,326,250
-----------
ENVIRONMENTAL SERVICES--3.56%
54,400 Republic Industries Incorporated*..................................... 1,584,400
-----------
</TABLE>
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GROWTH PORTFOLIO
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<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
COMMON STOCKS--(CONTINUED)
<C> <S> <C>
FINANCIAL SERVICES--3.28%
4,500 Federal Home Loan Mortgage Corporation................................ $ 384,750
32,000 Federal National Mortgage Association................................. 1,072,000
-----------
1,456,750
-----------
FOOD, RETAIL--0.74%
10,000 Safeway Incorporated*................................................. 330,000
-----------
FOREST PRODUCTS, PAPER--0.70%
30,000 Universal Forest Products Incorporated................................ 311,250
-----------
GAS UTILITIES--0.37%
15,000 Noram Energy Corporation.............................................. 163,125
-----------
HOTELS--7.03%
29,700 Extended Stay America Incorporated*................................... 935,550
12,500 Grand Casinos Incorporated*........................................... 321,875
19,000 HFS Incorporated*..................................................... 1,330,000
10,000 Mirage Resorts, Incorporated*......................................... 540,000
-----------
3,127,425
-----------
HOUSEHOLD PRODUCTS--1.42%
3,000 Premark International Incorporated.................................... 55,500
20,000 Syratech Corporation*................................................. 450,000
3,000 Tupperware Corporation*............................................... 126,750
-----------
632,250
-----------
INDUSTRIAL SERVICES & SUPPLIES--0.94%
5,000 Career Horizons Incorporated.......................................... 175,000
20,000 Data Documents Incorporated*.......................................... 245,000
-----------
420,000
-----------
INFORMATION & COMPUTER SERVICES--3.98%
10,000 Ceridian Corporation*................................................. 505,000
5,000 First Data Corporation................................................ 398,125
12,500 Princeton Video Image Incorporated.................................... 437,500
20,000 Sipex Corporation*.................................................... 427,500
-----------
1,768,125
-----------
LEISURE--3.58%
18,750 Mattel Incorporated................................................... 536,719
30,000 Norwood Promotional Products, Incorporated*........................... 675,000
38,500 Rawlings Sporting Goods Company Incorporated*......................... 380,187
-----------
1,591,906
-----------
LIFE INSURANCE--1.43%
20,000 PennCorp Financial Group, Incorporated................................ 635,000
-----------
LONG DISTANCE & PHONE COMPANIES--2.51%
5,000 Brooks Fiber Properties Incorporated*................................. 165,000
16,000 MFS Communications Company, Incorporated*............................. 602,000
2,500 McLeod Incorporated*.................................................. 60,000
15,000 Teleport Communications*.............................................. 286,950
-----------
1,113,950
-----------
</TABLE>
10
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
COMMON STOCKS--(CONTINUED)
<C> <S> <C>
MANUFACTURING, HIGH TECHNOLOGY--5.00%
17,000 Belden, Incorporated.................................................. $ 510,000
5,000 Boston Communications Group*.......................................... 82,500
16,000 Microcom Incorporated*................................................ 202,000
70,000 Noel Group, Incorporated*............................................. 603,750
25,000 Waters Corporation*................................................... 825,000
-----------
2,223,250
-----------
MEDIA--9.98%
30,000 Ascent Entertainment Group Incorporated*.............................. 757,500
17,000 British Sky Broadcast Group plc, ADR*................................. 690,625
31,500 Comcast Corporation, Class A Special.................................. 582,750
26,666 International Cabletel Incorporated*.................................. 786,646
15,000 Liberty Media Group, Series A*........................................ 397,500
30,000 NYNEX Cablecomms Group plc, ADR*...................................... 487,500
20,000 TeleCommunications, Incorporated Class A*............................. 362,500
15,000 TeleWest Communications plc, ADR*..................................... 374,063
-----------
4,439,084
-----------
MEDICAL PRODUCTS--1.35%
4,700 Fuisz Technologies Limited*........................................... 89,300
15,000 VISX, Incorporated*................................................... 511,875
-----------
601,175
-----------
MEDICAL PROVIDERS--8.42%
25,000 Cohr Incorporated*.................................................... 593,750
7,500 Columbia Healthcare Corporation....................................... 400,313
4,000 NCS Healthcare Incorporated*.......................................... 121,000
15,000 Ornda Healthcorp*..................................................... 360,000
30,000 Pediatric Services of America, Incorporated*.......................... 682,500
10,000 Pharmaceutical Product Development Incorporated*...................... 335,000
27,000 Phycor Incorporated*.................................................. 1,026,000
800,000 Quality Care Systems, Incorporated*................................... 224,000
-----------
3,742,563
-----------
]MINING & METALS--1.12%
7,500 Potash Corporation of Saskatchewan Incorporated....................... 496,875
-----------
OIL SERVICES--0.76%
10,000 Camco International Incorporated...................................... 338,750
-----------
OTHER INSURANCE--0.53%
5,000 ACE Limited........................................................... 235,000
-----------
RAILROADS--0.21%
3,600 Railtex Incorporated*................................................. 92,700
-----------
SPECIALTY RETAIL--8.21%
75,000 BAB Holdings Incorporated*............................................ 825,000
16,000 Eckerd Corporation*................................................... 362,000
35,000 General Nutrition Companies Incorporated*............................. 612,500
53,000 Staples, Incorporated*................................................ 1,033,500
26,000 Viking Office Products, Incorporated*................................. 815,750
-----------
3,648,750
-----------
</TABLE>
11
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
COMMON STOCKS--(CONCLUDED)
<C> <S> <C>
WIRELESS TELECOMMUNICATIONS--0.53%
5,000 Omnipoint Corporation*................................................ $ 130,313
5,000 Western Wireless Corporation*......................................... 106,875
-----------
237,188
-----------
Total Common Stocks (cost--$25,034,484)........................................... 40,289,841
-----------
PREFERRED STOCK--0.91%
MEDIA--0.91%
20,000 The News Corporation Limited, ADR (cost--$348,452).................... 402,500
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
- --------- --------------------- ---------------
<C> <S> <C> <C> <C>
CONVERTIBLE BONDS--2.16%
MEDIA--2.16%
$ 600 IntelCom Group, Incorporated
(cost--$600,000).......................... 09/17/98 8.000% 961,560
-----------
U.S. GOVERNMENT OBLIGATIONS--6.74%
3,000 U.S. Treasury Bills (cost--$2,997,326).... 07/05/96 to 07/11/96 4.400 to 4.630 2,997,326
-----------
REPURCHASE AGREEMENT--0.99%
440 Repurchase Agreement dated 06/28/96 with 07/01/96 4.750 440,000
State Street Bank & Trust Company,
collateralized by $440,701 U.S. Treasury
Notes, 6.000%, due
08/31/97; proceeds: $440,174
(cost--$440,000)
-----------
45,091,227
Total Investments (cost--$29,420,262)--101.42%........
(630,783)
Liabilities in excess of other assets--(1.42)%........
-----------
$44,460,444
Net Assets--100.00%...................................
-----------
-----------
</TABLE>
- ------------
* Non-income producing security
ADR American Depositary Receipt
ADS American Depositary Shares
See accompanying notes to financial statements
12
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- -----------
<C> <S> <C>
COMMON STOCKS--95.60%
AUSTRALIA--1.16%
FOOD--1.16%
165,234 Burns Philip & Company, Limited....................................... $ 311,640
-----------
AUSTRIA--3.16%
CONSTRUCTION--0.51%
2,002 Flughafen Wein AG..................................................... 137,556
-----------
OIL & GAS--0.86%
2,288 OMV AG................................................................ 230,841
-----------
TECHNOLOGY--1.79%
3,906 VA Technologie AG..................................................... 478,740
-----------
Total Austria Common Stocks........................................................ 847,137
-----------
FINLAND--0.95%
MANUFACTURING--0.95%
15,054 Valmet Corporation.................................................... 255,147
-----------
FRANCE--9.45%
AUTOMOTIVE--1.51%
7,571 Valeo SA.............................................................. 405,516
-----------
BANKING--0.77%
5,871 Banque Nationale de Paris............................................. 206,254
-----------
CAPITAL GOODS--0.98%
2,846 Technip SA/Compagnie Francaise........................................ 262,268
-----------
ENERGY--3.01%
]10,878 Total SA (Class B).................................................... 807,454
-----------
FOOD--1.93%
922 Carrefour SA.......................................................... 516,962
-----------
PRODUCERS' GOODS--1.25%
19,229 Coflexip SA, ADR...................................................... 334,104
-----------
Total France Common Stocks......................................................... 2,532,558
-----------
GERMANY--3.83%
ENERGY--2.32%
11,672 Veba AG............................................................... 620,792
-----------
PHARMACEUTICAL--1.51%
507 Gehe AG............................................................... 340,779
95 Gehe (new) AG ........................................................ 63,854
-----------
404,633
-----------
Total German Common Stocks......................................................... 1,025,425
-----------
</TABLE>
13
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
HONG KONG--5.25%
BROADCASTING--1.32%
94,000 Television Broadcasting Limited....................................... $ 352,767
-----------
CONGLOMERATE--0.52%
22,200 Hutchison Whampoa Limited............................................. 139,668
-----------
FINANCIAL SERVICES--0.79%
14,000 HSBC Holdings......................................................... 211,606
-----------
INSURANCE--0.26%
81,000 National Mutual Asia Limited.......................................... 71,155
-----------
RETAIL--1.43%
395,000 Giordano Holdings Limited............................................. 382,712
-----------
UTILITIES--0.93%
150,600 Consolidated Electric Power Asia...................................... 249,029
-----------
Total Hong Kong Common Stocks...................................................... 1,406,937
-----------
INDONESIA--1.00%
AUTOMOTIVE--1.00%
143,500 Astra International................................................... 208,083
47,000 Steady Safe........................................................... 60,580
-----------
268,663
-----------
ITALY--3.54%
BANKING--0.70%
17,425 IMI................................................................... 145,658
1,681 IMI, ADR.............................................................. 42,866
-----------
188,524
-----------
FURNITURE/HOME APPLIANCES--0.55%
2,856 Industrie Natuzzi SPA, ADR............................................ 146,370
-----------
TELECOMMUNICATIONS--2.29%
273,817 Telecom Italia Mobilare............................................... 612,456
-----------
Total Italy Common Stocks.......................................................... 947,350
-----------
JAPAN--12.48%
AUTOMOTIVE--1.42%
29,000 Suzuki Motor Corporation, Limited..................................... 381,841
-----------
ELECTRONICS--4.91%
20,000 Canon Incorporated.................................................... 416,952
7,000 Murata Manufacturing Company, Limited................................. 265,624
11,000 Omron Corporation..................................................... 234,353
6,000 Secom Company, Limited................................................ 397,202
-----------
1,314,131
-----------
</TABLE>
14
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
JAPAN--(CONCLUDED)
EQUIPMENT--0.99%
4,000 Rohm Company.......................................................... $ 264,801
-----------
FINANCIAL SERVICES--1.26%
13,900 Credit Saison Company................................................. 336,808
-----------
FOOD--0.90%
4,000 Ito-Yokado Company, Limited........................................... 241,759
-----------
TELECOMMUNICATIONS--2.48%
76 DDI Corporation....................................................... 664,344
-----------
TOYS--0.52%
3,000 Sega Enterprises...................................................... 140,447
-----------
Total Japan Common Stocks.......................................................... 3,344,131
-----------
MALAYSIA--0.88%
BANKING--0.88%
16,800 AMMB Holdings Berhad.................................................. 235,719
-----------
MEXICO--2.88%
BANKING--0.52%
16,536 Grupo Financiero Bancomer ADR * +..................................... 140,556
-----------
MEDIA--0.70%
6,090 Grupo Televisa, S.A. de C.V. ADR...................................... 187,268
-----------
TELECOMMUNICATIONS--1.66%
41,161 Grupo Carso, S.A. de C.V.* (Series A)................................. 291,953
10,958 Grupo Carso, S.A. de C.V. ADR* +...................................... 151,987
-----------
443,940
-----------
Total Mexico Common Stocks......................................................... 771,764
-----------
NETHERLANDS--2.67%
ENTERTAINMENT--0.52%
2,346 Polygram.............................................................. 138,655
-----------
FINANCIAL SERVICES--1.55%
13,973 Internationale Nederlanden Groep N.V.................................. 417,019
-----------
FOOD PROCESSING--0.60%
1,508 Nutricia Verenigde Bedrijven.......................................... 159,598
-----------
Total Netherlands Common Stocks.................................................... 715,272
-----------
NORWAY--1.59%
COMMERCIAL SERVICES--1.59%
14,855 Petroleum Geo-Service*................................................ 425,796
-----------
</TABLE>
15
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
PHILIPPINES--1.15%
BREWERY--1.01%
78,320 San Miguel Corporation................................................ $ 270,533
-----------
TELECOMMUNICATIONS--0.14%
24,200 Philippino Telephone.................................................. 36,946
-----------
Total Philippines Common Stocks.................................................... 307,479
-----------
SOUTH AFRICA--1.35%
MINING--1.35%
461,040 South African Iron & Steel/Iscor...................................... 360,703
-----------
SPAIN--0.73%
OIL & GAS--0.73%
5,640 Repsol S.A............................................................ 196,291
-----------
SWEDEN--1.27%
AUTOMOTIVE MANUFACTURING--1.27%
11,160 Autoliv Ab 'B' Free................................................... 340,527
-----------
SWITZERLAND--6.83%
FOOD--1.62%
379 Nestle S.A.--Registered............................................... 433,203
-----------
INSURANCE--0.95%
248 Schw Ruckversicher.................................................... 254,903
-----------
MANUFACTURING--1.59%
345 ABB AG................................................................ 427,180
-----------
PHARMACEUTICAL--2.67%
378 Sandoz AG............................................................. 432,665
37 Roche Holdings AG..................................................... 282,487
-----------
715,152
-----------
Total Switzerland Common Stocks.................................................... 1,830,438
-----------
THAILAND--0.83%
BANKING--0.83%
20,300 Thai Farmers Bank plc................................................. 222,312
-----------
</TABLE>
16
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
UNITED KINGDOM--8.10%
BROADCASTING--1.84%
29,455 Reed International.................................................... $ 492,441
-----------
BUILDING MATERIALS & PAPER PACKAGING--0.96%
51,971 BPB Industries........................................................ 257,070
-----------
DRUGS--1.09%
74,842 Medeva plc............................................................ 292,905
-----------
ENTERTAINMENT--3.93%
20,604 Granada Group......................................................... 275,669
29,397 Siebe................................................................. 417,740
12,884 Thorn EMI plc......................................................... 358,967
-----------
1,052,376
-----------
HEALTHCARE--0.28%
36,656 Takare plc............................................................ 74,007
-----------
Total United Kingdom Common Stocks................................................. 2,168,799
-----------
UNITED STATES--26.50%
BANKS--1.97%
6,385 Citicorp.............................................................. 527,561
-----------
BEVERAGES--0.30%
1,784 Panamerican Beverages, Incorporated................................... 79,834
-----------
CHEMICALS--3.85%
22,129 Airgas Incorporated*.................................................. 420,451
10,703 Allied Signal Incorporated............................................ 611,409
-----------
1,031,860
-----------
ELECTRONIC EQUIPMENT--1.33%
8,567 UCAR International Incorporated*...................................... 356,601
-----------
ELECTRONICS--4.04%
2,535 Avery Dennison Corporation............................................ 139,108
2,929 Intel Corporation..................................................... 215,098
7,626 Motorola Incorporated................................................. 479,485
14,978 Sensormatic Electronics Corporation................................... 245,265
-----------
1,078,956
-----------
HEALTH (NON-DRUG)--0.54%
7,540 Sunrise Medical Incorporated*......................................... 145,145
-----------
INSURANCE--1.62%
9,499 The Travelers Group, Incorporated..................................... 433,392
-----------
MOTOR VEHICLES--1.47%
6,370 Chrysler Corporation.................................................. 394,940
-----------
POLLUTION CONTROL--1.14%
20,057 Wheelabrator Technologies, Incorporated*.............................. 305,869
-----------
</TABLE>
17
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- -----------
<C> <S> <C>
COMMON STOCKS--(CONCLUDED)
UNITED STATES--(CONCLUDED)
PRODUCERS' GOODS--0.81%
3,637 Tyco International Limited............................................ $ 148,208
3,923 Zebra Technologies Corporation (Class A).............................. 69,633
-----------
217,841
-----------
RETAIL (ALL OTHER)--1.26%
11,875 Toys 'R' Us, Incorporated*............................................ 338,438
-----------
RETAIL (FOOD)--0.30%
4,597 General Nutrition Company Incorporated................................ 80,448
-----------
SERVICES--5.10%
14,636 Ecolab Incorporated................................................... 482,988
8,102 First Data Corporation................................................ 645,122
5,989 Medaphis Corporation.................................................. 238,063
-----------
1,366,173
-----------
SOAPS, HARDWARES--2.77%
8,752 Colgate-Palmolive Company............................................. 741,732
-----------
Total United States Common Stocks.................................................. 7,098,790
-----------
Total Common Stocks (cost--$22,758,578)............................................ 25,612,878
-----------
PREFERRED STOCKS--3.77%
AUSTRIA--0.68%
BANKING--0.68%
3,596 Creditanstalt Bankverein.............................................. 182,244
-----------
BRAZIL--1.18%
FOOD--0.44%
11,087,547 Ceval Alimentos S.A................................................... 118,127
-----------
MACHINERY--0.74%
630,000 Brasmotor............................................................. 196,993
-----------
TELEPHONE COMPANIES--0.00%
3,713 Telebras.............................................................. 259
-----------
Total Brazil Preferred Stocks...................................................... 315,379
-----------
GERMANY--1.48%
TECHNOLOGY--1.48%
2,673 SAP AG................................................................ 396,775
-----------
PANAMA--0.43%
BANKING--0.43%
2,072 Banco Latinamericano.................................................. 116,550
-----------
Total Preferred Stocks (cost--$939,620)............................................ 1,010,948
-----------
</TABLE>
18
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATE RATE VALUE
- ---------- --------------------- --------------- -----------
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENT--1.61%
$ 430 Repurchase Agreement dated 06/28/96 with 07/01/96 5.250% $ 430,000
State Street Bank & Trust Company,
collateralized by $440,943 U.S. Treasury
Bonds, 7.125% due 02/15/23; proceeds:
$430,188 (cost--$430,000)...................
-----------
Total Investments (cost--$24,128,198)--100.98%.......... 27,053,826
Liabilities in excess of other assets--(0.98%).......... (262,951)
-----------
Net Assets--100.00%..................................... $26,790,875
-----------
-----------
</TABLE>
- ------------
<TABLE>
<S> <C>
* Non-income producing security
+ Security exempt from registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally to
qualified institutional buyers.
ADR American Depositary Receipt
</TABLE>
See accompanying notes to financial statements
19
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMOUNT MATURITY INTEREST
(000)* DATES RATES VALUE
- ---------- --------------------- ------------------ -----------
<S> <C> <C> <C>
LONG-TERM DEBT SECURITIES--73.08%
AUSTRALIA--6.09% 12/01/01
400 New South Wales Treasury 08/15/01 to 06/14/05 $ 357,151
1,450 Corporation........................... 11/15/06 1,176,554
300 Queensland Treasury Corporation Global 254,195
Issue................................. 12.000% -----------
Treasury Corporation of Victoria 6.500 to 12.000
Global Issue.......................... 10.250 1,787,900
-----------
CANADA--4.15% 526,095
2,135 Ontario Hydro Global.................. 239,804
1,190 Province of British Columbia 453,200
540 Residual.............................. 04/11/08 to 04/11/11 8.605 to 10.551@ -----------
Province of Ontario................... 01/09/12 9.000 to 9.061@
01/10/01 10.875 1,219,099
-----------
DENMARK--3.50%
5,700 Government of Denmark 05/15/03 to 03/15/06 8.000 1,027,588
-----------
GERMANY--7.25%
3,074 Federal Republic of Germany........... 07/22/02 to 01/04/24 6.250 to 8.000 2,126,459
-----------
IRELAND--2.06%
339 Republic of Ireland................... 07/11/03 9.250 603,084
-----------
ITALY--4.43%
2,010,000 Government of Italy................... 07/15/98 to 04/01/04 8.500 to 10.500 1,299,196
-----------
NEW ZEALAND--4.51%
1,916 Government of New Zealand............. 03/15/02 to 11/15/06 8.000 to 10.000 1,323,833
-----------
SPAIN--6.83%
234,540 Government of Spain................... 08/30/98 to 01/31/06 10.150 to 12.250 2,004,235
-----------
UNITED KINGDOM--9.61%
1,568 United Kingdom Gilt................... 09/30/98 to 02/26/01 8.000 to 15.500 2,818,995
-----------
UNITED STATES--24.65% 1,270,610
1,250 Chase Manhattan Corporation........... 1,075,671
1,000 Clorox Corporation.................... 1,101,975
1,000 Ford Motor Capital Corporation........ 12/01/97 7.500 882,441
995 U.S. Treasury Bonds................... 07/15/01 8.800 2,904,697
2,929 U.S. Treasury Notes................... 07/01/01 9.500 -----------
02/15/26 6.000
01/31/98 to 05/15/06 5.625 to 6.875 7,235,394
-----------
Total Long-Term Debt Securities
(cost--$21,537,673)...............................
SHORT-TERM DEBT SECURITIES--23.80% 21,445,783
10/17/96 -----------
AUSTRALIA--3.64% 04/01/97
Government of Australia Treasury 499,594
650 Bills................................. 568,926
700 New South Wales Treasury -----------
Corporation........................... 7.500@
12.500 1,068,520
-----------
ITALY--1.27%
568,400 Swiss Bank Corporation TD............. 08/22/96 10.000 371,988
-----------
POLAND--1.87%
1,650 Government of Poland Treasury Bills... 08/07/96 to 04/23/97 20.906 to 21.400@ 550,077
-----------
UNITED STATES--17.02% 1,000,997
1,000 General Motors Acceptance Corporation 3,995,320
4,000 MTN................................... -----------
U.S. Treasury Bills................... 07/15/96 8.625
07/11/96 4.200 4,996,317
-----------
Total Short-Term Debt Securities
(cost--$6,977,354)................................ 6,986,902
-----------
20
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL INCOME PORTFOLIO
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATE RATE VALUE
- ---------- --------------------- ------------------ -----------
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENT--0.60%
$ 175 Repurchase Agreement dated 06/28/96 07/01/96 4.875% $ 175,000
with Brown Brothers Harriman &
Company, collateralized by $175,000
U.S. Treasury Notes, 6.875% due
02/28/97; proceeds: $175,071
(cost--$175,000)......................
-----------
Total Investments (cost--$28,690,027)--97.48%..... 28,607,685
Other assets in excess of liabilities--2.52%...... 739,595
-----------
Net Assets--100.00%............................... $29,347,280
-----------
-----------
</TABLE>
- ------------
Note: The Portfolio of Investments is listed by the security issuer's country
of origin.
* In local currency unless otherwise indicated
@ Yield to maturity
MTN Medium Term Note
TD Time Deposit
21
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GLOBAL INCOME PORTFOLIO
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT TO MATURITY APPRECIATION
DELIVER IN EXCHANGE FOR DATES (DEPRECIATION)
------------- ------------------- --------------------- --------------
<S> <C> <C> <C> <C>
Australian Dollars............ 437,345 U.S.$ 341,571 07/29/96 $ (1,633)
Australian Dollars............ 798,725 U.S.$ 637,263 08/20/96 11,266
Australian Dollars............ 970,000 U.S.$ 766,300 08/22/96 6,182
Belgian Francs................ 22,000,000 U.S.$ 759,406 09/30/96 54,616
Belgian Francs................ 28,879,180 U.S.$ 997,554 09/30/96 71,666
British Pounds................ 684,040 U.S.$ 1,055,665 09/30/96 (6,519)
British Pounds................ 183,500 U.S.$ 277,636 01/13/97 (6,742)
Canadian Dollars.............. 644,700 U.S.$ 474,201 02/24/97 1,870
Canadian Dollars.............. 964,000 U.S.$ 708,615 03/24/97 2,451
Danish Kronas................. 3,020,000 U.S.$ 523,397 07/15/96 7,976
Finnish Markkas............... 3,906,481 U.S.$ 862,358 02/24/97 15,486
Finnish Markkas............... 2,565,955 U.S.$ 568,179 03/24/97 8,772
French Francs................. 2,310,000 U.S.$ 449,469 08/07/96 424
German Deutschemarks.......... 1,343,208 U.S.$ 893,882 07/12/96 10,470
German Deutschemarks.......... 1,200,000 U.S.$ 790,514 07/12/96 1,378
German Deutschemarks.......... 655,000 U.S.$ 430,102 08/14/96 (634)
German Deutschemarks.......... 1,080,000 U.S.$ 708,942 08/23/96 (2,237)
Italian Lira.................. 1,241,000,000 U.S.$ 788,122 07/12/96 (22,103)
New Zealand Dollars........... 700,000 U.S.$ 476,630 07/05/96 (4,122)
New Zealand Dollars........... 880,000 U.S.$ 585,640 07/10/96 (18,405)
Spanish Pesetas............... 117,500,000 U.S.$ 913,782 08/09/96 to 11/20/96 163
Spanish Pesetas............... 20,313,093 U.S.$ 158,994 08/13/96 676
Spanish Pesetas............... 142,800,000 U.S.$ 1,107,234 08/23/96 (5,195)
U.S. Dollars.................. 160,699 BFR 5,000,000 09/30/96 (939)
U.S. Dollars.................. 395,537 CAD 539,908 03/24/97 (72)
U.S. Dollars.................. 788,281 DEM 1,200,000 07/12/96 855
U.S. Dollars.................. 357,162 DEM 540,000 08/23/96 (941)
U.S. Dollars.................. 355,392 DEM 540,000 08/23/96 (280)
U.S. Dollars.................. 428,642 DEM 655,000 08/14/96 2,094
U.S. Dollars.................. 729,019 DEM 1,110,465 07/12/96 1,237
U.S. Dollars.................. 513,522 DKK 3,020,000 07/15/96 1,899
U.S. Dollars.................. 310,535 ESP 40,000,000 08/09/96 2,000
U.S. Dollars.................. 791,086 ITL 1,241,000,000 07/12/96 19,138
U.S. Dollars.................. 982,222 FIM 4,597,238 02/24/97 to 03/24/97 17,209
U.S. Dollars.................. 445,482 FRF 2,310,000 08/07/96 3,563
-------
$171,569
-------
-------
</TABLE>
<TABLE>
<CAPTION>
CURRENCY TYPE ABBREVIATIONS:
<S> <C> <C> <C>
BFR --Belgian Francs ESP --Spanish Pesetas
CAD --Canadian Dollars ITL --Italian Lira
DEM --German Deutschemarks FIM --Finnish Markkas
DKK --Danish Kronas FRF --French Francs
</TABLE>
INVESTMENTS BY TYPE OF ISSUER
<TABLE>
<CAPTION>
PERCENTAGE OF NET
ASSETS
-----------------------
<S> <C> <C>
LONG-TERM SHORT-TERM
--------- ----------
<CAPTION>
<S> <C> <C>
Government and other public issuers.................................... 61.33% 19.12%
Financial institutions................................................. 3.75% 4.68%
Banks.................................................................. 4.33% 0.00%
Repurchase Agreement................................................... 0.00% 0.60%
Other.................................................................. 3.67% 0.00%
--------- -----
73.08% 24.40%
--------- -----
--------- -----
</TABLE>
See accompanying notes to financial statements
22
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STRATEGIC FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- --------------------- ----------------- -----------
<C> <S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
CERTIFICATES--18.31%
$ 652 GNMA ARM.............................. 11/20/21 7.000% $ 658,160
773 GNMA ARM.............................. 09/20/23 7.000 780,262
776 GNMA ARM.............................. 09/20/24 7.250 781,540
-----------
Total Government National Mortgage Association
Certificates
(cost--$2,244,218)................................ 2,219,962
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION CERTIFICATES--8.25%
1,010 FNMA ARM (cost--$1,003,687)........... 10/01/27 6.124 1,000,491
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS--36.53%
267 Chase Mortgage Finance Corporation 11/25/24 6.750 265,795
REMIC Series 1993-N, Class A1........
116 Countrywide Mortgage Backed Securities 01/25/24 6.500 116,088
Incorporated, Series 1993-E, Class
A1....................................
104 FHLMC REMIC Series 1614, Class QZ..... 11/15/23 6.500 77,131
65 FHLMC REMIC Series 1628, Class LZ..... 12/15/23 6.500 50,453
365 FHLMC REMIC Series 1541, Class KC 09/15/22 6.253 219,423
(1)...................................
35 FNMA REMIC PO Series 1993-235, Class G 09/25/23 7.385+ 17,346
(1)...................................
794 FNMA REMIC Series 1991-59, Class K.... 05/25/16 8.000 805,980
123 FNMA REMIC Series 1993-096, Class Z... 06/25/23 7.000 103,511
267 FNMA REMIC Series 1993-112, Class 07/25/23 7.000 216,864
ZB....................................
84 FNMA REMIC Series 1993-163, Class 09/25/23 7.000 68,732
ZA....................................
276 FNMA REMIC Series G92-40 Class ZC..... 07/25/22 7.000 250,575
170 FNMA REMIC Series 1991-57, Class 05/25/21 6.500 152,232
57Z...................................
235 FNMA REMIC Series 1993-G16, Class K... 04/25/23 5.000 177,498
142 Greenwich Capital Acceptance 01/25/22 7.647 143,246
Incorporated, Series 1991-B, Class
A1, ARM...............................
430 Greenwich Capital Acceptance 10/25/22 7.066 433,935
Incorporated, Series 1992-LB6, Class
A1, ARM...............................
500 Merrill Lynch Mortgage Investors 11/15/23 6.120 502,965
Incorporated, Series 1993-I, Class
A3, FRN...............................
318 Prudential Home Mortgage Securities 09/25/23 6.950 223,556
Corporation REMIC Series 1993-38,
Class A7..............................
674 Westam Mortgage Financial Corporation, 06/26/20 5.350 602,703
Series 14, Class 14A.................
-----------
Total Collateralized Mortgage Obligations
(cost--$4,504,642)................................ 4,428,033
-----------
CORPORATE BONDS--31.74%
500 BankAmerica Corporation MTN (1)....... 10/01/98 5.882 501,696
500 Ford Motor Credit Corporation (1)..... 11/09/98 5.660 501,524
500 G I Holdings Incorporated............. 10/01/98 9.864++ 402,500
500 K III Communications Incorporated..... 05/01/02 10.625 521,250
300 Lehman Brothers Holding Incorporated 01/12/99 6.240 298,884
(1)...................................
500 Noranda Incorporated (1).............. 08/18/00 6.000 508,732
500 RJR Nabisco Incorporated.............. 12/01/02 8.625 507,326
500 United Airlines Incorporated.......... 02/19/15 10.850 606,308
-----------
Total Corporate Bonds (cost--$3,877,225).......... 3,848,220
-----------
</TABLE>
23
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STRATEGIC FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- --------------------- ----------------- -----------
<C> <S> <C> <C> <C>
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--0.82%
$ 100 U.S. Treasury Bills (cost--$98,574)... 08/29/96 to 11/14/96 4.955 to 5.140% $ 98,574
-----------
COMMERCIAL PAPER--1.64%
200 Canadian Wheat Board 08/01/96 5.400 199,070
(cost--$199,070)......................
-----------
REPURCHASE AGREEMENT--2.34%
284 Repurchase Agreement dated 06/28/96 07/01/96 4.750 284,000
with State Street Bank & Trust
Company, collateralized by $284,305
U.S. Treasury Notes, 6.000% due
08/31/97; proceeds: $284,112
(cost--$284,000)......................
-----------
Total Investments (cost--$12,211,416)--99.63%..... 12,078,350
Other assets in excess of liabilities--0.37%...... 44,403
-----------
Net Assets--100%.................................. $12,122,753
-----------
-----------
</TABLE>
- ------------
<TABLE>
<S> <C>
+ Estimated yield to maturity at June 30, 1996.
++ Yield to maturity
ARM Adjustable Rate Mortgage
FRN Floating Rate Note
MTN Medium Term Note
PO Principal Only--This security entitles the holder to receive principal payments from
an underlying pool of mortgages. High prepayments return principal faster than
expected and cause the yield to increase. Low prepayments return the principal more
slowly than expected and cause the yield to decrease.
REMIC Real Estate Mortgage Investment Conduit
(1) Variable rate security; the rate shown is as of June 30, 1996.
</TABLE>
FUTURES CONTRACTS
<TABLE>
<CAPTION>
NUMBER OF IN EXPIRATION UNREALIZED
CONTRACTS CONTRACT TO RECEIVE EXCHANGE FOR DATE APPRECIATION
- --------- ----------------------------------------------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
28 10 year U.S. Treasury Notes.................... $2,954,000 Sept 96 $ 56,000
13 30 year U.S. Treasury Bonds.................... $1,388,156 Sept 96 35,750
------
$ 91,750
------
------
</TABLE>
See accompanying notes to financial statements
24
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--58.38%
AGRICULTURE, FOOD & BEVERAGE--2.11%
8,000 IBP Incorporated...................................................... $ 221,000
8,000 Pepsico Incorporated.................................................. 283,000
2,000 Philip Morris Companies Incorporated.................................. 208,000
-----------
712,000
-----------
AIRLINES--1.04%
2,500 AMR Corporation*...................................................... 227,500
4,000 America West Airlines Incorporated*................................... 88,000
2,500 Western Pacific Airlines Incorporated*................................ 35,625
-----------
351,125
-----------
APPAREL, TEXTILES--0.61%
2,000 Nike Incorporated..................................................... 205,500
-----------
BANKS--5.22%
5,000 Banco Commercial Portugues............................................ 248,750
4,000 The Bank of New York Incorporated..................................... 205,000
4,000 Barnett Banks Incorporated............................................ 244,000
5,000 CCB Financial Corporation............................................. 256,250
3,000 Chase Manhattan Corporation........................................... 211,875
3,000 Citicorp.............................................................. 247,875
5,000 Corestates Financial Corporation...................................... 192,500
800 NationsBank Corporation............................................... 66,100
2,500 Summit Bancorp........................................................ 87,812
-----------
1,760,162
-----------
CHEMICALS--2.30%
4,000 Allied-Signal Incorporated............................................ 228,500
5,000 Cabot Corporation..................................................... 122,500
3,000 Du Pont (E.I.) de Nemours & Company................................... 237,375
5,000 IMC Global Incorporated............................................... 188,125
-----------
776,500
-----------
COMPUTER HARDWARE--4.73%
5,000 3Com Corporation*..................................................... 228,750
5,000 Cisco Systems Incorporated*........................................... 283,125
4,300 Compaq Computer Corporation*.......................................... 211,775
2,000 Digital Equipment Corporation*........................................ 90,000
4,000 EMC Corporation*...................................................... 74,500
1,500 International Business Machines....................................... 148,500
4,000 Sun Microsystems Incorporated*........................................ 235,500
5,000 Western Digital Corporation*.......................................... 130,625
3,600 Xerox Corporation..................................................... 192,600
-----------
1,595,375
-----------
</TABLE>
25
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
COMPUTER SOFTWARE--1.21%
2,500 Computer Association International Incorporated....................... $ 178,125
3,000 Sterling Software Incorporated*....................................... 231,000
-----------
409,125
-----------
DEFENSE/AEROSPACE--3.27%
5,000 General Dynamics Corporation.......................................... 310,000
2,000 Lockheed Martin Corporation........................................... 168,000
4,000 McDonnell Douglas Corporation......................................... 194,000
3,500 Rockwell International Corporation.................................... 200,375
2,000 United Technologies Corporation....................................... 230,000
-----------
1,102,375
-----------
DIVERSIFIED RETAIL--1.43%
7,000 Federated Department Stores Incorporated.............................. 238,875
5,000 Sears Roebuck & Company............................................... 243,125
-----------
482,000
-----------
DRUGS & MEDICINE--2.99%
3,000 Bristol Myers Squibb Company.......................................... 270,000
4,000 Pfizer Incorporated................................................... 285,500
3,000 Rhone Poulenc Rorer Incorporated...................................... 201,375
4,000 Schering--Plough Corporation.......................................... 251,000
-----------
1,007,875
-----------
ELECTRIC UTILITIES--2.34%
7,000 CMS Energy Corporation................................................ 216,125
5,000 FPL Group............................................................. 230,000
10,000 Public Service Company of New Mexico.................................. 205,000
5,000 Unicom Corporation.................................................... 139,375
-----------
790,500
-----------
ENERGY RESERVES & PRODUCTION--1.60%
3,000 Exxon Corporation..................................................... 260,625
2,500 Mobil Corporation..................................................... 280,312
-----------
540,937
-----------
FINANCIAL SERVICES--1.01%
5,000 Horizon Group Incorporated............................................ 102,500
3,000 Textron Incorporated.................................................. 239,625
-----------
342,125
-----------
FOOD RETAIL--0.59%
6,000 Safeway Incorporated*................................................. 198,000
-----------
FOREST PRODUCTS, PAPER--1.26%
3,500 Champion International Corporation.................................... 146,125
5,000 International Paper Company........................................... 184,375
6,200 Shorewood Packaging Corporation*...................................... 95,325
-----------
425,825
-----------
</TABLE>
26
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
FREIGHT, AIR, LAND, SEA--0.78%
6,000 Tidewater Incorporated................................................ $ 263,250
-----------
GAS UTILITIES--0.32%
10,000 Noram Energy Corporation.............................................. 108,750
-----------
HOTELS--0.59%
6,000 Bally Entertainment Group*............................................ 165,000
1,000 La Quinta Inns Incorporated........................................... 33,500
-----------
198,500
-----------
INFORMATION & COMPUTER SERVICES--0.76%
2,500 American Express Company.............................................. 111,563
12,000 Computervision Corporation (New)*..................................... 120,000
500 Omnicom Group......................................................... 23,250
-----------
254,813
-----------
LEISURE--0.39%
4,625 Mattel Incorporated................................................... 132,391
-----------
LIFE INSURANCE--1.56%
3,750 AFLAC Incorporated.................................................... 112,031
4,000 Chubb Corporation..................................................... 199,500
5,000 Reliastar Financial Corporation....................................... 215,625
-----------
527,156
-----------
LONG DISTANCE & PHONE COMPANIES--0.62%
5,000 Sprint Corporation.................................................... 210,000
-----------
MANUFACTURING--GENERAL--1.62%
7,000 Ingersoll Rand Company................................................ 306,250
5,000 Varity Corporation*................................................... 240,625
-----------
546,875
-----------
MEDICAL PRODUCTS--2.62%
7,500 Beckman Instruments Incorporated (New)................................ 285,000
3,500 Becton Dickinson & Company............................................ 280,875
3,000 Johnson & Johnson..................................................... 148,500
5,500 United States Surgical Corporation*................................... 170,500
-----------
884,875
-----------
MEDICAL PROVIDERS--2.39%
5,000 Columbia Healthcare Corporation....................................... 266,875
5,000 Healthsouth Corporation*.............................................. 180,000
10,000 Humana Incorporated................................................... 178,750
7,500 Ornda Healthcorp*..................................................... 180,000
-----------
805,625
-----------
MINING & METALS--1.37%
10,000 Freeport-McMoran Copper & Gold Incorporated........................... 318,750
5,000 USX-US Steel Group.................................................... 141,875
-----------
460,625
-----------
</TABLE>
27
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONCLUDED)
MOTOR VEHICLES--1.19%
5,000 Lear Corporation*..................................................... $ 176,250
2,500 TRW Incorporated...................................................... 224,687
-----------
400,937
-----------
OIL REFINING--2.56%
6,000 Coastal Corporation................................................... 250,500
16,500 Nabors Industries Incorporated*....................................... 268,125
7,000 Repsol SA, ADR........................................................ 243,250
2,000 Tenneco Incorporated.................................................. 102,250
-----------
864,125
-----------
OIL SERVICES--2.08%
5,000 Diamond Offshore Drilling Incorporated*............................... 286,250
10,000 Forest Oil Corporation*............................................... 136,250
5,000 Halliburton Company................................................... 277,500
-----------
700,000
-----------
OTHER INSURANCE--1.72%
2,500 ACE Limited........................................................... 117,500
3,500 Allstate Corporation.................................................. 159,687
2,500 American International Group Incorporated............................. 246,563
2,000 Travelers Aetna Property Casualty Corporation*........................ 56,750
-----------
580,500
-----------
PUBLISHING--0.48%
5,000 New York Times Company................................................ 163,125
-----------
RAILROADS--0.39%
2,000 Conrail Incorporated.................................................. 132,750
-----------
REAL PROPERTY--3.11%
5,000 Avalon Properties Incorporated........................................ 108,750
4,000 Chelsea GCA Realty Incorporated....................................... 127,000
4,000 Equity Residential Properties Trust................................... 131,500
4,000 Household International Incorporated.................................. 304,000
5,000 Irvine Apartment Communities Incorporated............................. 100,625
5,000 Oasis Residental Incorporated......................................... 109,375
1,500 Starwood Lodging Trust................................................ 54,562
5,000 Wellsford Residential Properties Trust................................ 112,500
-----------
1,048,312
-----------
RESTAURANTS--0.48%
3,000 Marriot International Incorporated.................................... 161,250
-----------
SEMICONDUCTOR--0.62%
5,000 Avnet Incorporated.................................................... 210,625
-----------
SPECIALTY RETAIL--1.02%
10,000 Eckerd Corporation*................................................... 226,250
5,000 Waban Incorporated.................................................... 119,375
-----------
345,625
-----------
Total Common Stocks (cost--$17,909,225)........................................... 19,699,533
-----------
</TABLE>
28
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
PREFERRED STOCKS--1.48%
APPAREL, RETAIL--0.72%
1,300 TJX Companies Incorporated............................................ $ 244,400
-----------
FOREST PRODUCTS, PAPER--0.76%
5,000 Devon Fing Trust...................................................... 255,000
-----------
499,400
Total Preferred Stocks (cost--$472,742)...........................................
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
- --------- --------------------- --------------
<C> <S> <C> <C> <C>
FEDERAL HOME LOAN MORTGAGE ASSOCIATION CERTIFICATES--2.03%
$ 78 FHLMC...................................... 05/01/19 7.740%+ 79,854
600 FHLMC 30 Year TBA.......................... TBA 8.000 605,432
-----------
Total Federal Home Loan Mortgage Association
Certificates (cost--$679,464).......................... 685,286
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION CERTIFICATES--5.27%
160 FNMA....................................... 02/02/06 5.875 147,340
226 FNMA....................................... 01/01/26 7.500 223,011
600 FNMA TBA................................... TBA 7.000 577,307
840 FNMA TBA................................... TBA 7.500 829,230
-----------
Total Federal National Mortgage Association
(cost--$1,792,132)..................................... 1,776,888
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS--0.97%
80 Aetna Commercial Mortgage Corporation...... 12/26/30 6.590 77,175
170 FNMA REMIC Series 1996-M4 Class A.......... 02/17/07 7.750 172,656
80 Salomon Brothers Mortgage Securities VII 03/20/06 6.780 77,700
Incorporated
-----------
Total Collateralized Mortgage Obligations
(cost--$332,672)....................................... 327,531
-----------
CORPORATE BONDS--9.70%
200 Alltel Corporation......................... 09/15/05 6.750 191,622
110 Associates Corporation of North America.... 11/01/97 7.750 112,145
200 Bankers Trust of New York Corporation...... 05/01/05 8.250 209,913
90 Commercial Credit Group Incorporated....... 03/15/02 7.375 91,364
125 Equitable Life Assurance................... 12/01/05 6.950 119,680
105 First Union Corporation.................... 08/01/05 7.050 102,445
250 Ford Motor Credit Corporation.............. 01/25/01 5.750 238,837
350 General Motors Acceptance Corporation...... 10/01/02 6.625 341,297
280 Lehman Brothers Holdings Incorporated...... 09/15/03 7.125 274,204
100 Molten Metal Technology Incorporated....... 05/01/06 5.500 98,000
100 North American Vaccine Incorporated........ 05/01/03 6.500 94,500
300 Prudential Insurance Company of America.... 07/01/25 8.300 299,670
200 Quantum Corporation........................ 03/01/03 5.000 184,500
290 Santander Financial Issuances.............. 07/15/05 6.800 277,152
250 Southwestern Bell Telephone Company........ 03/01/00 6.125 244,868
170 Sunglass Hut International Incorporated.... 06/15/03 5.250 172,125
125 Swiss Bank Corporation..................... 07/15/25 7.500 122,259
90 United Parcel Service of America 04/01/20 8.375 99,448
Incorporated...............................
-----------
Total Corporate Bonds (cost--$3,372,190)............... 3,274,029
-----------
</TABLE>
29
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BALANCED PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- --------------------- -------------- -----------
LONG-TERM U.S. GOVERNMENT OBLIGATIONS--16.35%
<C> <S> <C> <C> <C>
$ 1,210 U.S. Treasury Bonds........................ 11/15/24 to 02/15/25 7.500 to 7.625% $ 1,301,722
4,178 U.S. Treasury Notes........................ 09/30/97 to 02/15/05 5.250 to 7.500 4,215,357
-----------
Total Long-Term U.S. Government Obligations
(cost--$5,628,953)..................................... 5,517,079
-----------
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--11.80%
580 U.S. Treasury Notes........................ 11/30/96 7.250 583,988
3,400 U.S. Treasury Bills........................ 07/05/96 to 07/11/96 4.400 to 4.850 3,396,425
-----------
Total Short-Term U.S. Government Obligations
(cost--$3,981,979)..................................... 3,980,413
-----------
REPURCHASE AGREEMENT--0.10%
35 Repurchase Agreement dated 06/28/96 with 07/01/96 4.750 35,000
State Street Bank & Trust Company,
collateralized by $35,736 U.S. Treasury
Notes, 6.000%, due 08/31/97; proceeds:
$35,014 (cost--$35,000)....................
-----------
Total Investments (cost--$34,204,357)--106.08%......... 35,795,159
Liabilities in excess of other assets--(6.08%)........ (2,052,898)
-----------
Net Assets--100.00%.................................... $33,742,261
-----------
-----------
</TABLE>
- ------------
<TABLE>
<S> <C>
* Non-income producing security
+ Variable rate security, the rate is as of June 30, 1996.
ADR American Depositary Receipt
REMIC Real Estate Mortgage Investment Conduit
TBA To Be Assigned--Securities are purchased on a forward commitment with an approximate
(generally +/- 1.0%) principal amount and no definite maturity date. The actual
principal amount and maturity date will be determined upon settlement when the
specific mortgage pools are assigned.
</TABLE>
See accompanying notes to financial statements
30
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROWTH & INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--88.28%
AGRICULTURE, FOOD & BEVERAGE--2.76%
5,000 IBP Incorporated........................................................ $ 138,125
5,000 Pepsico Incorporated.................................................... 176,875
1,300 Philip Morris Companies Incorporated.................................... 135,200
-----------
450,200
-----------
AIRLINES--3.20%
4,000 America West Airlines Incorporated*..................................... 88,000
3,000 AMR Corporation*........................................................ 273,000
2,000 Continental Airlines Incorporated....................................... 123,500
2,500 Western Pacific Airlines Incorporated*.................................. 35,625
-----------
520,125
-----------
APPAREL, TEXTILES--0.63%
1,000 Nike Incorporated....................................................... 102,750
-----------
BANKS--9.58%
5,000 Banco Commercial Portugues.............................................. 248,750
4,000 The Bank of New York Incorporated....................................... 205,000
5,000 Barnett Banks Incorporated.............................................. 305,000
2,000 CCB Financial Corporation............................................... 102,500
1,872 Chase Manhattan Corporation............................................. 132,210
2,000 Citicorp................................................................ 165,250
2,500 Corestates Financial Corporation........................................ 96,250
400 First Empire State Corporation.......................................... 96,400
1,500 NationsBank Corporation................................................. 123,937
2,500 Summit Bancorp.......................................................... 87,812
-----------
1,563,109
-----------
CHEMICALS--4.21%
5,000 Cabot Corporation....................................................... 122,500
2,500 Du Pont (E.I.) de Nemours & Company..................................... 197,813
5,000 IMC Global Incorporated................................................. 188,125
2,000 Olin Corporation........................................................ 178,500
-----------
686,938
-----------
COMPUTER HARDWARE--7.40%
2,500 3Com Corporation*....................................................... 114,375
7,400 Cisco Systems Incorporated*............................................. 419,025
1,300 Compaq Computer Corporation*............................................ 64,025
1,500 Digital Equipment Corporation*.......................................... 67,500
1,000 EMC Corporation*........................................................ 18,625
500 International Business Machines......................................... 49,500
3,000 Sun Microsystems Incorporated*.......................................... 176,625
4,000 Western Digital Corporation*............................................ 104,500
3,600 Xerox Corporation....................................................... 192,600
-----------
1,206,775
-----------
COMPUTER SOFTWARE--2.27%
2,500 Computer Association International Incorporated......................... 178,125
2,500 Sterling Software Incorporated*......................................... 192,500
-----------
370,625
-----------
DEFENSE/AEROSPACE--6.85%
2,000 Lockheed Martin Corporation............................................. 168,000
5,800 Loral Space & Communications............................................ 79,025
3,200 McDonnell Douglas Corporation........................................... 155,200
</TABLE>
31
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROWTH & INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
DEFENSE/AEROSPACE--(CONCLUDED)
4,400 Raytheon Company........................................................ $ 227,150
3,500 Rockwell International Corporation...................................... 200,375
2,500 United Technologies Corporation......................................... 287,500
-----------
1,117,250
-----------
DIVERSIFIED RETAIL--2.06%
3,000 Federated Department Stores Incorporated................................ 102,375
4,796 Sears Roebuck & Company................................................. 233,206
-----------
335,581
-----------
DRUGS & MEDICINE--4.18%
1,400 Bristol Myers Squibb Company............................................ 126,000
3,000 Pfizer Incorporated..................................................... 214,125
2,000 Rhone Poulenc Rorer Incorporated........................................ 134,250
2,000 Schering-Plough Corporation............................................. 125,500
1,500 Smithkline Beecham Corporation plc...................................... 81,563
-----------
681,438
-----------
ELECTRIC UTILITIES--1.53%
3,000 FPL Group Incorporated.................................................. 138,000
4,000 Unicom Corporation...................................................... 111,500
-----------
249,500
-----------
ENERGY RESERVES & PRODUCTION--1.10%
1,600 Mobil Corporation....................................................... 179,400
-----------
FINANCIAL SERVICES--0.73%
1,500 Textron Incorporated.................................................... 119,812
-----------
FOOD RETAIL--0.51%
2,500 Safeway Incorporated*................................................... 82,500
-----------
FOREST PRODUCTS, PAPER--0.44%
1,700 Champion International Corporation...................................... 70,975
-----------
FREIGHT, AIR, LAND, SEA--0.81%
3,000 Tidewater Incorporated.................................................. 131,625
-----------
GAS UTILITIES--0.33%
5,000 Noram Energy Corporation................................................ 54,375
-----------
HOTELS--1.36%
2,000 Bally Entertainment Group *............................................. 55,000
5,000 La Quinta Inns Incorporated............................................. 167,500
-----------
222,500
-----------
INFORMATION & COMPUTER SERVICES--2.83%
3,500 American Express Company................................................ 156,188
12,000 Computervision Corporation (New)*....................................... 120,000
4,000 Omnicom Group........................................................... 186,000
-----------
462,188
-----------
LEISURE--0.55%
3,125 Mattel Incorporated..................................................... 89,453
-----------
LIFE INSURANCE--2.23%
5,250 AFLAC Incorporated...................................................... 156,844
2,000 Chubb Corporation....................................................... 99,750
2,500 Reliastar Financial Corporation......................................... 107,812
-----------
364,406
-----------
</TABLE>
32
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROWTH & INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
LONG DISTANCE & PHONE COMPANIES--0.52%
2,000 Sprint Corporation...................................................... $ 84,000
-----------
MANUFACTURING--GENERAL--3.48%
3,900 Case Corporation........................................................ 187,200
900 General Electric Company................................................ 77,850
2,500 Ingersoll Rand Company.................................................. 109,375
4,000 Varity Corporation*..................................................... 192,500
-----------
566,925
-----------
MANUFACTURING--HIGH TECHNOLOGY--0.42%
800 United States Robotics Corporation*..................................... 68,400
-----------
MEDICAL PRODUCTS--4.99%
3,000 Beckman Instruments Incorporated (New).................................. 114,000
2,100 Becton Dickinson & Company.............................................. 168,525
2,500 Johnson & Johnson....................................................... 123,750
3,800 Medtronic Incorporated.................................................. 212,800
4,000 Mentor Corporation...................................................... 102,000
3,000 United States Surgical Corporation*..................................... 93,000
-----------
814,075
-----------
MEDICAL PROVIDERS--2.49%
2,000 Columbia Healthcare Corporation......................................... 106,750
2,500 Healthsouth Corporation*................................................ 90,000
5,000 Humana Incorporated..................................................... 89,375
5,000 Ornda Healthcorp*....................................................... 120,000
-----------
406,125
-----------
MINING & METALS--1.33%
5,000 Freeport--McMoran Copper & Gold Incorporated............................ 159,375
2,000 USX--US Steel Group..................................................... 56,750
-----------
216,125
-----------
MISCELLANEOUS--1.81%
5,000 American Radio Systems Corporation*..................................... 295,000
-----------
MOTOR VEHICLES--0.43%
2,000 Lear Corporation*....................................................... 70,500
-----------
OIL REFINING--2.21%
2,500 Coastal Corporation..................................................... 104,375
5,000 Tenneco Incorporated.................................................... 255,625
-----------
360,000
-----------
OIL SERVICES--3.90%
3,500 Diamond Offshore Drilling Incorporated*................................. 200,375
10,000 Forest Oil Corporation*................................................. 136,250
3,500 Halliburton Company..................................................... 194,250
6,500 Nabors Industries Incorporated*......................................... 105,625
-----------
636,500
-----------
</TABLE>
33
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROWTH & INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONCLUDED)
OTHER INSURANCE--3.68%
2,500 ACE Limited............................................................. $ 117,500
5,091 Allstate Corporation.................................................... 232,277
2,250 American International Group Incorporated............................... 221,906
1,000 Travelers Aetna Property Casualty Corporation*.......................... 28,375
-----------
600,058
-----------
PUBLISHING--0.40%
2,000 New York Times Company.................................................. 65,250
-----------
RAILROADS--0.61%
1,500 Conrail Incorporated.................................................... 99,563
-----------
REAL PROPERTY--2.76%
2,500 Avalon Properties Incorporated.......................................... 54,375
2,000 Chelsea GCA Realty Incorporated......................................... 63,500
2,000 Equity Residential Properties Trust..................................... 65,750
2,500 Horizon Group Incorporated.............................................. 51,250
2,500 Irvine Community Apartments Incorporated................................ 50,313
2,500 Oasis Residential Incorporated.......................................... 54,687
1,500 Starwood Lodging Trust.................................................. 54,562
2,500 Wellsford Residential Properties Trust.................................. 56,250
-----------
450,687
-----------
RESTAURANTS--0.66%
2,000 Marriot International Incorporated...................................... 107,500
-----------
SEMICONDUCTOR--0.77%
3,000 Avnet Incorporated...................................................... 126,375
-----------
SPECIALTY RETAIL--2.27%
10,000 Eckerd Corporation*..................................................... 226,250
6,000 Waban Incorporated...................................................... 143,250
-----------
369,500
-----------
Total Common Stocks (cost--$11,722,137)............................................. 14,398,108
-----------
PREFERRED STOCKS--2.35%
APPAREL, RETAIL--0.92%
800 TJX Companies Incorporated.............................................. 150,400
-----------
FOREST PRODUCT, PAPER--0.80%
3,000 International Paper Capital Trust....................................... 130,500
-----------
MISCELLANEOUS--0.63%
2,000 Devon Fing Trust........................................................ 102,000
-----------
Total Preferred Stocks (cost--$367,699)............................................. 382,900
-----------
</TABLE>
34
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROWTH & INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- --------------------- --------------- -----------
<C> <S> <C> <C> <C>
CORPORATE BONDS--2.80%
$ 100 Molten Metal Technology Incorporated........ 05/01/06 5.500% $ 98,000
100 North American Vaccine Incorporated......... 05/01/03 6.500 94,500
100 Quantum Corporation......................... 03/01/03 5.000 92,250
170 Sunglass Hut International Incorporated..... 06/15/03 5.250 172,125
-----------
Total Corporate Bonds (cost--$472,751).................. 456,875
-----------
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--6.12%
1,000 U.S. Treasury Bills (cost--$999,461)........ 07/05/96 4.850 999,461
-----------
REPURCHASE AGREEMENT--0.37%
60 Repurchase Agreement dated 06/28/96 with 07/01/96 4.750 60,000
State Street Bank & Trust Company,
collateralized by $60,096 U.S. Treasury
Notes, 6.000%, due 08/31/97; proceeds:
$60,024 (cost--$60,000).....................
-----------
Total Investments (cost--$13,622,048)--99.92%........... 16,297,344
Other assets in excess of liabilities--0.08%............ 12,704
-----------
Net Assets--100.00%..................................... $16,310,048
-----------
-----------
</TABLE>
- ------------
* Non-income producing security
See accompanying notes to financial statements
35
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--98.32%
AGRICULTURE, FOOD & BEVERAGE--1.93%
3,700 Philip Morris Companies Incorporated.................................. $ 384,800
-----------
AIRLINES--1.66%
3,500 Continental Airlines Incorporated*.................................... 216,125
2,900 Northwest Airlines Corporation*....................................... 114,550
-----------
330,675
-----------
APPAREL, TEXTILES--1.03%
5,900 Liz Claiborne......................................................... 204,288
-----------
APPAREL, RETAIL--2.77%
10,300 TJX Companies Incorporated New........................................ 347,625
9,000 Woolworth Corporation*................................................ 202,500
-----------
550,125
-----------
BANKS--0.63%
3,800 TCF Financial Corporation............................................. 126,350
-----------
CHEMICALS--0.97%
3,500 Avery Dennison Corporation............................................ 192,063
-----------
COMPUTER HARDWARE--10.44%
2,700 Adaptec Incorporated*................................................. 127,913
5,800 Ascend Communications Incorporated*................................... 326,250
5,800 Cascade Communications Corporation*................................... 394,400
5,600 Cisco Systems Incorporated*........................................... 317,100
7,200 Iomega Corporation*................................................... 208,800
8,600 Sun Microsystems Incorporated*........................................ 506,325
7,500 Western Digital Corporation*.......................................... 195,937
-----------
2,076,725
-----------
COMPUTER SOFTWARE--12.65%
3,600 BMC Software Incorporated*............................................ 215,100
3,000 C-Cube Microsystems Incorporated*..................................... 99,000
6,900 Cadence Design Systems Incorporated*.................................. 232,875
6,950 Computer Associates International Incorporated........................ 495,187
5,000 Compuware Corporation*................................................ 197,500
5,000 Fore Systems*......................................................... 180,625
1,900 Microsoft Corporation*................................................ 228,238
5,200 Oracle Systems Corporation*........................................... 205,075
5,400 Parametric Technology Corporation*.................................... 234,225
3,600 Peoplesoft Incorporated*.............................................. 256,500
3,200 Rational Software Corporation*........................................ 172,000
-----------
2,516,325
-----------
DRUGS & MEDICINE--0.55%
2,900 Watson Pharmaceuticals Incorporated*.................................. 109,838
-----------
ENERGY RESERVES & PRODUCTION--1.95%
5,300 Panenergy Corporation................................................. 174,238
5,100 Phillips Petroleum Company............................................ 213,562
-----------
387,800
-----------
</TABLE>
36
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
ENVIRONMENTAL SERVICES--0.31%
2,100 USA Waste Services Incorporated*...................................... $ 62,213
-----------
FINANCIAL SERVICES--2.34%
6,300 Green Tree Financial Corporation...................................... 196,875
6,400 MBNA Corporation...................................................... 182,400
3,900 Money Store Incorporated.............................................. 86,287
-----------
465,562
-----------
FOOD RETAIL--2.48%
6,900 Safeway Incorporated*................................................. 227,700
7,100 Vons Companies Incorporated*.......................................... 265,362
-----------
493,062
-----------
FREIGHT, AIR, LAND, SEA--1.68%
7,600 Tidewater Incorporated................................................ 333,450
-----------
GAS UTILITIES--1.21%
22,100 Noram Energy Corporation.............................................. 240,338
-----------
HEAVY MACHINERY--1.05%
2,800 JLG Industries, Incorporated.......................................... 207,900
-----------
HOTELS--3.61%
4,400 HFS Incorporated*..................................................... 308,000
2,000 Hilton Hotels Corporation............................................. 225,000
5,500 La Quinta Inns Incorporated........................................... 184,250
-----------
717,250
-----------
INDUSTRIAL SERVICES & SUPPLIES--2.33%
4,400 Corrections Corporation of America*................................... 308,000
5,600 Robert Half International Incorporated*............................... 156,100
-----------
464,100
-----------
INFORMATION & COMPUTER SERVICES--6.64%
3,500 America Online Incorporated*.......................................... 153,125
2,200 AMR Corporation*...................................................... 200,200
1,600 G Tech Holdings Corporation*.......................................... 47,400
4,700 Gartner Group Incorporated*........................................... 172,138
4,600 HBO & Company......................................................... 311,650
4,900 HealthCare COMPARE Corporation*....................................... 238,875
4,100 Paychex Incorporated.................................................. 197,312
-----------
1,320,700
-----------
LEISURE--1.47%
8,800 Callaway Golf Company................................................. 292,600
-----------
LIFE INSURANCE--3.22%
6,000 Conseco Incorporated.................................................. 240,000
3,800 SunAmerica Incorporated............................................... 214,700
10,100 Western National Corporation.......................................... 185,587
-----------
640,287
-----------
</TABLE>
37
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONTINUED)
LONG DISTANCE & PHONE COMPANIES--1.04%
6,600 LCI International Incorporated*....................................... $ 207,075
-----------
MANUFACTURING--GENERAL--1.26%
3,800 Quintiles Transnational Corporation*.................................. 249,850
-----------
MANUFACTURING--HIGH TECHNOLOGY--6.21%
3,400 Aspect Telecommunications Corporation*................................ 168,300
5,200 Komag Incorporated*................................................... 137,150
4,000 Pairgain Technologies Incorporated*................................... 248,000
5,000 SCI Systems Incorporated*............................................. 203,125
5,600 United States Robotics Corporation*................................... 478,800
-----------
1,235,375
-----------
MEDICAL PRODUCTS--3.21%
2,400 Becton, Dickinson & Company........................................... 192,600
2,000 Idexx Labs Incorporated*.............................................. 78,500
2,400 Luxottica Group, S.P.A., ADS.......................................... 176,100
3,400 Medtronic Inc......................................................... 190,400
-----------
637,600
-----------
MEDICAL PROVIDERS--5.83%
6,850 Health Management Associates Incorporated, New*....................... 138,713
4,900 Lincare Holdings Incorporated*........................................ 192,325
8,600 Omnicare Incorporated................................................. 227,900
4,300 Oxford Health Plans Incorporated*..................................... 176,837
6,150 Phycor Incorporated*.................................................. 233,700
3,300 Service Corporation International..................................... 189,750
-----------
1,159,225
-----------
MINING & METALS--0.37%
1,100 Harsco Corporation.................................................... 73,975
-----------
MOTOR VEHICLES--0.97%
3,100 Chrysler Corporation.................................................. 192,200
-----------
OIL REFINING--1.74%
4,500 Valero Energy Corporation............................................. 112,500
4,700 Williams Companies Incorporated....................................... 232,650
-----------
345,150
-----------
OIL SERVICES--3.40%
15,800 Global Marine Incorporated*........................................... 219,225
9,500 Reading & Bates Corporation*.......................................... 210,187
4,900 Sonat Offshore Drilling Incorporated.................................. 247,450
-----------
676,862
-----------
PUBLISHING--0.44%
2,100 Meredith Corporation.................................................. 87,675
-----------
RAILROADS--0.70%
6,300 Canadian Pacific Limited.............................................. 138,600
-----------
RESTAURANTS--1.08%
4,000 Marriott International Incorporated................................... 215,000
-----------
</TABLE>
38
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGGRESSIVE GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- -----------
<C> <S> <C>
COMMON STOCKS--(CONCLUDED)
SECURITIES & ASSET MANAGEMENT--3.81%
5,605 Bear Stearns Company Incorporated..................................... $ 132,418
7,200 Edwards AG Incorporated............................................... 195,300
3,400 Lehman Brothers Holdings Incorporated................................. 84,150
3,800 Morgan Stanley Group Incorporated..................................... 186,675
3,600 Salomon Incorporated.................................................. 158,400
-----------
756,943
-----------
SEMICONDUCTOR--1.64%
7,900 Atmel Corporation*.................................................... 237,987
3,200 Maxim Integrated Productions Incorporated*............................ 87,400
-----------
325,387
-----------
SPECIALTY RETAIL--4.15%
9,000 Bed, Bath & Beyond Incorporated*...................................... 240,750
5,200 COMPUSA Incorporated*................................................. 177,450
9,600 Staples Incorporated*................................................. 187,200
3,000 Tiffany & Company New................................................. 219,000
-----------
824,400
-----------
THRIFT--1.55%
3,500 Standard Federal Bancorporation....................................... 134,750
5,800 Washington Mutual Incorporated........................................ 173,275
-----------
308,025
-----------
19,549,793
Total Common Stocks (cost--$15,777,167)...........................................
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATE RATE
- --------- --------------------- ---------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER--0.91%
$181
USAA Capital Corporation (cost--$181,000)............. 07/01/96 5.500% 181,000
-----------
Total Investments (cost--$15,958,167)--99.23%.......... 19,730,793
Other assets in excess of liabilities--0.77%........... 153,537
-----------
Net Assets--100.00%.................................... $19,884,330
-----------
-----------
</TABLE>
- ------------
* Non-income producing security
ADS American Depositary Shares
See accompanying notes to financial statements
39
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HIGH GRADE FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- --------------------- -------------- -----------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--5.94%
$ 230 U.S. Treasury Notes....................... 03/31/00 6.875% $ 233,450
200 U.S. Treasury Lines....................... 08/15/09 6.000 179,822
115 U.S. Treasury Bonds....................... 02/15/25 7.625 123,984
-----------
Total U.S. Government Obligations (cost--$561,743).... 537,256
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
CERTIFICATES--5.00%
471 GNMA (cost--$440,008)..................... 01/15/24 7.000 452,083
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
CERTIFICATES--23.13%
80 FNMA...................................... 12/01/08 6.000 75,461
437 FNMA...................................... 10/01/23 7.000 420,263
383 FNMA...................................... 07/01/09 7.500 384,858
136 FNMA...................................... 04/01/09 7.000 134,020
200 FNMA...................................... 01/01/99 7.000 192,436
265 FNMA...................................... 02/02/06 5.875 244,031
470 FNMA...................................... 01/01/99 7.500 463,974
174 FNMA...................................... 09/01/11 8.000 175,304
-----------
Total Federal National Mortgage Association
Certificates
(cost--$2,107,212)...................................
2,090,347
-----------
AGENCY BACKED NOTES--6.36%
570 FHLMC (cost--$573,562).................... 01/01/99 8.000 575,161
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS--6.10%
100 Aetna Commercial Mortgage Trust Series
1995--C5,
Class A2................................. 12/26/30 6.590 96,469
196 FDIC REMIC Trust Series 1994--C1, Class
2A2....................................... 09/25/25 7.850 198,403
65 Salomon Brothers Incorporated Mortgage
Securities
Series 1996--C1, Class A2................ 03/20/06 6.780 63,131
200 Structured Asset Securities Corporation
Series 1995--C4, Class A 1B.............. 06/25/26 6.890 193,500
-----------
Total Collateralized Mortgage Obligations
(cost--$569,393)...................................... 551,503
-----------
CORPORATE BONDS--30.42%
AGRICULTURE, FOOD & BEVERAGE--2.37%
225 Nabisco Incorporated...................... 06/15/05 6.850 214,591
-----------
BANKS--4.83%
200 BankAmerica Corporation................... 06/15/04 7.625 204,576
225 JP Morgan & Company Incorporated.......... 09/15/04 7.625 231,425
-----------
436,001
-----------
DIVERSIFIED RETAIL--2.52%
250 Wal Mart Stores, Incorporated............. 10/15/05 5.875 227,978
-----------
ENVIRONMENTAL SERVICES--2.31%
200 Browning Ferris Industries Incorporated... 03/15/05 7.875 208,703
-----------
FINANCIAL SERVICES--3.30%
300 Commercial Credit Group Incorporated...... 05/01/02 6.875 298,546
-----------
FREIGHT, AIR, LAND, SEA--2.75%
225 United Parcel Services Incorporated....... 04/01/20 8.375 248,620
-----------
HOUSEHOLD PRODUCTS--2.19%
225 Procter + Gamble Corporation.............. 01/15/26 6.450 197,687
-----------
HOTELS--2.31%
225 Circus Circus Enterprises................. 02/01/06 6.450 208,711
-----------
INSURANCE--5.40%
250 Equitable Life............................ 12/01/05 6.950 239,360
250 Travelers Aetna Property Casualty
Company................................... 04/15/01 6.750 248,412
-----------
487,772
-----------
</TABLE>
40
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HIGH GRADE FIXED INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- --------- --------------------- -------------- -----------
<C> <S> <C> <C> <C>
CORPORATE BONDS--(CONCLUDED)
SECURITIES AND ASSET MANAGEMENT--2.44%
$ 225 Lehman Brothers Holdings Incorporated..... 09/15/03 7.125% $ 220,342
-----------
Total Corporate Bonds (cost--$2,740,612).............. 2,748,951
-----------
CANADIAN BONDS--5.12%
250 Quebec Province CDA....................... 02/09/24 7.125 228,842
250 Toronto Dominion Bank of Ontario.......... 08/15/08 6.500 233,590
-----------
Total Canadian Bonds (cost--$461,217)................. 462,432
-----------
YANKEE BONDS--7.30%
225 Dresdner Bank AG.......................... 09/15/05 6.625 215,118
225 Societe General New York.................. 06/01/06 7.400 224,737
225 Swiss Bank Corporation.................... 07/15/25 7.500 220,066
-----------
Total Yankee Bonds (cost--$663,967)................... 659,921
-----------
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--19.34%
1,750 U.S. Treasury Bills (cost--$1,747,861).... 07/11/96 4.400 1,747,861
-----------
REPURCHASE AGREEMENT--3.60%
325 Repurchase Agreement dated 06/28/96 with
State Street Bank & Trust Company,
collateralized by $325,518 U.S. Treasury
Notes, 6.000%, due 08/31/97; proceeds:
$325,162 (cost--$325,000)................. 07/01/96 4.750 325,000
-----------
Total Investments (cost--$10,190,575)--112.31%........ 10,150,515
Liabilities in excess of other assets--(12.31)%....... (1,112,703)
-----------
Net Assets--100%...................................... $ 9,037,812
-----------
-----------
</TABLE>
- ------------
REMIC Real Estate Mortgage Investment Conduit
See accompanying notes to financial statements
41
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY
MARKET GROWTH
PORTFOLIO PORTFOLIO
----------- -----------
<S> <C> <C>
ASSETS
Investments, at value (cost--$15,020,352; $29,420,262;
$24,128,198; $28,690,027; $12,211,416; $34,204,357; $13,622,048;
$15,958,167 and $10,190,575, respectively)...................... $15,020,352 $45,091,227
Cash (including cash denominated in foreign currencies)........... 1,218 497
Dividends and interest receivable................................. 62,698 37,310
Receivable for investments sold................................... -- --
Receivable for shares of beneficial interest sold................. -- 46
Unrealized appreciation of forward foreign currency contracts..... -- --
Deferred organizational expenses and other assets................. 9,951 6,987
----------- -----------
Total assets.................................................. 15,094,219 45,136,067
----------- -----------
LIABILITIES
Dividends payable................................................. 51,846 --
Payable to affiliates............................................. 6,065 27,739
Payable for investments purchased................................. 200,000 623,938
Payable for shares of beneficial interest repurchased............. -- --
Unrealized depreciation of forward foreign currency contracts..... -- --
Accrued expenses and other liabilities............................ -- 23,946
----------- -----------
Total liabilities............................................. 257,911 675,623
----------- -----------
NET ASSETS
Beneficial interest shares of $0.001 par value
outstanding--14,850,524; 2,211,760; 2,046,602; 2,584,744;
1,165,862; 2,979,983; 1,248,135; 1,553,445 and 981,208,
respectively (unlimited amount authorized)......................... 14,852,135 24,216,311
Accumulated net investment income (loss).......................... -- (15,825)
Accumulated net realized gains (losses) from investment
transactions....................................................... (15,827) 4,588,990
Net unrealized appreciation/depreciation of investments and assets
and liabilities denominated in foreign currencies............... -- 15,670,968
----------- -----------
Net assets.................................................... $14,836,308 $44,460,444
----------- -----------
----------- -----------
Net asset value, offering price and redemption value per share..... $1.00 $20.10
----- ------
----- ------
</TABLE>
42
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH GRADE
GLOBAL GLOBAL STRATEGIC GROWTH AGGRESSIVE FIXED
GROWTH INCOME FIXED INCOME BALANCED AND INCOME GROWTH INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------- ----------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
27,053,826
$ $28,607,685 $ 12,078,350 $35,795,159 $16,297,344 $19,730,793 $10,150,515
261,321 6,084 -- 684 2,368 222 4,458
48,116 759,484 46,388 230,847 24,135 12,117 102,287
3,884 1,825,767 -- 213,203 95,235 181,959 --
25,257 -- -- -- -- 100,422 --
-- 241,391 -- -- -- -- --
51,330 178 41,718 7,917 10,817 6,852 11,805
- ----------- ----------- ------------ ----------- ----------- ----------- -----------
27,443,734 31,440,589 12,166,456 36,247,810 16,429,899 20,032,365 10,269,065
- ----------- ----------- ------------ ----------- ----------- ----------- -----------
-- -- -- -- -- -- --
16,401 18,328 4,866 20,720 9,352 12,955 3,662
486,173 1,940,730 -- 2,472,030 100,000 100,422 1,227,591
-- 38,054 -- -- -- -- --
-- 69,822 -- -- -- -- --
150,285 26,375 38,837 12,799 10,499 34,658 --
- ----------- ----------- ------------ ----------- ----------- ----------- -----------
652,859 2,093,309 43,703 2,505,549 119,851 148,035 1,231,253
- ----------- ----------- ------------ ----------- ----------- ----------- -----------
27,495,471 28,886,062 12,197,276 29,510,276 12,139,130 15,556,454 8,927,198
126,438 836,545 384,424 384,412 36,726 (76,740) 221,994
(3,748,314) (460,335) (417,647) 2,256,771 1,458,896 631,990 (71,320)
2,917,280 85,008 (41,300) 1,590,802 2,675,296 3,772,626 (40,060)
- ----------- ----------- ------------ ----------- ----------- ----------- -----------
$26,790,875 $29,347,280 $ 12,122,753 $33,742,261 $16,310,048 $19,884,330 $ 9,037,812
- ----------- ----------- ------------ ----------- ----------- ----------- -----------
- ----------- ----------- ------------ ----------- ----------- ----------- -----------
$13.09 $11.35 $10.40 $11.32 $13.07 $12.80 $9.21
------ ------ ------ ------ ------ ------ -----
------ ------ ------ ------ ------ ------ -----
</TABLE>
See accompanying notes to financial statements
43
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Operations
For the Six Months Ended June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY
MARKET GROWTH
PORTFOLIO PORTFOLIO
--------- ----------
<S> <C> <C>
INVESTMENT INCOME:
Interest (net of foreign withholding taxes, if any)............... $ 493,312 $ 136,076
Dividends (net of foreign withholding taxes, if any).............. -- 81,689
--------- ----------
493,312 217,765
--------- ----------
EXPENSES:
Investment advisory and administration............................ 45,301 166,023
Legal and audit................................................... 22,637 22,992
Custody and accounting............................................ 14,377 22,187
Reports and notices to shareholders............................... 9,454 16,385
Trustees' fees and expenses....................................... 1,500 1,500
Transfer agency fees and expenses................................. 750 750
Amortization of organizational expenses........................... -- --
Other expenses.................................................... 908 2,433
--------- ----------
94,927 232,270
--------- ----------
Net investment income (loss)...................................... 398,385 (14,505)
--------- ----------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENT TRANSACTIONS:
Net realized gains (losses) from:
Investment transactions......................................... 19 4,633,427
Futures contracts............................................... -- --
Foreign currency transactions................................... -- --
Net change in unrealized appreciation/depreciation of:
Investments..................................................... -- 1,304,116
Assets, liabilities and forward contracts denominated in foreign
currencies........................................................... -- 3
--------- ----------
Net realized and unrealized gains (losses) from investment
transactions......................................................... 19 5,937,546
--------- ----------
Net increase (decrease) in net assets resulting from operations... $ 398,404 $5,923,041
--------- ----------
--------- ----------
</TABLE>
44
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH GRADE
GLOBAL GLOBAL STRATEGIC GROWTH AGGRESSIVE FIXED
GROWTH INCOME FIXED INCOME BALANCED AND INCOME GROWTH INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------- ---------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 12,044 $1,338,980 $ 492,051 $ 394,905 $ 35,227 $ 10,060 $ 297,209
260,040 -- -- 187,783 119,305 74,761 --
- ---------- ---------- ------------ ---------- ---------- ---------- ----------
272,084 1,338,980 492,051 582,688 154,532 84,821 297,209
- ---------- ---------- ------------ ---------- ---------- ---------- ----------
101,629 124,225 33,198 125,779 55,094 75,609 22,848
10,642 19,519 28,600 21,368 20,875 28,788 23,523
15,433 52,512 21,342 29,689 18,779 32,615 13,211
14,296 18,403 15,411 14,064 10,922 11,392 3,803
1,500 1,500 1,500 1,500 1,500 1,500 1,500
750 750 750 750 750 750 750
-- -- -- -- 5,278 -- --
1,396 3,023 1,859 3,223 2,076 6,724 4,409
- ---------- ---------- ------------ ---------- ---------- ---------- ----------
145,646 219,932 102,660 196,373 115,274 157,378 70,044
- ---------- ---------- ------------ ---------- ---------- ---------- ----------
126,438 1,119,048 389,391 386,315 39,258 (72,557) 227,165
- ---------- ---------- ------------ ---------- ---------- ---------- ----------
462,445 179,330 (46,136) 2,257,828 1,467,328 669,175 (12,835 )
-- -- (367,246) -- -- -- --
(18,955) (105,998) (2,708) -- -- -- --
1,800,898 (1,012,095) (288,401) (777,872) 61,477 1,658,295 (491,122 )
(243) 238,089 9,419 -- -- -- --
- ---------- ---------- ------------ ---------- ---------- ---------- ----------
2,244,145 (700,674) (695,072) 1,479,956 1,528,805 2,327,470 (503,957 )
- ---------- ---------- ------------ ---------- ---------- ---------- ----------
$2,370,583 $ 418,374 $ (305,681) $1,866,271 $1,568,063 $2,254,913 $(276,792 )
- ---------- ---------- ------------ ---------- ---------- ---------- ----------
- ---------- ---------- ------------ ---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to financial statements
45
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
---------------------------------
FOR THE SIX
MONTHS ENDED
JUNE 30, FOR THE YEAR
1996 ENDED
(UNAUDITED) DECEMBER 31, 1995
------------ -----------------
<CAPTION>
<S> <C> <C>
FROM OPERATIONS:
Net investment income...................................... $ 398,385 $ 1,346,538
Net realized gains from investment transactions............ 19 1,021
------------ -----------------
Net increase in net assets resulting from operations....... 398,404 1,347,559
------------ -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income...................................... (398,385 ) (1,346,538)
------------ -----------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares....................... 6,573,369 18,374,704
Cost of shares repurchased................................. (14,157,022 ) (22,800,127)
Proceeds from dividends reinvested......................... 445,744 1,356,406
------------ -----------------
Net decrease in net assets derived from beneficial interest
transactions.................................................. (7,137,909 ) (3,069,017)
------------ -----------------
Net decrease in net assets................................. (7,137,890 ) (3,067,996)
NET ASSETS:
Beginning of period........................................ 21,974,198 25,042,194
------------ -----------------
End of period.............................................. $14,836,308 $21,974,198
------------ -----------------
------------ -----------------
</TABLE>
See accompanying notes to financial statements
46
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
----------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30, 1996 ENDED
(UNAUDITED) DECEMBER 31, 1995
------------- -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income (loss)............................... $ (14,505) $ 103,153
Net realized gains from investment transactions............ 4,633,427 4,013,576
Net change in unrealized appreciation/depreciation of:
Investments.............................................. 1,304,116 8,506,699
Assets and liabilities denominated in foreign
currencies.................................................... 3 --
------------- -----------------
Net increase in net assets resulting from operations....... 5,923,041 12,623,428
------------- -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income...................................... -- (190,395)
Net realized gains from investments........................ -- (3,971,808)
------------- -----------------
-- (4,162,203)
------------- -----------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares....................... 2,611,311 6,496,559
Cost of shares repurchased................................. (10,873,294) (14,453,279)
Proceeds from dividends reinvested......................... 4,015,525 3,144,360
------------- -----------------
Net decrease in net assets derived from beneficial interest
transactions.................................................. (4,246,458) (4,812,360)
------------- -----------------
Net increase in net assets................................. 1,676,583 3,648,865
NET ASSETS:
Beginning of period........................................ 42,783,861 39,134,996
------------- -----------------
End of period.............................................. $44,460,444 $42,783,861
------------- -----------------
------------- -----------------
</TABLE>
See accompanying notes to financial statements
47
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL GROWTH PORTFOLIO
---------------------------------
FOR THE SIX
MONTHS ENDED
JUNE 30, FOR THE YEAR
1996 ENDED
(UNAUDITED) DECEMBER 31, 1995
------------ -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income...................................... $ 126,438 $ 34,469
Net realized gains (losses) from investment transactions... 462,445 (3,970,722)
Net realized losses from foreign currency transactions..... (18,955 ) (125,201)
Net change in unrealized appreciation/depreciation of:
Investments............................................. 1,800,898 2,259,000
Assets and liabilities denominated in foreign
currencies.................................................... (243 ) 4,191
------------ -----------------
Net increase (decrease) in net assets resulting from
operations.................................................... 2,370,583 (1,798,263)
------------ -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income...................................... -- --
Net realized gains from investments........................ -- --
------------ -----------------
-- --
------------ -----------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares....................... 1,306,005 2,842,004
Cost of shares repurchased................................. (5,392,966 ) (15,384,651)
Proceeds from dividends reinvested......................... -- 2,355,062
------------ -----------------
Net decrease in net assets derived from beneficial interest
transactions.................................................. (4,086,961 ) (10,187,585)
------------ -----------------
Net decrease in net assets................................. (1,716,378 ) (11,985,848)
NET ASSETS:
Beginning of period........................................ 28,507,253 40,493,101
------------ -----------------
End of period.............................................. $26,790,875 $28,507,253
------------ -----------------
------------ -----------------
</TABLE>
See accompanying notes to financial statements
48
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL INCOME PORTFOLIO
---------------------------------
FOR THE SIX
MONTHS ENDED
JUNE 30, FOR THE YEAR
1996 ENDED
(UNAUDITED) DECEMBER 31, 1995
------------ -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income...................................... $ 1,119,048 $ 3,388,558
Net realized gains from investment transactions............ 179,330 654,621
Net realized gains (losses) from foreign currency
transactions.................................................. (105,998 ) 530,557
Net change in unrealized appreciation/depreciation of:
Investments............................................. (1,012,095 ) 1,949,600
Assets, liabilities and forward contracts denominated in
foreign currencies............................................ 238,089 (555,776)
------------ -----------------
Net increase in net assets resulting from operations....... 418,374 5,967,560
------------ -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income...................................... -- (3,743,994)
------------ -----------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares....................... 352,427 1,301,569
Cost of shares repurchased................................. (10,470,945 ) (21,821,807)
Proceeds from dividends reinvested......................... 3,347,850 1,307,800
------------ -----------------
Net decrease in net assets derived from beneficial interest
transactions.................................................. (6,770,668 ) (19,212,438)
------------ -----------------
Net decrease in net assets................................. (6,352,294 ) (16,988,872)
NET ASSETS:
Beginning of period........................................ 35,699,574 52,688,446
------------ -----------------
End of period.............................................. $29,347,280 $35,699,574
------------ -----------------
------------ -----------------
</TABLE>
See accompanying notes to financial statements
49
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGIC FIXED INCOME PORTFOLIO
---------------------------------
FOR THE SIX
MONTHS ENDED
JUNE 30, FOR THE YEAR
1996 ENDED
(UNAUDITED) DECEMBER 31, 1995
------------ -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income...................................... $ 389,391 $ 1,144,229
Net realized gains (losses) from investment transactions... (46,136 ) 881,108
Net realized gains (losses) from futures contracts......... (367,246 ) 102,281
Net realized losses from foreign currency transactions..... (2,708 ) (8)
Net change in unrealized appreciation/depreciation of:.....
Investments............................................. (288,401 ) 936,088
Assets and liabilities denominated in foreign
currencies.................................................... 9,419 (9,403)
------------ -----------------
Net increase (decrease) in net assets resulting from
operations.................................................... (305,681 ) 3,054,295
------------ -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income...................................... -- (1,139,505)
Net realized gains from investments........................ -- (989,297)
------------ -----------------
-- (2,128,802)
------------ -----------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares....................... 876,088 2,921,636
Cost of shares repurchased................................. (4,317,420 ) (8,696,373)
Proceeds from dividends reinvested......................... 2,128,802 1,570,233
------------ -----------------
Net decrease in net assets derived from beneficial interest
transactions.................................................. (1,312,530 ) (4,204,504)
------------ -----------------
Net decrease in net assets................................. (1,618,211 ) (3,279,011)
NET ASSETS:
Beginning of period........................................ 13,740,964 17,019,975
------------ -----------------
End of period.............................................. $12,122,753 $13,740,964
------------ -----------------
------------ -----------------
</TABLE>
See accompanying notes to financial statements
50
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED PORTFOLIO*
---------------------------------
FOR THE SIX
MONTHS ENDED
JUNE 30, FOR THE YEAR
1996 ENDED
(UNAUDITED) DECEMBER 31, 1995
------------ -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income...................................... $ 386,315 $ 761,674
Net realized gains from investment transactions............ 2,257,828 1,787,409
Net change in unrealized appreciation/depreciation of
investments................................................... (777,872 ) 2,985,937
------------ -----------------
Net increase in net assets resulting from operations....... 1,866,271 5,535,020
------------ -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income...................................... -- (761,194)
Net realized gains from investments........................ -- (1,568,321)
------------ -----------------
-- (2,329,515)
------------ -----------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares....................... 13,547,910 3,408,739
Cost of shares repurchased................................. (7,414,721 ) (9,485,923)
Proceeds from dividends reinvested......................... 2,329,515 3,021,779
------------ -----------------
Net increase (decrease) in net assets derived from
beneficial interest transactions......................... 8,462,704 (3,055,405)
------------ -----------------
Net increase in net assets................................. 10,328,975 150,100
NET ASSETS:
Beginning of period........................................ 23,413,286 23,263,186
------------ -----------------
End of period.............................................. $33,742,261 $23,413,286
------------ -----------------
------------ -----------------
</TABLE>
- ------------
* Prior to the close of business on January 26, 1996, the Balanced Portfolio was
known as the Asset Allocation Portfolio.
See accompanying notes to financial statements
51
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH AND INCOME
PORTFOLIO
---------------------------------
FOR THE SIX
MONTHS ENDED
JUNE 30, FOR THE YEAR
1996 ENDED
(UNAUDITED) DECEMBER 31, 1995
------------ -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income...................................... $ 39,258 $ 125,687
Net realized gains from investment transactions............ 1,467,328 592,325
Net change in unrealized appreciation/depreciation of
investments................................................... 61,477 2,818,337
------------ -----------------
Net increase in net assets resulting from operations....... 1,568,063 3,356,349
------------ -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income...................................... -- (125,999)
Net realized gains from investments........................ -- (31,656)
------------ -----------------
-- (157,655)
------------ -----------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares....................... 2,049,649 5,263,538
Cost of shares repurchased................................. (2,261,876 ) (6,857,288)
Proceeds from dividends reinvested......................... 157,655 140,023
------------ -----------------
Net decrease in net assets derived from beneficial interest
transactions.................................................. (54,572 ) (1,453,727)
------------ -----------------
Net increase in net assets................................. 1,513,491 1,924,967
NET ASSETS:
Beginning of period........................................ 14,796,557 12,871,590
------------ -----------------
End of period.............................................. $16,310,048 $14,796,557
------------ -----------------
------------ -----------------
</TABLE>
See accompanying notes to financial statements
52
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH
PORTFOLIO
---------------------------------
FOR THE SIX
MONTHS ENDED
JUNE 30, FOR THE YEAR
1996 ENDED
(UNAUDITED) DECEMBER 31, 1995
------------ -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income (loss)............................... $ (72,557 ) $ 38,977
Net realized gains from investment transactions............ 669,175 1,186,424
Net change in unrealized appreciation/depreciation of
investments................................................... 1,658,295 1,761,260
------------ -----------------
Net increase in net assets resulting from operations....... 2,254,913 2,986,661
------------ -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income...................................... -- (37,374)
Net realized gains from investments........................ -- (495,199)
------------ -----------------
-- (532,573)
------------ -----------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares....................... 1,177,443 3,941,115
Cost of shares repurchased................................. (1,741,078 ) (2,342,734)
Proceeds from dividends reinvested......................... 532,573 7,556
------------ -----------------
Net increase (decrease) in net assets derived from
beneficial interest transactions......................... (31,062 ) 1,605,937
------------ -----------------
Net increase in net assets................................. 2,223,851 4,060,025
NET ASSETS:
Beginning of period........................................ 17,660,479 13,600,454
------------ -----------------
End of period.............................................. $19,884,330 $17,660,479
------------ -----------------
------------ -----------------
</TABLE>
See accompanying notes to financial statements
53
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH GRADE FIXED
INCOME PORTFOLIO
----------------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30, 1996 ENDED
(UNAUDITED) DECEMBER 31, 1995
------------- -----------------
<S> <C> <C>
FROM OPERATIONS:
]Net investment income.................................... $ 227,165 $ 543,112
Net realized gains (losses) from investment
transactions................................................. (12,835) 25,005
Net change in unrealized appreciation/depreciation of
investments.................................................. (491,122) 831,524
------------- -----------
Net increase (decrease) in net assets resulting from
operations................................................... (276,792) 1,399,641
------------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income..................................... -- (544,295)
------------- ----------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares...................... 816,224 3,145,013
Cost of shares repurchased................................ (1,192,893) (2,711,457)
Proceeds from dividends reinvested........................ 544,295 220,084
------------- -----------
Net increase in net assets derived from beneficial
interest transactions........................................ 167,626 653,640
------------- -----------
Net increase (decrease) in net assets..................... (109,166) 1,508,986
NET ASSETS:
Beginning of period....................................... 9,146,978 7,637,992
------------- -----------
End of period............................................. $ 9,037,812 $ 9,146,978
------------- -----------
------------- -----------
</TABLE>
See accompanying notes to financial statements
54
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Series Trust (the "Fund") is organized under Massachusetts law
by a Declaration of Trust dated November 21, 1986 and is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended, as an open-end management investment company. The Fund's board of
trustees have the authority to issue an unlimited number of shares of beneficial
interest, par value $0.001.
As of June 30, 1996, the Fund had nine series of shares available for
investment, each having its own investment objectives and policies: the Money
Market Portfolio, the Growth Portfolio, the Global Growth Portfolio, the Global
Income Portfolio, the Strategic Fixed Income Portfolio; the Balanced Portfolio,
the Growth and Income Portfolio; the Aggressive Growth Portfolio and the High
Grade Fixed Income Portfolio (collectively referred to as the "Portfolios"). At
the close of business on January 26, 1996, shares of the former Asset Allocation
Portfolio were substituted for all shares of the former Balanced Portfolio, the
sub-advisory agreement between Mitchell Hutchins and Provident Investment
Counsel, Inc. was terminated, and the former Asset Allocation Portfolio was
renamed the Balanced Portfolio.
All series of shares are diversified except Global Income Portfolio. Shares
of each series of the Fund are offered only to insurance company separate
accounts which fund certain variable contracts. Shares of each series of the
Fund are offered to separate accounts of PaineWebber Life Insurance Company
("PaineWebber Life"). PaineWebber Life is a wholly-owned subsidiary of
PaineWebber Life Holdings Inc., which in turn is a wholly-owned subsidiary of
PaineWebber Group Inc.
Organizational Matters--The costs incurred by the Growth and Income
Portfolio in connection with its organization and registration of shares of the
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 the 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"), or by the applicable sub-adviser, as the primary
market for each Portfolio. Securities traded in the over-the-counter ("OTC")
market and listed on The Nasdaq Stock Market, Inc. ("Nasdaq") are valued at the
last trade price on Nasdaq prior to the time of valuation; other OTC securities
are valued at the last bid price available in the OTC market prior to the time
of valuation. The amortized cost method, which approximates market value, is
used to value 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 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.
55
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 values. If events materially affecting
the value of such investments or currency exchange rates occur 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
recorded on the trade date. Realized gains and losses from investment
transactions are calculated on the identified cost basis. Dividend income is
recorded on the ex-dividend date ("ex-date") (except for certain dividends from
foreign securities that are recorded as soon after the ex-date as the respective
Portfolios become 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 Portfolios are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities and other assets and liabilities stated in foreign
currencies are translated at the exchange rates prevailing at the end of the
period; and (2) purchases, sales, income and expenses are translated at the rate
of exchange prevailing on the respective dates of such transactions. The
resulting exchange gains and losses are included in the Statement of Operations.
The Portfolios do not generally isolate the effect of fluctuations in
foreign exchange rates from the effects of fluctuations in the market price of
investment securities. However, the Portfolios do isolate the effect of
fluctuations in foreign exchange rates when determining the realized gain or
loss upon the sale or maturity of foreign currency-denominated debt obligations
pursuant to federal income tax regulations; such amount is categorized as
foreign exchange gain or loss for both financial reporting and income tax
purposes.
Forward Foreign Currency Contracts--Certain Portfolios may enter into
forward foreign currency exchange contracts ("forward contracts") in connection
with planned purchases or sales of securities to hedge the U.S. dollar value of
portfolio securities denominated in a particular currency. These Portfolios may
also engage in cross-hedging by using forward contracts in one currency to hedge
fluctuations in the value of securities denominated in a different currency if
Mitchell Hutchins or the applicable sub-adviser anticipates that there is a
correlation between the two currencies. Forward contracts may also be used to
shift a Portfolio's exposure to foreign currency fluctuations from one country
to another.
These Portfolios have no specific limitation on the percentage of assets
which may be committed to such contracts. However, the value of all forward
contracts will not exceed the total market value of a Portfolio's total assets.
The Portfolios may not enter into forward contracts unless (1) the contracts
would not obligate the Portfolio to deliver an amount of foreign currency in
excess of the value of the
56
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- --------------------------------------------------------------------------------
positions being hedged by such contracts or (2) the Portfolios maintain cash or
liquid 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.
Futures Contracts--Upon entering into a financial futures contract, a Fund
is required to pledge to a broker an amount of cash and/or U.S. Government
securities equal to a certain percentage of the contract amount. This amount is
known as the "initial margin." Subsequent payments, known as "variation margin"
are made or received by the Fund each day, depending on the daily fluctuations
in the value of the underlying financial futures contracts. Such variation
margin is recorded for financial statement purposes on a daily basis as
unrealized gain or loss until the financial futures contract is closed, at which
time the net gain or loss is reclassified to realized.
The Strategic Fixed Income Fund primarily used financial futures contracts
for hedging purposes as well as to manage the average duration of a Fund's
portfolio. However, imperfect correlations between futures contracts and the
portfolio securities being hedged, or market disruptions, do not normally permit
full control of these risks at all times.
Option Writing--When a Portfolio writes a call or a put option, an amount
equal to the premium received by the Portfolio is included in the Portfolio's
Statement of Assets and Liabilities as an asset and as an equivalent liability.
The amount of the liability is subsequently marked-to-market to reflect the
current market value of the option written. If an option which the Portfolio has
written either expires on its stipulated expiration date or the Portfolio enters
into a closing purchase transaction, the Portfolio realizes a gain (or loss if
the cost of a closing purchase transaction exceeds the premium received when the
option was written) without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option is extinguished.
If a call option which the Portfolio has written is exercised, the Portfolio
realizes a capital gain or loss (long-term or short-term, depending on the
holding period of the underlying security) from the sale of the underlying
security and the proceeds from the sale are increased by the premium originally
received. If a put option which the Portfolio has written is exercised, the
amount of the premium originally received reduces the cost of the security which
the Portfolio purchases upon exercise of the option.
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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.
Each Portfolio occasionally participates in joint repurchase agreement
transactions with other funds managed by Mitchell Hutchins.
Reverse Repurchase Agreements--Each Portfolio may enter into reverse
repurchase agreements with banks and broker-dealers up to an aggregate value of
not more than 5% of its total assets (10% of total assets for Global Income and
Balanced Portfolios). At June 30, 1996, the Portfolios had no reverse repurchase
agreements outstanding.
Dividends and Distributions--Dividends and distributions to shareholders are
recorded on the ex-date. The amount of dividends and distributions are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification. 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.
CONCENTRATION OF RISK
Investing in securities of foreign issuers and currency transactions may
involve certain considerations and risks not typically associated with
investments in the United States. These risks include revaluation of currencies,
adverse fluctuations in foreign currency values and possible adverse political,
social and economic developments, including those particular to a specific
industry, country or region, which could cause the securities and their markets
to be less liquid and prices more volatile than those of comparable U.S.
companies and U.S. government securities. These risks are greater with respect
to securities of issuers located in emerging market countries in which certain
of the Portfolios are authorized to invest. The ability of the issuers of debt
securities held by the Portfolios to meet their obligations may be affected by
economic and political developments particular to a specific industry, country
or region.
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INVESTMENT ADVISER AND ADMINISTRATOR
The Fund's board of trustees has approved an investment advisory and
administration contract with Mitchell Hutchins, under which Mitchell Hutchins
serves as investment adviser and administrator of the Fund and each Portfolio.
Mitchell Hutchins receives compensation from each Portfolio, computed daily and
payable monthly, as follows:
ANNUAL RATE
AS A PERCENTAGE
OF EACH
PORTFOLIO'S
AVERAGE NET ASSETS
------------------
Money Market Portfolio.................................... 0.50%
Growth Portfolio.......................................... 0.75
Global Growth Portfolio................................... 0.75
Global Income Portfolio................................... 0.75
Strategic Fixed Income Portfolio.......................... 0.50
Balanced Portfolio........................................ 0.75
Growth and Income Portfolio............................... 0.70
Aggressive Growth Portfolio............................... 0.80
High Grade Fixed Income Portfolio......................... 0.50
Under separate contracts, Mitchell Hutchins pays GE Investment Management
Incorporated, Pacific Investment Management Company and Nicholas Applegate
Capital Management, to serve as the respective sub-advisers of Global Growth
Portfolio, Strategic Fixed Income Portfolio and Aggressive Growth Portfolio.
Mitchell Hutchins (not the Portfolios) pays the sub-advisers a fee, computed
daily and paid monthly, at an annual rate of 0.29%, 0.25% and 0.50% of each
Portfolio's average net assets.
During the six months ended June 30, 1996, the Growth Portfolio and the
Growth and Income Portfolio paid $1,026 and $412, respectively, in brokerage
commissions to PaineWebber for transactions executed on behalf of those
Portfolios.
INVESTMENTS IN SECURITIES
For the six months ended June 30, 1996, aggregate purchases and sales of
portfolio securities, excluding short-term securities, were:
PURCHASES SALES
----------- -----------
Growth Portfolio................................ $10,501,875 $15,287,508
Global Growth Portfolio......................... $ 5,718,832 $ 8,381,105
Global Income Portfolio......................... $25,797,545 $29,864,423
Strategic Fixed Income Portfolio................ $29,918,085 $32,935,962
Balanced Portfolio.............................. $39,793,700 $33,099,381
Growth and Income Portfolio..................... $ 7,767,900 $ 8,781,590
Aggressive Growth Portfolio..................... $13,912,022 $14,451,638
High Grade Fixed Income Portfolio............... $12,728,175 $13,227,963
59
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At June 30, 1996, the components of net unrealized
appreciation/(depreciation) of investments were as follows:
<TABLE>
<CAPTION>
NET
UNREALIZED
GROSS GROSS APPRECIATION/
APPRECIATION DEPRECIATION (DEPRECIATION)
------------ ------------ --------------
<S> <C> <C> <C>
Growth Portfolio...................................... $ 16,558,745 $887,780 $ 15,670,965
Global Growth Portfolio............................... $ 3,802,740 $877,112 $ 2,925,628
Global Income Portfolio............................... $ 378,111 $460,453 $ (82,342)
Strategic Fixed Income Portfolio...................... $ 23,556 $156,622 $ (133,066)
Balanced Portfolio.................................... $ 2,288,275 $697,473 $ 1,590,802
Growth and Income Portfolio........................... $ 2,948,440 $273,144 $ 2,675,296
Aggressive Growth Portfolio........................... $ 4,221,553 $448,927 $ 3,772,626
High Grade Fixed Income Portfolio..................... $ 61,852 $101,912 $ (40,060)
</TABLE>
For federal income tax purposes, the cost of securities owned at June 30,
1996 was substantially the same as the cost of securities for financial
statement purposes.
FEDERAL INCOME TAX STATUS
Each of the Portfolios intends to distribute all of its taxable income and
to comply with the other requirements of the Internal Revenue Code applicable to
regulated investment companies. Accordingly, no provision for federal income
taxes is required.
At December 31, 1995, 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>
HIGH GRADE
MONEY GLOBAL GLOBAL FIXED
MARKET GROWTH INCOME INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
2001............................................ $ 763 -- -- --
2002............................................ 15,083 -- $ 526,312 $ 22,487
2003............................................ -- $4,171,198 -- --
--------- ---------- --------- ----------
$ 15,846 $4,171,198 $ 526,312 $ 22,487
--------- ---------- --------- ----------
--------- ---------- --------- ----------
</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.
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WRITTEN OPTION ACTIVITY
Written option activity for the six months ended June 30, 1996 for the
Strategic Fixed Income Portfolio were as follows:
<TABLE>
<CAPTION>
NUMBER OF AMOUNT OF
OPTIONS PREMIUMS
--------- ---------
<S> <C> <C>
Options outstanding at December 31, 1995............................... -- $ --
Options written during the six months ending June 30, 1996............. 27 17,588
Options terminated in closing purchase transactions.................... (13) (9,069 )
Options expired prior to exercise...................................... (14) (8,519 )
Options exercised...................................................... -- --
--- ---------
Options outstanding at June 30, 1996................................... 0 $ --
--- ---------
--- ---------
</TABLE>
SHARES OF BENEFICIAL INTEREST
At June 30, 1996, there was an unlimited amount of $0.001 par value shares
of beneficial interest authorized. Transactions in shares of beneficial interest
for each of the Portfolios were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1996
------------------------------------------------------------------------------------------------------
STRATEGIC GROWTH
MONEY GLOBAL GLOBAL FIXED AND AGGRESSIVE
MARKET GROWTH GROWTH INCOME INCOME BALANCED INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- --------- ---------- ---------- --------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold
(1)............ 6,573,369 140,812 103,072 31,461 83,960 1,245,921 163,514 94,910
Shares
redeemed....... (14,157,022) (594,427 ) (432,528) (933,528) (413,631 ) (669,975 ) (179,904 ) (145,373)
Reinvestment of
dividends...... 445,744 230,248 -- 298,382 200,641 216,699 13,293 46,676
----------- --------- ---------- ---------- --------- ---------- --------- ------
Net increase
(decrease) in
shares
outstanding.... (7,137,909) (223,367 ) (329,456) (603,685) (129,030 ) 792,645 (3,097 ) (3,787)
----------- --------- ---------- ---------- --------- ---------- --------- ------
----------- --------- ---------- ---------- --------- ---------- --------- ------
<CAPTION>
<S> <C>
HIGH GRADE
FIXED
INCOME
PORTFOLIO
------------
Shares sold
(1)............ 88,081
Shares
redeemed....... (127,581)
Reinvestment of
dividends...... 57,354
------
Net increase
(decrease) in
shares
outstanding.... 17,854
------
------
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1995
------------------------------------------------------------------------------------------------------
STRATEGIC GROWTH
MONEY GLOBAL GLOBAL FIXED AND AGGRESSIVE
MARKET GROWTH GROWTH INCOME INCOME BALANCED INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- --------- ---------- ---------- --------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold.... 18,374,704 395,367 241,937 112,665 263,966 313,446 490,246 358,840
Shares
redeemed....... (22,800,127) (865,482 ) (1,313,670) (1,885,539) (767,469 ) (880,843 ) (660,141 ) (211,321)
Reinvestment of
dividends...... 1,356,406 216,758 193,445 117,825 152,154 317,414 15,387 787
----------- --------- ---------- ---------- --------- ---------- --------- ------
Net increase
(decrease) in
shares
outstanding... (3,069,017) (253,357 ) (878,288) (1,655,049) (351,349 ) (249,983 ) (154,508 ) 148,306
----------- --------- ---------- ---------- --------- ---------- --------- ------
----------- --------- ---------- ---------- --------- ---------- --------- ------
<CAPTION>
HIGH GRADE
FIXED
INCOME
PORTFOLIO
------------
<S> <C>
Shares sold.... 346,367
Shares
redeemed....... (284,797)
Reinvestment of
dividends...... 25,297
------
Net increase
(decrease) in
shares
outstanding... 86,867
------
------
</TABLE>
(1) For the Balanced Portfolio, includes 1,198,513 shares issued in connection
with the acquisition of the former Balanced Portfolio.
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Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
--------------------------------------------------------------------
FOR THE SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, 1996 ---------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------- ------- ------- ------- -------
Net investment income................. 0.02 0.05 0.03 0.02 0.03 0.05
------ ------- ------- ------- ------- -------
Dividends from net investment
income................................ (0.02) (0.05) (0.03) (0.02) (0.03) (0.05)
------ ------- ------- ------- ------- -------
Net asset value, end of period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------- ------- ------- ------- -------
------ ------- ------- ------- ------- -------
Total investment return (1)........... 4.39% 5.22% 3.43% 2.45% 3.00% 5.00%
------ ------- ------- ------- ------- -------
------ ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)..... $14,836 $21,974 $25,042 $15,468 $19,383 $20,249
Expenses to average net assets........ 1.05%* 0.79% 0.88% 0.86% 0.81% 1.00%
Net investment income to average net
assets................................ 4.40%* 5.23% 3.56% 2.43% 3.13% 4.92%
</TABLE>
- ------------
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends at net
asset value on the payable dates and a sale at net asset value on the last
day of each period reported. The figures do not include additional contract
level charges; results would be lower if such charges were included. Total
investment return for periods of less than one year have not been
annualized.
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PaineWebber Series Trust
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Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
--------------------------------------------------------------------
FOR THE SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, 1996 ---------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period................................ $ 17.57 $ 14.56 $ 18.06 $ 15.68 $ 14.92 $ 10.57
------ ------- ------- ------- ------- -------
Net investment income (loss).......... (0.01) 0.04 0.01 -- 0.11 0.10
Net realized and unrealized gains
(losses) from investment
transactions.......................... 2.54 4.68 (2.13) 3.08 0.76 4.35
------ ------- ------- ------- ------- -------
Total income (loss) from investment
operations............................ 2.53 4.72 (2.12) 3.08 0.87 4.45
------ ------- ------- ------- ------- -------
Dividends from net investment
income................................ -- (0.08) (0.01) -- (0.11) (0.10)
Distributions from net realized gains
from investments..................... -- (1.63) (1.37) (0.70) -- --
------ ------- ------- ------- ------- -------
Total dividends and distributions..... 0.00 (1.71) (1.38) (0.70) (0.11) (0.10)
------ ------- ------- ------- ------- -------
Net asset value, end of period........ $ 20.10 $ 17.57 $ 14.56 $ 18.06 $ 15.68 $ 14.92
------ ------- ------- ------- ------- -------
------ ------- ------- ------- ------- -------
Total investment return (1)........... 14.40% 32.50% (11.65)% 19.61% 5.83% 42.10%
------ ------- ------- ------- ------- -------
------ ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)..... $44,460 $42,784 $39,135 $51,696 $46,479 $37,470
Expenses to average net assets........ 1.05%* 1.02% 1.00% 0.92% 0.94% 1.13%
Net investment income to average net
assets................................ (0.07)%* 0.23% 0.04% 0.00% 0.78% 1.07%
Portfolio turnover.................... 26% 41% 27% 35% 29% 28%
Average commission rate paid per share
of common stock investments
purchased/sold (2).................... $0.0600 -- -- -- -- --
</TABLE>
- ------------
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each period reported. The figures do not
include additional contract level charges; results would be lower if such
charges were included. Total investment return for periods of less than one
year have not been annualized.
(2) Disclosure is required for fiscal years beginning on or after September 1,
1995.
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Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
GLOBAL GROWTH PORTFOLIO
--------------------------------------------------------------------
FOR THE SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, 1996 ---------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period................................ $ 12.00 $ 12.44 $ 14.97 $ 11.10 $ 12.06 $ 11.76
------ ------- ------- ------- ------- -------
Net investment income (loss).......... 0.08 0.01 (0.03) 0.03 0.10 0.23
Net realized and unrealized gains
(losses) from investment
transactions.......................... 1.01 (0.45) (1.76) 4.42 (1.01) 0.35
------ ------- ------- ------- ------- -------
Total income (loss) from investment
operations............................ 1.09 (0.44) (1.79) 4.45 (0.91) 0.58
------ ------- ------- ------- ------- -------
Dividends from net investment
income................................ -- -- (0.01) -- (0.05) (0.23)
Distributions from net realized gains
from investments..................... -- -- (0.73) (0.58) -- (0.05)
------ ------- ------- ------- ------- -------
Total dividends and distributions..... 0.00 0.00 (0.74) (0.58) (0.05) (0.28)
------ ------- ------- ------- ------- -------
Net asset value, end of period........ $ 13.09 $ 12.00 $ 12.44 $ 14.97 $ 11.10 $ 12.06
------ ------- ------- ------- ------- -------
------ ------- ------- ------- ------- -------
Total investment return (1)........... 9.08% (3.54)% (11.94)% 40.02% (7.55)% 4.93%
------ ------- ------- ------- ------- -------
------ ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)..... $26,791 $28,507 $40,493 $38,035 $21,493 $24,308
Expenses to average net assets........ 1.07%* 1.96% 1.48% 1.40% 1.46% 1.53%
Net investment income (loss) to
average net assets.................... 0.93%* 0.10% (0.13)% 0.38% 0.82% 2.12%
Portfolio turnover.................... 21% 157% 175% 267% 127% 89%
Average commission rate paid per share
of common stock investments
purchased/sold (2).................... $0.0122 -- -- -- -- --
</TABLE>
- ------------
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each period reported. The figures do not
include additional contract level charges; results would be lower if such
charges were included. Total investment return for periods of less than one
year have not been annualized.
(2) Disclosure is required for fiscal years beginning on or after September 1,
1995.
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Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
GLOBAL INCOME PORTFOLIO
--------------------------------------------------------------------
FOR THE SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, 1996 ---------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period................................ $ 11.20 $ 10.88 $ 11.72 $ 11.17 $ 11.65 $ 11.16
------ ------- ------- ------- ------- -------
Net investment income (loss).......... 0.37 (0.05) 0.97 0.96 0.80 0.75
Net realized and unrealized gains
(losses) from investment
transactions.......................... (0.22) 1.52 (1.60) 0.90 (0.65) 0.40
------ ------- ------- ------- ------- -------
Total income (loss) from investment
operations............................ 0.15 1.47 (0.63) 1.86 0.15 1.15
------ ------- ------- ------- ------- -------
Dividends from net investment
income................................ -- (1.15) (0.21) (0.94) (0.56) (0.65)
Distributions in excess of net
investment income..................... -- -- -- (0.16) -- --
Distributions from net realized gains
from investments..................... -- -- -- (0.21) (0.07) (0.01)
------ ------- ------- ------- ------- -------
Total dividends and distributions..... 0.00 (1.15) (0.21) (1.31) (0.63) (0.66)
------ ------- ------- ------- ------- -------
Net asset value, end of period........ $ 11.35 $ 11.20 $ 10.88 $ 11.72 $ 11.17 $ 11.65
------ ------- ------- ------- ------- -------
------ ------- ------- ------- ------- -------
Total investment return (1)........... 1.34% 13.58% (5.56)% 16.65% 1.29% 10.30%
------ ------- ------- ------- ------- -------
------ ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)..... $29,347 $35,700 $52,688 $64,610 $63,172 $51,988
Expenses to average net assets........ 1.33%* 1.19% 1.17% 0.98% 1.07% 1.20%
Net investment income to average net
assets................................ 6.76%* 7.21% 7.23% 7.47% 7.20% 7.59%
Portfolio turnover.................... 104% 160% 97% 69% 75% 14%
</TABLE>
- ------------
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each period reported. The figures do not
include additional contract level charges; results would be lower if such
charges were included. Total investment return for periods of less than one
year have not been annualized.
65
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- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
STRATEGIC FIXED INCOME PORTFOLIO
--------------------------------------------------------------------
FOR THE SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, 1996 ---------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period................................ $ 10.61 $ 10.34 $ 11.93 $ 11.58 $ 11.61 $ 10.49
------ ------- ------- ------- ------- -------
Net investment income................. 0.33 0.88 0.85 0.87 0.74 0.47
Net realized and unrealized gains
(losses) from investment
transactions.......................... (0.54) 1.03 (1.49) 0.48 0.05 1.12
------ ------- ------- ------- ------- -------
Total income (loss) from investment
operations............................ (0.21) 1.91 (0.64) 1.35 0.79 1.59
------ ------- ------- ------- ------- -------
Dividends from net investment
income................................ -- (0.88) (0.85) (0.87) (0.74) (0.47)
Distributions from net realized gains
from investments..................... -- (0.76) (0.10) (0.13) (0.08) --
------ ------- ------- ------- ------- -------
Total dividends and distributions..... 0.00 (1.64) (0.95) (1.00) (0.82) (0.47)
------ ------- ------- ------- ------- -------
Net asset value, end of period........ $ 10.40 $ 10.61 $ 10.34 $ 11.93 $ 11.58 $ 11.61
------ ------- ------- ------- ------- -------
------ ------- ------- ------- ------- -------
Total investment return (1)........... (1.98)% 18.51% (5.34)% 11.66% 6.76% 15.17%
------ ------- ------- ------- ------- -------
------ ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)..... $12,123 $13,741 $17,020 $22,354 $24,103 $15,690
Expenses to average net assets**...... 1.55%* 0.99% 0.89% 0.79% 0.76% 1.25%
Net investment income to average net
assets**.............................. 5.86%* 6.35% 6.64% 6.13% 6.59% 6.43%
Portfolio turnover.................... 229% 234% 54% 8% 23% 1%
</TABLE>
- ------------
* Annualized
** During the year ended December 31, 1991, Mitchell Hutchins agreed to
reimburse the Portfolio for a portion of its operating expenses and waived
all or a portion of its advisory fees. If such reimbursements and waivers
had not been made, the annualized ratio of expenses to average net assets
and the annualized ratio of net investment income to average net assets
would have been 1.28% and 6.40%, respectively, for the year ended December
31, 1991.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each period reported. The figures do not
include additional contract level charges; results would be lower if such
charges were included. Total investment return for periods of less than one
year have not been annualized.
66
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
BALANCED PORTFOLIO**
--------------------------------------------------------------------
FOR THE SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, 1996 ---------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period................................ $ 10.70 $ 9.54 $ 11.95 $ 11.63 $ 11.39 $ 9.99
------ ------- ------- ------- ------- -------
Net investment income................. 0.13 0.35 0.30 0.33 0.35 0.47
Net realized and unrealized gains
(losses) from investment
transactions.......................... 0.49 1.88 (1.44) 1.48 0.24 1.40
------ ------- ------- ------- ------- -------
Total income (loss) from investment
operations............................ 0.62 2.23 (1.14) 1.81 0.59 1.87
------ ------- ------- ------- ------- -------
Dividends from net investment
income................................ -- (0.35) (0.30) (0.33) (0.35) (0.47)
Distributions from net realized gains
from investments..................... -- (0.72) (0.97) (1.16) -- --
------ ------- ------- ------- ------- -------
Total dividends and distributions..... 0.00 (1.07) (1.27) (1.49) (0.35) (0.47)
------ ------- ------- ------- ------- -------
Net asset value, end of period........ $ 11.32 $ 10.70 $ 9.54 $ 11.95 $ 11.63 $ 11.39
------ ------- ------- ------- ------- -------
------ ------- ------- ------- ------- -------
Total investment return (1)........... 5.79% 23.27% (9.59)% 15.76% 5.18% 18.73%
------ ------- ------- ------- ------- -------
------ ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)..... $33,742 $23,413 $23,263 $33,367 $38,583 $33,327
Expenses to average net assets........ 1.17%* 1.09% 1.03% 0.95% 0.93% 0.94%
Net investment income to average net
assets................................ 2.30%* 2.88% 2.30% 2.27% 3.11% 4.64%
Portfolio turnover.................... 103% 171% 112% 60% 31% 101%
Average commission rate paid per share
of common stock investments
purchased/sold (2).................... $0.0628 -- -- -- -- --
</TABLE>
- ------------
* Annualized
** Prior to the close of business on January 26, 1996, the Balanced Portfolio
was known as the Asset Allocation Portfolio.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each period reported. The figures do not
include additional contract level charges; results would be lower if such
charges were included. Total investment return for periods of less than one
year have not been annualized.
(2) Disclosure is required for fiscal years beginning on or after September 1,
1995.
67
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO
---------------------------------------------------------------
FOR THE SIX
MONTHS FOR THE YEARS ENDED FOR THE PERIOD
ENDED DECEMBER 31, JANUARY 2, 1992+
JUNE 30, 1996 --------------------------- TO DECEMBER 31,
(UNAUDITED) 1995 1994 1993 1992
------------- ------- ------- ------- -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........ $ 11.83 $ 9.16 $ 9.87 $ 10.26 $ 10.00
------ ------- ------- ------- ------
Net investment income....................... 0.03 0.10 0.10 0.16 0.08
Net realized and unrealized gains (losses)
from investment transactions............... 1.21 2.70 (0.71) (0.39) 0.26
------ ------- ------- ------- ------
Total income (loss) from investment
operations.................................. 1.24 2.80 (0.61) (0.23) 0.34
------ ------- ------- ------- ------
Dividends from net investment income........ -- (0.10) (0.10) (0.16) (0.08)
Distributions from net realized gains from
investments................................. -- (0.03) -- -- --
------ ------- ------- ------- ------
Total dividends and distributions........... 0.00 (0.13) (0.10) (0.16) (0.08)
------ ------- ------- ------- ------
Net asset value, end of period.............. $ 13.07 $ 11.83 $ 9.16 $ 9.87 $ 10.26
------ ------- ------- ------- ------
------ ------- ------- ------- ------
Total investment return (1)................. 10.48% 30.52% (6.18)% (2.26)% 3.40%
------ ------- ------- ------- ------
------ ------- ------- ------- ------
Ratios/Supplemental Data:
Net assets, end of period (000's)........... $16,310 $14,797 $12,872 $16,281 $20,037
Expenses to average net assets.............. 1.46%* 1.37% 1.35% 1.12% 1.29%*
Net investment income to average net
assets...................................... 0.50%* 0.94% 1.06% 1.37% 1.21%*
Portfolio turnover.......................... 53% 134% 150% 52% 14%
Average commission rate paid per share of
common stock investments purchased/sold
(2)......................................... $0.0600 -- -- -- --
</TABLE>
- ------------
+ Commencement of operations
* Annualized
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each period reported. The figures do not
include additional contract level charges; results would be lower if such
charges were included. Total investment return for periods of less than one
year have not been annualized.
(2) Disclosure is required for fiscal years beginning on or after September 1,
1995.
68
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO
-----------------------------------------------------------
FOR THE SIX FOR THE YEARS
MONTHS ENDED
ENDED DECEMBER 31, FOR THE PERIOD
JUNE 30, 1996 ------------------ NOVEMBER 2, 1993+
(UNAUDITED) 1995 1994 TO DECEMBER 31, 1993
------------- ------- ------- --------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........ $ 11.34 $ 9.65 $ 9.95 $10.00
------ ------- ------- -----
Net investment income (loss)................ (0.05) 0.03 0.01 0.01
Net realized and unrealized gains (losses)
from investment transactions.............. 1.51 2.00 (0.30) (0.05)
------ ------- ------- -----
Total income (loss) from investment
operations.................................. 1.46 2.03 (0.29) (0.04)
------ ------- ------- -----
Dividends from net investment income........ -- (0.02) (0.01) (0.01)
Distributions from net realized gains from
investments................................. -- (0.32) -- --
------ ------- ------- -----
Total dividends and distributions........... 0.00 (0.34) (0.01) (0.01)
------ ------- ------- -----
Net asset value, end of period.............. $ 12.80 $ 11.34 $ 9.65 $ 9.95
------ ------- ------- -----
------ ------- ------- -----
Total investment return (1)................. 12.87% 21.04% (2.90)% (0.36)%
------ ------- ------- -----
------ ------- ------- -----
Ratios/Supplemental Data:
Net assets, end of period (000's)........... $19,884 $17,660 $13,600 $2,814
Expenses to average net assets**............ 1.67%* 1.29% 1.59% 0.00%
Net investment income (loss) to average net
assets**.................................... (0.77)%* 0.23% 0.07% 3.31%*
Portfolio turnover.......................... 74% 119% 90% 0%
Average commission rate paid per share of
common stock investments purchased/sold
(2)......................................... $0.0600 -- -- --
</TABLE>
- ------------
+ Commencement of operations
* Annualized
** During the period ended December 31, 1993, Mitchell Hutchins agreed to
reimburse the Portfolio for all of its operating expenses and waived all of
its advisory fees. If such reimbursements and waivers had not been made, the
annualized ratio of expenses to average net assets and the annualized ratio
of net investment income (loss) to average net assets would have been 12.28%
and (8.97)%, respectively.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each period reported. The figures do not
include additional contract level charges; results would be lower if such
charges were included. Total investment return for periods of less than one
year have not been annualized.
(2) Disclosure is required for fiscal years beginning on or after September 1,
1995.
69
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
HIGH GRADE FIXED INCOME PORTFOLIO
--------------------------------------------------------
FOR THE SIX FOR THE YEARS
MONTHS ENDED FOR THE PERIOD
ENDED DECEMBER 31, NOVEMBER 8, 1993+
JUNE 30, 1996 ---------------- TO DECEMBER 31,
(UNAUDITED) 1995 1994 1993
------------- ------ ------ -------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period......... $ 9.49 $ 8.71 $ 9.61 $ 10.00
----- ------ ------ -----
Net investment income........................ 0.23 0.56 0.26 0.02
Net realized and unrealized gains (losses)
from investment transactions................ (0.51) 0.79 (0.89) (0.39)
----- ------ ------ -----
Total income (loss) from investment
operations................................... (0.28) 1.35 (0.63) (0.37)
----- ------ ------ -----
Dividends from net investment income......... 0.00 (0.57) (0.27) (0.02)
----- ------ ------ -----
Net asset value, end of period............... $ 9.21 $ 9.49 $ 8.71 $ 9.61
----- ------ ------ -----
----- ------ ------ -----
Total investment return (1).................. (2.95)% 15.44% (6.56)% (3.73)%
----- ------ ------ -----
----- ------ ------ -----
Ratios/Supplemental Data:
Net assets, end of period (000's)............ $ 9,038 $9,147 $7,638 $ 1,480
Expenses to average net assets**............. 1.53%* 1.01% 1.56% 0.00%
Net investment income to average net
assets**..................................... 4.97%* 5.56% 4.61% 3.90%*
Portfolio turnover........................... 147% 136% 36% 0%
</TABLE>
- ------------
+ Commencement of operations
* Annualized
** During the period ended December 31, 1993, Mitchell Hutchins agreed to
reimburse the Portfolio for all of its operating expenses and waived all of
its advisory fees. If such reimbursements and waivers had not been made, the
annualized ratio of expenses to average net assets and the annualized ratio
of net investment income (loss) to average net assets would have been 23.52%
and (19.62)%, respectively.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates and a sale at net
asset value on the last day of each period reported. The figures do not
include additional contract level charges; results would be lower if such
charges were included. Total investment return for periods of less than one
year have not been annualized.
70
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
Shareholder Information
- --------------------------------------------------------------------------------
A special meeting of shareholders was held on April 11, 1996, at which the
following proposals were approved:
<TABLE>
<CAPTION>
PROPOSAL 1
- ----------
To elect ten members of its Board of Trustees: FUNDS VOTING TOGETHER
-----------------------------------
SHARES WITHHOLD
SHARES FOR VOTED AUTHORITY
---------------- ---------------
<S> <C> <C>
Margo N. Alexander........................................... 34,840,722.694 1,234,414.204
Richard Q. Armstrong......................................... 34,953,316.871 1,121,820.027
E. Garrett Bewkes, Jr........................................ 34,843,743.804 1,231,393.094
Richard Burt................................................. 35,080,827.956 994,308.942
Mary C. Farrell.............................................. 34,821,691.189 1,253,445.709
Meyer Feldberg............................................... 34,970,636.012 1,104,500.886
George W. Gowen.............................................. 34,889,847.507 1,185,289.391
Frederic V. Malek............................................ 34,784,908.070 1,290,228.828
Carl W. Schafer.............................................. 34,986,746.251 1,088,390.647
John R. Torell III........................................... 35,025,179.647 1,049,957.251
</TABLE>
<TABLE>
<CAPTION>
PROPOSAL 2
- ----------
To vote for or against the ratification of the selection of Ernst & Young LLP as the independent
auditors for its current fiscal year:
SHARES FOR VOTED SHARES AGAINST SHARES ABSTAIN
---------------- -------------- --------------
<S> <C> <C> <C>
Money Market................................... 17,816,902.952 83,336.392 1,940,968.383
Global Growth.................................. 2,080,043.327 13,317.089 113,601.448
Growth......................................... 2,351,420.038 19,377.200 93,206.139
Global Income.................................. 2,953,825.804 11,407.710 110,591.086
Balanced....................................... 3,043,431.743 9,201.002 280,701.793
Strategic Fixed Income......................... 1,251,478.499 8,055.839 70,230.419
Growth and Income.............................. 1,165,499.887 2,244.076 73,620.869
Aggressive Growth.............................. 1,484,431.816 19,243.224 54,092.223
High Grade Fixed Income........................ 885,127.422 12,704.229 94,686.203
</TABLE>
<TABLE>
<CAPTION>
PROPOSAL 3
- ----------
To vote for or against the following changes to each Fund's fundamental investment restrictions and
policies:
SHARES VOTED
SHARES FOR VOTED AGAINST SHARES ABSTAIN
---------------- ------------ --------------
<S> <C> <C> <C>
Modification of Fundamental Restriction on
Portfolio Diversification for Diversified
Funds:
Money Market................................... 17,028,523.454 875,733.791 1,936,950.454
Global Growth.................................. 2,006,976.665 43,523.875 156,461.324
Growth......................................... 2,192,234.882 100,956.730 170,811.766
Balanced....................................... 3,020,185.649 119,662.509 193,294.692
Strategic Fixed Income......................... 1,233,499.545 26,459.860 69,805.352
Growth and Income.............................. 1,123,322.099 34,445.824 83,596.909
Aggressive Growth.............................. 1,465,347.628 22,264.887 102,736.550
High Grade Fixed Income........................ 867,956.863 31,562.068 92,998.923
</TABLE>
71
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VOTED
SHARES FOR VOTED AGAINST SHARES ABSTAIN
---------------- ------------ --------------
Modification of Fundamental Restriction on
Portfolio Diversification for Non-Diversified
Funds:
<S> <C> <C> <C>
Global Income.................................. 2,840,952.120 43,913.483 190,958.996
<CAPTION>
Modification of Fundamental Restriction on Concentration;
Modification of Fundamental Restriction on Underwriting Securities;
Modification of Fundamental Restriction on Real Estate Investments;
Elimination of Fundamental Restriction on Pledging Portfolio Securities;
Elimination of Fundamental Restriction on Investments in Oil, Gas and Mineral Leases and Programs;
<CAPTION>
SHARES VOTED
SHARES FOR VOTED AGAINST SHARES ABSTAIN
---------------- ------------ --------------
<S> <C> <C> <C>
For each of the proposals listed above the votes
were as follows:
Money Market................................... 17,028,523.454 875,733.791 1,936,950.454
Global Growth.................................. 2,006,976.665 43,523.875 156,461.324
Growth......................................... 2,192,234.882 100,956.730 170,811.766
Global Income.................................. 2,840,952.120 43,913.483 190,958.996
Balanced....................................... 3,020,185.649 119,662.509 193,294.692
Strategic Fixed Income......................... 1,233,499.545 26,459.860 69,805.352
Growth and Income.............................. 1,123,322.099 34,445.824 83,596.909
Aggressive Growth.............................. 1,465,347.628 22,264.887 102,736.550
High Grade Fixed Income........................ 867,956.863 31,562.068 92,998.923
Modification of Fundamental Restriction on Senior Securities and Borrowing;
Modification of Fundamental Restriction on Making Loans;
Elimination of Fundamental Restriction on Short Sales;
<CAPTION>
SHARES VOTED
SHARES FOR VOTED AGAINST SHARES ABSTAIN
---------------- ------------ --------------
<S> <C> <C> <C>
For each of the proposals listed above, the votes
were as follows:
Money Market................................... 17,028,523.454 875,733.791 1,936,950.454
Global Growth.................................. 2,006,976.665 43,523.875 156,461.324
Growth......................................... 2,187,611.895 105,579.717 170,811.766
Global Income.................................. 2,840,952.120 43,913.483 190,958.996
Balanced....................................... 3,020,185.649 119,662.509 193,294.692
Strategic Fixed Income......................... 1,233,499.545 26,459.860 69,805.352
Growth and Income.............................. 1,118,661.326 39,049.057 83,654.449
Aggressive Growth.............................. 1,465,347.628 22,264.887 102,736.550
High Grade Fixed Income........................ 867,956.863 31,562.068 92,998.923
</TABLE>
72
<PAGE>
PaineWebber Series Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VOTED
SHARES FOR VOTED AGAINST SHARES ABSTAIN
---------------- ------------ --------------
Modification of Fundamental Restriction on
Investing in Commodities:
<S> <C> <C> <C>
Money Market................................... 17,028,523.454 875,733.791 1,936,950.454
Global Growth.................................. 1,981,952.308 68,422.482 156,587.074
Growth......................................... 2,166,857.608 126,334.003 170,811.766
Global Income.................................. 2,840,952.120 43,913.483 190,958.996
Balanced....................................... 2,985,491.652 154,356.506 193,294.692
Strategic Fixed Income......................... 1,233,499.545 26,459.860 69,805.352
Growth and Income.............................. 1,118,661.326 39,049.057 83,654.449
Aggressive Growth.............................. 1,465,347.628 22,264.887 102,736.550
High Grade Fixed Income........................ 867,956.863 31,562.068 92,998.923
<CAPTION>
SHARES VOTED
SHARES FOR VOTED AGAINST SHARES ABSTAIN
---------------- ------------ --------------
<S> <C> <C> <C>
Elimination of Fundamental Restriction on
Margin Transactions:
Money Market................................... 17,028,523.454 875,733.791 1,936,950.454
Global Growth.................................. 2,006,976.665 43,523.875 156,461.324
Growth......................................... 2,192,234.882 100,956.730 170,811.766
Global Income.................................. 2,840,952.120 43,913.483 190,958.996
Balanced....................................... 3,020,185.649 119,662.509 193,294.692
Strategic Fixed Income......................... 1,232,485.876 27,545.933 69,732.947
Growth and Income.............................. 1,123,322.099 34,445.824 83,596.909
Aggressive Growth.............................. 1,465,347.628 22,264.887 102,736.550
High Grade Fixed Income........................ 867,956.863 31,562.068 92,998.923
<CAPTION>
SHARES VOTED
SHARES FOR VOTED AGAINST SHARES ABSTAIN
---------------- ------------ --------------
<S> <C> <C> <C>
Elimination of Fundamental Restriction on
Investments in Other Investment Companies:
Money Market................................... 17,028,523.454 875,733.791 1,936,950.454
Global Growth.................................. 2,006,976.665 43,523.875 156,461.324
Growth......................................... 2,192,234.882 100,956.730 170,811.766
Global Income.................................. 2,837,176.633 47,688.970 190,958.996
Balanced....................................... 3,020,185.649 119,662.509 193,294.692
Strategic Fixed Income......................... 1,233,499.545 26,459.860 69,805.352
Growth and Income.............................. 1,123,322.099 34,445.824 83,596.909
Aggressive Growth.............................. 1,465,347.628 22,264.887 102,736.550
High Grade Fixed Income........................ 867,956.863 31,562.068 92,998.923
</TABLE>
- ------------
(Broker non-votes and abstentions are included with the "Shares Withhold
Authority" or "Shares Abstain" totals.)
73
<PAGE>
[LOGO]
(C) 1996 PAINEWEBBER INCORPORATED 911227-1114
(R) REGISTERED TRADEMARK OF PAINEWEBBER INCORPORATED U351
811 0060 0896
